As Filed with the Securities and Exchange Commission on July 12, 2006

REGISTRATION NO. 333-      

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

REGIONS FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

417 North 20th Street

Birmingham, Alabama 35203

(205) 944-1300

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

 

R. Alan Deer

Executive Vice President,

General Counsel and

Corporate Secretary

417 North 20th Street

Birmingham, Alabama 35203

(205) 326-7317

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

With Copies To:

 

 

Approximate date of commencement of the proposed sale of the securities to the public:  As soon as practicable after this Registration Statement becomes effective.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

CALCULATION OF REGISTRATION FEE

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

PRELIMINARY DRAFT DATED JULY 12, 2006, SUBJECT TO COMPLETION

 

 

PROPOSED MERGER — YOUR VOTE IS VERY IMPORTANT

 

We are pleased to report that the boards of directors of Regions Financial Corporation and AmSouth Bancorporation have unanimously approved a strategic merger involving our two companies. Before we can complete the merger, we must obtain the approval of the stockholders of both Regions and AmSouth. We are sending you this document to ask you to vote in favor of adoption of the merger agreement.

 

In the merger, AmSouth will merge with and into Regions, with the combined company retaining the name Regions Financial Corporation. If the merger is completed, AmSouth stockholders will receive 0.7974 shares of Regions common stock for each share of AmSouth common stock held immediately prior to the merger. After completion of the merger, we expect that current Regions stockholders will own approximately 62% of the combined company and AmSouth stockholders will own approximately 38% of the combined company.

 

The exchange ratio in the merger is fixed and will not be adjusted to reflect stock price changes prior to completion of the merger. Based on the closing price of Regions common stock on the New York Stock Exchange on May 24, 2006, the last trading day before public announcement of the merger, the 0.7974 exchange ratio represented approximately [          ] in value for each share of AmSouth common stock. Based on the closing price of Regions common stock on the New York Stock Exchange on [          ], 2006, the latest practicable date before the date of this document, the 0.7974 exchange ratio represented approximately $[     ] in value for each share of AmSouth common stock.

 

You should obtain current market quotations for both Regions common stock and AmSouth common stock. Regions common stock is listed on the New York Stock Exchange under the symbol “RF.” AmSouth common stock is listed on the New York Stock Exchange under the symbol “ASO.”

 

The merger is intended to be generally tax-free to AmSouth stockholders other than with respect to any cash received instead of fractional shares of Regions common stock.

 

We cannot complete the merger unless Regions stockholders and AmSouth stockholders adopt the merger agreement. Regions and AmSouth will each hold a stockholders’ meeting to vote on this merger proposal. Your vote is important. Whether or not you plan to attend your meeting, please take the time to submit your proxy with voting instructions in accordance with the instructions contained in this document. If you do not vote, it will have the same effect as voting against the merger. The places, dates and times of the meetings are as follows:

 

 

This document describes the special meetings, the merger, the documents related to the merger, and other related matters. Please read this entire document carefully. We look forward to the successful combination of Regions and AmSouth.

 

 

Neither the securities and exchange commission nor any state securities commission has approved or disapproved the Regions common stock to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

 

The securities to be issued in the merger are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

 

The date of this joint proxy statement/prospectus is [          ], 2006, and it is first being mailed to Regions stockholders and AmSouth stockholders on or about [          ], 2006.

REGIONS FINANCIAL CORPORATION
417 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [          ], 2006

 

Regions Financial Corporation will hold a special meeting of Regions stockholders at Regions Bank Operations Center, 201 Milan Parkway, Birmingham, Alabama, 35209, at 10:00 a.m. local time, on [          ], 2006 to consider and vote upon the following matters:

 

 

Upon completion of the merger, Regions will be the surviving corporation, and each share of AmSouth common stock will be converted into 0.7974 shares of Regions common stock. Your attention is directed to the joint proxy statement/prospectus accompanying this notice for a complete discussion of the merger. A copy of the merger agreement is included as Annex A to the accompanying joint proxy statement/prospectus.

 

The board of directors has fixed the close of business on [          ], 2006 as the record date for the Regions special meeting. Regions stockholders of record at such time are entitled to notice of, and to vote at, the Regions special meeting or any adjournment or postponement of the special meeting.

 

Whether or not you plan to attend the special meeting, please submit your proxy with voting instructions. To submit your proxy by mail, please complete, sign, date and return the accompanying proxy card in the enclosed self-addressed, stamped envelope. Alternatively, you may use the toll-free telephone number indicated on the proxy card to vote by telephone or visit the website indicated on the proxy card to vote on the internet. This will not prevent you from voting in person, but it will help to secure a quorum and avoid added solicitation costs. Any holder of Regions common stock who is present at the Regions special meeting may vote in person instead of by proxy, thereby canceling any previous proxy. Also, a proxy may be revoked in writing at any time before the Regions special meeting.

 

The Regions board of directors has unanimously approved the merger agreement and unanimously recommends that Regions stockholders vote “for” adoption of the merger agreement.

 

By Order of the Board of Directors,

R. Alan Deer

Executive Vice President, General

Counsel and Corporate Secretary

 

Birmingham, Alabama

[          ], 2006

 

 

 

YOUR VOTE IS IMPORTANT

 

Please complete, sign, date and return your proxy card, or vote via phone or the internet promptly, whether or not you plan to attend the special meeting.

REFERENCES TO ADDITIONAL INFORMATION

 

This document incorporates important business and financial information about Regions and AmSouth from documents that are not included in or delivered with this document. You can obtain documents incorporated by reference in this document, by requesting them in writing or by telephone from the appropriate company at the following addresses:

 

 

You will not be charged for any of these documents that you request. Regions stockholders and AmSouth stockholders requesting documents should do so by [          ], 2006 in order to receive them before the meetings.

