##### Table of Contents



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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934



For the Quarterly Period Ended September 30, 2002

Commission File Number 0-3613

SOUTHTRUST CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                       |  |                                               
|---------------------------------------------------------------------- |  | ----------------------------------------------
|Delaware(State or other jurisdiction
of incorporation or organization) |  | 63-0574085(I.R.S. Employer
Identification No.)

|                                                                                    |  |                
|----------------------------------------------------------------------------------- |  | ---------------
|420 North 20th Street, Birmingham, Alabama(Address of principal executive officers) |  | 35203(Zip Code)

(205) 254-5530(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 proceeding 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 [ ]

At September 30, 2002, 346,844,222 shares of the Registrants Common
Stock, $2.50 par value, were outstanding.



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TABLE OF CONTENTS



|                                     |                                                                                               |                                                                  |  |  |  |  |  | 
|------------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION      
|                                     | Item 1. Financial Statements                                                                 
|                                     | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                     | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                     | Item 4. Controls and Procedures                                                              
|                                     |                                                                                               | Consolidated Condensed Balance Sheets                           
|                                     |                                                                                               | Consolidated Condensed Statements of Cash Flows                 
|                                     |                                                                                               | Notes to Consolidated Condensed Financial Statements (Unaudited)
|                                     | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                     | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                     | Item 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION         
|                                     | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                          
|Ex-99.1 906 Certification of the CEO
|Ex-99.2 906 Certification of the CFO



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1. Financial Statements

|                                                                                                                    |  |         |      | 
|------------------------------------------------------------------------------------------------------------------- |  | ------- | ---- | 
|Statement Description                                                                                               |  | Page(s)
|                                                                                                                    |  |        
|Consolidated Condensed Balance Sheets (Unaudited)
September 30, 2002, December 31, 2001 and
September 30, 2001      |  |         | 3    | 
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Consolidated Condensed Statements of Income (Unaudited)
Three and nine months ended September 30, 2002 and 2001     |  |         | 4    | 
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Consolidated Condensed Statements of Stockholders Equity (Unaudited)
Nine months ended September 30, 2002 and 2001 |  |         | 5    | 
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Consolidated Condensed Statements of Cash Flows (Unaudited)
Nine months ended September 30, 2002 and 2001           |  |         | 6    | 
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Notes to Consolidated Condensed Financial Statements (Unaudited)                                                    |  |         | 7-15 | 

The Consolidated Condensed Financial Statements were prepared by the
Company without an audit, but, in the opinion of Management, reflect all
adjustments necessary for the fair presentation of the Companys financial
position and results of operations for the three and nine month periods ended
September 30, 2002 and 2001. Results of operations for the interim 2002 period
are not necessarily indicative of results expected for the full year. While
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission, the Company believes that the disclosures
herein are adequate to make the information presented not misleading. These
condensed financial statements should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included in the
Companys annual report on Form 10-K for the year ended December 31, 2001. The
accounting policies employed are the same as those shown in Note A to the
Consolidated Financial Statements on Form 10-K.




Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations




Item 3. Quantitative and Qualitative Disclosures About Market Risk

These items are included on pages 16-33.




Item 4. Controls and Procedures

This item is included on page 34.

2



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##### Table of Contents






SOUTHTRUST CORPORATION
Consolidated Condensed Balance Sheets
(Unaudited)

|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |           |            |             | 
|------------------------------------------ | -------------------------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------ | --------- | ------------ | ----------- | ---------- | --------- | ---------- | ----------- | ---------- | --------- | ---------- | ----------- | 
|(In thousands, except share data)          |                                                                            | September 30                                 |                                                                     | December 31                                |           | September 30
|                                           |                                                                            | 2002                                         |                                                                     | 2001                                       |           | 2001        
|                                           |                                                                            |                                              |                                                                     |                                            |           |             
|Assets                                     |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |           
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and due from banks                                                    |                                              | $                                                                   | 1,123,590                                  |           |              | $           | 1,159,236  |           |            | $           | 968,516    |          
|                                          
|                                          
|                                          
|                                          
|                                           | Short-term investments:                                                    |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Federal funds sold and securities purchased
under resale agreements |                                            |           | 230,049      |             |            |           | 28,219     |             |            |           | 20,735     |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Interest-bearing deposits in other banks                            |                                            |           | 5,318        |             |            |           | 5,728      |             |            |           | 3,298      |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Trading securities                                                  |                                            |           | 92,382       |             |            |           | 107,321    |             |            |           | 118,898    |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Loans held for sale                                                 |                                            |           | 785,230      |             |            |           | 787,710    |             |            |           | 451,351    |            
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                           |                                                                            |                                              |                                                                     | Total short-term investments               |           |              | 1,112,979   |            |           |            | 928,978     |            |           |            | 594,282     | 
|                                          
|                                          
|                                          
|                                          
|                                           | Available-for-sale securities                                              |                                              |                                                                     | 10,489,170                                 |           |              |             | 9,954,837  |           |            |             | 9,668,775  |          
|                                          
|                                          
|                                          
|                                          
|                                           | Held-to-maturity securities (1)                                            |                                              |                                                                     | 407,458                                    |           |              |             | 544,695    |           |            |             | 618,126    |          
|                                          
|                                          
|                                          
|                                          
|                                           | Loans                                                                      |                                              |                                                                     | 33,839,332                                 |           |              |             | 33,695,495 |           |            |             | 33,066,339 |          
|                                          
|                                          
|                                          
|                                          
|                                           | Less:                                                                      |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Unearned income                                                     |                                            |           | 239,279      |             |            |           | 272,896    |             |            |           | 253,140    |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Allowance for loan losses                                           |                                            |           | 497,624      |             |            |           | 483,124    |             |            |           | 471,133    |            
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                           |                                                                            |                                              |                                                                     | Net loans                                  |           |              | 33,102,429  |            |           |            | 32,939,475  |            |           |            | 32,342,066  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Premises and equipment, net                                                |                                              |                                                                     | 912,473                                    |           |              |             | 838,552    |           |            |             | 807,236    |          
|                                          
|                                          
|                                          
|                                          
|                                           | Due from customers on acceptances                                          |                                              |                                                                     | 3,300                                      |           |              |             | 25,361     |           |            |             | 8,111      |          
|                                          
|                                          
|                                          
|                                          
|                                           | Goodwill and core deposit intangible assets                                |                                              |                                                                     | 801,330                                    |           |              |             | 777,160    |           |            |             | 666,105    |          
|                                          
|                                          
|                                          
|                                          
|                                           | Bank owned life insurance                                                  |                                              |                                                                     | 972,226                                    |           |              |             | 934,806    |           |            |             | 921,887    |          
|                                          
|                                          
|                                          
|                                          
|                                           | Other assets                                                               |                                              |                                                                     | 828,749                                    |           |              |             | 651,448    |           |            |             | 672,802    |          
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                           |                                                                            |                                              |                                                                     | Total assets                               |           | $            | 49,753,704  |            |           | $          | 48,754,548  |            |           | $          | 47,267,906  | 
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|Liabilities                                |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |           
|                                          
|                                          
|                                          
|                                          
|                                           | Deposits:                                                                  |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Interest-bearing                                                    |                                            | $         | 27,268,628   |             |            | $         | 28,241,840 |             |            | $         | 26,148,802 |            
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              | Other                                                               |                                            |           | 4,295,318    |             |            |           | 4,392,271  |             |            |           | 3,889,455  |            
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                           |                                                                            |                                              |                                                                     | Total deposits                             |           |              | 31,563,946  |            |           |            | 32,634,111  |            |           |            | 30,038,257  | 
|                                          
|                                          
|                                          
|                                          
|                                           | Federal funds purchased and securities sold
under agreements to repurchase |                                              |                                                                     | 5,492,668                                  |           |              |             | 5,811,872  |           |            |             | 7,101,819  |          
|                                          
|                                          
|                                          
|                                          
|                                           | Other short-term borrowings                                                |                                              |                                                                     | 468,621                                    |           |              |             | 113,455    |           |            |             | 80,468     |          
|                                          
|                                          
|                                          
|                                          
|                                           | Bank acceptances outstanding                                               |                                              |                                                                     | 3,300                                      |           |              |             | 25,361     |           |            |             | 8,111      |          
|                                          
|                                          
|                                          
|                                          
|                                           | Federal Home Loan Bank advances                                            |                                              |                                                                     | 4,470,975                                  |           |              |             | 4,221,066  |           |            |             | 4,221,177  |          
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term debt                                                             |                                              |                                                                     | 2,185,136                                  |           |              |             | 1,263,419  |           |            |             | 1,071,075  |          
|                                          
|                                          
|                                          
|                                          
|                                           | Other liabilities                                                          |                                              |                                                                     | 1,034,786                                  |           |              |             | 722,889    |           |            |             | 846,907    |          
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                           |                                                                            |                                              |                                                                     | Total liabilities                          |           |              | 45,219,432  |            |           |            | 44,792,173  |            |           |            | 43,367,814  | 
|                                          
|                                          
|                                          
|                                          
|Stockholders equity                       |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Preferred stock, par value $1.00 a share (2) |                                                                     |                                            | 0         |              |             |            | 0         |            |             |            | 0         |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Common stock, par value $2.50 a share (3)    |                                                                     |                                            | 889,249   |              |             |            | 887,745   |            |             |            | 869,737   |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Capital surplus                              |                                                                     |                                            | 603,243   |              |             |            | 597,187   |            |             |            | 446,974   |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Retained earnings                            |                                                                     |                                            | 2,871,877 |              |             |            | 2,566,308 |            |             |            | 2,470,756 |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Accumulated other comprehensive income       |                                                                     |                                            | 350,541   |              |             |            | 91,029    |            |             |            | 203,992   |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            | Treasury stock, at cost (4)                  |                                                                     |                                            | (180,638  | )            |             |            | (179,894  | )          |             |            | (91,367   | )         
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                           |                                                                            |                                              |                                                                     | Total stockholders equity                 |           |              | 4,534,272   |            |           |            | 3,962,375   |            |           |            | 3,900,092   | 
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|                                           |                                                                            |                                              |                                                                     | Total liabilities and stockholders equity |           | $            | 49,753,704  |            |           | $          | 48,754,548  |            |           | $          | 47,267,906  | 
|                                           |                                                                            |                                              |                                                                     |                                            |           |              |             |            |           |            |             |            |          
|(1) Held-to-maturity securities-fair value |                                                                            | $                                            | 441,769                                                             |                                            |           | $            | 562,296     |            |           | $          | 643,487     |           
|                                          
|                                          
|                                          
|                                          
|(2) Preferred shares authorized            |                                                                            |                                              | 5,000,000                                                           |                                            |           |              | 5,000,000   |            |           |            | 5,000,000   |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              |                                                                     | Preferred shares issued                    |           |              | 0           |            |           |            | 0           |            |           |            | 0           | 
|                                          
|                                          
|                                          
|                                          
|(3) Common shares authorized               |                                                                            |                                              | 1,000,000,000                                                       |                                            |           |              | 500,000,000 |            |           |            | 500,000,000 |           
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                            |                                              |                                                                     | Common shares issued                       |           |              | 355,699,454 |            |           |            | 355,097,977 |            |           |            | 347,894,775 | 
|                                          
|                                          
|                                          
|                                          
|(4) Treasury shares of common stock        |                                                                            |                                              | 8,855,232                                                           |                                            |           |              | 8,825,370   |            |           |            | 5,209,878   |           

