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AmSouth Bancorporation (NYSE: ASO) today reported earnings for the fourth quarter ended Dec. 31, 2005, of $.52 per diluted share, compared to $.49 per diluted share reported for the fourth quarter of 2004. Net income for the fourth quarter of 2005 was $182.1 million versus $176.9 million for the same period in 2004. AmSouth's fourth quarter performance resulted in a return on average equity of 20.4 percent, a return on average assets of 1.40 percent, and an efficiency ratio of 51.7 percent. "AmSouth finished 2005 with record earnings for the year, highlighted by strong loan growth, solid deposit growth, and an expanding net interest margin in the fourth quarter," said Dowd Ritter, AmSouth's chairman, president and chief executive officer. "We intend to carry that strong momentum into this new year as we accelerate our expansion efforts in our fast-growing Florida markets." For the year, reported earnings were a record $725.7 million or $2.04 per diluted share, compared with $623.5 million or $1.74 per diluted share in 2004. Results for 2004 included charges related to a previously announced regulatory settlement. Excluding those expenses, earnings would have been $675.9 million or $1.89 per diluted share in 2004, resulting in earnings per share growth of 7.9 percent in 2005 (see Reconciliation of GAAP Amounts to Adjusted Amounts in the attached financial tables). Return on equity for 2005 was 20.4 percent, return on assets was 1.43 percent, and the efficiency ratio was 52.0 percent. Net interest income in the fourth quarter grew to $392.2 million, or an annual rate of 18.6 percent compared with the prior quarter, and the net interest margin expanded 6 basis points during the quarter to 3.37 percent. Strong loan growth continued, particularly in Commercial Real Estate, which grew 19.9 percent, and Residential Mortgage lending, which grew 20.4 percent, compared with the fourth quarter of 2004. Low-cost deposits grew $2.5 billion or 11.4 percent during the same period. Noninterest revenue, which includes earnings from service charges, trust, investment services, interchange, and other sources of fee income, was $216.9 million for the quarter. Noninterest expenses in the fourth quarter were $320.6 million, demonstrating disciplined expense control. Personnel costs, the largest single category of noninterest expense, increased only 2.0 percent over the same period in 2004. Credit quality remained strong despite the effects of a single commercial credit, which was previously provided for, that was charged off in the quarter. Net charge-offs were 0.44 percent of average net loans in the fourth quarter, increasing 25 basis points compared with the third quarter of 2005. Without the effect of the single commercial credit, net charge-offs would have been 0.24 percent, a 5 basis point increase. The ratio of loan loss reserves to total loans was 1.02 percent at December 31, 2005. Total nonperforming assets at December 31, 2005, were $122.9 million, or 0.34 percent of loans net of unearned income, foreclosed properties and repossessions, compared to $98.1 million, or 0.29 percent, in the previous quarter. The increase is due to leases to commercial airlines suffering well-publicized financial difficulties. Loans past due over 90 days were $86.1 million at the end of the quarter, reflecting an increase related to the effects of Hurricane Katrina. For 2006, AmSouth management expects earnings per share for the full year to be in the range of $2.11 to $2.17, including the impact of the adoption of Statement of Financial Accounting Standard No. 123R. This statement includes, among other things, stock option expensing and is estimated to reduce earnings between $0.02 and $0.03 per share, which is reflected in the guidance above. This forecast generally assumes a stable economy, moderately rising interest rates and flat equity markets, as well as these factors: -- Higher net interest income reflecting a relatively stable net interest margin; solid loan growth with disciplined pricing, coupled with continued strong low-cost deposit growth; -- A continuation of strong core credit quality; -- Steady growth in total noninterest revenues from current