EXHIBIT 99.2
Enhancing Shareholder Value through
Creation of a Premier Southeast
Financial Services Franchise
[AmSouth Logo]
Merges with
[First American Logo]
Forward Looking Statement
This presentation contains forward looking statements with respect to the
financial condition, results of operations and business of AmSouth
Bancorporation and, assuming the consummation of the merger, a combined AmSouth
Bancorporation/First American Corporation including statements relating to: (a)
the cost savings and accretion to reported earnings that will be realized from
the merger; (b) the impact on revenues of the merger; and (c) the restructuring
charges expected to be incurred in connection with the merger. These forward
looking statements involve certain risks and uncertainties. Factors that may
cause actual results to differ materially from those contemplated by such
forward looking statements include, among others, the following possibilities:
(1) expected cost savings from the merger cannot be fully realized or realized
within the expected time frame; (2) revenues following the merger are lower than
expected; (3) competitive pressure among depository institutions increases
significantly; (4) costs or difficulties related to the integration of the
businesses of AmSouth Bancorporation and First American Corporation are greater
than expected; (5) changes in the interest rate environment reduce interest
margins; (6) general economic conditions, either nationally or in the states in
which the combined company will be doing business, are less favorable than
expected; or (7) legislation or regulatory changes adversely affect the business
in which the combined company would be engaged.
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AmSouth Merges With First American
Terms of the Transaction
Strategic Rationale
Pro Forma Financial Impact
AmSouth's Record of Performance
Summary
Appendix
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Terms of the Transaction
[AmSouth and First American Logos]
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Transaction Summary
Fixed Exchange Ratio: 1.871 AmSouth shares per First
American share
Price Per First American Share(1) $53.09
Structure: Merger; Pooling of interests;
Tax-free exchange; 19.9% cross
options in place
Transaction Value: $6.3 Billion
Expected Closing: Fourth quarter 1999
Due Diligence: Completed, including Y2K review
Systems Conversion: Second quarter 2000
(1) Based on AmSouth's price per share of $28.375 as of May 28, 1999.
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Transaction Summary
Management: C. Dowd Ritter - President and CEO
Dennis C. Bottorff - Chairman
Sloan Gibson - CFO and head of
integration team
Board of Directors: 17 members
AmSouth 12
First American 5
Ownership: 44% AmSouth / 56% First American
Name: AmSouth Bancorporation
Headquarters: Birmingham, Alabama
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Compelling Economics
- -- Substantially Accretive to EPS
- 2000 Accretion = 2.7%
- 2001 Accretion = 9.1%
- -- Internal Rate of Return Significantly Exceeds AmSouth's Cost of Equity
- IRR = 15.5%
Note: 2000 EPS accretion assumes cost saves 75% phased-in; revenue
enhancements 50% phased-in; and leveraging of excess capital 60% phased-in.
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Principal Benefits
- -- Enhances Shareholder Value
- Accelerated earnings growth
- Strong and sustainable ROE
- Improved operating efficiency
- Increase in noninterest income as a percentage of total revenues
- -- Further Diversifies Revenue and Earnings Mix
- More balanced loan portfolio
- Addition of high return fee generating businesses
- Expanded regional footprint
- -- Creates a Premier Southeast Financial Services Franchise
- Leading positions in key markets
- Enhanced scale across all products and services
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Manageable Execution Risk
- -- Conservative Assumptions for Revenue and Expense Synergies
- -- Natural Extension of Franchise to Complementary and Contiguous Markets
- -- Due Diligence is Complete, Including Y2K and Credit
- -- Common Platforms
- -- Common Systems Facilitate Ease of Transition
- Deposit system
- Commercial loan system
- Consumer loan system
- Trust system
- Treasury services
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Strategic Rationale
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Premier Southeast Financial Services
Franchise
- -- $40B in Assets; $28B in Deposits
- -- $11 +B Market Cap
- -- Over 2 Million Households
- -- 680 Branches in 9 States
- -- #1 ATM Network in the Southeast (1,350 ATM's)
- -- #3 Small Business Lender HQ'd in the Southeast
- -- #3 Bank-owned Leasing Company in the Southeast
Combined Company's Deposits by State
[Geographical Chart showing the following:
AmSouth
- Florida - 18.2%
- Alabama - 24.6%
AmSouth and First American
- Tennessee - 35.0%
- Georgia - 1.0%
First American
- Virginia - 0.6%
- Kentucky - 0.8%
- Mississippi - 13.6%
- Louisiana - 5.4%
- Arkansas - 0.8%]
Source: Sheshunoff Database.