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##### Table of Contents



SOUTHTRUST CORPORATIONConsolidated Condensed Statements of Income
(Unaudited)

|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |           |           | 
|------------------------------------- | --------------------------------------------------- | ------------------------------------ | --------------------------------------------------- | -------------------------- | ------- | ------------------ | ------- | ----------------- | ------- | ------- | ------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | --------- | 
|                                      |                                                     |                                      |                                                     |                            |         | Three Months Ended |         | Nine Months Ended
|(In thousands, except per share data) |                                                     | September 30                         |                                                     | September 30              
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                  
|                                      |                                                     | 2002                                 |                                                     | 2001                       |         | 2002               |         | 2001             
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                  
|Interest income                       |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Loans, including fees                |                                                     | $                          | 487,019 |                    |         | $                 | 603,249 |         |         | $       | 1,482,557 |           |           | $       | 1,899,395 |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Available-for-sale securities        |                                                     |                            | 160,336 |                    |         |                   | 147,492 |         |         |         | 483,034   |           |           |         | 408,024   |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Held-to-maturity securities          |                                                     |                            | 7,644   |                    |         |                   | 21,608  |         |         |         | 25,007    |           |           |         | 101,743   |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Short-term investments               |                                                     |                            | 9,740   |                    |         |                   | 10,025  |         |         |         | 27,871    |           |           |         | 29,561    |          
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      |                                                     |                                      |                                                     | Total interest income      |         |                    | 664,739 |                   |         |         | 782,374 |         |           |           | 2,018,469 |         |           |           | 2,438,723 | 
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|Interest expense                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Deposits                             |                                                     |                            | 142,962 |                    |         |                   | 263,003 |         |         |         | 464,037   |           |           |         | 867,098   |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Short-term borrowings                |                                                     |                            | 25,059  |                    |         |                   | 58,350  |         |         |         | 77,078    |           |           |         | 238,086   |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Federal Home Loan Bank advances      |                                                     |                            | 50,392  |                    |         |                   | 56,853  |         |         |         | 153,574   |           |           |         | 169,787   |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Long-term debt                       |                                                     |                            | 17,310  |                    |         |                   | 14,408  |         |         |         | 46,309    |           |           |         | 49,053    |          
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      |                                                     |                                      |                                                     | Total interest expense     |         |                    | 235,723 |                   |         |         | 392,614 |         |           |           | 740,998   |         |           |           | 1,324,024 | 
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      |                                                     |                                      |                                                     | Net interest income        |         |                    | 429,016 |                   |         |         | 389,760 |         |           |           | 1,277,471 |         |           |           | 1,114,699 | 
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     |                                      |                                                     | Provision for loan losses  |         |                    | 36,354  |                   |         |         | 30,400  |         |           |           | 92,732    |         |           |           | 78,959    | 
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      |                                                     |                                      | Net interest income after provision for
loan losses |                            |         | 392,662            |         |                   |         | 359,360 |         |         |           | 1,184,739 |           |         |           | 1,035,740 |          
|                                     
|                                     
|                                     
|                                     
|Non-interest income                   |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Service charges on deposit accounts  |                                                     |                            | 72,057  |                    |         |                   | 60,220  |         |         |         | 202,880   |           |           |         | 172,458   |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Mortgage banking operations          |                                                     |                            | 17,201  |                    |         |                   | 11,770  |         |         |         | 43,587    |           |           |         | 38,373    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Bank card fees                       |                                                     |                            | 10,942  |                    |         |                   | 10,739  |         |         |         | 32,962    |           |           |         | 30,678    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Debit card fees                      |                                                     |                            | 9,870   |                    |         |                   | 8,318   |         |         |         | 28,154    |           |           |         | 23,127    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Trust fees                           |                                                     |                            | 8,501   |                    |         |                   | 7,925   |         |         |         | 25,422    |           |           |         | 24,071    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Investment fees                      |                                                     |                            | 15,822  |                    |         |                   | 13,585  |         |         |         | 44,370    |           |           |         | 35,956    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Bank owned life insurance            |                                                     |                            | 12,579  |                    |         |                   | 12,674  |         |         |         | 37,420    |           |           |         | 41,543    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Gains on loans held for sale, net    |                                                     |                            | 6,186   |                    |         |                   | 5,854   |         |         |         | 22,506    |           |           |         | 12,021    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Securities gains (losses)            |                                                     |                            | (813    | )                  |         |                   | 643     |         |         |         | 2,543     |           |           |         | 2,522     |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Other                                |                                                     |                            | 14,057  |                    |         |                   | 7,702   |         |         |         | 40,275    |           |           |         | 29,502    |          
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      |                                                     |                                      |                                                     | Total non-interest income  |         |                    | 166,402 |                   |         |         | 139,430 |         |           |           | 480,119   |         |           |           | 410,251   | 
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|Non-interest expense                  |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Salaries and employee benefits       |                                                     |                            | 186,379 |                    |         |                   | 168,098 |         |         |         | 551,927   |           |           |         | 479,668   |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Net occupancy                        |                                                     |                            | 27,018  |                    |         |                   | 25,238  |         |         |         | 81,684    |           |           |         | 74,810    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Equipment                            |                                                     |                            | 17,131  |                    |         |                   | 15,572  |         |         |         | 50,375    |           |           |         | 46,348    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Professional services                |                                                     |                            | 15,314  |                    |         |                   | 10,218  |         |         |         | 47,956    |           |           |         | 32,987    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Data processing                      |                                                     |                            | 10,626  |                    |         |                   | 9,293   |         |         |         | 31,290    |           |           |         | 26,222    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Communications                       |                                                     |                            | 13,617  |                    |         |                   | 13,697  |         |         |         | 43,824    |           |           |         | 39,609    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Core deposit intangible amortization |                                                     |                            | 3,671   |                    |         |                   | 10,022  |         |         |         | 10,819    |           |           |         | 29,663    |          
|                                     
|                                     
|                                     
|                                     
|                                      |                                                     | Other                                |                                                     |                            | 42,210  |                    |         |                   | 33,456  |         |         |         | 131,258   |           |           |         | 106,508   |          
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      |                                                     |                                      |                                                     | Total non-interest expense |         |                    | 315,966 |                   |         |         | 285,594 |         |           |           | 949,133   |         |           |           | 835,815   | 
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      | Income before income taxes                          |                                      |                                                     | 243,098                    |         |                    |         | 213,196           |         |         |         | 715,725 |           |           |           | 610,176 |          
|                                     
|                                     
|                                     
|                                     
|                                      | Income tax expense                                  |                                      |                                                     | 78,852                     |         |                    |         | 71,114            |         |         |         | 232,770 |           |           |           | 200,620 |          
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      |                                                     |                                      |                                                     | Net income                 |         | $                  | 164,246 |                   |         | $       | 142,082 |         |           | $         | 482,955   |         |           | $         | 409,556   | 
|                                      |                                                     |                                      |                                                     |                            |         |                    |         |                   |         |         |         |         |           |           |           |         |           |          
|                                      | Average shares outstanding  basic (in thousands)   |                                      |                                                     | 346,802                    |         |                    |         | 342,184           |         |         |         | 346,684 |           |           |           | 340,282 |          
|                                     
|                                     
|                                     
|                                     
|                                      | Average shares outstanding  diluted (in thousands) |                                      |                                                     | 351,008                    |         |                    |         | 346,541           |         |         |         | 350,961 |           |           |           | 344,123 |          
|                                     
|                                     
|                                     
|                                     
|                                      | Net income per share  basic                        |                                      |                                                     | $0.47                      |         |                    |         | $0.41             |         |         |         | $1.39   |           |           |           | $1.20   |          
|                                     
|                                     
|                                     
|                                     
|                                      | Net income per share  diluted                      |                                      |                                                     | 0.47                       |         |                    |         | 0.41              |         |         |         | 1.38    |           |           |           | 1.19    |          
|                                     
|                                     
|                                     
|                                     
|                                      | Dividends declared per share                        |                                      |                                                     | 0.17                       |         |                    |         | 0.14              |         |         |         | 0.51    |           |           |           | 0.42    |          

