<PAGE>
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                                   FORM 10-Q
 
                  QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 COMMISSION FILE NUMBER 1-7476
 
                            AMSOUTH BANCORPORATION
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
              DELAWARE                                 63-0591257
    (STATE OR OTHER JURISDICTION          (I.R.S. EMPLOYER IDENTIFICATION NO.)
  OFINCORPORATION OR ORGANIZATION)
 
        AMSOUTH--SONAT TOWER                              35203
        1900 5TH AVENUE NORTH                          (ZIP CODE)
         BIRMINGHAM, ALABAMA
   (ADDRESS OF PRINCIPAL EXECUTIVE
              OFFICES)
 
                                (205) 320-7151
             (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
 
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
 
YES  X    NO
 
AS OF NOVEMBER 8, 1996 AMSOUTH BANCORPORATION HAD 56,134,774 SHARES OF COMMON
STOCK OUTSTANDING.
 
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
 
                             AMSOUTH BANCORPORATION
 
                                   FORM 10-Q
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                                              PAGE
                                                                                              ----
<S>       <C>     <C>                                                                         <C>
Part I.   Financial Information
          Item 1. Financial Statements (Unaudited)
                  Consolidated Statement of Condition--September 30, 1996, December 31, 1995,
                   and September 30, 1995....................................................   3
                  Consolidated Statement of Earnings --Nine months and three months ended
                   September 30, 1996 and 1995...............................................   4
                  Consolidated Statement of Shareholders' Equity--Nine months ended
                   September 30, 1996........................................................   5
                  Consolidated Statement of Cash Flows--Nine months ended September 30, 1996
                   and 1995..................................................................   6
                  Notes to Consolidated Financial Statements.................................   7
                  Independent Accountants' Review Report.....................................   9
          Item 2. Management's Discussion and Analysis of Financial Condition and
                   Results of Operations.....................................................  10
Part II.  Other Information
          Item 1. Legal Proceedings..........................................................  21
          Item 6. Exhibits and Reports on Form 8-K...........................................  21
Signatures...................................................................................  22
Exhibit Index................................................................................  23
</TABLE>
 
                                       2
<PAGE>
 
                                     PART I
                             FINANCIAL INFORMATION
                    ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
 
                    AMSOUTH BANCORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CONDITION
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                         SEPTEMBER 30  DECEMBER 31  SEPTEMBER 30
                                             1996         1995          1995
                                         ------------  -----------  ------------
                                                    (IN THOUSANDS)
<S>                                      <C>           <C>          <C>
ASSETS
Cash and due from banks................. $   632,117   $   651,641  $   594,064
Federal funds sold and securities pur-
 chased under agreements to resell......      26,400         1,775        7,250
Trading securities......................       4,238         2,978       11,128
Available-for-sale securities...........   2,712,197     2,479,813      522,805
Held-to-maturity securities (market
 value of $2,703,451, $2,193,421 and
 $3,273,713, respectively)..............   2,722,661     2,167,009    3,258,715
Mortgage loans held for sale............      49,547        62,017       70,841
Loans...................................  11,918,492    11,819,809   12,001,811
Less: Allowance for loan losses.........     179,350       178,451      179,550
  Unearned income.......................      85,855        76,536       79,355
                                         -----------   -----------  -----------
   Net loans............................  11,653,287    11,564,822   11,742,906
Premises and equipment, net.............     293,967       276,426      275,845
Customers' acceptance liability.........       1,627         2,007        1,631
Accrued interest receivable and other
 assets.................................     519,039       530,307      519,050
                                         -----------   -----------  -----------
                                         $18,615,080   $17,738,795  $17,004,235
                                         ===========   ===========  ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits and interest-bearing liabili-
 ties:
 Deposits:
  Noninterest-bearing demand............ $ 1,867,463   $ 1,834,853  $ 1,768,953
  Interest-bearing demand...............   3,544,414     3,912,506    3,784,405
  Savings...............................   1,050,745     1,005,099      995,434
  Time..................................   5,218,366     5,672,586    5,743,774
  Certificates of deposit of $100,000 or
   more.................................     775,231       995,243      885,362
                                         -----------   -----------  -----------
   Total deposits.......................  12,456,219    13,420,287   13,177,928
 Federal funds purchased and securities
  sold under agreements to repurchase...   1,258,905     1,861,090    1,317,393
 Other borrowed funds...................   1,952,071       478,736      534,881
 Long-term Federal Home Loan Bank ad-
  vances................................     883,883        15,014       29,947
 Other long-term debt...................     421,687       425,885      276,351
                                         -----------   -----------  -----------
   Total deposits and interest-bearing
    liabilities.........................  16,972,765    16,201,012   15,336,500
Acceptances outstanding.................       1,627         2,007        1,631
Accrued expenses and other liabilities..     242,222       152,301      278,885
                                         -----------   -----------  -----------
   Total liabilities....................  17,216,614    16,355,320   15,617,016
                                         -----------   -----------  -----------
Shareholders' equity:
 Preferred stock -- no par value:
  Authorized -- 2,000,000 shares; Issued
   and outstanding -- none..............         -0-           -0-          -0-
 Common stock -- par value $1 a share:
  Authorized -- 200,000,000 shares;
  Issued -- 60,024,582, 60,030,242 and
   59,980,078 shares, respectively......      60,025        60,030       59,980
 Capital surplus........................     589,065       590,882      589,582
 Retained earnings......................     835,552       788,170      763,688
 Cost of common stock in treasury--
  3,370,512, 2,765,000, and 1,500,000
  shares, respectively..................     (97,188)      (73,192)     (24,173)
 Deferred compensation on restricted
  stock.................................      (3,950)       (4,120)      (4,467)
 Unrealized gains on available-for-sale
  securities, net of deferred taxes.....      14,962        21,705        2,609
                                         -----------   -----------  -----------
   Total shareholders' equity...........   1,398,466     1,383,475    1,387,219
                                         -----------   -----------  -----------
                                         $18,615,080   $17,738,795  $17,004,235
                                         ===========   ===========  ===========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       3
<PAGE>
 
                    AMSOUTH BANCORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF EARNINGS
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                          NINE MONTHS          THREE MONTHS
                                       ENDED SEPTEMBER 30  ENDED SEPTEMBER 30
                                       ------------------  -------------------
                                         1996      1995      1996      1995
                                       --------- --------  --------- ---------
                                        (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                    <C>       <C>       <C>       <C>
REVENUE FROM EARNING ASSETS
Loans................................  $ 750,958 $754,034  $ 252,423 $ 256,133
Securities:
 Trading securities..................        134      280         45        27
 Available-for-sale securities.......    122,392   27,407     43,008     8,900
 Held-to-maturity securities.........    132,083  160,018     46,586    52,706
                                       --------- --------  --------- ---------
  Total securities...................    254,609  187,705     89,639    61,633
Mortgage loans held for sale.........      4,631    4,265      1,218     1,192
Federal funds sold and securities
 purchased under agreements to re-
 sell................................      1,046      998        315        13
                                       --------- --------  --------- ---------
  Total revenue from earning assets..  1,011,244  947,002    343,595   318,971
                                       --------- --------  --------- ---------
INTEREST EXPENSE
Interest-bearing demand deposits.....     87,712  108,098     28,305    33,139
Savings deposits.....................     20,875   20,690      7,294     6,805
Time deposits........................    245,685  244,298     79,029    85,978
Certificates of deposit of $100,000
 or more.............................     38,246   39,159     12,296    14,018
Federal funds purchased and securi-
 ties sold under agreements to repur-
 chase...............................     68,642   47,853     24,365    14,966
Other borrowed funds.................     29,820   26,370     10,806     8,522
Long-term Federal Home Loan Bank ad-
 vances..............................     13,560    3,276      8,680       673
Other long-term debt.................     23,789   16,921      7,765     5,605
                                       --------- --------  --------- ---------
  Total interest expense.............    528,329  506,665    178,540   169,706
                                       --------- --------  --------- ---------
NET INTEREST INCOME..................    482,915  440,337    165,055   149,265
Provision for loan losses............     46,674   30,049     17,505     9,398
                                       --------- --------  --------- ---------
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES.....................    436,241  410,288    147,550   139,867
                                       --------- --------  --------- ---------
NONINTEREST REVENUES
Service charges on deposit accounts..     70,826   63,137     23,819    21,940
Trust income.........................     42,465   36,811     14,566    12,339
Credit card income...................     10,723    9,710      3,821     3,617
Investment services income...........     12,613    4,946      4,802     2,074
Mortgage income......................      2,409   36,620        578       430
Interchange income...................      6,308    4,007      2,305     1,543
Letters of credit income.............      5,840    4,926      1,886     1,504
Portfolio income.....................      6,763    4,087      2,715       638
Other operating revenues.............     16,828   15,714      5,685     4,342
                                       --------- --------  --------- ---------
  Total noninterest revenues.........    174,775  179,958     60,177    48,427
                                       --------- --------  --------- ---------
NONINTEREST EXPENSES
Salaries and employee benefits.......    173,275  173,661     58,921    52,832
Net occupancy expense................     40,202   41,896     13,903    12,168
Equipment expense....................     39,257   39,090     13,191    11,213
Marketing expense....................     13,387   12,662      4,522     4,087
Postage and office supplies..........     17,465   17,576      5,794     5,684
Telephone expense....................     11,691    9,669      4,046     3,342
Professional fees....................      8,249    8,698      2,649     2,671
FDIC premiums........................      7,875   16,835      2,637     2,109
SAIF assessment......................     24,196      -0-     24,196       -0-
Foreclosed properties expense........      1,054     (415)       178        (2)
Amortization.........................     13,073   16,568      4,471     4,229
Other operating expenses.............     53,536   53,867     17,561    16,656
                                       --------- --------  --------- ---------
  Total noninterest expenses.........    403,260  390,107    152,069   114,989
                                       --------- --------  --------- ---------
INCOME BEFORE INCOME TAXES...........    207,756  200,139     55,658    73,305
Income taxes.........................     76,695   73,076     20,465    27,210
                                       --------- --------  --------- ---------
  NET INCOME.........................  $ 131,061 $127,063  $  35,193 $  46,095
                                       ========= ========  ========= =========
Average common shares outstanding....     56,717   58,273     56,623    58,418
Earnings per common share............  $    2.31 $   2.18  $    0.62 $    0.79
</TABLE>
                See notes to consolidated financial statements.
 
