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| Mortgage income in 2000 was $18.0 million, a decrease of $27.0 million versus $45.0 million in 1999. The decrease reflected $12.7 million of impairment charges related to mortgage conduit servicing assets. Due to the structure of the mortgage conduits, AmSouth retains the related interest rate risk. Consequently, the valuation of both the mortgage conduit servicing asset and the interest-only strips related to mortgage loan sales to third-party conduits mentioned in the preceding paragraph is based on the projection of future net cash flows from those assets. As a result of the rapid rise in interest rates beginning in 1999 and continuing through the second quarter of 2000, a cash flow deficit from these assets began to occur in the third quarter of 2000. At that time, management determined, based on its economic forecast of future interest rates, that the cash flow deficit occurring was other than a temporary event and required an impairment charge. The remaining decrease in mortgage income reflected a decline in net gains from the sale of mortgages and servicing in 2000 as well as a reduction in mortgage servicing fees due to the sale of a third-party servicing portfolio in the third quarter of 1999. |
Other NIR in 2000 also included $23.4 million of losses on the sale of Medicare-dependent loans held in AHAD and $18.5 million of losses related to the securitization of approximately $1.0 billion of automobile loans. These losses were primarily the result of AmSouth’s financial restructuring during the third quarter of 2000. Partially offsetting the decreases in other NIR was interchange income, which increased $3.6 million in 2000 to $50.2 million due to higher ATM and CheckCard fees. AmSouth now has approximately 1,250 ATMs and more than one million CheckCards outstanding. The growth was the result of higher sales of convenience services through AmSouth’s strategic initiative to aggressively grow consumer banking. Income from BOLI increased $17.6 million in 2000 to $48.8 million. The increase reflected normal increases in cash surrender value on policies purchased in prior years and additional purchases in 2000. In connection with the merger integration of First American, AmSouth decided to sell IFC and the Arkansas banking operations, resulting in net pretax gains of $584 thousand. AmSouth subsequently decided to exit its Kentucky and Virginia markets through the sale of its branches in those markets, producing net pretax gains totaling $19.9 million. |
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Noninterest Revenues and Noninterest Expenses Table 4
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