4



---



##### Table of Contents



SOUTHTRUST CORPORATION
Consolidated Condensed Statements of Stockholders Equity
(Unaudited)

|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |         |       |  | 
|------------------------------------------------- | -------------------------------------------------- | --------------------------------------- | ----------- | --------- | --------------------------------- | - | ------- | ------ | -------- | - | ------------- | ------- | ------------- | - | --------- | --- | ----- | - | -------- | - | ----------- |  | --------- | - | - | - | --------- | ------- | ----- |  | 
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   | Accumulated |  |           |   |   |   |           |         |      
|                                                  |                                                    |                                         |             |           | Common Stock                      |   |         |        |          |   |               |         |               |   | Other     |     |       |   |          |   |             |  |          
|                                                  |                                                    |                                         |             |           |                                   |   | Capital |        | Retained |   | Comprehensive |         | Treasury      |   |           |     |      
|                                                  |                                                    |                                         |             |           | Shares                            |   | Amount  |        | Surplus  |   | Earnings      |         | Income (Loss) |   | Stock     |     | Total
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |      
|                                                  |                                                    |                                         |             |           | (In Thousands, except share data)
|Balance at January 1, 2001                        |                                                    |                                         | 338,106,862 |           |                                   | $ | 851,962 |        |          | $ | 333,987       |         |               | $ | 2,202,901 |     |       |   | ($12,164 | ) |             |  | ($24,226  | ) |   | $ | 3,352,460 |        
|                                                 
|                                                 
|                                                 
|                                                 
|Net income                                        |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | 409,556   |     |       |   | 0        |   |             |  | 0         |   |   |   | 409,556   |        
|                                                 
|                                                 
|                                                 
|                                                 
|Unrealized gain on available-for-sale
securities* |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | 0         |     |       |   | 172,698  |   |             |  | 0         |   |   |   | 172,698   |        
|                                                 
|                                                 
|                                                 
|                                                 
|Unrealized gain on derivatives*                   |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | 0         |     |       |   | 43,458   |   |             |  |           |   |   |   | 43,458    |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Total other comprehensive income                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   | 216,156   |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Comprehensive income                              |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   | $ | 625,712   |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Dividends declared ($.42 per share)               |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | (142,528  | )   |       |   | 0        |   |             |  | 0         |   |   |   | (142,528  | )      
|                                                 
|                                                 
|                                                 
|                                                 
|Common stock issued pursuant to:                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                    | Long  term incentive plan              |             |           | 651,610                           |   |         |        | 1,629    |   |               |         | 4,931         |   |           |     | 0     |   |          |   | 0           |  |           |   | 0 |   |           |         | 6,560 | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                    | Employee discounted stock purchase plan |             |           | 115,410                           |   |         |        | 289      |   |               |         | 1,385         |   |           |     | 0     |   |          |   | 0           |  |           |   | 0 |   |           |         | 1,674 | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Acquisitions accounted for as purchases            |                                         |             | 5,045,435 |                                   |   |         | 12,614 |          |   |               | 105,583 |               |   |           | 0   |       |   |          | 0 |             |  |           | 0 |   |   |           | 118,197 |      
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Acquisitions accounted for as poolings-of-interest |                                         |             | 1,297,344 |                                   |   |         | 3,243  |          |   |               | 1,088   |               |   |           | 827 |       |   |          | 0 |             |  |           | 0 |   |   |           | 5,158   |      
|                                                 
|                                                 
|                                                 
|                                                 
|Treasury stock acquired                           |                                                    |                                         | (2,531,764  | )         |                                   |   | 0       |        |          |   | 0             |         |               |   | 0         |     |       |   | 0        |   |             |  | (67,141   | ) |   |   | (67,141   | )      
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Balance at September 30, 2001                     |                                                    |                                         | 342,684,897 |           |                                   | $ | 869,737 |        |          | $ | 446,974       |         |               | $ | 2,470,756 |     |       | $ | 203,992  |   |             |  | ($91,367  | ) |   | $ | 3,900,092 |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Balance at January 1, 2002                        |                                                    |                                         | 346,272,607 |           |                                   | $ | 887,745 |        |          | $ | 597,187       |         |               | $ | 2,566,308 |     |       | $ | 91,029   |   |             |  | ($179,894 | ) |   | $ | 3,962,375 |        
|                                                 
|                                                 
|                                                 
|                                                 
|Net income                                        |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | 482,955   |     |       |   | 0        |   |             |  | 0         |   |   |   | 482,955   |        
|                                                 
|                                                 
|                                                 
|                                                 
|Unrealized gain on available-for-sale
securities* |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | 0         |     |       |   | 229,904  |   |             |  | 0         |   |   |   | 229,904   |        
|                                                 
|                                                 
|                                                 
|                                                 
|Unrealized gain on derivatives*                   |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | 0         |     |       |   | 29,608   |   |             |  | 0         |   |   |   | 29,608    |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Total other comprehensive income                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   | 259,512   |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Comprehensive income                              |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   | $ | 742,467   |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Dividends declared ($.51 per share)               |                                                    |                                         | 0           |           |                                   |   | 0       |        |          |   | 0             |         |               |   | (177,386  | )   |       |   | 0        |   |             |  | 0         |   |   |   | (177,386  | )      
|                                                 
|                                                 
|                                                 
|                                                 
|Common stock issued pursuant to:                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                    | Long  term incentive plan              |             |           | 473,333                           |   |         |        | 1,183    |   |               |         | 4,208         |   |           |     | 0     |   |          |   | 0           |  |           |   | 0 |   |           |         | 5,391 | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                    | Employee discounted stock purchase plan |             |           | 128,144                           |   |         |        | 321      |   |               |         | 1,848         |   |           |     | 0     |   |          |   | 0           |  |           |   | 0 |   |           |         | 2,169 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Treasury stock acquired                           |                                                    |                                         | (29,862     | )         |                                   |   | 0       |        |          |   | 0             |         |               |   | 0         |     |       |   | 0        |   |             |  | (744      | ) |   |   | (744      | )      
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        
|Balance at September 30, 2002                     |                                                    |                                         | 346,844,222 |           |                                   | $ | 889,249 |        |          | $ | 603,243       |         |               | $ | 2,871,877 |     |       | $ | 350,541  |   |             |  | ($180,638 | ) |   | $ | 4,534,272 |        
|                                                  |                                                    |                                         |             |           |                                   |   |         |        |          |   |               |         |               |   |           |     |       |   |          |   |             |  |           |   |   |   |           |        



