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AmSouth Bancorporation (NYSE: ASO) today reported earnings for the third quarter ended Sept. 30, 2005, of $.51 per diluted share, compared to $.33 per diluted share reported for the third quarter of 2004. Net income for the third quarter of 2005 was $180.3 million versus $119.6 million for the same period in 2004. Results for the third quarter of 2004 include charges and related professional fees totaling $54.0 million, or $0.15 per diluted share, in connection with regulatory settlements announced last year. Excluding the expenses from last year, third quarter 2004 earnings would have been $172.0 million or $0.48 per diluted share (see Reconciliation of GAAP Amounts to Adjusted Amounts in the attached financial tables). AmSouth's third quarter performance resulted in a return on average equity of 20.0 percent, a return on average assets of 1.41 percent, and an efficiency ratio of 52.2 percent. "Our growth in several loan categories, continued strong credit quality and the strength of AmSouth's Florida franchise were offset in part by the effects of the flattening yield curve, Hurricane Katrina, and increased competition for loans and deposits," said Dowd Ritter, AmSouth's chairman, president and chief executive officer. "Even with these challenges, which helped create one of the most difficult operating environments in recent memory, we continued to produce solid results." Net interest income in the third quarter was down slightly from the prior quarter to $374.7 million, and produced a net interest margin of 3.31 percent. Loan growth has been strong, particularly in Commercial Real Estate and First Residential Mortgage lending, which grew 18.4 percent and 24.5 percent, respectively, compared with the third quarter of 2004. Low-cost deposit growth has also been very solid, increasing 13.4 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 $259.6 million for the quarter, including a $44 million net pre-tax gain on the previously announced sale of AmSouth's mutual fund management business. Noninterest expenses in the third quarter rose to $336.9 million, reflecting higher marketing and professional services costs and an increase in other expenses including accruals related to Hurricane Katrina and other legal and regulatory matters. Net charge-offs improved to 0.19 percent of average net loans in the third quarter, declining 2 basis points compared with the second quarter of 2005. The ratio of loan loss reserves to total loans was 1.12 percent at September 30, 2005. The loan loss provision exceeded net charge-offs in the quarter by $19 million, as a result of Hurricane Katrina and one commercial credit. Nonperforming loan coverage ended the quarter at 478 percent. Total nonperforming assets at September 30, 2005, were $98.1 million, or 0.29 percent of loans net of unearned income, foreclosed properties and repossessions, compared to $90.0 million, or 0.27 percent, in the previous quarter. For supplemental financial information about the third quarter results, please refer to the Form 8-K filed by AmSouth with the Securities and Exchange Commission on October 18, 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 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 ----------------------------------- September 30 June 30 March 31 ------------ ------------ --------- Net interest income $374,733 $378,643 $379,748 Provision for loan losses 34,800 17,700 20,600 ------------ ------------ --------- Net interest income after provision 339,933 360,943 359,148 Noninterest revenues 259,649 223,151 215,436 Noninterest expenses 336,905 314,942 319,517 ------------ ------------ --------- Income before income taxes 262,677 269,152 255,067 Income taxes 82,349 84,553 76,422 ------------ ------------ --------- Net income $180,328 $184,599 $178,645 ============ ============ ========= Earnings per common share - basic (a) $0.52 $0.52 $0.50 Earnings per common share - diluted (a) 0.51 0.52 0.50 Cash dividends declared per common share 0.25 0.25 0.25 Average common shares outstanding - basic 349,346 352,054 354,299 Average common shares outstanding - diluted 354,654 357,026 358,812 End of period common shares outstanding 348,562 352,349 353,051 EARNINGS SUMMARY Three Months Ended Percent ------------------------- Change 2004 Versus ------------------------- Prior December 31 September 30 Year ----------- ------------- --------- Net interest income $379,212 $375,906 (0.3%) Provision for loan losses 44,250 28,800 20.8% ----------- ------------- Net interest income after provision 334,962 347,106 (2.1%) Noninterest revenues 380,289 213,171 21.8% Noninterest expenses 460,416 362,478 (7.1%) ----------- ------------- Income before income taxes 254,835 197,799 32.8% Income taxes 77,978 78,220 5.3% ----------- ------------- Net income $176,857 $119,579 50.8% =========== ============= Earnings per common share - basic (a) $0.50 $0.34 52.9% Earnings per common share - diluted (a) 0.49 0.33 54.5% Cash dividends declared per common share 0.25 0.24 4.2% Average common shares outstanding - basic 355,072 352,838 