                                       4
<PAGE>
 
                    AMSOUTH BANCORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                UNREALIZED
                          COMMON   CAPITAL   RETAINED  TREASURY    DEFERRED   GAINS/(LOSSES)
                           STOCK   SURPLUS   EARNINGS   STOCK    COMPENSATION ON SECURITIES    TOTAL
                          -------  --------  --------  --------  ------------ -------------- ----------
                                                       (IN THOUSANDS)
<S>                       <C>      <C>       <C>       <C>       <C>          <C>            <C>
Balance at January 1,
 1996...................  $60,030  $590,882  $788,170  $(73,192)   $(4,120)      $21,705     $1,383,475
Net income..............      -0-       -0-   131,061       -0-        -0-           -0-        131,061
Cash dividends declared
 ($1.20 per common
 share).................      -0-       -0-   (67,850)      -0-        -0-           -0-        (67,850)
Common stock transac-
 tions:
 Purchase of common
  stock.................      -0-       -0-       -0-   (61,354)       -0-           -0-        (61,354)
 Employee stock plans...       (5)   (1,803)   (3,486)   16,866        170           -0-         11,742
 Dividend reinvestment..      -0-       (14)     (106)    4,124        -0-           -0-          4,004
 Retirement of debt.....      -0-       -0-   (12,237)   16,368        -0-           -0-          4,131
Unrealized losses on
 available-for-sale
 securities, net of
 deferred taxes.........      -0-       -0-       -0-       -0-        -0-        (6,743)        (6,743)
                          -------  --------  --------  --------    -------       -------     ----------
Balance at September 30,
 1996...................  $60,025  $589,065  $835,552  $(97,188)   $(3,950)      $14,962     $1,398,466
                          =======  ========  ========  ========    =======       =======     ==========
</TABLE>
 
 
                See notes to consolidated financial satatements.
 
                                       5
<PAGE>
 
                    AMSOUTH BANCORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                          NINE MONTHS
                                                      ENDED SEPTEMBER 30
                                                      --------------------
                                                         1996       1995
                                                      ----------  --------
                                                        (IN THOUSANDS)
<S>                                                   <C>         <C>       <C>
OPERATING ACTIVITIES
Net income..........................................  $  131,061  $127,063
Adjustments to reconcile net income to net cash pro-
 vided by operating activities:
 Provision for loan losses..........................      46,674    30,049
 Foreclosed property provision (recoveries).........         301      (322)
 Depreciation and amortization of premises and
  equipment.........................................      20,698    20,768
 Amortization of premiums and discounts on held-to-
  maturity securities and available-for-sale
  securities........................................      (2,398)   (3,950)
 Net decrease in mortgage loans held for sale.......      12,470    59,382
 Net increase in trading securities.................      (1,260)   (2,748)
 Net gains on sales of available-for-sale securi-
  ties..............................................      (4,936)   (3,170)
 Net gains on calls of held-to-maturity securities..        (288)     (481)
 Net decrease in accrued interest receivable and
  other assets......................................      18,167    83,274
 Net increase in accrued expenses and other liabili-
  ties..............................................      40,937    74,399
 Provision for deferred income taxes................      27,408    10,782
 Amortization of intangible assets..................      12,858    17,219
 Other..............................................       2,558       802
                                                      ----------  --------
  Net cash provided by operating activities.........     304,250   413,067
                                                      ----------  --------
INVESTING ACTIVITIES
Proceeds from maturities and prepayments of avail-
 able-for-sale securities...........................     433,504    22,309
Proceeds from sales of available-for-sale securi-
 ties...............................................   1,174,447   219,606
Purchases of available-for-sale securities..........  (1,114,678) (336,671)
Proceeds from maturities, prepayments and calls of
 held-to-maturity securities........................     308,565   237,658
Purchases of held-to-maturity securities............    (863,501) (157,421)
Net (increase) decrease in federal funds sold and
 securities purchased under agreements to resell....     (24,625)  145,275
Net increase in loans...............................    (860,412) (426,072)
Net purchases of premises and equipment.............     (38,239)  (12,835)
Net cash used for acquisitions......................         -0-   (13,221)
                                                      ----------  --------
  Net cash used by investing activities.............    (984,939) (321,372)
                                                      ----------  --------
FINANCING ACTIVITIES
Net decrease in demand deposits and savings ac-
 counts.............................................    (289,836) (354,579)
Net (decrease) increase in time deposits............    (667,815)  379,582
Net (decrease) increase in federal funds purchased
 and securities sold under agreements to repurchase.    (602,185)  104,670
Net (decrease) increase in other borrowed funds.....   1,467,942  (133,330)
Issuance of long-term Federal Home Loan Bank ad-
 vances and other long-term debt....................   1,045,000       765
Payments for maturing long-term Federal Home Loan
 Bank advances and
 other long-term debt...............................    (176,861)  (74,757)
Cash dividends paid.................................     (67,850)  (44,278)
Proceeds from employee stock plans..................      14,124     7,657
Purchase of common stock............................     (61,354)      -0-
                                                      ----------  --------
  Net cash provided by financing activities.........     661,165  (114,270)
                                                      ----------  --------
(Decrease) increase in cash and cash equivalents....     (19,524)  (22,575)
Cash and cash equivalents at beginning of period....     651,641   616,639
                                                      ----------  --------  ---
Cash and cash equivalents at end of period..........  $  632,117  $594,064
                                                      ==========  ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       6
<PAGE>
 
                    AMSOUTH BANCORPORATION AND SUBSIDIARIES
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                                  (UNAUDITED)
 
                 NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
 
  General--The consolidated financial statements conform to generally accepted
accounting principles and to general industry practices. The accompanying
interim financial statements are unaudited; however, in the opinion of
management, all adjustments necessary for the fair presentation of the
consolidated financial statements have been included. All such adjustments are
of a normal recurring nature. Certain amounts in the prior year's financial
statements have been reclassified to conform with the 1996 presentation. These
reclassifications had no effect on net income. The notes included herein
should be read in conjunction with the notes to consolidated financial
statements included in AmSouth Bancorporation's (AmSouth) 1995 annual report
on Form 10-K.
 
  Effective January 1, 1996, AmSouth adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," (Statement 121). The statement requires
that long-lived assets and certain identifiable intangibles to be held and
used by the entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. An impairment loss is recognized when the sum of the future cash
flows (undiscounted and without interest charges expected from the use of the
asset and its eventual disposition) is less than the carrying amount of the
asset. The adoption of Statement 121 resulted in no material impact on
AmSouth's financial condition or results of operations.
 