---

|* |  | See disclosure of reclassification amount and tax effect in Notes to
Consolidated Condensed Financial Statements
|- |  | ----------------------------------------------------------------------------------------------------------------

5



---



##### Table of Contents






SOUTHTRUST CORPORATION
Consolidated Condensed Statements of Cash Flows
(Unaudited)

|                     |                                                                                   |                                                     |                                           |            |                   |         |   |            |            |         | 
|-------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------- | ---------- | ----------------- | ------- | - | ---------- | ---------- | ------- | 
|                     |                                                                                   |                                                     |                                           |            | Nine Months Ended
|(In Thousands)       |                                                                                   | September 30                                       
|                     |                                                                                   |                                                    
|                     |                                                                                   | 2002                                                |                                           | 2001      
|                     |                                                                                   |                                                     |                                           |           
|Operating activities |                                                                                   |                                                     |                                           |            |                   |         |   |           
|                    
|                    
|                    
|                    
|                     | Net income                                                                        |                                                     | $                                         | 482,955    |                   |         | $ | 409,556    |           
|                    
|                    
|                    
|                    
|                     | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     | Provision (credit) for:                                                           |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Loan losses                                         |                                           |            | 92,732            |         |   |            | 78,959     |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Depreciation of premises and equipment              |                                           |            | 44,070            |         |   |            | 39,959     |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Amortization of intangibles                         |                                           |            | 12,525            |         |   |            | 32,931     |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Amortization of security premium                    |                                           |            | 2,324             |         |   |            | 2,179      |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Accretion of security discount                      |                                           |            | (15,897           | )       |   |            | (7,950     | )      
|                    
|                    
|                    
|                    
|                     |                                                                                   | Deferred income taxes                               |                                           |            | 26,196            |         |   |            | 79,564     |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Bank owned life insurance                           |                                           |            | (37,420           | )       |   |            | (41,543    | )      
|                    
|                    
|                    
|                    
|                     | Net gain on sales of loans held for sale                                          |                                                     |                                           | (22,506    | )                 |         |   | (12,021    | )         
|                    
|                    
|                    
|                    
|                     | Net gain on sales of securities                                                   |                                                     |                                           | (2,543     | )                 |         |   | (2,522     | )         
|                    
|                    
|                    
|                    
|                     | Origination and purchase of loans held for sale                                   |                                                     |                                           | (2,783,435 | )                 |         |   | (2,669,515 | )         
|                    
|                    
|                    
|                    
|                     | Proceeds from sales of loans held for sale                                        |                                                     |                                           | 2,808,421  |                   |         |   | 2,573,198  |           
|                    
|                    
|                    
|                    
|                     | Net increase in trading securities                                                |                                                     |                                           | (31,101    | )                 |         |   | (47,442    | )         
|                    
|                    
|                    
|                    
|                     | Net (increase) decrease in other assets                                           |                                                     |                                           | (120,765   | )                 |         |   | 60,683     |           
|                    
|                    
|                    
|                    
|                     | Net increase in other liabilities                                                 |                                                     |                                           | 261,603    |                   |         |   | 141,007    |           
|                     |                                                                                   |                                                     |                                           |            |                   |         |   |            |           
|                     |                                                                                   |                                                     | Net cash provided by operating activities |            |                   | 717,159 |   |            |            | 637,043 | 
|                    
|                    
|                    
|                    
|Investing activities |                                                                                   |                                                     |                                           |            |                   |         |   |           
|                    
|                    
|                    
|                    
|                     | Proceeds from maturities, calls or prepayments of:                                |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Available-for-sale securities                       |                                           |            | 1,917,481         |         |   |            | 3,936,552  |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Held-to-maturity securities                         |                                           |            | 127,835           |         |   |            | 2,499,757  |        
|                    
|                    
|                    
|                    
|                     | Proceeds from sales of:                                                           |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Available-for-sale securities                       |                                           |            | 1,005,898         |         |   |            | 43,802     |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Held-to-maturity securities                         |                                           |            | 8,568             |         |   |            | 0          |        
|                    
|                    
|                    
|                    
|                     | Purchases of:                                                                     |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Available-for-sale securities                       |                                           |            | (2,731,018        | )       |   |            | (6,365,371 | )      
|                    
|                    
|                    
|                    
|                     |                                                                                   | Held-to-maturity securities                         |                                           |            | 0                 |         |   |            | (14,500    | )      
|                    
|                    
|                    
|                    
|                     |                                                                                   | Premises and equipment                              |                                           |            | (115,952          | )       |   |            | (89,167    | )      
|                    
|                    
|                    
|                    
|                     | Net (increase) decrease in:                                                       |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Short-term investments                              |                                           |            | (181,141          | )       |   |            | 76,757     |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Loans                                               |                                           |            | (547,416          | )       |   |            | (744,539   | )      
|                    
|                    
|                    
|                    
|                     | Net cash paid in acquisitions                                                     |                                                     |                                           | (31,300    | )                 |         |   | (15,795    | )         
|                     |                                                                                   |                                                     |                                           |            |                   |         |   |            |           
|                     |                                                                                   | Net cash used in investing activities               |                                           |            | (547,045          | )       |   |            | (672,504   | )      
|                    
|                    
|                    
|                    
|Financing activities |                                                                                   |                                                     |                                           |            |                   |         |   |           
|                    
|                    
|                    
|                    
|                     | Net increase (decrease) in:                                                       |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Deposits                                            |                                           |            | (1,219,308        | )       |   |            | (1,627,133 | )      
|                    
|                    
|                    
|                    
|                     |                                                                                   | Short-term borrowings                               |                                           |            | 32,593            |         |   |            | 875,104    |        
|                    
|                    
|                    
|                    
|                     | Proceeds from:                                                                    |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Common Stock issuances                              |                                           |            | 5,906             |         |   |            | 7,302      |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Federal Home Loan Bank advances                     |                                           |            | 400,020           |         |   |            | 1,570,506  |        
|                    
|                    
|                    
|                    
|                     |                                                                                   | Long-term debt                                      |                                           |            | 902,483           |         |   |            | 0          |        
|                    
|                    
|                    
|                    
|                     | Payments for:                                                                     |                                                     |                                           |            |                   |         |   |            |           
|                    
|                    
|                    
|                    
|                     |                                                                                   | Repurchase of common stock                          |                                           |            | (744              | )       |   |            | (67,141    | )      
|                    
|                    
|                    
|                    
|                     |                                                                                   | Federal Home Loan Bank advances                     |                                           |            | (150,111          | )       |   |            | (472,110   | )      
|                    
|                    
|                    
|                    
|                     |                                                                                   | Long-term debt                                      |                                           |            | (103              | )       |   |            | (98,910    | )      
|                    
|                    
|                    
|                    
|                     |                                                                                   | Cash dividends                                      |                                           |            | (176,496          | )       |   |            | (143,391   | )      
|                     |                                                                                   |                                                     |                                           |            |                   |         |   |            |           
|                     |                                                                                   | Net cash provided by (used in) financing activities |                                           |            | (205,760          | )       |   |            | 44,227     |        
|                     |                                                                                   |                                                     |                                           |            |                   |         |   |            |           
|                     |                                                                                   | Increase (decrease) in cash and due from banks      |                                           |            | (35,646           | )       |   |            | 8,766      |        
|                    
|                    
|                    
|                    
|                     | Cash and due from banks at beginning of year                                      |                                                     |                                           | 1,159,236  |                   |         |   | 959,750    |           
|                     |                                                                                   |                                                     |                                           |            |                   |         |   |            |           
|                     | Cash and due from banks at end of period                                          |                                                     | $                                         | 1,123,590  |                   |         | $ | 968,516    |           
|                     |                                                                                   |                                                     |                                           |            |                   |         |   |            |           