 

See “Where You Can Find More Information” on page [  ].

 

You should rely only on the information contained or incorporated by reference into this document to vote on the merger agreement. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated [          ], 2006. You should not assume that the information contained in, or incorporated by reference into, this document is accurate as of any date other than that date. Neither our mailing of this document to Regions stockholders or AmSouth stockholders nor the issuance by Regions of common stock in connection with the merger will create any implication to the contrary.

 

TABLE OF CONTENTS

 

 

 

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:		What Am I Being Asked To Vote On?
A:		Regions stockholders and AmSouth stockholders are each being asked to adopt a merger agreement entered into between Regions Financial Corporation and AmSouth Bancorporation. In the merger, AmSouth will be merged with and into Regions, and Regions will be the surviving corporation.
Q:		Why Is My Vote Important?
A:		The affirmative vote of the holders of at least a majority of the outstanding shares of each of Regions and AmSouth is required to adopt the merger agreement. Accordingly, if a Regions stockholder or an AmSouth stockholder fails to vote or abstains, this will have the same effect as a vote against adoption of the merger agreement.
Q:		What Do I Need To Do Now?
A:		After you have carefully read this document, indicate on your proxy card how you want your shares to be voted. Then complete, sign, date and mail your proxy card in the enclosed postage paid return envelope as soon as possible. Alternatively, you may vote by telephone or the internet. This will enable your shares to be represented and voted at the Regions special meeting or the AmSouth special meeting, as applicable.
Q:		If My Shares Are Held In Street Name By My Broker, Will My Broker Automatically Vote My Shares For Me?
A:		No. Without instructions from you, your broker will not be able to vote your shares. You should instruct your broker to vote your shares, following the directions your broker provides. Please check the voting form used by your broker to see if it offers telephone or internet voting.
Q:		What If I Fail To Instruct My Broker?
A:		If you fail to instruct your broker to vote shares held in “street name”, the resulting broker non-vote will have the same effect as a vote against adoption of the merger agreement.
Q:		Can I Change my Vote?
A:		Yes. If you have not voted through your broker, there are three ways you can change your vote after you have submitted your proxy (whether by mail, phone or the internet):
		• First, you may send a written notice to the Corporate Secretary of Regions or AmSouth, as appropriate, stating that you would like to revoke your proxy.
		• Second, you may complete and submit a new proxy card or vote again by telephone or the internet. Your latest vote actually received by Regions or AmSouth, as the case may be, before the special meeting will be counted, and any earlier votes will be revoked.
		• Third, you may attend the Regions or AmSouth special meeting, as the case may be, and vote in person. Any earlier proxy will thereby be revoked. However, simply attending the meeting without voting will not revoke an earlier proxy you may have given.
		If you have instructed a broker to vote your shares, you must follow the directions you receive from your broker in order to change or revoke your vote.
Q:		If I Am An AmSouth Stockholder, Should I Send In My Stock Certificates Now?
A:		No. Please do NOT send in your stock certificates at this time. You will be provided at a later date with instructions regarding the surrender of your stock certificates. You should then, prior to the election deadline, send your AmSouth common stock certificates to the exchange agent, together with your completed, signed form of election. There is no need for Regions stockholders to send in or exchange their existing stock certificates at any time in connection with the merger.

Q:		When Do You Expect To Complete The Merger?

A:		We currently expect to complete the merger in the fourth quarter of 2006. However, we cannot assure you when or if the merger will occur. We must first obtain the approvals of our stockholders at the special meetings and the necessary regulatory approvals.

Q:		Whom Should I Call With Questions?

A:		If you are a Regions stockholder and you have questions about the merger or the Regions special meeting or you need additional copies of this document, or if you have questions about the process for voting or if you need a replacement proxy card, you should contact:

		DF King & Co., Inc. 48 Wall Street, 22nd Floor New York, NY 10005 Telephone: 1-800-714-3305
		If you are an AmSouth stockholder and you have questions about the merger or the AmSouth special meeting or you need additional copies of this document, or if you have questions about the process for voting or if you need a replacement proxy card, you should contact:
		Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor New York, NY 10022 Telephone: 1-877-750-9498

 

SUMMARY

	•	adoption of the merger agreement by the stockholders of both companies;
	•	receipt of governmental and regulatory approvals required to complete the merger, which approvals must not be subject to any condition that would have a material adverse effect on the combined company after the completion of the merger;
	•	there being no injunction, decree, or order enjoining or prohibiting the merger;
	•	listing of the Regions common stock to be issued in the merger on the NYSE;
	•	the receipt by each party of an opinion of their respective counsel that the merger will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code;
	•	the accuracy of the other party’s representations and warranties, subject to the material adverse effect standard in the merger agreement; and
	•	the other party having performed and complied with its covenants in the merger agreement in all material respects.

	•	if there is an uncured breach of the other party’s representations, warranties or covenants that would result in the failure of the related closing conditions;
	•	if any of the required regulatory approvals are denied and the denial is final and nonappealable;
	•	if the other party fails to recommend approval of the merger to its stockholders, breaches its non-solicitation covenant or its obligation to use reasonable best efforts to obtain its stockholders’ approval, negotiates with a third party regarding a competing transaction and the negotiations do not cease within 20 business days, or endorses a competing transaction;
	•	if the merger has not been completed by May 31, 2007; or

	•	if a party’s stockholders fail to adopt the merger agreement, and that party substantially engages in bad faith in breach of its obligation to restructure the transaction and/or to re-submit it to stockholders for approval.

	•	to adopt the merger agreement;

	•	to approve the adjournment of the Regions special meeting, if necessary or appropriate, to solicit additional proxies; and
	•	to act on such other business as may properly come before the Regions special meeting.