  Statement of Financial Accounting Standards No. 122, "Accounting for
Mortgage Servicing Rights, an amendment of FASB Statement No. 65" (Statement
122) was adopted by AmSouth effective January 1, 1996. In accordance with
Statement 122, the cost of mortgage loans purchased or originated with a
definitive plan to sell the loans and retain the mortgage servicing rights is
allocated between the loans and the servicing rights based on their estimated
fair values at the purchase or origination date. The adoption of Statement 122
resulted in no material impact on AmSouth's financial condition or results of
operations.
 
  In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities,"
(Statement 125). Statement 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of liabilities
based on consistent application of a "financial-components approach" that
focuses on control. Under that approach, after a transfer of financial assets,
an entity recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control has
been surrendered and derecognizes liabilities when extinguished. Statement 125
provides standards for consistently distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. The impact
of Statement 125, when adopted on January 1, 1997, on AmSouth's financial
condition or results of operations has not been determined at this time.
 
  Cash Flows--For the nine months ended September 30, 1996 and 1995, AmSouth
paid interest of $522,674,000 and $497,491,000, respectively, and income taxes
of $59,442,000 and $43,691,000, respectively. Noncash transfers from loans to
foreclosed properties for the nine months ended September 30, 1996 and 1995
were $15,333,000 and $11,050,000, respectively, and noncash transfers from
foreclosed properties to loans were $942,000 and $2,914,000, respectively. For
the nine months ended September 30, 1996, noncash transfers from loans to
available-for-sale securities of approximately $706,525,000 and noncash
transfers from loans to other assets of approximately $5,309,000 were made in
connection with mortgage loan securitizations. For the nine months ended
September 30, 1996, a $4,131,000 transfer from long-term debt to shareholders'
equity was made due to the redemption of convertible debt.
 
  Shareholders' Equity--On March 1, 1996, AmSouth purchased 1,000,000 shares
of its common stock at a cost of $40,506,000 for the purpose of satisfying
requirements of employee benefit and dividend reinvestment
 
                                       7
<PAGE>
 
plans. This repurchase was part of a plan approved in October 1995 and all
authorized shares have been repurchased.
 
  On July 18, 1996, AmSouth's Board of Directors authorized a new plan to
repurchase up to five percent of AmSouth's outstanding shares of common stock
as of June 30, 1996, or approximately 2.8 million shares, from time to time.
The shares will be used to fund stock issued under AmSouth's dividend
reinvestment and employee benefit plans or for general corporate purposes.
During the third quarter of 1996, AmSouth purchased 550,000 shares of its
common stock at a cost of $20,848,000.
 
                                       8
<PAGE>
 
                    INDEPENDENT ACCOUNTANTS' REVIEW REPORT
 
The Board of Directors
AmSouth Bancorporation
 
We have reviewed the accompanying consolidated statement of condition of
AmSouth Bancorporation and subsidiaries as of September 30, 1996 and 1995, and
the related consolidated statement of earnings for the three-month and nine-
month periods ended September 30, 1996 and 1995, and the consolidated
statement of cash flows for the nine-month periods ended September 30, 1996
and 1995. These financial statements are the responsibility of the Company's
management.
 
We conducted our reviews in accordance with the standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
 
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
 
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of condition of AmSouth Bancorporation
and subsidiaries as of December 31, 1995, and the related consolidated
statements of earnings, shareholders' equity, and cash flows for the year then
ended (not presented herein) and in our report dated January 31, 1996, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
statement of condition as of December 31, 1995, is fairly stated, in all
material respects, in relation to the consolidated statement of condition from
which it has been derived.
 
                                          /s/ ERNST & YOUNG LLP
 
November 12, 1996
 
                                       9
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
  AmSouth's reported net income for the nine months ended September 30, 1996
was $131.1 million, a 3.1% increase over net income of $127.1 million for the
same period of 1995. On a per common share basis, earnings were $2.31 and
$2.18, respectively. Included in year-to-date net income for 1996 was a one-
time, pre-tax charge of $24.2 million, or $.27 per share net of tax, required
under recently passed federal legislation to recapitalize the Savings
Association Insurance Fund (SAIF). Year-to-date net income for 1995 included a
pre-tax gain of $25.0 million from the sale of AmSouth's third-party mortgage
servicing portfolio. Also included in 1995 year-to-date net income was $22.2
million in nonrecurring expenses primarily associated with productivity
initiatives and a refund from the Federal Deposit Insurance Corporation (FDIC)
of approximately $5.0 million. Year-to-date earnings for 1996 resulted in an
annualized return on average assets (ROA) of .97% and an annualized return on
average equity (ROE) of 12.74% compared to 1.01% and 12.62%, respectively, for
the first nine months of 1995. Exclusive of the one-time SAIF assessment, ROA
and ROE for 1996 was 1.09% and 14.14%, respectively. AmSouth's 1996 year-to-
date operating efficiency ratio improved to 60.65% compared to 62.03% for the
prior year. Exclusive of the one-time SAIF assessment, 1996 year-to-date
operating efficiency ratio was 57.01%.
 
  Net income for the third quarter of 1996 was $35.2 million, or $.62 per
common share, compared to $46.1 million, or $.79 per common share, for the
same period of 1995. Exclusive of the one time SAIF assessment, 1996 third
quarter net income was $50.4 million, or $.89 per common share. ROA and ROE
for the third quarter of 1996 were .77% and 10.08%, respectively, compared to
1.09% and 13.38% for the third quarter of 1995. Third quarter 1996 ROA and ROE
were 1.10% and 14.42%, respectively, exclusive of the one-time SAIF
assessment.
 
 Net Interest Income
 
  Net interest income on a fully taxable equivalent basis for the nine months
ended September 30, 1996 was $490.1 million, an 8.9% increase over the same
period of 1995. The improvement in net interest income was primarily the
result of a $1.2 billion increase in year-to-date average earning asset
balances. The net interest margin increased four basis points to 3.90% .
 
  The increase in year-to-date average earning assets was primarily due to an
increase in average securities. Average securities increased $1.3 billion as a
result of the securitization of approximately $1.0 billion of variable rate
residential first mortgages during the previous twelve months and additional
purchases of securities. Average loans net of unearned income decreased $68.9
million. Exclusive of residential first mortgages, average loans net of
unearned income increased $880.1 million, or 11.9%, primarily in commercial,
dealer indirect and consumer revolving credit loans.
 
  The year-to-date average balance of interest-bearing liabilities increased
$1.0 billion, funding 85.9% of the growth in average earning assets. An
increase of $690.5 million in average Federal funds purchased and securities
sold under agreements to repurchase was the primary reason for the increase.
Other significant increases included a $303.9 million increase in treasury,
tax and loan notes, a $149.8 million increase in parent company subordinated
long-term debt, related to the issuance of 6.75% debentures in the fourth
quarter of 1995, and a $193.9 million increase in Federal Home Loan Bank
advances. These increases were partially offset by a $214.1 million decrease
in interest-bearing deposits. The remaining growth in average earning assets
was funded by decreases in noninterest-earning assets and increases in
noninterest-bearing liabilities and shareholders' equity.
 
 Asset/Liability Management
 
  AmSouth maintains a formal asset and liability management process to
quantify, monitor and control interest rate risk and to assist management in
maintaining stability in the net interest margin under varying interest rate
environments. This is accomplished through the development and implementation
of lending, funding and pricing strategies designed to maximize net interest
income performance under varying interest rate environments subject to
specific liquidity and interest rate risk guidelines.
 
 
                                      10
<PAGE>
 
  The primary tool used by AmSouth to measure interest rate risk is an
earnings simulation model which evaluates the impact of different interest
rate scenarios on the corporation's projected business plan over a 12 to 24
month horizon. Management feels that a more traditional interest sensitivity
gap analysis does not provide a complete picture of the corporation's exposure
to interest rate changes since static gap models are a point-in-time
measurement and, therefore, do not incorporate the effects of future balance
sheet trends, changes in the relationship between yields earned and rates
paid, patterns of rate movements in general or changes in prepayment speeds
due to changes in rates. AmSouth's earnings simulation model incorporates the
effect of these factors in addition to the impact of certain embedded interest
rate caps and floors on certain assets and liabilities while also reflecting
management's anticipated action under varying interest rate environments.
 