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##### Table of Contents






Notes to Consolidated Condensed Financial Statements (Unaudited)

Note A  Recent Accounting Pronouncements

Statement of Financial Accounting
Standards (SFAS) 141  Business Combinations

In June 2001, the Financial Accounting Standards Board (FASB) issued
SFAS 141, which addresses financial accounting and reporting for business
combinations and supersedes APB Opinion 16  Business Combinations (APB 16).
This Statement requires that all business combinations be accounted for under
the purchase method. Also, intangible assets that meet certain criteria must be
recognized as assets apart from goodwill. Finally, it requires disclosures in
addition to the disclosure requirements of APB 16. The provisions of this
Statement apply to all business combinations initiated after June 30, 2001.

SFAS 142  Goodwill and Other Intangible Assetsand SFAS 147  Acquisitions of
Certain Financial Institutions

In June 2001, the FASB issued SFAS 142, which requires that an
identifiable intangible asset that is acquired either individually or with a
group of other assets (but not those acquired in a business combination) is to
be initially recognized and measured based on its fair value. An identifiable
intangible asset with a finite useful life is amortized over its estimated
useful life. An intangible asset with an indefinite useful life is not
amortized, but is tested for impairment under the provisions of SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of(which has been superceded by SFAS 144 as discussed below).

Goodwill recognized in business combinations is not amortized, but is
tested for impairment under the provisions of SFAS 142 at a level of reporting
referred to as a reporting unit. To the extent a reporting units carrying
amount exceeds its fair value, an indication exists that the reporting units
goodwill may be impaired and the Company must perform a second step of the
impairment test. In the second step, if the carrying amount of reporting unit
goodwill exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess. Goodwill of a reporting unit is
tested for impairment on an annual basis and between annual tests in certain
circumstances. The first step of the initial goodwill impairment test was
completed by June 30, 2002 as required by SFAS 142. After performing this
initial step, no goodwill impairment was indicated.

For business combinations that are consummated after June 30, 2001,
goodwill and identifiable intangibles are recorded in accordance with SFAS 142,
which requires no amortization of goodwill and separately identifiable
intangible assets with indefinite lives. For intangible assets in existence
prior to June 30, 2001, the Company continued to amortize goodwill and all
separately identifiable intangibles through December 31, 2001. Upon adoption
of SFAS 142 on January 1, 2002, the Company ceased amortizing goodwill and
separately identifiable intangibles with indefinite lives and continued to
amortize other identifiable intangibles in accordance with the guidelines set
forth in this Statement.

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In October 2002, the FASB issued SFAS 147, which removes acquisitions of
financial institutions (other than transactions between two or more mutual
enterprises) from the scope of SFAS 72, Accounting for Certain Acquisitions of
Banking or Thrift Institutionand FASB Interpretation 9, Applying APB Opinions
16 and 17 When a Savings and Loan or a Similar Institution Is Acquired in a
Business Combination Accounted for by the Purchase Method.These types of
transactions are now accounted for under SFAS 141 and 142. In addition, this
Statement amends SFAS 144, Accounting for the Impairment or Disposal of
Long-Lived Assets,to include in its scope long-term customer relationship
intangible assets of financial institutions. The provisions of this Statement
are effective October 1, 2002, with earlier adoption permitted.

Under the transition provisions of this Statement, any previously
recognized unidentifiable assets generated in business combinations are
reclassified to goodwill as of the later of the acquisition date or the date
that SFAS 142 is applied in its entirety. This reclassified goodwill is
accounted for and reported prospectively as goodwill under SFAS 142. In
addition, if the application date of SFAS 142 is earlier than October 1, 2002,
then any amortization expense recognized between the application of SFAS 142
and October 1, 2002 is reversed, and previously issued financial statements are
restated. The Company had unidentifiable intangible assets generated in
business combinations of approximately $251.8 million that were reclassified to
goodwill as of January 1, 2002, and amortization expense that had been
previously recorded during 2002 was reversed. For the nine months ended
September 30, 2002, the restated amortization expense related to the adoption
of SFAS 147 increased reported net income by $6.3 million. The reclassified
goodwill was tested for impairment under the provisions of SFAS 142 and no
goodwill impairment was indicated.

The following table details the change in the carrying amount of goodwill
through September 30, 2002:

|                      |  |            |       |          |  |          |       |  |  |   |       | 
|--------------------- |  | ---------- | ----- | -------- |  | -------- | ----- |  |  | - | ----- | 
|                      |  | Commercial |       | Regional |  | Total   
|(In millions)         |  | Banking    |       | Banking  |  | Goodwill
|                      |  |            |       |          |  |         
|Balance at 12/31/01   |  | $          | 157.7 |          |  | $        | 322.7 |  |  | $ | 480.4 | 
|                     
|                     
|                     
|                     
|Reclassified goodwill |  |            | 125.9 |          |  |          | 125.9 |  |  |   | 251.8 | 
|                     
|                     
|                     
|                     
|Goodwill acquired     |  |            | 9.4   |          |  |          | 17.8  |  |  |   | 27.2  | 
|                     
|                     
|                     
|                     
|Other                 |  |            | 0.5   |          |  |          | 1.0   |  |  |   | 1.5   | 
|                      |  |            |       |          |  |          |       |  |  |   |       | 
|Balance at 9/30/02    |  | $          | 293.5 |          |  | $        | 467.4 |  |  | $ | 760.9 | 
|                      |  |            |       |          |  |          |       |  |  |   |       | 

The Company has core deposit intangible assets of $40.4 million as of
September 30, 2002, with an original cost of $171.4 million and accumulated
amortization of $131.0 million. Estimated amortization expense related to core
deposit intangible assets for the next five years is as follows: $13.7 million
in 2002, $12.8 million in 2003, $10.4 million in 2004, $4.6 million in 2005 and
$1.7 million in 2006.

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The following table is a reconciliation of net income, basic earnings per
share, and diluted earnings per share with and without goodwill amortization:

(Dollars in thousands, except per share data)

|                                |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |      | 
|------------------------------- | --------------------- | - | ------------------------------- | ---- | ------------------------------ | - | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                                |                       |   | Three Months Ended September 30 |      | Nine Months Ended September 30
|                                |                       |   | 2002                            |      | 2001                           |   | 2002    |      | 2001
|                                |                       |   |                                 |      |                                |   |         |      |     
|Reported net income             |                       | $ | 164,246                         |      |                                | $ | 142,082 |      |      | $ | 482,955 |      |  | $ | 409,556 |     
|                               
|                               
|                               
|                               
|Add back: Goodwill amortization |                       |   |                                |      |                                |   | 5,323   |      |      |   |        |      |  |   | 15,588  |     
|                                |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     
|Adjusted net income             |                       | $ | 164,246                         |      |                                | $ | 147,405 |      |      | $ | 482,955 |      |  | $ | 425,144 |     
|                                |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     
|Basic earnings per share:       |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     
|                               
|                               
|                               
|                               
|                                | Reported net income   |   | $                               | 0.47 |                                |   | $       | 0.41 |      |   | $       | 1.39 |  |   | $       | 1.20 | 
|                               
|                               
|                               
|                               
|                                | Goodwill amortization |   |                                 |     |                                |   |         | 0.02 |      |   |         |     |  |   |         | 0.05 | 
|                                |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     
|                                | Adjusted net income   |   | $                               | 0.47 |                                |   | $       | 0.43 |      |   | $       | 1.39 |  |   | $       | 1.25 | 
|                                |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     
|Diluted earnings per share:     |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     
|                               
|                               
|                               
|                               
|                                | Reported net income   |   | $                               | 0.47 |                                |   | $       | 0.41 |      |   | $       | 1.38 |  |   | $       | 1.19 | 
|                               
|                               
|                               
|                               
|                                | Goodwill amortization |   |                                 |     |                                |   |         | 0.02 |      |   |         |     |  |   |         | 0.05 | 
|                                |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     
|                                | Adjusted net income   |   | $                               | 0.47 |                                |   | $       | 0.43 |      |   | $       | 1.38 |  |   | $       | 1.24 | 
|                                |                       |   |                                 |      |                                |   |         |      |      |   |         |      |  |   |         |     