	•	to adopt the merger agreement;
	•	to approve the adjournment of the AmSouth special meeting, if necessary or appropriate, to solicit additional proxies; and
	•	to act on such other business as may be properly brought before the AmSouth special meeting.

		Regions				AmSouth
		Common				Common
		Stock				Stock
May 24, 2006		$	35.53			$	28.90
[          ], 2006		$	[    ]			$	[    ]

 

Set forth below are highlights from Regions’ consolidated financial data at or for the years ended December 31, 2001 through 2005, and at or for the three months ended March 31, 2005 and March 31, 2006. You should read this information in conjunction with Regions’ consolidated financial statements and related notes, as well as the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in Regions’ Annual Report on Form 10-K for the year ended December 31, 2005, and quarterly report as of March 31, 2006, which are incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information” on page [  ].

 

 

 

 

Set forth below are highlights from AmSouth’s consolidated financial data at or for the years ended December 31, 2001 through 2005, and at or for the three months ended March 31, 2005 and March 31, 2006. You should read this information in conjunction with AmSouth’s consolidated financial statements and related notes, as well as the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in AmSouth’s Annual Report on Form 10-K for the year ended December 31, 2005, and quarterly report as of March 31, 2006, which are incorporated by reference in this document and from which this information is derived. See “Where You Can Find More Information” on page   .

 

 

 

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

The following table shows information about our financial condition and operations, including per share data and financial ratios, after giving effect to the merger. This information is called pro forma information in this document. The table sets forth the information as if the merger had become effective March 31, 2006, with respect to financial condition, and at the beginning of each of the periods presented, with respect to operations data. The pro forma data in the tables assume that the merger is accounted for as an acquisition by Regions of AmSouth using the purchase method of accounting. The pro forma financial information includes adjustments to record the assets and liabilities of AmSouth at their estimated fair values and is subject to further adjustment as additional information becomes available and as additional analyses are performed. The pro forma statements of operations do not include intangibles which may be incurred subsequent to the merger. This table should be read in conjunction with, and is qualified in its entirety by, the historical financial statements, including the notes thereto, of Regions and AmSouth which are incorporated by reference in this document and the more detailed pro forma financial information, including the notes thereto, appearing elsewhere in this document. See “Where You Can Find More Information” on page [  ] and “Pro Forma Financial Information” on page [  ].

 

We anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses. The pro forma information does not reflect the benefits of expected cost savings, opportunities to earn additional revenue or the costs and amortization referred to in the preceding paragraph and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during these periods.

 

For purposes of the “Pro Forma Financial Information” on page [  ], we have made certain assumptions regarding divestitures we will need to make in order to obtain approval of the merger by the Federal Reserve Board. These assumptions, as well as estimates of the foregone interest from these transactions, are included in the pro forma financial information upon which the information in the following table is based. The adjustments recorded for these divestitures on the merger date could vary significantly from the pro forma adjustments included herein depending on final regulatory divestiture requirements and changes in interest rates.

 

 

 

 

 

 

The following table sets forth for Regions common stock and AmSouth common stock certain historical, pro forma and pro forma-equivalent per share financial information. The pro forma and pro forma equivalent per share information gives effect to the merger as if the merger had been effective on December 31, 2005. The pro forma data in the tables assumes that the merger is accounted for as an acquisition by Regions of AmSouth using the purchase method of accounting. See “The Merger — Accounting Treatment” on page [  ]. The information in the following table is based on, and should be read together with, the historical financial information that we have presented in our prior filings with the Securities and Exchange Commission and the pro forma financial information that appears elsewhere in this document. See “Where You Can Find More Information” on page [  ] and “Pro Forma Financial Information” on page [  ].

 

We anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses. The pro forma information does not reflect the benefits of these expected cost savings, opportunities to earn additional revenue, the impact of restructuring and merger-related costs or the amortization of certain intangibles and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during these periods.

 

For purposes of the “Pro Forma Financial Information” on page [  ], we have made certain assumptions regarding divestitures we will need to make in order to obtain approval of the merger by the Federal Reserve Board. These assumptions, as well as estimates of the foregone interest from these transactions, are included in the pro forma financial information upon which the information in the following table is based. The adjustments recorded for these divestitures on the merger date could vary significantly from the pro forma adjustments included herein depending on final regulatory divestiture requirements and changes in interest rates.

 

 

This document contains or incorporates by reference a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Regions and AmSouth and may include statements for the period following the completion of the merger. You can find many of these statements by looking for words such as “plan,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “potential” or other similar expressions. Such statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, and Regions’ and AmSouth’s plans, objectives, expectations and intentions. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements.

 

The ability of Regions and AmSouth to predict results or the actual effects of its plans and strategies is inherently uncertain and the merger itself creates additional uncertainty. Accordingly, actual results may differ materially from anticipated results. The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements:

 

 

Because such forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Regions stockholders and AmSouth stockholders are cautioned not to place undue reliance on such statements, which speak only as of the date of this document or the date of any document incorporated by reference.

 

All subsequent written and oral forward-looking statements concerning the merger or other matters addressed in this document and attributable to Regions, AmSouth or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Neither Regions nor AmSouth undertakes any obligation to update such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

 

The Regions special meeting will be held on [          ], 2006 at 10:00 a.m. local time at Regions Bank Operations Center, 201 Milan Parkway, Birmingham, Alabama, 35209.