  Interest rate scenarios are simulated on a regular basis to determine the
range of interest rate risk. Net interest income performance is measured under
scenarios ranging from plus or minus 100 basis points to plus or minus 300
basis points over 12 months compared to a stable interest rate environment.
The net interest income differential is expressed as a percent of net interest
income over twelve months if interest rates are unchanged. As of September 30,
1996, the earnings simulation model results indicated that the corporation was
in a relatively neutral interest rate risk position with net interest income
in a plus or minus 200 basis point scenario being less than 2% of projected
net interest income in a stable interest rate scenario. This level of interest
rate risk is well within the corporation's policy guidelines. A very important
factor in determining this interest rate risk position is the extent to which
pricing on administered rate deposit products, including interest checking,
savings, and money market accounts would be affected under varying interest
rate scenarios. At AmSouth, pricing for these products is assumed to be more
variable in rising rate scenarios than in declining rate scenarios. While
these assumptions are somewhat subjective, management reviews the anticipated
pricing for these products on a regular basis and alters these assumptions
whenever trends or market conditions dictate.
 
  Over the last few years, AmSouth has, from time to time, utilized various
off-balance sheet instruments such as interest rate swaps, caps and floors to
assist in managing interest rate risk. At September 30, 1996, AmSouth had $1.0
billion notional amount of caps outstanding, consisting of $500.0 million of
caps sold and $500.0 million of caps purchased, as hedges on $500.0 million of
prime rate loans. This transaction effectively locked in the historically wide
300 basis points spread between Federal funds and the prime rate in a rising
rate environment. Additionally, $110.0 million notional amount of caps
outstanding hedge the cost of designated liabilities. In addition to the caps,
AmSouth had interest rate swaps in the aggregate notional amount of $150.0
million which were purchased to hedge the cost of $150.0 million of 6.75%
subordinated debentures issued in the fourth quarter of 1995. These swaps
effectively converted the fixed rate applicable to these debentures to a
floating rate tied to the one-month LIBOR rate. AmSouth also had $220.0
million notional amount of interest rate swaps to hedge designated securities
and deposits. At September 30, 1996, AmSouth also held other off-balance sheet
instruments to provide customers and AmSouth a means of managing the risks of
changing interest and foreign exchange rates. These other off-balance sheet
instruments were immaterial. At September 30, 1996, no off-balance sheet
instruments were held for trading purposes.
 
 Credit Quality
 
  AmSouth maintains an allowance for loan losses which it believes is adequate
to absorb losses inherent in the loan portfolio. A formal review is prepared
quarterly to assess the risk in the portfolio and to determine the adequacy of
the allowance for loan losses. The review includes analyses of historical
performance, the level of nonperforming and adversely rated loans, specific
analyses of certain problem loans, loan activity since the previous quarter,
reports prepared by the Loan Review Department, consideration of current
economic conditions, and other pertinent information. The level of allowance
to net loans outstanding will vary depending on the overall results of this
quarterly review. The review is then presented to and subsequently approved by
senior management and the Audit and Community Responsibility Committee of the
Board of Directors.
 
  Table 7 presents a five quarter analysis of the allowance for loan losses.
At September 30, 1996, the allowance for loan losses was $179.4 million, or
1.52% of loans net of unearned income, compared to $179.6 million, or 1.51%,
for the prior year. The coverage ratio of the allowance for loan losses to
nonperforming loans
 
                                      11
<PAGE>
 
increased from 200.94% at September 30, 1995 to 221.40% for the same period in
1996 as the level of nonperforming loans decreased $8.3 million.
 
  For the three months ended September 30, 1996, net charge-offs were $16.9
million, an increase of $8.0 million compared to the same period of 1995.
Year-to-date net charge-offs were $45.8 million compared to $23.4 million for
the prior year. Increases for both periods were primarily in the consumer
revolving credit and dealer indirect loan portfolios which grew 25.6% and
14.3%, respectively, from September 30, 1995 to September 30, 1996. However,
these portfolios comprised only 4.2% and 10.0%, respectively, of the total
loan portfolio. Declining trends in credit quality in the consumer sector of
the economy also contributed to the increase in net charge-offs. Annualized
net charge-offs to average loans net of unearned income for the three months
ended September 30, 1996 was .57% compared to .30% for the same period of the
prior year. Year to date, the ratio was .52% compared to .27% for the prior
year. The increased level of net charge-offs, combined with the growth in the
consumer loan portfolio, which traditionally has a higher risk of loss,
resulted in a provision for loan losses for the three months and nine months
ended September 30, 1996, of $17.5 million and $46.7 million, respectively.
Net charge-offs of impaired loans for the nine months ended September 30, 1996
were $2.3 million.
 
  Table 8 presents a five quarter comparison of the components of
nonperforming assets. As a percentage of loans net of unearned income,
foreclosed properties and repossessions, nonperforming assets decreased from
 .88% at September 30, 1995 to .82% at September 30, 1996. The level of
nonperforming assets decreased $6.9 million during the same period.
 
  Included in nonperforming assets at September 30, 1996 and 1995, were $47.4
million and $52.7 million, respectively, in loans that were considered to be
impaired, substantially all of which were on a nonaccrual basis. Collateral
dependent loans, which were measured at the fair value of the collateral,
constituted approximately all of these impaired loans. There was $2.9 million
in the allowance for loan losses specifically allocated to these impaired
loans. The average balance of impaired loans for the three months ended
September 30, 1996 and 1995 was $44.3 million and $56.9 million, respectively,
and $50.0 million and $58.8 million, respectively, for the nine months ended
September 30, 1996 and 1995. AmSouth recorded no material interest income on
its impaired loans during the three months and nine months ended September 30,
1996.
 
 Noninterest Revenues and Noninterest Expenses
 
  Year-to-date noninterest revenues totaled $174.8 million at September 30,
1996 compared to $180.0 million for the same period of the prior year.
Included in mortgage income for the prior year is a $25.0 million gain from
AmSouth's sale of its third-party mortgage servicing portfolio in the second
quarter of 1995. Exclusive of the gain, year-to-date noninterest revenues
increased 12.8% over the prior year. Compared to the prior year, service
charges on deposit accounts increased $7.7 million, or 12.2%. This increase is
attributable to a revenue enhancement initiative that was implemented in the
second quarter of 1995 to automate the payment of certain demand deposit
account service fees. Trust income increased 15.4% to $42.5 million primarily
from new employee benefit plan administration accounts, increased personal
trust accounts and higher fees. Investment services income increased $7.7
million primarily as a result of a higher sales volume of annuity products.
The introduction of the AmSouth CheckCardSM in 1995 and the expansion of
AmSouth's ATM network were the primary reasons for a 57.4% increase in
interchange income. Credit card income increased 10.4% reflecting a higher
level of customer activity and an increased number of cardholder accounts.
 
  Noninterest revenues for the third quarter of 1996 were $60.2 million, a
24.3% increase over the same period of the prior year. Changes were primarily
for the same reasons discussed in the year-to-date analysis.
 
  Year-to-date noninterest expenses totaled $403.3 million at September 30,
1996 compared to $390.1 million for the same period of the prior year.
Exclusive of the one-time SAIF assessment in 1996 and the $22.2 million in
nonrecurring productivity initiative expenses and the approximately $5.0
million FDIC refund in 1995, noninterest expenses increased 1.7%. Salaries and
employee benefits, net of $6.7 million of expenses related to business and
branch consolidations in 1995, increased $6.3 million primarily due to a
higher company match of
 
                                      12
<PAGE>
 
employee thrift plan contributions and enhancements to employee life insurance
benefits. Net occupancy expense increased $3.8 million, net of costs of $5.5
million for branch consolidations in 1995. This increase is primarily related
to a lease in a new office complex. Adjusted for $4.7 million for development
costs of new financial systems and the write-off of various leases in 1995,
equipment expense increased $4.9 million primarily due to investments in
technology for the consumer and commercial lines of business. Telephone
expense increased $2.0 million as the network was established for the consumer
and commercial technology projects. Exclusive of the one-time SAIF assessment
in 1996 and a refund from the Federal Deposit Insurance Corporation (FDIC) in
the third quarter of 1995, FDIC premiums decreased $14.0 million. FDIC
premiums are lower as a result of the FDIC reducing the premium rate on
deposits insured by the Bank Insurance Fund (BIF) to zero beginning in 1996.
After the one-time assessment, AmSouth's cost for deposit insurance will be
lowered by approximately $7.0 million per year primarily due to the reduction
in SAIF deposit premium rates. Amortization expense decreased $3.5 million due
to the elimination of purchased mortgage servicing rights when AmSouth's
third-party mortgage servicing portfolio was sold in June 1995.
 
  Noninterest expenses for the third quarter of 1996 totaled $152.1 million.
Net of the effects of the SAIF assessment and the FDIC refund, noninterest
expenses increased $7.9 million , or 6.6% over the third quarter of 1995.
Changes for the quarter were primarily for the same reasons discussed in the
year-to-date analysis.
 
