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AmSouth Bancorporation (NYSE: ASO) today reported earnings for the second quarter ended June 30, 2005, of $.52 per diluted share, compared to $.47 per diluted share reported for the second quarter of 2004. Net income for the second quarter of 2005 was a record $184.6 million versus $167.0 million for the same period in 2004, an increase of 10.6 percent. This second quarter performance resulted in a return on average equity of 20.9 percent, a return on average assets of 1.47 percent, and an improved efficiency ratio of 51.4 percent. "AmSouth generated solid, high quality results this quarter," said Dowd Ritter, AmSouth's chairman, president and chief executive officer. "We saw strong performance across the board: good loan production and deposit growth, extremely strong credit quality and disciplined expense control." Net interest income was $378.6 million in the second quarter, a 4.8 percent increase compared with the same quarter in 2004. The net interest margin in the second quarter was 3.40 percent, which is a 4 basis point decline compared with the same period in 2004. The increase in net interest income in the second quarter was driven by solid loan growth supported by continued strength in deposits, particularly in the low-cost category. Commercial loans grew 12.8 percent compared with the same quarter in 2004, and low-cost deposits increased 15.1 percent during the same period. Noninterest revenue, which includes earnings from service charges, trust, investment management services, securities gains and other sources of fee income, was $223.2 million for the quarter. Interchange income increased 10.2 percent compared with the second quarter of 2004, and commercial credit fee income rose 25.4 percent compared with the previous year. Continued disciplined expense control resulted in noninterest expenses in the second quarter of $314.9 million, an increase of 1.0 percent compared with the previous year. Net charge-offs were 0.21 percent of average net loans in the second quarter, declining 2 basis points compared with the first quarter of 2005. The ratio of loan loss reserves to total loans was 1.09 percent at June 30, 2005. The loan loss provision essentially matched net charge-offs in the quarter. Nonperforming loan coverage increased to 519 percent during the quarter. Total nonperforming assets at June 30, 2005, were $90.0 million, or 0.27 percent of loans net of unearned income, foreclosed properties and repossessions, compared to $112.7 million, or 0.34 percent, in the previous quarter. For supplemental financial information about the second quarter results, please refer to the Form 8-K filed by AmSouth with the Securities and Exchange Commission on July 19, 2005, or visit the Investor Relations Resource Center on AmSouth's web site at www.amsouth.com. About AmSouth AmSouth is a regional bank holding company with over $50 billion in assets, more than 685 branch banking offices and more than 1,200 ATMs. AmSouth operates in Florida, Tennessee, Alabama, Mississippi, Louisiana and Georgia. AmSouth is a leader among regional banks in the Southeast in several key business segments, including consumer and commercial banking, small business banking, mortgage lending, equipment leasing, and trust and investment management services. AmSouth also offers a complete line of banking products and services at its web site, www.amsouth.com. Forward Looking Statements Statements in this document that are not purely historical are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995), including any statements regarding descriptions of management's plans, objectives or goals for future operations, products or services, and forecasts of its revenues, earnings or other measures of performance. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. A number of factors - many of which are beyond AmSouth's control - could cause actual conditions, events or results to differ materially from those described in the forward-looking statements. Factors which could cause results to differ materially from current management expectations include, but are not limited to: the effects of previously disclosed regulatory agreements on AmSouth's branch expansion plans; the successful completion of the sale of AmSouth's mutual fund advisory business; the execution of AmSouth's strategic initiatives; legislation and regulation; general economic conditions, especially in the Southeast; the performance of the stock and bond markets; changes in interest rates, yield curves and interest rate spread relationships; prepayment speeds within the loan and investment security portfolios; deposit flows; the cost of funds; cost of