 

At the Regions Special Meeting, Regions stockholders will be asked to:

 

•  adopt the merger agreement;

 

 

You should complete and return the proxy card accompanying this document to ensure that your vote is counted at the Regions special meeting, regardless of whether you plan to attend the Regions special meeting. If you are a registered stockholder (that is, you hold stock certificates registered in your own name), you may also vote by telephone or through the internet, by following the instructions described on your proxy card. If your shares are held in nominee or “street name” you will receive separate voting instructions from your broker or nominee with your proxy materials. Although most brokers and nominees offer telephone and internet voting, availability and specific processes will depend on their voting arrangements. You can revoke the proxy at any time before the vote is taken at the Regions special meeting by submitting to Regions’ corporate secretary written notice of revocation or a properly executed proxy of a later date, or by attending the Regions special meeting and voting in person. Written notices of revocation and other communications about revoking Regions proxies should be addressed to:

 

Regions Financial Corporation

417 North 20th Street

Birmingham, Alabama 35203

Attention: R. Alan Deer

Executive Vice President, General Counsel and Corporate Secretary

 

If your shares are held in street name, you should follow the instructions of your broker regarding the revocation of proxies.

 

All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with the instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” adoption of the merger agreement and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. The Regions board of directors is currently unaware of any other matters that may be presented for action at the Regions special meeting. If other matters properly come before the Regions special meeting, or at any adjournment or postponement thereof, we intend that shares represented by properly submitted proxies will be voted, or not voted, by and at the discretion of the persons named as proxies on the proxy card.

 

We will bear the entire cost of soliciting proxies from you. In addition to solicitation of proxies by mail, we will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of Regions common stock and secure their voting instructions, if necessary. We will reimburse the record holders for their reasonable expenses in taking those actions. We have also made arrangements with D.F. King & Co., Inc. to assist us in soliciting proxies and have agreed to pay them $15,000 plus reasonable expenses for these services. If

necessary, we may also use several of our regular employees, who will not be specially compensated, to solicit proxies from Regions stockholders, either personally or by telephone, telegram, facsimile or letter.

 

The Regions board of directors has fixed the close of business on [          ], 2006 as the record date for determining the Regions stockholders entitled to receive notice of and to vote at the Regions special meeting. At that time, [          ] shares of Regions common stock were outstanding, held by approximately [          ] holders of record. As of the record date, directors and executive officers of Regions and their affiliates had the right to vote [          ] shares of Regions common stock as of the record date, representing less than [          ]% of the shares entitled to vote at the Regions special meeting. Regions currently expects that its directors and executive officers will vote such shares “FOR” adoption of the merger agreement;

 

The presence, in person or by properly executed proxy, of the holders of a majority of the outstanding shares of Regions common stock is necessary to constitute a quorum at the special meeting. Abstentions and broker non-votes will be counted solely for the purpose of determining whether a quorum is present.

 

Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Regions common stock entitled to vote at the Regions special meeting. Approval of the proposal relating to the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies requires that the votes cast in favor of the proposal exceed the votes cast in opposition. You are entitled to one vote for each share of Regions common stock you held as of the record date.

 

Because the affirmative vote of the holders of a majority of the outstanding shares of Regions common stock entitled to vote at the Regions special meeting is required to adopt the merger agreement, the failure to vote by proxy or in person will have the same effect as a vote against the merger agreement. Abstentions and broker non-votes also will have the same effect as a vote against the merger. Accordingly, the Regions board of directors urges Regions stockholders to complete, date and sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope, or to vote by telephone or the internet.

 

Abstentions, failures to vote and broker non-votes will have no effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Participants in Regions’ 401(k) plan, the EquiServe Investment Plan and the Directors Stock Investment Plan, please note that the enclosed proxy card also constitutes the voting instruction form for shares allocated to you under the plan and covers all shares you are entitled to vote under the plan or plans, in addition to shares you may hold directly. Signing and returning the proxy card, or voting by telephone or on the internet as explained below, will enable voting of all shares, including those held in such plans.

 

Many stockholders of Regions have the option to submit their proxies or voting instructions electronically by telephone or the internet instead of submitting proxies by mail on the enclosed proxy card. Please note that there are separate arrangements for using the telephone and the internet depending on whether your shares are registered in Regions’ stock records in your name or in the name of a brokerage firm or bank. Regions stockholders should check their proxy card or the voting instructions forwarded by their broker, bank or other holder of record to see which options are available.

 

Regions holders of record may submit their proxies:

 

 

The AmSouth special meeting will be held on [          ], 2006 at 11:00 a.m., local time at the auditorium of AmSouth Bank in the AmSouth-Harbert Plaza, 1901 Sixth Avenue North in Birmingham, Alabama.

 

At the AmSouth special meeting, the AmSouth stockholders will be asked to:

 

 

You should complete and return the proxy card accompanying this document to ensure that your vote is counted at the special meeting, regardless of whether you plan to attend the special meeting. If you are a registered stockholder (that is, you hold stock certificates registered in your own name), you may also vote by telephone or through the internet, by following the instructions described on your proxy card. If your shares are held in nominee or “street name” you will receive separate voting instructions from your broker or nominee with your proxy materials. Although most brokers and nominees offer telephone and internet voting, availability and specific processes will depend on their voting arrangements. You can revoke the proxy at any time before the vote is taken at the special meeting by submitting to AmSouth’s corporate secretary written notice of revocation or a properly executed proxy of a later date, or by attending the special meeting and voting in person. Written notices of revocation and other communications about revoking AmSouth proxies should be addressed to:

 

AmSouth Bancorporation

1900 Fifth Avenue North

Birmingham, Alabama 35203

Attention: John D. Buchanan

Executive Vice President,

General Counsel and Corporate Secretary

 

If your shares are held in street name, you should follow the instructions of your broker regarding the revocation of proxies.

 

All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with the instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the adoption of the merger agreement and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. The AmSouth board of directors is currently unaware of any other matters that may be presented for action at the special meeting. If other matters properly come before the special meeting, or at any adjournment or postponement thereof, we intend that shares represented by properly submitted proxies will be voted, or not voted, by and at the discretion of the persons named as proxies on the proxy card.