 Capital Adequacy
 
  At September 30, 1996, shareholders' equity totaled $1.4 billion or 7.51% of
total assets. Since December 31, 1995, shareholders' equity has increased
$15.0 million due to net income of $131.1 million, reduced by dividends of
$67.9 million and partially offset by the purchase of 1,550,000 shares of
AmSouth common stock for $61.4 million. The purchase of 1,000,000 shares in
March 1996 completed a program approved by the Board of Directors in 1995 to
repurchase 2,265,000 shares to provide shares for AmSouth's employee benefit
and dividend reinvestment plans and other corporate purposes. In July 1996,
the Board of Directors approved an additional program to repurchase from time
to time up to five percent of AmSouth's outstanding shares of common stock as
of June 30, 1996 or approximately 2.8 million shares. The shares will be used
for the same purposes as the previous program. In August 1996, 550,000 shares
were purchased under this program.
 
  Table 11 presents the calculation of the risk-adjusted capital ratios for
AmSouth at September 30, 1996 and 1995. At September 30, 1996, AmSouth
remained above the regulatory minimum required risk-adjusted Tier 1 Capital
Ratio of 4.00% and the regulatory required risk-adjusted Total Capital Ratio
of 8.00%. In addition, the risk-adjusted capital ratios for AmSouth's banking
subsidiaries were above the regulatory minimum and each subsidiary was well-
capitalized at September 30, 1996.
 
                                      13
<PAGE>
 
                           TABLE 1--FINANCIAL SUMMARY
 
<TABLE>
<CAPTION>
                                    SEPTEMBER 30
                             ------------------------------     %
                                 1996            1995         CHANGE
                             --------------  --------------  -------------
                             (IN THOUSANDS EXCEPT PER SHARE DATA)
 <S>                         <C>             <C>             <C>
 BALANCE SHEET SUMMARY
 End-of-period balances:
  Loans net of unearned
   income.................   $   11,832,637  $   11,922,456      (0.8)%
  Total securities........        5,415,847*      3,788,449*     43.0
  Total assets............       18,615,080      17,004,235       9.5
  Total deposits..........       12,456,219      13,177,928      (5.5)
  Shareholders' equity....        1,398,466       1,387,219       0.8
 Year-to-date average bal-
  ances:
  Loans net of unearned
   income.................   $   11,658,708  $   11,727,594      (0.6)%
  Total securities........        5,017,533*      3,746,248*     33.9
  Total assets............       17,969,164      16,869,446       6.5
  Total deposits..........       13,074,206      13,294,728      (1.7)
  Shareholders' equity....        1,374,003       1,346,145       2.1
</TABLE>
 
<TABLE>
<CAPTION>
                                NINE MONTHS                 THREE MONTHS
                            ENDED SEPTEMBER 30           ENDED SEPTEMBER 30
                            --------------------    %    --------------------    %
                              1996       1995     CHANGE   1996       1995     CHANGE
                            ---------  ---------  ------ ---------  ---------  ------
 <S>                        <C>        <C>        <C>    <C>        <C>        <C>
 EARNINGS SUMMARY
  Net income.............   $ 131,061  $ 127,063    3.1% $  35,193  $  46,095  (23.7)%
  Per common share.......        2.31       2.18    6.0       0.62       0.79  (21.5)
 SELECTED RATIOS
  Return on average
   assets (annualized)...        0.97%      1.01%             0.77%      1.09%
  Return on average
   equity (annualized)...       12.74      12.62             10.08      13.38
  Average equity to
   average assets........        7.65       7.98              7.62       8.13
  Allowance for loan
   losses to loans net of
   unearned income.......        1.52       1.51              1.52       1.51
  Efficiency ratio.......       60.65      62.03             66.86      57.40
 COMMON STOCK DATA
  Cash dividends
   declared..............   $    1.20  $    1.14         $    0.40  $    0.38
  Book value at end of
   period................       24.68      23.72             24.68      23.72
  Market value at end of
   period................       44.50      38.00             44.50      38.00
  Average common shares
   outstanding...........      56,717     58,273            56,623     58,418
 WITHOUT SAIF ASSESSMENT
  Net income.............   $ 146,280  $ 127,063   15.1% $  50,412  $  46,095    9.4%
  Per common share.......        2.58       2.18   18.3       0.89       0.79   12.7
  Return on average
   assets (annualized)...        1.09%      1.01%             1.10%      1.09%
  Return on average
   equity (annualized)...       14.14      12.62             14.42      13.38
  Efficiency ratio.......       57.01      62.03             56.22      57.40
</TABLE>
 
 
--------
* Excludes adjustment for market valuation on available-for-sale securities.
 
                                       14
<PAGE>
 
         TABLE 2--YEAR-TO-DATE YIELDS EARNED ON AVERAGE EARNING ASSETS
             AND RATES PAID ON AVERAGE INTEREST-BEARING LIABILITIES
 
<TABLE>
<CAPTION>
                                     1996                           1995
                         ------------------------------  ----------------------------
                                  NINE MONTHS                    NINE MONTHS
                              ENDED SEPTEMBER 30             ENDED SEPTEMBER 30
                         ------------------------------  ----------------------------
                           AVERAGE     REVENUE/  YIELD/    AVERAGE    REVENUE/ YIELD/
                           BALANCE     EXPENSE    RATE     BALANCE    EXPENSE   RATE
                         -----------  ---------- ------  -----------  -------- ------
                              (TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS)
<S>                      <C>          <C>        <C>     <C>          <C>      <C>
ASSETS
Earning assets:
 Loans net of unearned
  income................ $11,658,708  $  752,662  8.62%  $11,727,594  $756,320  8.62%
 Trading securities.....       3,986         134  4.49         6,745       290  5.75
 Available-for-sale
  securities............   2,414,356     122,392  6.77       502,981    27,407  7.29
 Held-to-maturity
  securities:
  Taxable...............   2,396,223     120,952  6.74     2,965,488   145,192 6.558
  Tax-free..............     202,968      16,612 10.93       271,034    22,126 10.91
                         -----------  ----------         -----------  --------
  Total held-to-maturity
   securities...........   2,599,191     137,564  7.07     3,236,522   167,318  6.91
                         -----------  ----------         -----------  --------
    Total securities....   5,017,533     260,090  6.92     3,746,248   195,015  6.96
 Other earning assets...     119,147       5,677  6.36       103,019     5,263  6.83
                         -----------  ----------         -----------  --------
  Total earning assets..  16,795,388   1,018,429  8.10    15,576,861   956,598  8.21
 Cash and other assets..   1,330,009                       1,467,199
 Allowance for loan
  losses................    (178,548)                       (175,936)
 Market valuation on
  available-for-sale
  securities............      22,315                           1,322
                         -----------                     -----------
                         $17,969,164                     $16,869,446
                         ===========                     ===========
LIABILITIES AND
 SHAREHOLDERS' EQUITY
Interest-bearing
 liabilities:
 Interest-bearing demand
  deposits.............. $ 3,711,128      87,712  3.16   $ 3,917,453   108,098  3.69
 Savings deposits.......   1,028,268      20,875  2.71       946,992    20,690  2.92
 Time deposits..........   5,692,628     245,685  5.76     5,769,648   244,298  5.66
 Certificates of deposit
  of $100,000 or more...     887,055      38,246  5.76       899,062    39,159  5.82
 Federal funds purchased
  and securities sold
  under agreements to
  repurchase............   1,771,159      68,642  5.18     1,080,661    47,853  5.92
 Other interest-bearing
  liabilities...........   1,528,263      67,169  5.87       958,309    46,567  6.50
                         -----------  ----------         -----------  --------
  Total interest-bearing
   liabilities..........  14,618,501     528,329  4.83    13,572,125   506,665  4.99
                         -----------  ---------- -----   -----------  -------- -----
 Incremental interest
  spread................                          3.27%                         3.22%
                                                 =====                         =====
 Noninterest-bearing
  demand deposits.......   1,755,127                       1,761,573
 Other liabilities......     221,533                         189,603
 Shareholders' equity...   1,374,003                       1,346,145
                         -----------                     -----------
                         $17,969,164                     $16,869,446
                         ===========                     ===========
Net interest
 income/margin on a
 taxable equivalent
 basis..................                 490,100  3.90%                449,933  3.86%
                                                 =====                         =====
Taxable equivalent
 adjustment:
 Loans..................                   1,704                         2,286
 Securities.............                   5,481                         7,310
                                      ----------                      --------
  Total taxable
   equivalent
   adjustment...........                   7,185                         9,596
                                      ----------                      --------
   Net interest income..              $  482,915                      $440,337
                                      ==========                      ========
</TABLE>
--------
Note:  The taxable equivalent adjustment has been computed based on a 35%
federal income tax rate.
 