Average common shares outstanding - diluted 360,286 358,272 End of period common shares outstanding 356,310 354,635 EARNINGS SUMMARY YTD Percent ------------------------- Change 2005 2004 Versus ------------ ------------ Prior September 30 September 30 Year ------------ ------------ --------- Net interest income $1,133,124 $1,096,813 3.3% Provision for loan losses 73,100 83,500 (12.5%) ------------ ------------ Net interest income after provision 1,060,024 1,013,313 4.6% Noninterest revenues 698,236 651,853 7.1% Noninterest expenses 971,364 996,522 (2.5%) ------------ ------------ Income before income taxes 786,896 668,644 17.7% Income taxes 243,324 222,003 9.6% ------------ ------------ Net income $543,572 $446,641 21.7% ============ ============ Earnings per common share - basic (a) $1.54 $1.27 21.3% Earnings per common share - diluted (a) 1.52 1.25 21.6% Cash dividends declared per common share 0.75 0.72 4.2% Average common shares outstanding - basic 351,881 351,882 Average common shares outstanding - diluted 356,816 357,169 End of period common shares outstanding 348,562 354,635 KEY PERFORMANCE RATIOS Three Months Ended ----------------------------------- 2005 ----------------------------------- September 30 June 30 March 31 ------------ ------------ --------- Average shareholders' equity to average total assets 7.06% 7.03% 7.04% End of period shareholders' equity to end of period total assets 7.00 7.20 6.98 Return on average assets (annualized) (a) 1.41 1.47 1.44 Return on average shareholders' equity (annualized) (a) 20.02 20.92 20.48 Net interest margin - taxable equivalent 3.31 3.40 3.45 Efficiency ratio (a) 52.22 51.41 52.72 Loans net of unearned income to total deposits 96.23 94.96 94.82 Book value per common share $10.26 $10.33 $9.89 Tangible book value per common share 9.41 9.48 9.04 KEY PERFORMANCE RATIOS Three Months Ended ----------------------------- 2004 ----------------------------- December 31 September 30 -------------- -------------- Average shareholders' equity to average total assets 7.05% 6.87% End of period shareholders' equity to end of period total assets 7.20 6.94 Return on average assets (annualized) (a) 1.42 0.98 Return on average shareholders' equity (annualized) (a) 20.15 14.20 Net interest margin - taxable equivalent 3.43 3.44 Efficiency ratio (a) 59.77 60.44 Loans net of unearned income to total deposits 95.82 101.83 Book value per common share $10.02 $9.73 Tangible book value per common share 9.17 8.88 KEY PERFORMANCE RATIOS YTD ----------------------------- 2005 2004 -------------- -------------- September 30 September 30 -------------- -------------- Average shareholders' equity to average total assets 7.04% 6.96% End of period shareholders' equity to end of period total assets 7.00 6.94 Return on average assets (annualized) (a) 1.44 1.26 Return on average shareholders' equity (annualized) (a) 20.47 18.05 Net interest margin - taxable equivalent 3.38 3.48 Efficiency ratio (a) 52.12 55.97 Loans net of unearned income to total deposits 96.23 101.83 Book value per common share $10.26 $9.73 Tangible book value per common share 9.41 8.88 (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 YTD September 30 September 30 -------------- -------------- Earnings per common share - basic, GAAP basis $0.34 $1.27 Adjustment for settlement agreement and related professional fees 0.15 0.15 -------------- -------------- Earnings per common share - basic, as adjusted $0.49 $1.42 Earnings per common share - diluted, GAAP basis $0.33 $1.25 Adjustment for settlement agreement and related professional fees 0.15 0.15 -------------- -------------- Earnings per common share - diluted, as adjusted $0.48 $1.40 Return on average assets (annualized), GAAP basis 0.98% 1.26% Adjustment for settlement agreement and related professional fees 0.42% 0.14% -------------- -------------- Return on average assets (annualized), as adjusted 1.40% 1.40% Return on average shareholders' equity (annualized), GAAP basis 14.20% 18.05% Adjustment for settlement agreement and related professional fees 6.23% 2.12% -------------- -------------- Return on average shareholders' equity (annualized), as adjusted 20.43% 20.17% Efficiency ratio, GAAP basis 60.44% 55.97% Adjustment for settlement agreement and related professional fees (9.00)% (3.03)% -------------- -------------- Efficiency ratio, as adjusted 51.44% 52.94% Unaudited AmSouth Bancorporation SUMMARY FINANCIAL INFORMATION ($ in thousands) BALANCE SHEET INFORMATION Three Months Ended AVERAGE BALANCES -------------------------------------- 2005 -------------------------------------- September 30 June 30 March 31 ------------- ------------ ----------- Loans net of unearned income $33,765,529 $33,361,522 $33,208,549 Total investment securities (b) 11,969,618 12,374,769 12,530,581 Interest-earning assets (b) 46,276,262 46,007,898 45,928,699 Total assets 50,635,581 50,341,297 50,296,110 Noninterest-bearing deposits 7,565,672 7,454,032 7,225,621 Interest-bearing deposits (c) 27,848,894 27,403,908 27,486,980 Total deposits (c) 35,414,566 34,857,940 34,712,601 Shareholders' equity 3,572,805 3,540,078 