 

AmSouth stockholders should not send stock certificates with their proxy cards. If the merger is completed, AmSouth stockholders will need to exchange their current stock certificates for Regions stock certificates. Upon completion of the merger, former AmSouth stockholders will be mailed a transmittal form with instructions on how to exchange their AmSouth stock certificates for Regions stock certificates.

 

We will bear the entire cost of soliciting proxies from you. In addition to solicitation of proxies by mail, we will request that banks, brokers, and other record holders send proxies and proxy material to the beneficial owners of AmSouth common stock and secure their voting instructions, if necessary. We will reimburse the record holders for their reasonable expenses in taking those actions. We have also made arrangements with Innisfree M&A Incorporated to assist us in soliciting proxies and have agreed to pay them a fee not expected to exceed $75,000 plus reasonable expenses for these services. If necessary, we may use several of our regular employees, who will not be specially compensated, to solicit proxies from AmSouth stockholders, either personally or by telephone, telegram, facsimile or letter.

 

The AmSouth board of directors has fixed the close of business on [          ], 2006 as the record date for determining the AmSouth stockholders entitled to receive notice of and to vote at the AmSouth special meeting. At that time, [          ] shares of AmSouth common stock were outstanding, held by approximately [     ] holders of record. As of the record date, directors and executive officers of AmSouth and their affiliates had the right to vote [          ] shares of AmSouth common stock, representing less than [     ]% of the shares entitled to vote at the AmSouth special meeting. AmSouth currently expects that its directors and executive officers will vote such shares “FOR” adoption of the merger agreement.

 

The presence, in person or by properly executed proxy, of the holders of a majority of the outstanding shares of AmSouth common stock is necessary to constitute a quorum at the AmSouth special meeting. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present.

 

Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of AmSouth common stock entitled to vote at the AmSouth special meeting. Approval of the proposal relating to the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies requires that the votes cast in favor of the proposal exceed the votes cast in opposition. You are entitled to one vote for each share of AmSouth common stock you held as of the record date.

 

Because the affirmative vote of the holders of a majority of the outstanding shares of AmSouth common stock entitled to vote at the AmSouth special meeting is required to adopt the merger agreement, the failure to vote by proxy or in person will have the same effect as a vote against the merger agreement. Abstentions and broker non-votes also will have the same effect as a vote against the merger. Accordingly, the AmSouth board of directors urges AmSouth stockholders to complete, date, and sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope or to vote by telephone or the internet.

 

Abstentions, failures to vote and broker non-votes will have no effect on the vote on the adoption of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Participants in Certain AmSouth Plans

 

Participants in AmSouth’s Direct Stock Purchase and Dividend Reinvestment Plan (the “DRP”) and/or AmSouth employees who participate in the AmSouth Stock Fund of the AmSouth Thrift Plan will find that the enclosed proxy card or electronic voting instruction shows the total of the number of any shares held by them in their own names (but not in street name through a broker) as well as those shares, including fractions of shares, held on their behalf by the agent for the DRP and/or the trustee for the Thrift Plan. Voting in one of the ways described above will allow voting of all shares, including those held by the DRP agent and the trustee for the Thrift Plan. Without instructions the trustee for the Thrift Plan will not be able to vote shares it holds with respect to the adoption of the merger agreement. Failure to instruct the trustee will have the same effect as a vote against adoption of the merger agreement.

 

Many stockholders of AmSouth have the option to submit their proxies or voting instructions electronically by telephone or the internet instead of submitting proxies by mail on the enclosed proxy card. Please note that there are

separate arrangements for using the telephone and the internet depending on whether your shares are registered in AmSouth’s stock records in your name or in the name of a brokerage firm or bank. AmSouth stockholders should check their proxy card or the voting instructions forwarded by their broker, bank or other holder of record to see which options are available.

 

AmSouth holders of record may submit their proxies:

 

 

 

The following discussion contains material information pertaining to the merger. This discussion is a summary only and may not contain all of the information that is important to you. A copy of the merger agreement is attached to this document as Annex A and is incorporated by reference herein. We encourage you to read and review the merger agreement as well as the discussion in this document.

 

The Regions board of directors and the AmSouth board of directors have each unanimously approved the merger agreement, which provides for the merger of AmSouth with and into Regions, with Regions as the surviving corporation. Each share of AmSouth common stock outstanding prior to the merger will be converted, upon completion of the merger, into the right to receive 0.7974 shares of the common stock of Regions. We sometimes refer to this ratio as the “exchange ratio.” Shares of AmSouth common stock issued and outstanding immediately prior to the merger will be cancelled.

 

Each of Regions’ and AmSouth’s board of directors has from time to time engaged with senior management in strategic reviews, and has considered ways to enhance its company’s performance and prospects in light of competitive and other relevant developments. These strategic reviews have focused on, among other things, the business environment facing financial institutions generally, as well as conditions and ongoing consolidation in the financial services industry, and from time to time have focused on the possibility of a merger with another major Alabama-based banking organization. For each company, these reviews have also included periodic discussions with respect to potential transactions that would further its strategic objectives, and the potential benefits and risks of those transactions.

 

Jackson W. Moore, Chairman, President and Chief Executive Officer of Regions, and C. Dowd Ritter, Chairman, President and Chief Executive Officer of AmSouth, have known each other for several years, and periodically have spoken about their respective companies and the banking industry at industry meetings. In late 2005, Mr. Moore and Mr. Ritter met in a social setting and during the course of conversation discussed general industry trends and developments regarding their respective companies.

 

In January 2006, the Regions board of directors held a regular meeting at which they discussed generally strategic objectives and the financial services industry, and during the course of this strategic review, the Regions board of directors discussed AmSouth and the preliminary conversation between Mr. Moore and Mr. Ritter. At this meeting, the board authorized Mr. Moore to engage in exploratory discussions with Mr. Ritter regarding a possible strategic transaction between the two companies. Subsequent to this meeting, starting in February 2006, Mr. Moore and Mr. Ritter spoke regarding the possibility of a strategic merger of the two companies.