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[AmSouth and First American Logos]
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Attractive Market Demographics
Personal Median HH
Growth Rates 1998 - 2003 Population Income Households Income
---------- ------ ---------- ------
United States 4.2% 21.6% 5.3% 15.4%
Southeast 5.3% 23.5% 6.5% 15.9%
- ----------------------------------------------------------------------------
The New AmSouth 5.9% 24.3% 7.1% 16.0%
- ----------------------------------------------------------------------------
Source: Woods & Poole Economics
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Leading Share in Key Markets
($ in billions)
Deposit
Market Share Total Branch
Top Ten MSA's Rank Deposits Offices
- ------------- ---- -------- -------
Nashville, TN 1 $3.7 65
Birmingham, AL 2 2.7 40
Tampa - St. Petersburg - Clearwater, FL 4 2.1 44
Jackson, MS 2 1.7 30
Knoxville, TN 2 1.3 27
Chattanooga, TN 1 1.2 35
Mobile, AL 2 1.1 22
Tri-Cities, TN 1 0.9 18
Pensacola, FL 1 0.6 14
Montgomery, AL 3 0.5 10
Source: Sheshunoff Data Services
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Strengthened Investment
Services Platform
- -- Largest Third-party Marketer of Investment and Insurance Products in
the United States (IFC Holdings, Inc.)
- Over $5 billion of products sold in 1998
- 400 financial institution clients in 44 states
- 2,500 registered reps
- -- Substantial Mutual Fund and Asset Management Capabilities
- $6.5 billion of assets under management
- 37 proprietary mutual funds
- -- Largest Bank Platform Annuity Sales Force in the Southeast and Among
the Largest in the Country With Over 1,400 Licensed Employees
- -- 168 Full Service Brokers
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Enhanced Noninterest Income Contribution
AMSOUTH ($319MM)
[Pie Chart]
Services Charges $105M 32%
Trust $67M 21%
Investment Services $31M 10%
Mortgage $18M 6%
Other $98M 31%
FIRST AMERICAN ($471M)
[Pie Chart]
Services Charges $132M 28%
Trust $43M 9%
Investment Services $151M 33%
Mortgage $49M 10%
Other $96M 20%
PRO FORMA COMBINED ($790M)
[Pie Chart]
Services Charges $237M 30%
Trust $110M 14%
Investment Services $182M 23%
Mortgage $67M 8%
Other $194M 25%
NONINTEREST INCOME TO TOTAL REVENUES
AMSOUTH: 31% FIRST AMERICAN: 39% PRO FORMA COMBINED: 35%
Note: Financial data for the twelve months ended December 31, 1998.
Excludes nonrecurring items.
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Pro Forma Financial
Impact
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Immediate and Substantial
EPS Accretion
($ in millions, except per share data) 2000 2000 Fully 2001
Projected PhasedIn Projected
--------- ---------- ---------
Projected Net Income
AmSouth $ 327 $ 327 $ 362
First American 353 353 388
----- ----- -----
Pro Forma Combined $ 680 $ 680 $ 750
----- ----- -----
Adjustments (After-Tax)
Cost Savings $ 62 $ 82 $ 89
Incremental Revenue 7 14 16
Leverage of Excess Equity 6 13 35
----- ----- -----
Pro Forma Earnings $ 755 $ 789 $ 890
Pro Forma EPS $1.88 $1.96 $2.21
AmSouth's EPS Estimates $1.83 $1.83 $2.03
EPS Accretion $0.05 $0.13 $0.18
EPS % Accretion 2.7% 7.1% 9.1%
Note: Earnings estimates based on First Call as of May 20, 1999; 2000
phase-ins reflect 50% revenue enhancements, 75% cost savings and 60%
leveraging excess capital; Excludes merger related charges.
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Transaction Accelerates AmSouth's EPS
Growth Rate
[Graph showing following:
Am South Stand Alone EPS:
1995A $0.88/33%
1996A $1.03/17%
1997A $1.21/17%
1998A $1.45/20%
1999E $1.63/12%
2000E $1.83
2001E $2.03
Pro Forma EPS:
2000E $1.88/15% (showing accretion = 2.7%) -- $1.96(1)
2001E $2.21/18% (showing accretion = 9.1%)
Note: 1995-1998 as reported for AmSouth. Estimates 1999 - 2000 based upon
First Call consensus estimates as of May 20, 1999. (1) Pro forma EPS
including fully phased in synergies.]