federal deposit insurance premiums; demand for loan products; demand for financial services; competition, including a continued consolidation in the financial services industry; changes in the quality or composition of AmSouth's loan and investment portfolios including capital market inefficiencies that may affect the marketability and valuation of available-for-sale securities; changes in consumer spending and saving habits; technological changes; adverse changes in the financial performance and/or condition of AmSouth's borrowers which could impact the repayment of such borrowers' loans; changes in accounting and tax principles, policies or guidelines and in tax laws; other economic, competitive, governmental and regulatory factors affecting AmSouth's operations, products, services and prices; the effects of weather and natural disasters, such as hurricanes; unexpected judicial actions and developments; results of investigations, examinations, and reviews of regulatory and law enforcement authorities; the outcome of litigation, which is inherently uncertain and depends on the findings of judges and juries; the impact on AmSouth's businesses, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and AmSouth's success at managing the risks involved in the foregoing. Forward-looking statements speak only as of the date they are made. AmSouth does not undertake a duty to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. -0- *T Unaudited AmSouth Bancorporation SUMMARY FINANCIAL INFORMATION ($ in thousands, except per share data) EARNINGS SUMMARY Three Months Ended ---------------------------------- 2005 2004 ---------------------- ----------- June 30 March 31 December 31 ------------ --------- ----------- Net interest income $378,643 $379,748 $379,212 Provision for loan losses 17,700 20,600 44,250 ------------ --------- ----------- Net interest income after provision 360,943 359,148 334,962 Noninterest revenues 223,151 215,436 380,289 Noninterest expenses 314,942 319,517 460,416 ------------ --------- ----------- Income before income taxes 269,152 255,067 254,835 Income taxes 84,553 76,422 77,978 ------------ --------- ----------- Net income $184,599 $178,645 $176,857 ============ ========= =========== Earnings per common share - basic (a) $0.52 $0.50 $0.50 Earnings per common share - diluted (a) 0.52 0.50 0.49 Cash dividends declared per common share 0.25 0.25 0.25 Average common shares outstanding - basic 352,054 354,299 355,072 Average common shares outstanding - diluted 357,026 358,812 360,286 End of period common shares outstanding 352,349 353,051 356,310 EARNINGS SUMMARY Three Months Ended Percent 2004 Change ---------------------- Versus Prior September 30 June 30 Year ------------ --------- ----------- Net interest income $375,906 $361,410 4.8% Provision for loan losses 28,800 26,600 (33.5%) ------------ --------- Net interest income after provision 347,106 334,810 7.8% Noninterest revenues 213,171 218,252 2.2% Noninterest expenses 362,478 311,770 1.0% ------------ --------- Income before income taxes 197,799 241,292 11.5% Income taxes 78,220 74,329 13.8% ------------ --------- Net income $119,579 $166,963 10.6% ============ ========= Earnings per common share - basic (a) $0.34 $0.47 10.6% Earnings per common share - diluted (a) 0.33 0.47 10.6% Cash dividends declared per common share 0.24 0.24 4.2% Average common shares outstanding - basic 352,838 351,602 Average common shares outstanding - diluted 358,272 356,314 End of period common shares outstanding 354,635 353,414 EARNINGS SUMMARY YTD ---------------------- Percent Change 2005 2004 Versus ------------ --------- Prior June 30 June 30 Year ------------ --------- ----------- Net interest income $758,391 $720,907 5.2% Provision for loan losses 38,300 54,700 (30.0%) ------------ --------- Net interest income after provision 720,091 666,207 8.1% Noninterest revenues 438,587 438,682 (0.0%) Noninterest expenses 634,459 634,044 0.1% ------------ --------- Income before income taxes 524,219 470,845 11.3% Income taxes 160,975 143,783 12.0% ------------ --------- Net income $363,244 $327,062 11.1% ============ ========= Earnings per common share - basic (a) $1.03 $0.93 10.8% Earnings per common share - diluted (a) 1.01 0.92 9.8% Cash dividends declared per common share 0.50 0.48 4.2% Average common shares outstanding - basic 353,170 351,399 Average common shares outstanding - diluted 357,914 356,611 End of period common shares outstanding 352,349 353,414 KEY PERFORMANCE RATIOS Three Months Ended ---------------------- 2005 ---------------------- June 30 March 31 ------------- -------- Average shareholders' equity to average total assets 7.03% 7.04% End of period shareholders' equity to end of