SFAS 143  Accounting for Asset Retirement Obligations

In June 2001, the FASB issued SFAS 143, which requires entities to record
the fair value of a liability for an asset retirement obligation in the period
in which it is incurred. When the liability is initially recorded, the entity
capitalizes a cost by increasing the carrying amount of the related long-lived
asset. Over time, the liability is accreted to its present value each period,
and the capitalized cost is depreciated over the useful life of the related
asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement.
This Statement is effective for fiscal years beginning after June 15, 2002.
Management does not expect this Statement to have a material impact to the
Consolidated Condensed Financial Statements.

SFAS 144  Accounting for the Impairment or Disposal of Long-Lived Assets

In August 2001, the FASB issued SFAS 144, which replaces SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of.The primary objectives of this Statement are to develop one
accounting model, based upon the framework established in SFAS 121, for
long-lived assets to be disposed of by sale and to address significant
implementation issues. This Statement requires that long-lived assets being
disposed of be measured at the lower of carrying amount or fair value less cost
to sell, whether reported in continuing operations or in discontinued
operations. Therefore, discontinued operations will no longer be measured at
net realizable value or include amounts for operating losses that have not yet
occurred. The provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001 and,
generally, are to be applied prospectively. The effect of this Statement on
the Consolidated Condensed Financial Statements was not material.

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SFAS 145  Rescission of FASB Statements No. 4, 44, 64, Amendment of FASB
Statement No. 13, and Technical Corrections

In April 2002, the FASB issued SFAS 145, which rescinds SFAS 4, Reporting
Gains and Losses from Extinguishment of Debt,SFAS 44, Accounting for
Intangible Assets of Motor Carriers,and SFAS 64, Extinguishments of Debt Made
to Satisfy Sinking-Fund Requirements.These rescissions eliminate the
requirement to report gains and losses from the extinguishment of debt as an
extraordinary item, net of related income tax effect, and are effective for
fiscal years beginning after May 15, 2002. This Statement also amends SFAS 13,
Accounting for Leases,and requires that capital leases that are modified so
that the resulting lease agreement is classified as an operating lease be
accounted for as a sale-leaseback. This amendment is effective for
transactions occurring after May 15, 2002. Finally, this Statement amends
several pronouncements to make technical corrections to existing authoritative
pronouncements. Management does not expect this Statement to have a material
impact to the Consolidated Condensed Financial Statements.

SFAS 146  Accounting for Costs Associated with Exit or Disposal Activities

In July 2002, the FASB issued SFAS 146, which requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
This Statement is effective prospectively for exit or disposal activities
initiated after December 31, 2002. Management does not expect this Statement
to have a material impact to the Consolidated Condensed Financial Statements.

Note B  Earnings per Share Reconciliation

A reconciliation of the numerator and denominator of the basic EPS
computation to the diluted EPS computation is as follows:

|                                      |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 
|------------------------------------- |  | ------------------------------- | ------- | ------------------------------ |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                      |  | Three months ended September 30 |         | Nine months ended September 30
|                                      |  |                                 |         |                               
|(In thousands, except per share data) |  | 2002                            |         | 2001                           |  | 2002 |         | 2001
|                                      |  |                                 |         |                                |  |      |         |     
|Basic:                                |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 
|                                     
|                                     
|                                     
|                                     
|Net income                            |  | $                               | 164,246 |                                |  | $    | 142,082 |      |  | $ | 482,955 |  |  | $ | 409,556 | 
|                                     
|                                     
|                                     
|                                     
|Average common shares outstanding     |  |                                 | 346,802 |                                |  |      | 342,184 |      |  |   | 346,684 |  |  |   | 340,282 | 
|                                      |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 
|Earnings per share                    |  | $                               | 0.47    |                                |  | $    | 0.41    |      |  | $ | 1.39    |  |  | $ | 1.20    | 
|                                      |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 
|Diluted:                              |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 
|                                     
|                                     
|                                     
|                                     
|Net income                            |  | $                               | 164,246 |                                |  | $    | 142,082 |      |  | $ | 482,955 |  |  | $ | 409,556 | 
|                                     
|                                     
|                                     
|                                     
|Average common shares outstanding     |  |                                 | 346,802 |                                |  |      | 342,184 |      |  |   | 346,684 |  |  |   | 340,282 | 
|                                     
|                                     
|                                     
|                                     
|Dilutive effect of stock options      |  |                                 | 4,206   |                                |  |      | 4,357   |      |  |   | 4,277   |  |  |   | 3,841   | 
|                                      |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 
|Average diluted shares outstanding    |  |                                 | 351,008 |                                |  |      | 346,541 |      |  |   | 350,961 |  |  |   | 344,123 | 
|                                      |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 
|Earnings per share                    |  | $                               | 0.47    |                                |  | $    | 0.41    |      |  | $ | 1.38    |  |  | $ | 1.19    | 
|                                      |  |                                 |         |                                |  |      |         |      |  |   |         |  |  |   |         | 

For the three and nine months ended September 30, 2001, the Company had
zero and 296,704 options issued that were not included in the calculation of
diluted EPS, as the exercise price of these options was in excess of the
average market price. There were no excluded options for the three and nine
months ended September 30, 2002.

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Note C  Comprehensive Income

Comprehensive income is the total of net income and all other non-owner
changes in equity. Items that are recognized under accounting standards as
components of comprehensive income are displayed in the Consolidated Condensed
Statements of Stockholders Equity.

In the calculation of comprehensive income, certain reclassification
adjustments are made to avoid double counting items that are displayed as part
of net income for a period that also had been displayed as part of other
comprehensive income in that period or earlier periods. The disclosure of the
reclassification amount is as follows:

|                                                   |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|-------------------------------------------------- |  | ------------------------------- | ------- | ------ |  | ------ | ------- | ------ |  | ------ | ------- | ------ |  | - | ------- | ---- |  | - | ------- | - |  | - | ------- | 
|                                                   |  | Three months ended September 30
|                                                   |  |                                 |         |        |  | 2002   |         |        |  |        |         |        |  |   |         | 2001 |  |   |         |  
|                                                   |  |                                
|                                                   |  | Before                          |         | Tax    |  | Net of |         | Before |  | Tax    |         | Net of
|                                                   |  | Tax                             |         | Effect |  | Tax    |         | Tax    |  | Effect |         | Tax   
|                                                   |  |                                 |         |        |  |        |         |        |  |        |         |       
|Unrealized gain on securities:                     |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|                                                  
|                                                  
|                                                  
|                                                  
|Unrealized holding gains arising
during the period |  | $                               | 120,754 |        |  | $      | (38,289 | )      |  | $      | 82,465  |        |  | $ | 193,975 |      |  | $ | (65,629 | ) |  | $ | 128,346 | 
|                                                  
|                                                  
|                                                  
|                                                  
|Less: reclassification adjustment                  |  |                                 | (813    | )      |  |        | 309     |        |  |        | (504    | )      |  |   | 643     |      |  |   | (244    | ) |  |   | 399     | 
|                                                   |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Net unrealized gain on securities                  |  |                                 | 121,567 |        |  |        | (38,598 | )      |  |        | 82,969  |        |  |   | 193,332 |      |  |   | (65,385 | ) |  |   | 127,947 | 
|                                                   |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Unrealized gain on derivatives:                    |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|                                                  
|                                                  
|                                                  
|                                                  
|Unrealized holding gains arising
during the period |  |                                 | 27,693  |        |  |        | (1,772  | )      |  | $      | 25,921  |        |  |   | 28,621  |      |  |   | (1,252  | ) |  |   | 27,369  | 
|                                                  
|                                                  
|                                                  
|                                                  
|Less: reclassification adjustment                  |  |                                 | 4,664   |        |  |        | (1,772  | )      |  |        | 2,892   |        |  |   | 3,296   |      |  |   | (1,252  | ) |  |   | 2,044   | 
|                                                   |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Net unrealized gain on derivatives                 |  |                                 | 23,029  |        |  |        | 0       |        |  |        | 23,029  |        |  |   | 25,325  |      |  |   | 0       |   |  |   | 25,325  | 
|                                                   |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Total Other Comprehensive Income                   |  | $                               | 144,596 |        |  | $      | (38,598 | )      |  | $      | 105,998 |        |  | $ | 218,657 |      |  | $ | (65,385 | ) |  | $ | 153,272 | 
|                                                   |  |                                 |         |        |  |        |         |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 