3,538,378 BALANCE SHEET INFORMATION Three Months Ended Percent AVERAGE BALANCES ------------------------- Change 2004 Versus -------------------------- Prior December 31 September 30 Year ------------- ------------ ----------- Loans net of unearned income $32,525,563 $32,079,701 5.3% Total investment securities (b) 12,413,850 12,374,084 (3.3%) Interest-earning assets (b) 45,224,572 44,684,992 3.6% Total assets 49,535,521 48,786,314 3.8% Noninterest-bearing deposits 6,978,442 6,643,642 13.9% Interest-bearing deposits (c) 26,344,499 25,735,595 8.2% Total deposits (c) 33,322,941 32,379,237 9.4% Shareholders' equity 3,491,181 3,350,323 6.6% Percent BALANCE SHEET INFORMATION YTD Change AVERAGE BALANCES -------------------------- Versus 2005 2004 Prior September 30 September 30 Year ------------- ------------ ----------- Loans net of unearned income $33,447,240 $30,811,005 8.6% Total investment securities (b) 12,289,601 12,214,734 0.6% Interest-earning assets (b) 46,072,226 43,323,935 6.3% Total assets 50,425,573 47,498,616 6.2% Noninterest-bearing deposits 7,416,354 6,422,090 15.5% Interest-bearing deposits (c) 27,581,253 25,153,716 9.7% Total deposits (c) 34,997,607 31,575,806 10.8% Shareholders' equity 3,550,546 3,304,939 7.4% (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 ENDING BALANCES -------------------------------------- September 30 June 30 March 31 ------------ ------------ ------------ Loans net of unearned income $34,335,169 $33,533,382 $33,025,437 Total investment securities 11,855,712 12,245,731 12,571,502 Interest-earning assets 46,779,359 46,191,133 45,815,651 Total assets 51,105,385 50,546,831 50,011,458 Noninterest-bearing deposits 8,022,022 7,687,525 7,500,430 Interest-bearing deposits 27,658,103 27,626,183 27,328,090 Total deposits 35,680,125 35,313,708 34,828,520 Shareholders' equity 3,577,455 3,638,225 3,491,722 Percent BALANCE SHEET INFORMATION Change ENDING BALANCES 2004 Versus --------------------------- Prior December 31 September 30 Year -------------- ------------ ---------- Loans net of unearned income $32,801,337 $32,502,221 5.6% Total investment securities 12,510,675 12,584,985 (5.8%) Interest-earning assets 45,453,317 45,392,357 3.1% Total assets 49,548,371 49,687,862 2.9% Noninterest-bearing deposits 7,182,806 6,798,077 18.0% Interest-bearing deposits 27,049,973 25,121,339 10.1% Total deposits 34,232,779 31,919,416 11.8% Shareholders' equity 3,568,841 3,450,558 3.7% Unaudited AmSouth Bancorporation SUMMARY FINANCIAL INFORMATION ($ in thousands) NONPERFORMING ASSETS 2005 2004 ----------------------------- ------------------- September June March December September 30 30 31 31 30 --------- --------- --------- --------- --------- Nonaccrual loans (d) $80,421 $70,421 $87,255 $88,488 $92,958 Foreclosed properties 15,853 17,791 23,258 19,609 23,043 Repossessions 1,869 1,755 2,208 2,498 3,231 --------- --------- --------- --------- --------- Total nonperforming assets (d) $98,143 $89,967 $112,721 $110,595 $119,232 ========= ========= ========= ========= ========= Nonperforming assets to loans net of unearned income, foreclosed properties and repossessions 0.29% 0.27% 0.34% 0.34% 0.37% Accruing loans 90 days past due $52,404 $49,185 $50,718 $51,117 $63,727 ========= ========= ========= ========= ========= (d) Exclusive of accruing loans 90 days past due ALLOWANCE FOR LOAN LOSSES 2005 2004 ----------------------------- ------------------- 3rd 2nd 1st 4th 3rd Quarter Quarter Quarter Quarter Quarter --------- --------- --------- --------- --------- Balance at beginning of period $365,626 $366,836 $366,774 $381,255 $382,482 Loans charged off (23,926) (27,170) (29,679) (44,277) (39,799) Recoveries of loans previously charged off 8,147 9,528 10,598 11,146 11,062 --------- --------- --------- --------- --------- Net Charge-offs (15,779) (17,642) (19,081) (33,131) (28,737) Addition to allowance charged to expense 34,800 17,700 20,600 44,250 28,800 Reduction of allowance related to sold loans 0 (1,268) (1,457) (25,600) (1,290) --------- --------- --------- --------- --------- Balance at end of period $384,647 $365,626 $366,836 $366,774 $381,255 ========= ========= ========= ========= ========= Allowance for loan losses to loans net of unearned income 1.12% 1.09% 1.11% 1.12% 1.17% Net charge-offs to average loans net of unearned income (e) 0.19% 0.21% 0.23% 0.41% 0.36% Allowance for loan losses to nonperforming loans (f) 478.29% 519.20% 420.42% 414.49% 410.14% Allowance for loan losses to nonperforming assets (f) 391.93% 406.40% 325.44% 331.64% 319.76% (e) Annualized (f) Exclusive of accruing loans 90 days past due Unaudited AmSouth Bancorporation RECONCILIATION OF GAAP AMOUNTS TO ADJUSTED AMOUNTS ($ in thousands, except per share data) Three Months Ended September 30, 2004 --------------------------------------------- Earnings Earnings per common Income Before Net per common share - Income 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 (g) 53,972 52,443 0.15 0.15 ------------- --------- ---------- ---------- Results as adjusted $251,771 $172,022 $0.49 $0.48 (g) 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