period total assets 7.20 6.98 Return on average assets (annualized) (a) 1.47 1.44 Return on average shareholders' equity (annualized) (a) 20.92 20.48 Net interest margin - taxable equivalent 3.40 3.45 Efficiency ratio (a) 51.41 52.72 Loans net of unearned income to total deposits 94.96 94.82 Book value per common share $10.33 $9.89 Tangible book value per common share 9.48 9.04 KEY PERFORMANCE RATIOS Three Months Ended ---------------------------------- 2004 ---------------------------------- December 31 September 30 June 30 ----------- ------------- -------- Average shareholders' equity to average total assets 7.05% 6.87% 6.92% End of period shareholders' equity to end of period total assets 7.20 6.94 6.82 Return on average assets (annualized) (a) 1.42 0.98 1.41 Return on average shareholders' equity (annualized) (a) 20.15 14.20 20.31 Net interest margin - taxable equivalent 3.43 3.44 3.44 Efficiency ratio (a) 59.77 60.44 52.83 Loans net of unearned income to total deposits 95.82 101.83 97.55 Book value per common share $10.02 $9.73 $9.32 Tangible book value per common share 9.17 8.88 8.46 KEY PERFORMANCE RATIOS YTD ---------------------- 2005 2004 ------------ -------- June 30 June 30 ------------ -------- Average shareholders' equity to average total assets 7.03% 7.01% End of period shareholders' equity to end of period total assets 7.20 6.82 Return on average assets (annualized) (a) 1.46 1.40 Return on average shareholders' equity (annualized) (a) 20.70 20.04 Net interest margin - taxable equivalent 3.42 3.50 Efficiency ratio (a) 52.06 53.70 Loans net of unearned income to total deposits 94.96 97.55 Book value per common share $10.33 $9.32 Tangible book value per common share 9.48 8.46 (a) Ratios and earnings per share as adjusted for the third quarter 2004 settlement agreement and related professional fees are provided in the following table. These expenses represent matters which management believes are not indicative of AmSouth's legal and regulatory affairs arising in the normal course of business. 2004 ------------ Three Months Ended September 30 ------------ Earnings per common share - basic, GAAP basis 0.34 Adjustment for settlement agreement and related professional fees 0.15 ------------ Earnings per common share - basic, as adjusted 0.49 Earnings per common share - diluted, GAAP basis 0.33 Adjustment for settlement agreement and related professional fees 0.15 ------------ Earnings per common share - diluted, as adjusted 0.48 Return on average assets (annualized), GAAP basis 0.98% Adjustment for settlement agreement and related professional fees 0.42% ------------ Return on average assets (annualized), as adjusted 1.40% Return on average shareholders' equity (annualized), GAAP basis 14.20% Adjustment for settlement agreement and related professional fees 6.23% ------------ Return on average shareholders' equity (annualized), as adjusted 20.43% Efficiency ratio, GAAP basis 60.44% Adjustment for settlement agreement and related professional fees (9.00)% ------------ Efficiency ratio, as adjusted 51.44% Unaudited AmSouth Bancorporation SUMMARY FINANCIAL INFORMATION ($ in thousands) BALANCE SHEET INFORMATION Three Months Ended AVERAGE BALANCES -------------------------------------- 2005 2004 ------------------------- ------------ June 30 March 31 December 31 ------------ ------------ ------------ Loans net of unearned income $33,361,522 $33,208,549 $32,525,563 Total investment securities (b) 12,374,769 12,530,581 12,413,850 Interest-earning assets (b) 46,007,898 45,928,699 45,224,572 Total assets 50,341,297 50,296,110 49,535,521 Noninterest-bearing deposits 7,454,032 7,225,621 6,978,442 Interest-bearing deposits (c) 27,403,908 27,486,980 26,344,499 Total deposits (c) 34,857,940 34,712,601 33,322,941 Shareholders' equity 3,540,078 3,538,378 3,491,181 BALANCE SHEET INFORMATION Three Months Ended AVERAGE BALANCES ------------------------- Percent Change 2004 Versus ------------------------- Prior September 30 June 30 Year ------------ ------------ ------------ Loans net of unearned income $32,079,701 $30,633,629 8.9% Total investment securities (b) 12,374,084 12,488,887 (0.9%) Interest-earning assets (b) 44,684,992 43,500,751 5.8% Total assets 48,786,314 47,742,291 5.4% Noninterest-bearing deposits 6,643,642 6,516,977 14.4% Interest-bearing deposits (c) 25,735,595 25,337,923 8.2% Total deposits (c) 32,379,237 31,854,900 9.4% Shareholders' equity 3,350,323 3,305,636 7.1% BALANCE SHEET INFORMATION YTD AVERAGE BALANCES ------------------------- Percent Change 2005 2004 Versus ------------ ------------ Prior June 30 June 30 Year ------------ ------------ ------------ Loans net of unearned income $33,285,458 $30,169,686 10.3% Total investment