|                                                   |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|-------------------------------------------------- |  | ------------------------------ | ------- | ------ |  | ------ | -------- | ------ |  | ------ | ------- | ------ |  | - | ------- | ---- |  | - | ------- | - |  | - | ------- | 
|                                                   |  | Nine months ended September 30
|                                                   |  |                                |         |        |  | 2002   |          |        |  |        |         |        |  |   |         | 2001 |  |   |         |  
|                                                   |  |                               
|                                                   |  | Before                         |         | Tax    |  | Net of |          | Before |  | Tax    |         | Net of
|                                                   |  | Tax                            |         | Effect |  | Tax    |          | Tax    |  | Effect |         | Tax   
|                                                   |  |                                |         |        |  |        |          |        |  |        |         |       
|Unrealized gain on securities:                     |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|                                                  
|                                                  
|                                                  
|                                                  
|Unrealized holding gains arising
during the period |  | $                              | 350,356 |        |  | $      | (117,988 | )      |  | $      | 232,368 |        |  | $ | 263,386 |      |  | $ | (89,124 | ) |  | $ | 174,262 | 
|                                                  
|                                                  
|                                                  
|                                                  
|Less: reclassification adjustment                  |  |                                | 3,975   |        |  |        | (1,511   | )      |  |        | 2,464   |        |  |   | 2,522   |      |  |   | (958    | ) |  |   | 1,564   | 
|                                                   |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Net unrealized gain on securities                  |  |                                | 346,381 |        |  |        | (116,477 | )      |  |        | 229,904 |        |  |   | 260,864 |      |  |   | (88,166 | ) |  |   | 172,698 | 
|                                                   |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Unrealized gain on derivatives:                    |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|                                                  
|                                                  
|                                                  
|                                                  
|Unrealized holding gains arising
during the period |  |                                | 42,822  |        |  |        | (5,021   | )      |  | $      | 37,801  |        |  |   | 50,303  |      |  |   | (2,601  | ) |  |   | 47,702  | 
|                                                  
|                                                  
|                                                  
|                                                  
|Less: reclassification adjustment                  |  |                                | 13,214  |        |  |        | (5,021   | )      |  |        | 8,193   |        |  |   | 6,845   |      |  |   | (2,601  | ) |  |   | 4,244   | 
|                                                   |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Net unrealized gain on derivatives                 |  |                                | 29,608  |        |  |        | 0        |        |  |        | 29,608  |        |  |   | 43,458  |      |  |   | 0       |   |  |   | 43,458  | 
|                                                   |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 
|Total Other Comprehensive Income                   |  | $                              | 375,989 |        |  | $      | (116,477 | )      |  | $      | 259,512 |        |  | $ | 304,322 |      |  | $ | (88,166 | ) |  | $ | 216,156 | 
|                                                   |  |                                |         |        |  |        |          |        |  |        |         |        |  |   |         |      |  |   |         |   |  |   |         | 

11



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##### Table of Contents



Note D  Supplemental Cash Flow Information

The following is supplemental disclosure to the Consolidated Condensed
Statements of Cash Flows for the nine months ended September 30, 2002 and 2001.

|                             |                                                   |                                |   |         |  |  |   |           | 
|---------------------------- | ------------------------------------------------- | ------------------------------ | - | ------- |  |  | - | --------- | 
|(In thousands)               |                                                   | Nine Months Ended September 30
|                             |                                                   | 2002                           |   | 2001   
|                             |                                                   |                                |   |        
|Cash paid during period for: |                                                   |                                |   |         |  |  |   |          
|                            
|                            
|                            
|                            
|                             | Interest                                          |                                | $ | 794,080 |  |  | $ | 1,385,104 | 
|                            
|                            
|                            
|                            
|                             | Income taxes                                      |                                |   | 139,410 |  |  |   | 48,423    | 
|                            
|                            
|                            
|                            
|Noncash transactions:        |                                                   |                                |   |         |  |  |   |          
|                            
|                            
|                            
|                            
|                             | Assets acquired in business combinations          |                                |   | 170,761 |  |  |   | 1,068,318 | 
|                            
|                            
|                            
|                            
|                             | Liabilities assumed in business combinations      |                                |   | 160,758 |  |  |   | 1,003,781 | 
|                            
|                            
|                            
|                            
|                             | Common Stock issued in business combinations      |                                |   | 0       |  |  |   | 123,355   | 
|                            
|                            
|                            
|                            
|                             | Loans transferred to other real estate            |                                |   | 60,929  |  |  |   | 48,199    | 
|                            
|                            
|                            
|                            
|                             | Financed sales of foreclosed property             |                                |   | 39,307  |  |  |   | 37,790    | 
|                            
|                            
|                            
|                            
|                             | Loans securitized into mortgage-backed securities |                                |   | 400,728 |  |  |   | 0         | 

Note E  Business Segments

The Company segregates financial information for use in assessing its
performance which is ultimately used for allocating resources to its business
segments. The Company has four reportable business segments which are
primarily aligned along lines of business. Each segment is managed by one or
more of the Companys executives who, in conjunction with the Chief Executive
Officer, make strategic business decisions regarding that segment. The four
reportable business segments are Commercial Banking, Regional Banking, Funds
Management, and Capital Management.

The Commercial Banking segment provides financing and other services for
large corporate customers throughout all geographic areas covered by
SouthTrust. Types of corporate lending include the following: commercial and
industrial, commercial real estate, leasing, asset-based and health care.
Also, this segment provides cash management and international services in
conjunction with the lending relationship established with corporate banking
customers.

The Regional Banking segment generates revenues through the Companys
branch banking network. Services and products include retail and small
business lending, depository services, business banking and private banking.
Also included in Regional Banking is regional lending activities, such as
middle-market and residential construction, and certain centralized consumer
lending areas. Branch administration costs are also included in Regional
Banking.

The Funds Management segment provides asset and liability management,
which includes management of interest rate and liquidity risk. Activities
include management of the Companys securities portfolio, wholesale and
long-term funding sources, and the use of derivatives such as interest rate
swap agreements.

The Capital Management segment provides trust, brokerage, investment, and
insurance services. All of these areas are managed as one area with the goal
of providing a variety of financial management products to customers.

12



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##### Table of Contents



The remaining Company divisions included within the Reconciliation
grouping are divisions that have no operating revenue. They contain
unallocated costs from support areas not directly associated with the other
reportable segments. Other items in this grouping include provisions for loan
losses in excess of the amounts allocated to the operating segments, income
from bank owned life insurance, intangible amortization, and income tax
expense. Intercompany eliminations are also included in the Reconciliation
group.

The Companys management accounting policies generally follow those for
the Company described in Note A to the Consolidated Financial Statements on
Form 10-K for the year ended December 31, 2001, except for the following items.
The Company uses a transfer pricing process to aid in assessing operating
segment performance. This process involves matched rate transfer pricing of
assets and liabilities to determine a contribution to the net interest margin
on a segment basis. Also, net interest margin is reported on a fully taxable
equivalent basis. The provision for loan losses is charged to each business
segment primarily based on net charge-offs. Data processing and other support
function costs are charged in accordance with the relative operational cost of
each segment. Also, depreciation expense is not disclosed separately by
segment, since this is not considered a significant component of the
profitability of a financial institution.