 

Based on preliminary mutual interest in the potential merits of a possible strategic transaction, exploratory discussions between the two companies concerning the framework for a possible transaction that would be mutually acceptable followed starting in mid-March 2006. These discussions focused on a strategic at-market merger, with fairly apportioned board and management representation and participation in the combined company and a “best-of-breed” approach to key management positions, as likely the most promising strategic direction for each company. Mr. Moore periodically apprised members of the Regions board of directors of the status of his discussions with Mr. Ritter. At a regular meeting of the Regions board of directors held in April 2006, Mr. Moore

described to the Regions board of directors his preliminary discussions with Mr. Ritter regarding a combination of Regions and AmSouth. The Regions board of directors recommended that Mr. Moore continue to pursue his discussions with Mr. Ritter. Thereafter, at a regular meeting of the Regions board of directors held in May 2006, Mr. Moore updated the board on the status of the preliminary discussions, and there was a consensus among the Regions directors that pursuing a transaction along the lines that had been outlined would be an attractive strategic and financial transaction for Regions to pursue. During the same period, Mr. Ritter periodically apprised members of the AmSouth board of directors of the status of his discussions with Mr. Moore. At a regularly scheduled AmSouth board of directors meeting held in April 2006, Mr. Ritter described to the AmSouth board of directors his preliminary discussions with Mr. Moore regarding a combination of AmSouth and Regions. The AmSouth board of directors recommended that Mr. Ritter continue to pursue his conversations with Mr. Moore and believed that a merger generally along these lines represented a potentially unique strategic and financial opportunity. In connection with these discussions, AmSouth retained Goldman Sachs as its outside financial advisor and Sullivan & Cromwell LLP as its outside legal advisor, and Regions retained Merrill Lynch as its outside financial advisor and Wachtell, Lipton, Rosen & Katz as its outside legal advisor.

 

On May 17, 2006, the parties entered into a confidentiality agreement, and thereafter commenced mutual due diligence.

 

At about that time, the parties and their outside counsel also began preliminary drafting of the transaction documents. Discussions between representatives of Regions and AmSouth continued regarding a potential business combination and the benefits for each company that could result from such a transaction. As a result of these discussions, the parties agreed to recommend to their respective boards of directors an all-stock transaction in which AmSouth would merge into Regions, with Regions being the surviving corporation, and having a fixed exchange ratio of 0.7974 shares of Regions common stock for each share of AmSouth common stock, which was designed to produce an at-market exchange ratio based on the ratio of the closing market price of AmSouth common stock on May 22, 2006 to the closing market price of Regions common stock on May 22, 2006. The parties and their respective counsel also negotiated the other terms of the definitive transaction agreements and exchanged disclosure schedules.

 

On May 24, 2006, the board of directors of Regions met with senior management and their outside legal and financial advisors. Management reviewed for the Regions board of directors the background of discussions with AmSouth and the progress of negotiations, and reported on Regions’ due diligence investigations of AmSouth. Merrill Lynch reviewed with the Regions board of directors the structure and other terms of the proposed transaction, and financial information regarding AmSouth, Regions and the transaction, as well as information regarding peer companies and comparable transactions. In connection with the deliberation by the Regions board of directors, Merrill Lynch rendered to the Regions board of directors its oral opinion (subsequently confirmed in writing), as described under “— Opinion of Regions’ Financial Advisor”, that, as of the date of its opinion, and subject to and based on the qualifications, limitations and assumptions set forth in its written opinion, the exchange ratio in the merger was fair, from a financial point of view, to Regions.

 

Representatives of Wachtell, Lipton, Rosen & Katz discussed with the Regions board of directors the legal standards applicable to its decisions and actions with respect to its consideration of the proposed transaction, and reviewed the legal terms of the proposed transaction agreements. Representatives of Wachtell, Lipton, Rosen & Katz also discussed with the Regions board of directors the shareholder and regulatory approvals that would be required to complete the proposed merger, the likely process and timetable of the merger including obtaining the required shareholder and regulatory approvals and compensation and benefits issues in connection with the merger. Wachtell, Lipton, Rosen & Katz also reviewed for the Regions board of directors a set of draft resolutions relating to the proposed merger.

 

Following these discussions, and review and discussion among the members of the Regions board of directors, including consideration of the factors described under “— Regions’ Reasons for the Merger; Recommendation of the Merger by the Regions Board of Directors”, the Regions board of directors unanimously determined that the transactions contemplated by the merger agreement and the related transactions and agreements are advisable and in the best interests of Regions and its shareholders, and the directors voted unanimously to approve the merger with AmSouth, to approve and adopt the merger agreement and to approve the related transactions and agreements.

AmSouth’s board of directors met in the afternoon of May 24, 2006. Mr. Ritter and other senior AmSouth executives reviewed the status of discussions and negotiations with Regions since the previous board meeting. Members of AmSouth’s management discussed the due diligence process and findings and financial aspects of the transaction, including the proposed merger consideration, accretion/dilution analysis, post-merger capital ratios, dividend rates, estimated expense savings and revenue opportunities. Management also discussed strategic factors related to the proposed transaction. Representatives from Goldman Sachs delivered a financial analysis of the transaction and then advised the AmSouth board of directors of its opinion that, as of May 24, 2006, and based upon the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Goldman Sachs, all as set forth in its written opinion, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to holders of AmSouth common stock.