levels; and -- Modest noninterest expense growth in the low to mid-single digits. For supplemental financial information about the fourth quarter results, please refer to the Form 8-K filed by AmSouth with the Securities and Exchange Commission on January 17, 2006, 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 $52 billion in assets, more than 680 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: specific factors described in the text of this document; 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 ---------------------------------- December 31 September 30 June 30 ----------- ------------ --------- Net interest income $392,150 $374,733 $378,643 Provision for loan losses 20,850 34,800 17,700 ----------- ------------ --------- Net interest income after provision 371,300 339,933 360,943 Noninterest revenues 216,944 259,649 223,151 Noninterest expenses 320,559 336,905 314,942 ----------- ------------ --------- Income before income taxes 267,685 262,677 269,152 Income taxes 85,552 82,349 84,553 ----------- ------------ --------- Net income $182,133 $180,328 $184,599 =========== ============ ========= Earnings per common share - basic (a) $0.52 $0.52 $0.52 Earnings per common share - diluted (a) 0.52 0.51 0.52 Cash dividends declared per common share 0.26 0.25 0.25 Average common shares outstanding - basic 347,201 349,346 352,054 Average common shares outstanding - diluted 351,811 354,654 357,026 End of period common shares outstanding 348,072 348,562 352,349 EARNINGS SUMMARY Three Months Ended Percent ------------------------ Change 2005 2004 Versus ----------- ------------ Prior March 31 December 31 Year ----------- ------------ --------- Net interest income $379,748 $379,212 3.4% Provision for loan losses 20,600 44,250 (52.9%) ----------- ------------ Net interest income after provision 359,148 334,962 10.8% Noninterest revenues 215,436 380,289 (43.0%) Noninterest expenses 319,517 460,416 (30.4%) ----------- ------------ Income before income taxes 255,067 254,835 5.0% Income taxes 76,422 77,978 9.7% ----------- ------------ Net income $178,645 $176,857 3.0% =========== ============ Earnings per common share - basic (a) $0.50 $0.50 4.0% Earnings per common share - diluted (a) 0.50 0.49 6.1% Cash dividends declared per common share 0.25 0.25 4.0% Average common shares outstanding - basic 354,299 355,072 Average common shares outstanding - diluted 358,812 360,286 End of period common shares outstanding 353,051 356,310 EARNINGS SUMMARY YTD Percent ------------------------ Change 2005 2004 Versus ----------- ------------ Prior December 31 December 31 Year ----------- ------------ -------- Net interest income $1,525,274 $1,476,025 3.3% Provision for loan losses 93,950 127,750 (26.5%) ----------- ------------ Net interest income after provision 1,431,324 1,348,275 6.2% Noninterest revenues 915,180 1,032,142 (11.3%) Noninterest expenses 1,291,923 1,456,938 (11.3%) ----------- ------------ Income before income taxes 1,054,581 923,479 14.2% Income taxes 328,876 299,981 9.6% ----------- ------------ Net income $725,705 $623,498 16.4% =========== ============ Earnings per common share - basic (a) $2.07 $1.77 16.9% Earnings per common share - diluted (a) 2.04 1.74 17.2% Cash dividends declared per common share 1.01 0.97 4.1% Average common shares outstanding - basic 350,702 352,684 Average common shares outstanding - diluted 355,554 357,952 End of period common shares outstanding 348,072 356,310 KEY PERFORMANCE RATIOS Three Months Ended ---------------------------------- 2005 ---------------------------------- December 31 September 30 June 30 ----------- ------------ --------- Average shareholders' equity to average total assets 6.87% 7.06% 7.03% End of period shareholders' equity to end of period total assets 6.91 7.00 7.20 Return on average assets (annualized) (a) 1.40 1.41 1.47 Return on average shareholders' equity (annualized) (a) 20.36 20.02 20.92 Net interest margin - taxable equivalent 3.37 3.31 3.40 Efficiency ratio (a) 51.71 52.22 51.41 Loans net of unearned income to total deposits 98.76 96.23 94.96 Book value per common share $10.44 $10.26 $10.33 Tangible book value per common share 9.59 9.41 9.48 KEY PERFORMANCE RATIOS Three Months Ended ------------------------ 2005 2004 ----------- ------------ March 31 December 31 ----------- ------------ Average shareholders' equity to average total assets 7.04% 7.05% End of period shareholders' equity to end of period total assets 6.98 7.20 Return on average assets (annualized) (a) 1.44 1.42 Return on average shareholders' equity (annualized) (a) 20.48 20.15 Net interest margin - taxable equivalent 3.45 3.43 Efficiency ratio (a) 52.72 59.77 Loans net of unearned income to total deposits 94.82 95.82 Book value per common share $9.89 $10.02 Tangible book value per common share 9.04 9.17 KEY PERFORMANCE RATIOS YTD ------------------------ 2005 2004 ----------- ------------ December 31 December 31 ----------- ------------ Average shareholders' equity to average total assets 7.00% 6.98% End of period shareholders' equity to end of period total assets 6.91 7.20 Return on average assets (annualized) (a) 1.43 1.30 Return on average shareholders' equity (annualized) (a) 20.44 18.60 Net interest margin - taxable equivalent 3.38 3.47 Efficiency ratio (a) 52.01 57.12 Loans net of unearned income to total deposits 98.76 95.82 Book value per common share $10.44 $10.02 Tangible book value per common share 9.59 9.17 (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 ----------- YTD December 31 ----------- Earnings per common share - basic, GAAP basis $1.77 Adjustment for settlement agreement and related professional fees 0.15 ----------- Earnings per common share - basic, as adjusted $1.92 Earnings per common share - diluted, GAAP basis $1.74 Adjustment for settlement agreement and related professional fees 0.15 ----------- Earnings per common share - diluted, as adjusted $1.89 Return on average assets (annualized), GAAP basis 1.30% Adjustment for settlement agreement and related professional fees 0.11% ----------- Return on average assets (annualized), as adjusted 1.41% Return on average shareholders' equity (annualized), GAAP basis 18.60% Adjustment for settlement agreement and related professional fees 1.57% ----------- Return on average shareholders' equity (annualized), as adjusted 20.17% Efficiency ratio, GAAP basis 57.12% Adjustment for settlement agreement and related professional fees (2.12)% ----------- Efficiency ratio, as adjusted 55.00% Unaudited AmSouth Bancorporation SUMMARY FINANCIAL INFORMATION ($ in thousands) BALANCE SHEET INFORMATION Three Months Ended AVERAGE BALANCES -------------------------------------- 2005 -------------------------------------- December 31 September 30 June 30 ------------ ------------ ------------ Loans net of unearned income $34,993,552 $33,765,529 $33,361,522 Total investment securities (a) 11,792,136 11,969,618 12,374,769 Interest-earning assets (a) 47,373,341 46,276,262 46,007,898 Total assets 51,673,254 50,635,581 50,341,297 Noninterest-bearing deposits 7,949,605 7,565,672 7,454,032 Interest-bearing deposits (b) 28,166,662 27,848,894 27,403,908 Total deposits (b) 36,116,267 35,414,566 34,857,940 Shareholders' equity 3,548,566 3,572,805 3,540,078 BALANCE SHEET INFORMATION AVERAGE BALANCES Three Months Ended Percent ------------------------- Change 2005 2004 Versus ------------ ------------ Prior March 31 December 31 Year ------------ ------------ ----------- Loans net of unearned income $33,208,549 $32,525,563 7.6% Total investment securities (a) 12,530,581 12,413,850 (5.0%) Interest-earning assets (a) 45,928,699 45,224,572 4.8% Total assets 50,296,110 49,535,521 4.3% Noninterest-bearing deposits 7,225,621 6,978,442 13.9% Interest-bearing deposits (b) 27,486,980 26,344,499 6.9% Total deposits (b) 34,712,601 33,322,941 8.4% Shareholders' equity 3,538,378 3,491,181 1.6% BALANCE SHEET INFORMATION AVERAGE BALANCES YTD Percent ------------------------- Change 2005 2004 Versus ------------ ------------ Prior December 31 December 31 Year ------------ ------------ ----------- Loans net of unearned income $33,836,996 $31,241,987 8.3% Total investment securities (a) 12,164,213 12,264,785 (0.8%) Interest-earning assets (a) 46,400,178 43,801,691 5.9% Total assets 50,740,057 48,010,625 5.7% Noninterest-bearing deposits 7,550,762 6,561,938 15.1% Interest-bearing deposits (b) 27,728,809 25,453,038 8.9% Total deposits (b) 35,279,571 32,014,976 10.2% Shareholders' equity 3,550,047 3,351,754 