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Enhanced Profitability
2000 Pro 2001 Pro
ASO 1Q99 Forma(1) Forma
-------- -------- --------
ROE 20.1% 21.5% 22.5%
ROA 1.4 1.5 1.6
Efficiency 56.0 50.1 47.2
NIR to Total Revenue 32.8 36.0 37.0
(1) 2000 phase-in reflects 50% of target revenue enhancements, 75% of target
cost savings and 60% of target leveraging of excess capital.
Excludes merger related charges.
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Transaction Synergies
- -- Cost Savings - $133 Million Pre-tax (18% of First American's NIE)
- -- Revenue Enhancements - $23 Million Pre-tax (5% of First American's NIR)
- -- Leverage of Excess Equity - $30 Million Pre-tax
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Conservative Cost Savings
($ in millions)
Pre-tax Cost Savings
Operations / Systems $50
Staff / Support Areas 41
Branch Consolidation 12
Facilities / Purchasing / Contracts 30
----
Total $133
18% of First American's Total Noninterest Expenses
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Revenue Enhancements
- -- Revenue Enhancements are a Modest 5% of FAM's Noninterest Revenue Base
= $23 Million Pre-tax
- -- Specific Items Include:
- Platform annuity improvements = $15 - 19 million
- Consumer lending = $8 - 15 million
- Growth in home equity lending
- Risk based pricing
- -- Additional Opportunities Include:
- Market by market deposit pricing
- Mutual fund sales through INVEST
- Bank owned life insurance
- Improved indirect lending performance profile
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Merger & Integration Charges
($ in millions)
Pre-tax Charges:
Employee Related $146
Branch / ATM / Marketing 31
Operations & Data Processing 64
Transaction Related Costs 55
----
Total $296
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Comparable Transaction Pricing
Price to
Forward EPS Price Premium to Cost
Acquiror Target Estimate to Book Market Savings(1)
- -------- ------ -------- ------- ------ ----------
AmSouth First American 18.9x 3.4x 30% 18%
Firstar Mercantile 21.0x 3.4x 29% 20%
SunTrust Crestar 25.8 4.3 31 17
Star Firstar 22.1 4.1 27 19
Regions First Commercial 23.3 3.8 3 22
First American Deposit Guaranty 25.8 4.2 22 22
National City First of America 22.9 3.8 36 27
First Bank System US Bancorp 17.4 3.4 22 28
Mean 22.6x 3.8x 24% 22%
Median 22.9 3.8 27 22
(1) Announced cost savings and revenue enhancement ratios based upon target
LTM financials
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Comparable Transaction Pricing
Forward P/E % of Acquiror P/E
----------- -----------------
Trans- Trans-
action action
Trans- with Trans- with
Acquiror Target Acquiror action Synergies action Synergies
- -------- ------ -------- ---------------- ------ ---------
AmSouth First American 16.6x 18.9x 14.0x 114% 84%
Firstar Mercantile 26.1 x 21.0x 17.3x 81% 66%
SunTrust Crestar 23.6 25.8 17.8 109 75
Star Banc Firstar 22.0 22.1 16.3 101 74
Regions First 16.9 23.3 16.1 138 95
Commercial
First American Deposit 20.6 25.8 16.5 125 80
Guaranty
National City First of 16.9 22.9 14.1 136 84
America
First Bank US Bancorp 14.5 17.4 11.6 120 80
System
Mean 20.1 x 22.6x 15.7x 116% 79%
Median 20.6 22.9 16.3 120 80
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AmSouth's Record of
Performance
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Goals Set / Goals Met
EPS Growth ROE
---------- ---
12 - 15%
Strategic Goals For 1999 and Beyond Annually 20 - 22%
- -----------------------------------
First Quarter 1999 Results 15.7% 20.1%
Three Year Goals 1997 - 1999 18% CAGR 18%+
- ----------------------------
1998 Results 19.2% 18.6%
1997 Results 18.2% 16.5%
One Year Goal 1996 - 1997 10% Per Annum 15%+
- -------------------------
First Quarter 1997 18.1% 15.9%
1996 Results 16.7% 14.3%
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Superior EPS Growth
[GRAPH showing the following:
$ Per Share
1Q95 -- $0.20
2Q95
3Q95
4Q95
1Q96 -- $0.26
2Q96
3Q96
4Q96
1Q97 -- $0.29
2Q97
3Q97
4Q97
1Q98 -- $0.34
2Q98
3Q98
4Q98
1Q99 -- $0.39
* 3Q96 excludes one-time SAIF assessment]
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Consistently Improving ROE's