 

Representatives of Sullivan & Cromwell LLP advised the AmSouth board regarding certain legal matters related to the proposed transaction, including the fiduciary obligations of AmSouth’s directors in connection with their consideration of the proposed merger agreement. Representatives of Sullivan & Cromwell LLP also presented information about the proposed merger agreement, including key terms relating to structure, covenants, representations and warranties and closing conditions. Sullivan & Cromwell LLP representatives also discussed regulatory and stockholder approvals required to complete the merger and the terms of the option agreements. Following the presentations, directors addressed questions to members of AmSouth’s management, representatives of Sullivan & Cromwell LLP and representatives of Goldman Sachs.

 

Following these discussions, and review and discussion among the members of the AmSouth board of directors, including consideration of the factors described under “ — AmSouth’s Reasons for the Merger; Recommendation of the Merger by the AmSouth Board of Directors”, the AmSouth board of directors unanimously determined that the transactions contemplated by the merger agreement and the related transactions and agreements are advisable and in the best interests of AmSouth and its stockholders, and the directors voted unanimously to approve the merger with Regions, to approve and adopt the merger agreement and to approve the related transactions and agreements.

 

The transaction was announced on the morning of May 25, 2006 in a press release issued jointly by Regions and AmSouth.

 

In reaching its decision to adopt the merger agreement and recommend adoption of the merger agreement to the Regions stockholders, the Regions board of directors consulted with Regions’ management, as well as with its outside legal and financial advisors, and considered a number of factors, including:

 

 

 

In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Regions board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the merger agreement and recommend that Regions stockholders vote “FOR” the adoption of the merger agreement. In addition, individual members of the Regions board of directors may have given differing weights to different factors. The Regions board of directors conducted an overall analysis of the factors described above, including through discussions with, and questioning of, Regions’ management and outside legal and financial advisors. The Regions board of directors also considered the advice of Merrill Lynch, its financial advisor, as well as Merrill Lynch’s analyses of the financial terms of the merger and relied on its opinion as to the fairness, from a financial point of view, of the exchange ratio in the merger to Regions.

 

It should be noted that this explanation of the Regions board’s reasoning and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

The Regions board of directors unanimously determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Regions and its stockholders and unanimously approved and adopted the merger agreement. The Regions board unanimously recommends that Regions stockholders vote “FOR” the adoption of the merger agreement.

 

AmSouth’s board concluded, in reaching its decision to recommend the merger to AmSouth stockholders, that Regions and AmSouth have a unique strategic fit, that the merger provides an opportunity for enhanced financial performance and stockholder value and that the merger involves substantial participation by AmSouth’s board and management in the operations of the combined company. In concluding that the merger is in the best interests of AmSouth and its stockholders, AmSouth’s board considered, among other things, the following factors:

 

 

 

 

 

 

 

 

 

AmSouth’s board also considered the potential risks outlined below but concluded that the anticipated benefits of combining with Regions were likely to outweigh substantially these risks. The risks included:

 

 

 

Although each member of AmSouth’s board individually considered these and other factors, the board did not collectively assign any specific or relative weights to the factors considered and did not make any determination with respect to any individual factor. The board collectively made its determination based on the conclusion reached by its members, in light of the factors that each of them considered appropriate, that the merger is in the best interests of AmSouth and its stockholders.

 

AmSouth’s board of directors realized there can be no assurance about future results, including results expected or considered in the factors listed above, such as assumptions regarding anticipated cost savings and earnings accretion/dilution. However, the board concluded that the potential positive factors outweighed the potential risks of completing the merger.

 

It should be noted that this explanation of the AmSouth board’s reasoning and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements.”

 

For the reasons set forth above, the AmSouth board of directors determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interest of AmSouth and its stockholders, and unanimously approved and adopted the merger agreement. The AmSouth board of directors unanimously recommends that the AmSouth stockholders vote “FOR” the adoption of the merger agreement.

 

Regions engaged Merrill Lynch as its financial advisor and AmSouth engaged Goldman Sachs as its financial advisor in connection with the merger based on their experience and expertise. Merrill Lynch and Goldman Sachs are internationally recognized investment banking firms that have substantial experience in transactions similar to the merger.

 

Regions’ board of directors engaged Merrill Lynch to act as its financial advisor in connection with the merger, and to render an opinion as to whether the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Regions.

 

On May 24, 2006, Merrill Lynch delivered its oral opinion to Regions’ board of directors, subsequently confirmed in its written opinion as of that same date, that, as of that date, and based upon and subject to the assumptions made, matters considered and qualifications and limitations set forth in the written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Regions.

 

The full text of the written opinion of Merrill Lynch, dated May 24, 2006, which sets forth the assumptions made, matters considered and qualifications and limitations on the review undertaken by Merrill Lynch, is attached as Annex D to this document and is incorporated into this document by reference. The following summary of Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. Stockholders of Regions are urged to read and should read the entire opinion carefully. Merrill Lynch has consented to the inclusion in this document of its opinion dated May 24, 2006 and of the summary of that opinion set forth below.

 

In preparing its opinion to Regions’ board of directors, Merrill Lynch performed various financial and comparative analyses, including those described below. The summary set forth below does not purport to be a complete description of the analyses underlying Merrill Lynch’s opinion or the presentation made by Merrill Lynch to Regions’ board of directors. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those

methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Merrill Lynch did not attribute any particular weight to any analysis or factor considered by it, but rather made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. Accordingly, Merrill Lynch believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors, or focusing on information presented in tabular format, without considering all of the analyses and factors or the narrative description of the analyses, would create a misleading or incomplete view of the process underlying its opinion.