securities (b) 12,452,245 12,134,183 2.6% Interest-earning assets (b) 45,968,517 42,635,928 7.8% Total assets 50,318,828 46,847,692 7.4% Noninterest-bearing deposits 7,340,457 6,310,096 16.3% Interest-bearing deposits (c) 27,445,215 24,859,579 10.4% Total deposits (c) 34,785,672 31,169,675 11.6% Shareholders' equity 3,539,233 3,281,997 7.8% (b) Excludes adjustment for market valuation on available-for-sale securities and certain noninterest-earning marketable equity securities. (c) Statement 133 valuation adjustments related to time deposits and other interest-bearing liabilities are included in other liabilities. BALANCE SHEET INFORMATION 2005 2004 ENDING BALANCES ------------------------- ------------ June 30 March 31 December 31 ------------ ------------ ------------ Loans net of unearned income $33,533,382 $33,025,437 $32,801,337 Total investment securities 12,245,731 12,571,502 12,510,675 Interest-earning assets 46,191,133 45,815,651 45,453,317 Total assets 50,546,831 50,011,458 49,548,371 Noninterest-bearing deposits 7,687,525 7,500,430 7,182,806 Interest-bearing deposits 27,626,183 27,328,090 27,049,973 Total deposits 35,313,708 34,828,520 34,232,779 Shareholders' equity 3,638,225 3,491,722 3,568,841 BALANCE SHEET INFORMATION Percent ENDING BALANCES Change 2004 Versus ------------------------- Prior September 30 June 30 Year ------------ ------------ ------------ Loans net of unearned income $32,502,221 $31,351,497 7.0% Total investment securities 12,584,985 12,590,729 (2.7%) Interest-earning assets 45,392,357 44,314,099 4.2% Total assets 49,687,862 48,295,813 4.7% Noninterest-bearing deposits 6,798,077 6,636,325 15.8% Interest-bearing deposits 25,121,339 25,502,919 8.3% Total deposits 31,919,416 32,139,244 9.9% Shareholders' equity 3,450,558 3,295,478 10.4% Unaudited AmSouth Bancorporation SUMMARY FINANCIAL INFORMATION ($ in thousands) NONPERFORMING ASSETS 2005 2004 ------------------- ----------------------------- June March December September June 30 31 31 30 30 --------- --------- --------- --------- --------- Nonaccrual loans (d) $70,421 $87,255 $88,488 $92,958 $102,670 Foreclosed properties 17,791 23,258 19,609 23,043 29,586 Repossessions 1,755 2,208 2,498 3,231 3,295 --------- --------- --------- --------- --------- Total nonperforming assets (d) $89,967 $112,721 $110,595 $119,232 $135,551 ========= ========= ========= ========= ========= Nonperforming assets to loans net of unearned income, foreclosed properties and repossessions 0.27% 0.34% 0.34% 0.37% 0.43% Accruing loans 90 days past due $49,185 $50,718 $51,117 $63,727 $52,972 ========= ========= ========= ========= ========= (d) Exclusive of accruing loans 90 days past due ALLOWANCE FOR LOAN LOSSES 2005 2004 ------------------- ----------------------------- 2nd 1st 4th 3rd 2nd Quarter Quarter Quarter Quarter Quarter --------- --------- --------- --------- --------- Balance at beginning of period $366,836 $366,774 $381,255 $382,482 $382,450 Loans charged off (27,170) (29,679) (44,277) (39,799) (38,202) Recoveries of loans previously charged off 9,528 10,598 11,146 11,062 11,634 --------- --------- --------- --------- --------- Net Charge-offs (17,642) (19,081) (33,131) (28,737) (26,568) Addition to allowance charged to expense 17,700 20,600 44,250 28,800 26,600 Reduction of allowance related to sold loans (1,268) (1,457) (25,600) (1,290) - --------- --------- --------- --------- --------- Balance at end of period $365,626 $366,836 $366,774 $381,255 $382,482 ========= ========= ========= ========= ========= Allowance for loan losses to loans net of unearned income 1.09% 1.11% 1.12% 1.17% 1.22% Net charge-offs to average loans net of unearned income (e) 0.21% 0.23% 0.41% 0.36% 0.35% Allowance for loan losses to nonperforming loans (d) 519.20% 420.42% 414.49% 410.14% 372.54% Allowance for loan losses to nonperforming assets (d) 406.40% 325.44% 331.64% 319.76% 282.17% (e) Annualized (d) Exclusive of accruing loans 90 days past due Unaudited AmSouth Bancorporation RECONCILIATION OF GAAP AMOUNTS TO ADJUSTED AMOUNTS ($ in thousands, except per share data) Three Months Ended September 30, 2004 ------------------------------------- Earnings Income Earnings per Before per common Income Net common share - Taxes Income share diluted --------- --------- -------- -------- Results as reported on a GAAP basis $197,799 $119,579 $0.34 $0.33 Costs incurred under settlement agreement and related professional fees (f) 53,972 52,443 0.15 0.15 --------- --------- -------- -------- Results as adjusted $251,771 $172,022 $0.49 $0.48 (f) These expenses represent matters which management believes are not indicative of AmSouth's legal and regulatory affairs arising in the normal course of business. *T