[GRAPH showing the following:
1Q95 - 12.3
2Q95 - 12.2
3Q95 - 13.4
4Q95 - 13.7
1Q96 - 13.8
2Q96 - 14.3
3Q96 - 14.4
4Q96 - 14.8
1Q97 - 15.9
2Q97 - 16.3
3Q97 - 16.6
4Q97 - 17.2
1Q98 - 18.0
2Q98 - 18.5
3Q98 - 18.7
4Q98 - 19.1
1Q99 - 20.1
* 3Q96 excludes one-time SAIF assessment]
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Working For The Shareholder
AmSouth Market Capitalization
($'s in Billions)
[GRAPH with $4.0 Billion Increase]
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Summary
- -- Financially compelling
- Immediately and substantially accretive
- Strong, sustainable ROE
- IRR significantly exceeds cost of equity
- -- Leading southeastern franchise
- 2 million households in key markets
- High growth demographic profile
- -- Enhances strategic position
- Broadens product line and revenue sources
- Improved operating efficiency creates competitive advantage
- -- Manageable execution risk
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Appendix
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Combined Balance Sheet
($ in millions, as of March 31, 1999)
ASO FAM Combined
--- --- --------
Loans $ 13,194 $ 11,469 $ 24,663
Securities 5,119 6,859 11,978
Other Earning Assets 123 201 324
---- ---- ----
Total Earning Assets 18,436 18,529 36,965
Loan Loss Allowance (177) (190) (367)
Other Assets 1,825 1,987 3,812
----- ------- -----
Total Assets $ 20,084 $ 20,326 $ 40,410
======== ======== ========
Total Deposits $ 12,945 $ 14,435 $ 27,380
Purchased Funding 5,308 3,760 9,068
Other Liabilities 403 313 716
Stockholders' Equity 1,428 1,818 3,246
------ ------ -----
Total Liabilities & Equity $ 20,084 $ 20,326 $ 40,410
======== ======== ========
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Balanced Loan Mix
($ in millions, as of March 31, 1999)
ASO FAM Combined
-------------- --------------- ---------------
Balances Mix Balances Mix Balances Mix
-------- --- -------- --- -------- ---
Commercial Real Estate $ 3,587 27% $ 1,460 13% $ 5,047 20%
Commercial Loans & Leases 3,622 28 5,568 49 9,190 37
Residential First Mortgages 1,419 11 1,421 12 2,840 12
Home Equity 1,850 14 391 4 2,241 9
Consumer 2,716 20 2,639 22 5,355 22
------ -- ------- -- -------- --
Total $ 13,194 100% $11,479 100% $ 24,673 100%
======== === ======= === ======== ===
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Favorable Deposit Mix
($ in millions, as of March 31, 1999)
ASO FAM Combined
-------------- -------------- ---------------
Balances Mix Balances Mix Balances Mix
-------- --- -------- --- -------- ---
Noninterest-Bearing Demand $ 2,159 17% $ 2,820 19% $ 4,979 18%
Interest-Bearing Demand 4,483 35 5,373 37 9,856 36
Savings 969 7 1,046 7 2,015 7
Time 4,396 34 3,693 25 8,089 29
CD's > $100,000 938 7 1,670 12 2,608 10
---- -- ------- -- ------- ---
Total $12,945 100% $14,602 100% $ 27,547 100%
======= === ======= === ======== ===
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Net Interest Margin
(For the quarter ended March 31, 1999)
ASO FAM Combined
--- --- --------
Yields
- ------
Loan Yield 8.42% 8.29% 8.36%
Investment Yield 6.90 6.55 6.70
Earning Assets 7.98 7.57 7.77
Rates Paid
- ----------
Interest-Bearing Deposits 4.12% 3.74% 3.93%
Interest-Bearing Liabilities 5.11 4.83 5.00
Spreads
- -------
Incremental Interest Spread 3.54% 3.57% 3.55%
Net Interest Margin 4.08 4.23 4.15
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Strong Asset Quality
(As of March 31, 1999)
ASO FAM Combined
--- --- --------
Allowance/Loans 1.34% 1.65% 1.49%
Annualized Net Charge-offs/ 0.28% 0.33%(1) 0.30%
Average Loans
NPAs / Loans + OREO 0.59% 0.47% 0.53%
Allowance / Non-Performing 265% 415% 326%
Loans
(1) Net charge-offs for 1Q99 exclude a $7.9 million charge-off on a single
loan to a sub-prime lender.
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Capital Ratios
($ in millions, as of March 31, 1999)
ASO FAM Combined
--- --- --------
Average Equity $1,421 $1,805 $3,226
Equity to Assets Ratio 7.18% 8.90% 8.05%
Total Capital Ratio 10.78% 12.58% 11.61%
Leverage Ratio 6.07% 7.99% 7.04%
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