 

In arriving at its opinion, Merrill Lynch, among other things:

 

 

In preparing its opinion, Merrill Lynch assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to it, discussed with or reviewed by or for it, or that was publicly available. Merrill Lynch did not assume any responsibility for independently verifying such information and did not undertake any independent evaluation or appraisal of any of the assets or liabilities of AmSouth or Regions and it was not furnished with any such evaluation or appraisal, nor did it evaluate the solvency or fair value of AmSouth or Regions under any state or federal laws relating to bankruptcy, insolvency or similar matters. In addition, Merrill Lynch did not assume any obligation to conduct any physical inspection of the properties or facilities of AmSouth or Regions. With respect to the financial forecast information and the expected synergies furnished to or discussed with Merrill Lynch by AmSouth or Regions, Merrill Lynch assumed that they had been reasonably prepared and reflected the best currently available estimates and judgment of the management of AmSouth or Regions as to the expected future financial performance of AmSouth or Regions, as the case may be, and the expected synergies. Merrill Lynch further assumed that the merger would qualify as a tax-free reorganization for U.S. federal income tax purposes. Merrill Lynch also assumed that the final form of the merger agreement and each stock option agreement would be substantially similar to the last draft reviewed by it.

Merrill Lynch’s opinion is necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information made available to Merrill Lynch as of, May 24, 2006. Merrill Lynch further assumed that in the course of obtaining the necessary regulatory or other consents or approvals (contractual or otherwise) for the merger, no restrictions, including any divestiture requirements or amendments or modifications, would be imposed that will have a material adverse effect on the contemplated benefits of the merger.

 

In connection with the preparation of its opinion, Merrill Lynch was not authorized by Regions or the board of directors of Regions to solicit, nor did Merrill Lynch solicit, third party indications of interest for the acquisition of all or any part of Regions.

 

Merrill Lynch’s opinion is addressed to Regions’ board of directors and addresses only the fairness, from a financial point of view, of the exchange ratio pursuant to the merger agreement. The opinion does not address the merits of the underlying decision of Regions to engage in the merger and does not constitute, nor should it be construed as, a recommendation to any stockholder of Regions as to how that stockholder should vote with respect to the merger or any matter related thereto. In addition, the opinion of Merrill Lynch does not address and Merrill Lynch was not asked to address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Regions. Merrill Lynch did not express any opinion as to the prices at which the common stock of Regions will trade following the announcement or consummation of the merger.

 

Merrill Lynch’s Financial Analysis

 

The following is a summary of the material financial analyses that Merrill Lynch performed in connection with its opinion to Regions’ board of directors dated May 24, 2006. The financial analyses summarized below include information presented in tabular format. In order to understand fully the financial analyses performed by Merrill Lynch, the tables must be read together with the accompanying text of each summary. The tables alone do not constitute a complete description of the financial analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Merrill Lynch. To the extent the following quantitative information reflects market data, except as otherwise indicated, Merrill Lynch based this information on market data as they existed prior to May 24, 2006. This information, therefore, does not necessarily reflect current or future market conditions.

 

Calculation of Transaction Value

 

Merrill Lynch reviewed the terms of the merger. The merger consideration had an implied total offer value of $28.53 per share of AmSouth common stock based upon the closing price of Regions common stock of $35.78 on May 22, 2006. Merrill Lynch noted that AmSouth stockholders will receive 0.7974 shares of Regions common stock for each share of AmSouth common stock. Merrill Lynch also noted that the combination of Regions and AmSouth would have an implied aggregate total value of approximately $26 billion as of May 22, 2006.

 

Historical Market-for-Market Exchange Ratio Analysis

 

Merrill Lynch also analyzed the historical exchange ratio that existed between AmSouth common stock and Regions common stock for selected periods during the past year to illustrate the implied exchange ratio between the companies’ common stock at such intervals. The results of Merrill Lynch’s analysis are set forth in the following table:

 

Comparable Companies Analysis

 

Merrill Lynch reviewed and compared selected financial information and trading statistics of AmSouth and Regions to the publicly available corresponding data for the following regional financial institutions with a market capitalization in excess of $5 billion:

 

 

The following table compares selected financial information and trading statistics of AmSouth and Regions with corresponding mean data for the above-listed comparable companies, which data is based on financial data at or for the period ending March 31, 2006, earnings per share estimates and projected earnings per share growth rates from First Call and market prices as of May 22, 2006. First Call is a recognized data service that monitors and publishes compilations of earnings estimates by selected research analysts regarding companies of interest to institutional investors.

 

 

No company used in the comparable company analyses described above is identical to AmSouth, Regions, or the pro forma combined company, as the case may be. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the merger, public trading or other values of the companies to which they are being compared. Mathematical analyses, such as determining the mean or median, are not of themselves meaningful methods of using comparable company data.

Discounted Dividend Analysis — AmSouth

 

Merrill Lynch performed a discounted dividend analysis to estimate a range of present values per share of AmSouth common stock. The valuation range was determined by adding (i) the present value of AmSouth’s earnings available for dividends, net of earnings necessary to maintain AmSouth’s tangible common equity to tangible assets ratio at 6.5% through December 31, 2011, and (ii) the present value of the “terminal value” of AmSouth common stock. In calculating the terminal value of AmSouth common stock, Merrill Lynch applied multiples ranging from 11.5x to 13.5x to year 2012 forecasted cash earnings. The dividend stream and terminal value were then discounted back to May 22, 2006 using discount rates ranging from 11.0% to 13.0%, which are rates Merrill Lynch viewed as the appropriate range for a company with AmSouth’s risk characteristics.

 

In performing this analysis, Merrill Lynch used the First Call consensus earnings per share estimate for AmSouth for 2007. After 2007, earnings per share were assumed to increase annually at 7.5%, the First Call consensus projected earnings growth rate for AmSouth. The analysis assumed annual asset growth rate of 5% for AmSouth.

 

Based on the foregoing criteria and assumptions, Merrill Lynch determined that the stand-alone present value of the AmSouth common stock ranged from $25.29 to $31.20 per share.

 

Discounted Dividend Analysis — Regions