                                       15
<PAGE>
 
 TABLE 3--QUARTERLY YIELDS EARNED ON AVERAGE EARNING ASSETS AND RATES PAID ON
                     AVERAGE INTEREST-BEARING LIABILITIES
 
<TABLE>
<CAPTION>
                                                            1996                                               
                     ----------------------------------------------------------------------------------------  
                            THIRD QUARTER                SECOND QUARTER                 FIRST QUARTER          
                     ----------------------------  ----------------------------  ----------------------------  
                       AVERAGE    REVENUE/ YIELD/    AVERAGE    REVENUE/ YIELD/    AVERAGE    REVENUE/ YIELD/  
                       BALANCE    EXPENSE   RATE     BALANCE    EXPENSE   RATE     BALANCE    EXPENSE   RATE   
                     -----------  -------- ------  -----------  -------- ------  -----------  -------- ------  
                                                              (TAXABLE EQUIVALENT BASIS-DOLLARS IN THOUSANDS)  
 <S>                 <C>          <C>      <C>     <C>          <C>      <C>     <C>          <C>      <C>     
 ASSETS                                                                                                        
 Earning assets:                                                                                               
 Loans net of                                                                                                  
  unearned income..  $11,726,594  $252,951  8.58%  $11,575,473  $248,233  8.63%  $11,673,313  $251,472  8.66%  
 Trading                                                                                                       
  securities.......        3,816        45  4.69         4,366        48  4.42         3,778        41  4.36   
 Available-for-                                                                                                
  sale securities..    2,468,474    43,008  6.93     2,419,311    40,912  6.80     2,354,687    38,472  6.57   
 Held-to-maturity                                                                                              
  securities:                                                                                                  
  Taxable..........    2,566,379    43,162  6.69     2,477,564    41,531  6.74     2,142,855    36,259  6.81   
  Tax-free.........      191,680     5,106 10.60       201,702     5,594 11.15       215,647     5,912 11.03   
                     -----------  --------         -----------  --------         -----------  --------         
  Total held-to-                                                                                               
   maturity                                                                                                    
   securities......    2,758,059    48,268  6.96     2,679,266    47,125  7.07     2,358,502    42,171  7.19   
                     -----------  --------         -----------  --------         -----------  --------         
   Total                                                                                                       
    securities.....    5,230,349    91,321  6.95     5,102,943    88,085  6.94     4,716,967    80,684  6.88   
 Other earning                                                                                                 
  assets...........       98,454     1,533  6.19       152,586     2,390  6.30       106,629     1,760  6.64   
                     -----------  --------         -----------  --------         -----------  --------         
  Total earning                                                                                                
   assets..........   17,055,397   345,805  8.07    16,831,002   338,708  8.09    16,496,909   333,916  8.14   
 Cash and other                                                                                                
  assets...........    1,332,692                     1,324,032                     1,333,274                   
 Allowance for                                                                                                 
  loan losses......     (178,764)                     (178,475)                     (178,402)                  
 Market valuation                                                                                              
  on available-                                                                                                
  for-sale                                                                                                     
  securities.......       13,767                        21,508                        31,764                   
                     -----------                   -----------                   -----------                   
                     $18,223,092                   $17,998,067                   $17,683,545                   
                     ===========                   ===========                   ===========                   
 LIABILITIES AND                                                                                               
  SHAREHOLDERS'                                                                                                
  EQUITY                                                                                                       
 Interest-bearing                                                                                              
  liabilities:                                                                                                 
 Interest-bearing                                                                                              
  demand deposits..  $ 3,587,581    28,305  3.14   $ 3,700,373    29,051  3.16   $ 3,846,787    30,356  3.17   
 Savings deposits..    1,044,721     7,294  2.78     1,025,627     6,899  2.71     1,014,277     6,682  2.65   
 Time deposits.....    5,586,176    79,029  5.63     5,771,320    83,283  5.80     5,721,558    83,372  5.86   
 Certificates of                                                                                               
  deposit of                                                                                                   
  $100,000 or                                                                                                  
  more.............      853,058    12,296  5.73       880,157    12,602  5.76       928,322    13,348  5.78   
 Federal funds                                                                                                 
  purchased and                                                                                                
  securities                                                                                                   
  sold under                                                                                                   
   agreements to                                                                                               
   repurchase......    1,870,288    24,365  5.18     1,767,378    22,473  5.11     1,674,720    21,805  5.24   
 Other interest-                                                                                               
  bearing                                                                                                      
  liabilities......    1,894,780    27,251  5.72     1,492,290    21,822  5.88     1,193,692    18,096  6.10   
                     -----------  --------         -----------  --------         -----------  --------         
 Total interest-                                                                                               
  bearing                                                                                                      
  liabilities......   14,836,604   178,540  4.79    14,637,145   176,130  4.84    14,379,356   173,659  4.86   
                                  -------- -----                -------- -----                -------- -----   
 Incremental                                                                                                   
  interest spread..                         3.28%                         3.25%                         3.28%  
                                           =====                         =====                         =====   
 Noninterest-                                                                                                  
  bearing demand                                                                                               
  deposits.........    1,781,474                     1,767,696                     1,715,922                   
 Other liabilities.      216,683                       219,469                       211,581                   
 Shareholders'                                                                                                 
  equity...........    1,388,331                     1,373,757                     1,376,686                   
                     -----------                   -----------                   -----------                   
                     $18,223,092                   $17,998,067                   $17,683,545                   
                     ===========                   ===========                   ===========                   
 Net interest                                                                                                  
  income/margin on                                                                                             
  a taxable                                                                                                    
  equivalent basis.                167,265  3.90%                162,578  3.89%                160,257  3.91%  
                                           =====                         =====                         =====   
 Taxable equivalent                                                                                            
  adjustment:                                                                                                  
 Loans.............                    528                           574                           602         
 Securities........                  1,682                         1,849                         1,950         
                                  --------                      --------                      --------         
  Total taxable                                                                                                
   equivalent                                                                                                  
   adjustment......                  2,210                         2,423                         2,552         
                                  --------                      --------                      --------         
   Net interest                                                                                                
    income.........               $165,055                      $160,155                      $157,705         
                                  ========                      ========                      ========         
</TABLE> 

<TABLE> 
<CAPTION> 
                                              1995                             
                     ----------------------------------------------------------
                           FOURTH QUARTER                 THIRD QUARTER        
                     ----------------------------  ----------------------------
                       AVERAGE    REVENUE/ YIELD/    AVERAGE    REVENUE/ YIELD/
                       BALANCE    EXPENSE   RATE     BALANCE    EXPENSE   RATE 
                     -----------  -------- ------  -----------  -------- ------ 
 <S>                <C>          <C>      <C>     <C>          <C>      <C>
 ASSETS                      
 Earning assets:             
 Loans net of                
  unearned income.. $11,806,113  $257,968  8.67%  $11,816,908  $256,878  8.62%
 Trading                     
  securities.......       5,348        29  2.15         2,797        27  3.83
 Available-for-              
  sale securities..     642,444    10,627  6.56       496,588     8,900  7.11
 Held-to-maturity            
  securities:                
  Taxable..........   3,158,591    52,453  6.59     2,908,333    48,044  6.55
  Tax-free.........     232,750     6,315 10.76       255,893     6,957 10.79
                    -----------  --------         -----------  --------
  Total held-to-             
   maturity                  
   securities......   3,391,341    58,768  6.88     3,164,226    55,001  6.90
                    -----------  --------         -----------  --------
   Total                     
    securities.....   4,039,133    69,424  6.82     3,663,611    63,928  6.92
 Other earning               
  assets...........      73,533     1,310  7.07        87,315     1,205  5.48
                    -----------  --------         -----------  --------
  Total earning              
   assets..........  15,918,779   328,702  8.19    15,567,834   322,011  8.21
 Cash and other              
  assets...........   1,413,087                     1,404,025
 Allowance for               
  loan losses......    (178,948)                     (179,588)
 Market valuation            
  on available-              
  for-sale                   
  securities.......       5,761                         4,324
                    -----------                   -----------
                    $17,158,679                   $16,796,595
                    ===========                   ===========
 LIABILITIES AND             
  SHAREHOLDERS'              
  EQUITY                     
 Interest-bearing            
  liabilities:               
 Interest-bearing            
  demand deposits.. $ 3,823,303    31,756  3.30   $ 3,830,799    33,139  3.43
 Savings deposits..   1,002,444     6,810  2.70       986,486     6,805  2.74
 Time deposits.....   5,770,288    85,680  5.89     5,800,011    85,978  5.88
 Certificates of             
  deposit of                 
  $100,000 or                
  more.............     997,469    15,120  6.01       919,357    14,018  6.05
 Federal funds               
  purchased and              
  securities                 
  sold under                 
   agreements to             
   repurchase......   1,388,274    19,329  5.52     1,044,177    14,966  5.69
 Other interest-             
  bearing                    
  liabilities......     833,555    14,036  6.68       905,252    14,800  6.49
                    -----------  --------         -----------  --------
 Total interest-             
  bearing                    
  liabilities......  13,815,333   172,731  4.96    13,486,082   169,706  4.99
                                 -------- -----                -------- -----
 Incremental                 
  interest spread..                        3.23%                         3.22%
                                          =====                         =====
 Noninterest-                
  bearing demand             
  deposits.........   1,738,426                     1,730,937
 Other liabilities.     221,993                       213,217
 Shareholders'               
  equity...........   1,382,927                     1,366,359
                    -----------                   -----------
                    $17,158,679                   $16,796,595
                    ===========                   ===========
 Net interest                
  income/margin on           
  a taxable                  
  equivalent basis.               155,971  3.89%                152,305  3.88%
                                          =====                         =====
 Taxable equivalent          
  adjustment:                
 Loans.............                   682                           745
 Securities........                 2,083                         2,195
                                 --------                      --------
  Total taxable              
   equivalent                
   adjustment......                 2,765                         3,040
                                 --------                      --------
   Net interest              
    income.........              $153,206                      $149,265
                                 ========                      ========
</TABLE>
----
Note:  The taxable equivalent adjustment has been computed based on a 35%
federal income tax rate.
 
