The credit risk associated with loan commitments and standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to AmSouth’s credit policies. Collateral is obtained based on management’s assessment of the customer.

Various legal proceedings are pending against AmSouth and its subsidiaries. Some of these proceedings seek relief or allege damages that are substantial. The actions arise in the ordinary course of AmSouth’s business and include actions relating to its imposition of certain fees, lending, collections, loan servicing, deposit taking, investment, trust, and other activities.

AmSouth offers a Dividend Reinvestment and Common Stock Purchase Plan, whereby shareholders can reinvest dividends to acquire shares of common stock. Shareholders may also invest additional cash up to $5,000 per quarter with no brokerage commissions or fees charged.

On March 20, 1997, AmSouth’s Board approved the repurchase by AmSouth of up to 13,500,000 shares of its common stock. During 1997, 1998 and 1999, AmSouth purchased 5,859,000, 5,297,000 and 1,352,000 shares, respectively, at a cost of $110,267,000, $136,514,000 and $41,247,000, respectively, under this plan. The authorization expired in March 1999.

On April 15, 1999, AmSouth’s Board approved the repurchase by AmSouth of approximately 13,100,000 shares of its common stock. From April 15, 1999, to May 30, 1999, AmSouth purchased 655,000 shares at a cost of $20,398,000 under this plan. The authorization was rescinded by the Board on May 31, 1999. On April 15, 1999, AmSouth’s Board also approved a three-for-two common stock split in the form of a 50 percent stock dividend. The stock dividend was paid May 24, 1999, to shareholders of record as of April 30, 1999.

On April 15, 1999, AmSouth’s shareholders approved an increase in the common stock authorized to be issued by AmSouth to 350,000,000 shares. On September 16, 1999, in an action related to its merger with First American, AmSouth’s shareholders approved an increase in the common stock authorized to be issued by AmSouth from 350,000,000 to 750,000,000 shares.

On April 20, 2000, AmSouth’s Board approved the repurchase by AmSouth of approximately 35,000,000 shares of its common stock over a two-year period. From April 20, 2000, to December 31, 2000, AmSouth purchased 22,322,000 shares at a cost of $369,696,000 under this plan.

At December 31, 2000, there were 4,365,500 shares reserved for issuance under the Dividend Reinvestment and Common Stock Purchase Plan, 29,910,900 shares reserved for issuance under stock compensation plans (16,644,800 shares represent stock options outstanding) and 811,900 shares reserved for issuance under the employee stock purchase plan for a total of 35,088,300 shares.

In 2000, AmSouth again increased its dividend per share to $0.81 per common share, compared to $0.71 in 1999 and $0.57 in 1998.

Included in other comprehensive income within shareholders’ equity at December 31, 2000 and 1999, was $114,606,000 and $136,463,000, respectively, of unrealized securities losses associated with the transfer of available-for-sale securities to held-to-maturity at the time of AmSouth’s merger with First American. This amount is being amortized over the estimated lives of the transferred securities.