5.9% (a) Excludes adjustment for market valuation on available-for- sale securities and certain noninterest-earning marketable equity securities. (b) Statement 133 valuation adjustments related to time deposits and other interest-bearing liabilities are included in other liabilities. BALANCE SHEET INFORMATION ENDING BALANCES 2005 -------------------------------------- December 31 September 30 June 30 ------------ ------------ ------------ Loans net of unearned income $35,897,939 $34,335,169 $33,533,382 Total investment securities 11,669,483 11,855,712 12,245,731 Interest-earning assets 48,072,394 46,779,359 46,191,133 Total assets 52,607,110 51,105,385 50,546,831 Noninterest-bearing deposits 8,233,137 8,022,022 7,687,525 Interest-bearing deposits 28,115,245 27,658,103 27,626,183 Total deposits 36,348,382 35,680,125 35,313,708 Shareholders' equity 3,634,577 3,577,455 3,638,225 BALANCE SHEET INFORMATION Percent ENDING BALANCES Change 2005 2004 Versus ------------ ------------ Prior March 31 December 31 Year ------------ ------------ ----------- Loans net of unearned income $33,025,437 $32,801,337 9.4% Total investment securities 12,571,502 12,510,675 (6.7%) Interest-earning assets 45,815,651 45,453,317 5.8% Total assets 50,011,458 49,548,371 6.2% Noninterest-bearing deposits 7,500,430 7,182,806 14.6% Interest-bearing deposits 27,328,090 27,049,973 3.9% Total deposits 34,828,520 34,232,779 6.2% Shareholders' equity 3,491,722 3,568,841 1.8% Unaudited AmSouth Bancorporation SUMMARY FINANCIAL INFORMATION ($ in thousands) NONPERFORMING ASSETS 2005 2004 --------------------------------------- --------- December September June March December 31 30 30 31 31 --------- --------- --------- --------- --------- Nonaccrual loans (c) $102,981 $80,421 $70,421 $87,255 $88,488 Foreclosed properties 17,667 15,853 17,791 23,258 19,609 Repossessions 2,274 1,869 1,755 2,208 2,498 --------- --------- --------- --------- --------- Total nonperforming assets (c) $122,922 $98,143 $89,967 $112,721 $110,595 ========= ========= ========= ========= ========= Nonperforming assets to loans net of unearned income, foreclosed properties and repossessions 0.34% 0.29% 0.27% 0.34% 0.34% Accruing loans 90 days past due $86,109 $52,404 $49,185 $50,718 $51,117 ========= ========= ========= ========= ========= (c) Exclusive of accruing loans 90 days past due ALLOWANCE FOR LOAN LOSSES 2005 2004 --------------------------------------- --------- 4th 3rd 2nd 1st 4th Quarter Quarter Quarter Quarter Quarter --------- --------- --------- --------- --------- Balance at beginning of period $384,647 $365,626 $366,836 $366,774 $381,255 Loans charged off (47,314) (23,926) (27,170) (29,679) (44,277) Recoveries of loans previously charged off 8,512 8,147 9,528 10,598 11,146 --------- --------- --------- --------- --------- Net Charge-offs (38,802) (15,779) (17,642) (19,081) (33,131) Addition to allowance charged to expense 20,850 34,800 17,700 20,600 44,250 Reduction of allowance related to sold loans 0 0 (1,268) (1,457) (25,600) --------- --------- --------- --------- --------- Balance at end of period $366,695 $384,647 $365,626 $366,836 $366,774 ========= ========= ========= ========= ========= Allowance for loan losses to loans net of unearned income 1.02% 1.12% 1.09% 1.11% 1.12% Net charge-offs to average loans net of unearned income (d) 0.44% 0.19% 0.21% 0.23% 0.41% Allowance for loan losses to nonperforming loans (e) 356.08% 478.29% 519.20% 420.42% 414.49% Allowance for loan losses to nonperforming assets (e) 298.32% 391.93% 406.40% 325.44% 331.64% (d) Annualized (e) Exclusive of accruing loans 90 days past due Unaudited AmSouth Bancorporation RECONCILIATION OF GAAP AMOUNTS TO ADJUSTED AMOUNTS ($ in thousands, except per share data) Year-to-Date December 31, 2004 ------------------------------------- Earnings Income Earnings per Before per common Income Net common share - Taxes Income share diluted --------- --------- -------- -------- Results as reported on a GAAP basis $923,479 $623,498 $1.77 $1.74 Costs incurred under settlement agreement and related professional fees (f) 53,972 52,443 0.15 0.15 --------- --------- -------- -------- Results as adjusted $977,451 $675,941 $1.92 $1.89 (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