                                       16
<PAGE>
 
                 TABLE 4--INTEREST RATE SWAPS, CAPS AND FLOORS
 
<TABLE>
<CAPTION>
                                                 SWAPS
                                       -------------------------
                                       RECEIVE  PAY                CAPS
                                        FIXED  FIXED BASIS OTHER & FLOORS TOTAL
                                       ------- ----- ----- ----- -------- ------
                                                     (IN MILLIONS)
<S>                                    <C>     <C>   <C>   <C>   <C>      <C>
Balance at January 1, 1996...........   $150   $-0-  $-0-  $-0-   $1,110  $1,260
 Additions...........................    220    -0-   -0-   -0-      -0-     220
 Maturities..........................    -0-    -0-   -0-   -0-      -0-     -0-
 Calls...............................    -0-    -0-   -0-   -0-      -0-     -0-
 Terminations........................    -0-    -0-   -0-   -0-      -0-     -0-
                                        ----   ----  ----  ----   ------  ------
Balance at September 30, 1996........   $370   $-0-  $-0-  $-0-   $1,110  $1,480
                                        ====   ====  ====  ====   ======  ======
</TABLE>
 
       TABLE 5--MATURITIES ON CAPS AND INTEREST RATES EXCHANGED ON SWAPS
 
<TABLE>
<CAPTION>
                                              MATURE DURING
                                      ---------------------------------
                                      1996   1997  1998   1999    2000   TOTAL
                                      -----  ----  -----  -----  ------  ------
                                             (DOLLARS IN MILLIONS)
<S>                                   <C>    <C>   <C>    <C>    <C>     <C>
Receive fixed swaps:
 Notional amount..................... $ 150  $ 65  $ 115  $  40  $  -0-  $  370
 Receive rate........................  6.28% 6.89%  6.66%  6.70%   0.00%   6.55%
 Pay rate............................  5.50% 5.55%  5.55%  5.66%   0.00%   5.54%
Caps:
 Notional amount..................... $  33  $ 77  $ -0-  $ -0-  $1,000  $1,110
</TABLE>
 
--------
Note:  The maturities and interest rates exchanged are calculated assuming
that interest rates remain unchanged from average September 1996 rates. The
information presented could change as future interest rates increase or
decrease.
 
                       TABLE 6--LOANS AND CREDIT QUALITY
<TABLE>
<CAPTION>
                                                                          NET CHARGE-OFFS
                                  LOANS           NONPERFORMING LOANS*   NINE MONTHS ENDED
                              SEPTEMBER 30            SEPTEMBER 30         SEPTEMBER 30
                         ----------------------- ----------------------- ------------------
                            1996        1995          1996        1995     1996      1995
                         ----------- ----------- -------------- -------- --------  --------
                                                 (IN THOUSANDS)
<S>                      <C>         <C>         <C>            <C>      <C>       <C>
Commercial.............. $ 3,505,912 $ 3,033,409    $ 17,410    $ 11,554 $  2,331  $  2,971
Commercial real estate:
 Commercial real estate
  mortgages.............   1,619,213   1,476,494      26,361      27,138      (75)    1,393
 Real estate construc-
  tion..................     688,892     496,067       1,930      11,843     (274)      229
                         ----------- -----------    --------    -------- --------  --------
   Total commercial real
    estate..............   2,308,105   1,972,561      28,291      38,981     (349)    1,622
                         ----------- -----------    --------    -------- --------  --------
Consumer:
 Residential first mort-
  gages.................   2,961,250   4,272,370      27,637      30,922    2,045       612
 Other residential mort-
  gages.................     811,945     665,629       1,061       1,106      301      (193)
 Dealer indirect........   1,190,890   1,041,744       4,647       4,525   10,922     5,012
 Revolving credit.......     502,272     399,981         -0-         -0-   20,924    10,274
 Other consumer.........     638,118     616,117       1,961       2,267    9,601     3,121
                         ----------- -----------    --------    -------- --------  --------
  Total consumer........   6,104,475   6,995,841      35,306      38,820   43,793    18,826
                         ----------- -----------    --------    -------- --------  --------
                         $11,918,492 $12,001,811    $ 81,007    $ 89,355 $ 45,775  $ 23,419
                         =========== ===========    ========    ======== ========  ========
</TABLE>
--------
* Exclusive of accruing loans 90 days past due.
 
                                      17
<PAGE>
 
                       TABLE 7--ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
                                         1996                          1995
                          ----------------------------------- -----------------------
                          3RD QUARTER 2ND QUARTER 1ST QUARTER 4TH QUARTER 3RD QUARTER
                          ----------- ----------- ----------- ----------- -----------
                                            (DOLLARS IN THOUSANDS)
<S>                       <C>         <C>         <C>         <C>         <C>
Balance at beginning of
 period.................   $ 178,724   $ 177,930   $ 178,451   $ 179,550   $ 179,002
Loans charged off.......     (21,202)    (18,442)    (20,626)    (13,998)    (12,290)
Recoveries of loans pre-
 viously charged off....       4,323       5,187       4,985       2,809       3,440
                           ---------   ---------   ---------   ---------   ---------
Net charge-offs.........     (16,879)    (13,255)    (15,641)    (11,189)     (8,850)
Addition to allowance
 charged to expense.....      17,505      14,049      15,120      10,090       9,398
                           ---------   ---------   ---------   ---------   ---------
Balance at end of peri-
 od.....................   $ 179,350   $ 178,724   $ 177,930   $ 178,451   $ 179,550
                           =========   =========   =========   =========   =========
Allowance for loan
 losses to loans net of
 unearned income........        1.52%       1.55%       1.55%       1.52%       1.51%
Allowance for loan
 losses to nonperforming
 loans..................      221.40%     213.83%     195.70%     185.41%     200.94%
Allowance for loan
 losses to nonperforming
 assets.................      183.67%     182.29%     163.06%     154.49%     171.73%
Net charge-offs to aver-
 age loans net of un-
 earned income
 (annualized)...........        0.57%       0.46%       0.54%       0.38%       0.30%
</TABLE>
 
                         TABLE 8--NONPERFORMING ASSETS
 
<TABLE>
<CAPTION>
                                      1996                          1995
                          ------------------------------  ------------------------
                          SEPTEMBER 30 JUNE 30  MARCH 31  DECEMBER 31 SEPTEMBER 30
                          ------------ -------  --------  ----------- ------------
                                          (DOLLARS IN THOUSANDS)
<S>                       <C>          <C>      <C>       <C>         <C>
Nonaccrual loans........    $81,007    $83,583  $ 90,919   $ 96,246     $ 89,355
Foreclosed properties...     13,874     12,845    14,764     16,150       13,144
Repossessions...........      2,769      1,614     3,439      3,114        2,052
                            -------    -------  --------   --------     --------
 Total nonperforming as-
  sets*.................    $97,650    $98,042  $109,122   $115,510     $104,551
                            =======    =======  ========   ========     ========
Nonperforming assets* to
 loans net of unearned
 income, foreclosed
 properties and
 repossessions..........       0.82%      0.85%     0.95%      0.98%        0.88%
Accruing loans 90 days
 past due...............    $39,535    $39,944  $ 40,110   $ 39,618     $ 45,548
</TABLE>
 
--------
* Exclusive of accruing loans 90 days past due.
 
                                       18
<PAGE>
 
                              TABLE 9--SECURITIES
<TABLE>
<CAPTION>
                                    SEPTEMBER 30, 1996     SEPTEMBER 30, 1995
                                  ---------------------- ----------------------
                                   CARRYING     MARKET    CARRYING     MARKET
                                    AMOUNT      VALUE      AMOUNT      VALUE
                                  ----------- ---------- ----------- ----------
                                                 (IN THOUSANDS)
<S>                               <C>         <C>        <C>         <C>
Held-to-maturity:
 U.S. Treasury and federal agency
  securities..................... $ 2,267,306 $2,243,054 $ 3,004,790 $3,007,257
 State, county and municipal se-
  curities.......................     191,773    199,774     247,375    259,991
 Other securities................     263,582    260,623       6,550      6,465
                                  ----------- ---------- ----------- ----------
                                  $ 2,722,661 $2,703,451 $ 3,258,715 $3,273,713
                                  =========== ========== =========== ==========
Available-for-sale:
 U.S. Treasury and federal agency
  securities..................... $ 2,431,074            $   333,090
 Other securities................     281,123                189,715
                                  -----------            -----------
                                  $ 2,712,197            $   522,805
                                  ===========            ===========
</TABLE>
 
--------
Notes:
1. The weighted average remaining life, which reflects the amortization on
   mortgage related and other asset-backed securities, and the weighted
   average yield on the combined held-to-maturity and available-for-sale
   portfolios at September 30, 1996 were approximately 4.5 years and 6.95%,
   respectively. Included in the balance was $4.1 billion of mortgage-backed
   securities, $1.2 billion of which were variable rate. The weighted average
   remaining life and the weighted average yield of mortgage-backed securities
   at September 30, 1996 were approximately 4.8 years and 7.00%, respectively.
   The duration of the combined portfolios, which considers the repricing
   frequency of variable rate securities, is approximately 2.6 years.
 
2. The available-for-sale portfolio included a net unrealized gain of $23.2
   million and $4.2 million at September 30, 1996 and 1995, respectively.
 
 
                 TABLE 10--OTHER INTEREST-BEARING LIABILITIES
 
<TABLE>
<CAPTION>
                                                               SEPTEMBER 30
                                                            -------------------
                                                               1996      1995
                                                            ---------- --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Other borrowed funds:
 Treasury, tax, and loan notes............................. $1,779,946 $275,482
 Federal Home Loan Bank advances...........................    155,000  161,950
 Term federal funds purchased..............................        -0-   82,030
 Floating Rate Notes Due 1999..............................      6,769    6,899
 Other.....................................................     10,356    8,520
                                                            ---------- --------
   Total other borrowed funds.............................. $1,952,071 $534,881
                                                            ========== ========
Other long-term debt:
 6.75% Subordinated Debentures Due 2025.................... $  149,841 $    -0-
 7.75% Subordinated Notes Due 2004.........................    149,297  149,206
 Subordinated Capital Notes Due 1999.......................     99,666   99,537
 7.50% Convertible Subordinated Debentures.................        -0-    3,986
 Other.....................................................     22,883   23,622
                                                            ---------- --------
   Total other long-term debt.............................. $  421,687 $276,351
                                                            ========== ========
</TABLE>
 
                                      19
<PAGE>
 
                            TABLE 11--CAPITAL RATIOS
 
<TABLE>
<CAPTION>
                                                            SEPTEMBER 30
                                                       ------------------------
                                                          1996         1995
                                                       -----------  -----------
                                                       (DOLLARS IN THOUSANDS)
<S>                                                    <C>          <C>
Risk-adjusted capital ratios:
 Total assets........................................  $18,615,080  $17,004,235
 Adjusted allowance for loan losses..................      170,669      162,136
 Adjustment for risk-weighting of balance sheet
  items..............................................   (6,413,442)  (5,912,037)
 Adjustment for off-balance sheet items..............    1,568,075    1,994,340
 Unrealized gains on available-for-sale securities...      (23,644)      (4,184)
 Less certain intangible assets......................     (272,271)    (288,866)
                                                       -----------  -----------
  Total risk-adjusted assets.........................  $13,644,467  $12,955,624
                                                       ===========  ===========
 Shareholders' equity................................  $ 1,398,466  $ 1,387,219
 Unrealized gains on available-for-sale securities
  (net of deferred taxes)............................      (14,962)      (2,609)
 Less certain intangible assets......................     (272,271)    (288,866)
                                                       -----------  -----------
 Tier I capital......................................    1,111,233    1,095,744
                                                       -----------  -----------
 Adjusted allowance for loan losses..................      171,465      162,136
 Qualifying long-term debt...........................      339,003      208,928
                                                       -----------  -----------
 Tier II capital.....................................      509,672      371,064
                                                       -----------  -----------
  Total capital......................................  $ 1,620,905  $ 1,466,808
                                                       ===========  ===========
 Tier I capital to total risk-adjusted assets........         8.14%        8.46%
 Total capital to risk-adjusted assets...............        11.88%       11.32%
Other capital ratios:
 Leverage............................................         6.19%        6.64%
 Equity to assets....................................         7.51%        8.16%
 Tangible equity to assets...........................         6.14%        6.57%
</TABLE>
 
                                       20
<PAGE>
 
                                    PART II
 
                               OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
Several of AmSouth's subsidiaries are defendants in legal proceedings arising
in the ordinary course of business. Some of these proceedings seek relief or
damages that are substantial. The actions relate to AmSouth's lending,
collections, servicing, investment, trust and other activities.
 
Among the actions which are pending against AmSouth subsidiaries are actions
filed as class actions in the State of Alabama. The actions are similar to
others that have been brought in recent years in Alabama against financial
institutions in that they seek punitive damage awards in transactions
involving relatively small amounts of actual damages. In recent years, juries
in Alabama state courts have made large punitive damage awards in such cases.
Legislation which would limit these lawsuits has been proposed from time to
time in the Alabama legislature but has not been enacted into law. AmSouth
cannot predict whether any such legislation will be enacted.
 
It may take a number of years to finally resolve some of these legal
proceedings pending against AmSouth subsidiaries, due to their complexity and
for other reasons. It is not possible to determine with any certainty at this
time the corporation's potential exposure from the proceedings. However, based
upon the advice of legal counsel, AmSouth's management is of the opinion that
the ultimate resolution of these legal proceedings will not have a material
adverse effect on AmSouth's financial condition or results of operations.
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
ITEM 6(A)--EXHIBITS
 
The exhibits listed in the Exhibit Index at page 23 of this Form 10-Q are
filed herewith or are incorporated by reference herein.
 
ITEM 6(B)--REPORTS ON FORM 8-K
 
No report on Form 8-K was filed by AmSouth during the period June 30, 1996 to
September 30, 1996.
 
                                      21
<PAGE>
 
                                   SIGNATURES
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, AMSOUTH
HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED.
 
                                                  /s/ C. Dowd Ritter
November 13, 1996                         By: _________________________________
                                                     C. Dowd Ritter
                                          Chairman of the Board, President and
                                                 Chief Executive Officer
 
                                                  /s/ Dennis J. Dill
November 13, 1996                         By: _________________________________
                                                     Dennis J. Dill
                                              Executive Vice President and
                                                Chief Accounting Officer
 
                                       22
<PAGE>
 
                                 EXHIBIT INDEX
 
The following is a list of exhibits including items incorporated by reference.
 
  3-a Restated Certificate of Incorporation of AmSouth Bancorporation (1)
 
  3-b By-Laws of AmSouth Bancorporation (2)
 
  11 Statement Re: Computation of Earnings per Common Share
 
  15 Letter Re: Unaudited Interim Financial Information
 
  21 AmSouth Bancorporation List of Subsidiaries
 
  27 Financial Data Schedule
 
                               NOTES TO EXHIBITS
 
  (1) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31,        1993, incorporated herein by reference.
 
  (2) Filed as Exhibit 3-b to AmSouth's Form 10-Q Quarterly Report for the
quarter ended March 31,        1996, incorporated herein by reference.
 
                                       23