The Companys management accounting policies are continuously evolving
based on both internal and external factors. Therefore, the Company has
restated the comparative 2001 segment information to conform to the 2002
presentation. The restatement for 2001 includes organizational structure
changes made during 2002 and changes to the allocation of interest rate risk.
As management accounting policies change, prior period restatement may also be
necessary in the future. In addition, results of operations for SouthTrusts
reportable segments may not be comparable to similar reportable segments for
other financial institutions.

13



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##### Table of Contents



The following tables present the Companys business segment information
for the three and nine month periods ended September 30, 2002 and 2001:

|                          |                |            |      |                                       |      |            |       |            |      |         |       |             |       |       |      |     |     |   |       |       |        |   |       |       |       | 
|------------------------- | -------------- | ---------- | ---- | ------------------------------------- | ---- | ---------- | ----- | ---------- | ---- | ------- | ----- | ----------- | ----- | ----- | ---- | --- | --- | - | ----- | ----- | ------ | - | ----- | ----- | ----- | 
|                          |                |            |      | Three months ended September 30, 2002
|                          |                |            |      |                                      
|                          |                |            |      | Commercial                            |      | Regional   |       | Funds      |      | Capital |       | Reconciling |       | Total
|(In millions)             |                | Banking    |      | Banking                               |      | Management |       | Management |      | Items   |       | Company    
|                          |                |            |      |                                       |      |            |       |            |      |         |       |            
|Net interest margin (FTE) |                | $          | 77.9 |                                       |      | $          | 267.2 |            |      | $       | 143.8 |             |       | $     | 1.0  |     |     | $ | (58.0 | )     |        | $ | 431.9 |      
|                         
|                         
|                         
|                         
|Provision for loan losses |                |            | 3.2  |                                       |      |            | 25.4  |            |      |         | 0.0   |             |       |       | 0.0  |     |     |   | 7.7   |       |        |   | 36.3  |      
|                         
|                         
|                         
|                         
|Non-interest income       |                |            | 8.6  |                                       |      |            | 123.9 |            |      |         | 2.0   |             |       |       | 25.2 |     |     |   | 6.7   |       |        |   | 166.4 |      
|                         
|                         
|                         
|                         
|Non-interest expense      |                |            | 24.1 |                                       |      |            | 283.6 |            |      |         | 5.0   |             |       |       | 18.8 |     |     |   | (15.5 | )     |        |   | 316.0 |      
|                          |                |            |      |                                       |      |            |       |            |      |         |       |            
|                         
|                         
|                         
|                         
|                          | Pre-tax income |            |      | 59.2                                  |      |            |       | 82.1       |      |         |       | 140.8       |       |       |      | 7.4 |     |   |       | (43.5 | )      |   |       | 246.0 |      
|                         
|                         
|                         
|                         
|Income tax expense (FTE)  |                |            | 0.0  |                                       |      |            | 0.0   |            |      |         | 0.0   |             |       |       | 0.0  |     |     |   | 81.7  |       |        |   | 81.7  |      
|                          |                |            |      |                                       |      |            |       |            |      |         |       |             |       |       |      |     |     |   |       |       |        |   |       |      
|                          |                | Net income |      | $                                     | 59.2 |            |       | $          | 82.1 |         |       | $           | 140.8 |       |      | $   | 7.4 |   |       | $     | (125.2 | ) |       | $     | 164.3 | 
|                          |                |            |      |                                       |      |            |       |            |      |         |       |             |       |       |      |     |     |   |       |       |        |   |       |      

|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |       |          | 
|------------------------- | -------------- | ------------- | ----- | ------------------------------------ | -------- | ---------- | ----- | ---------- | -------- | ------- | ----- | ----------- | -------- | ----- | ---- | ---- | ----- | - | ------ | ------ | ------- | - | ------- | ----- | -------- | 
|                          |                |               |       | Nine months ended September 30, 2002
|                          |                |               |       |                                     
|                          |                |               |       | Commercial                           |          | Regional   |       | Funds      |          | Capital |       | Reconciling |          | Total
|(In millions)             |                | Banking       |       | Banking                              |          | Management |       | Management |          | Items   |       | Company    
|                          |                |               |       |                                      |          |            |       |            |          |         |       |            
|Net interest margin (FTE) |                | $             | 230.8 |                                      |          | $          | 797.5 |            |          | $       | 388.4 |             |          | $     | 3.0  |      |       | $ | (132.7 | )      |         | $ | 1,287.0 |      
|                         
|                         
|                         
|                         
|Provision for loan losses |                |               | 14.0  |                                      |          |            | 65.7  |            |          |         | 0.0   |             |          |       | 0.0  |      |       |   | 13.0   |        |         |   | 92.7    |      
|                         
|                         
|                         
|                         
|Non-interest income       |                |               | 24.3  |                                      |          |            | 346.9 |            |          |         | 6.0   |             |          |       | 72.5 |      |       |   | 30.4   |        |         |   | 480.1   |      
|                         
|                         
|                         
|                         
|Non-interest expense      |                |               | 55.6  |                                      |          |            | 838.6 |            |          |         | 11.4  |             |          |       | 54.7 |      |       |   | (11.2  | )      |         |   | 949.1   |      
|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |      
|                          | Pre-tax income |               |       | 185.5                                |          |            |       | 240.1      |          |         |       | 383.0       |          |       |      | 20.8 |       |   |        | (104.1 | )       |   |         | 725.3 |         
|                         
|                         
|                         
|                         
|Income tax expense (FTE)  |                |               | 0.0   |                                      |          |            | 0.0   |            |          |         | 0.0   |             |          |       | 0.0  |      |       |   | 242.3  |        |         |   | 242.3   |      
|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |      
|                          |                | Net income    |       | $                                    | 185.5    |            |       | $          | 240.1    |         |       | $           | 383.0    |       |      | $    | 20.8  |   |        | $      | (346.4  | ) |         | $     | 483.0    | 
|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |      
|                          |                | Ending assets |       | $                                    | 11,349.4 |            |       | $          | 25,032.1 |         |       | $           | 11,095.5 |       |      | $    | 121.0 |   |        | $      | 2,155.7 |   |         | $     | 49,753.7 | 
|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |      

|                          |                |            |      |                                       |      |            |       |            |       |         |      |             |      |       |      |     |     |   |       |       |        |   |       |       |       | 
|------------------------- | -------------- | ---------- | ---- | ------------------------------------- | ---- | ---------- | ----- | ---------- | ----- | ------- | ---- | ----------- | ---- | ----- | ---- | --- | --- | - | ----- | ----- | ------ | - | ----- | ----- | ----- | 
|                          |                |            |      | Three months ended September 30, 2001
|                          |                |            |      |                                      
|                          |                |            |      | Commercial                            |      | Regional   |       | Funds      |       | Capital |      | Reconciling |      | Total
|(In millions)             |                | Banking    |      | Banking                               |      | Management |       | Management |       | Items   |      | Company    
|                          |                |            |      |                                       |      |            |       |            |       |         |      |            
|Net interest margin (FTE) |                | $          | 79.1 |                                       |      | $          | 275.7 |            |       | $       | 74.8 |             |      | $     | 0.5  |     |     | $ | (37.0 | )     |        | $ | 393.1 |      
|                         
|                         
|                         
|                         
|Provision for loan losses |                |            | 9.7  |                                       |      |            | 19.9  |            |       |         | 0.0  |             |      |       | 0.0  |     |     |   | 0.8   |       |        |   | 30.4  |      
|                         
|                         
|                         
|                         
|Non-interest income       |                |            | 6.0  |                                       |      |            | 99.2  |            |       |         | 0.6  |             |      |       | 22.3 |     |     |   | 11.3  |       |        |   | 139.4 |      
|                         
|                         
|                         
|                         
|Non-interest expense      |                |            | 12.3 |                                       |      |            | 250.7 |            |       |         | 1.7  |             |      |       | 17.2 |     |     |   | 3.7   |       |        |   | 285.6 |      
|                          |                |            |      |                                       |      |            |       |            |       |         |      |             |      |       |      |     |     |   |       |       |        |   |       |      
|                          | Pre-tax income |            |      | 63.1                                  |      |            |       | 104.3      |       |         |      | 73.7        |      |       |      | 5.6 |     |   |       | (30.2 | )      |   |       | 216.5 |      
|                         
|                         
|                         
|                         
|Income tax expense (FTE)  |                |            | 0.0  |                                       |      |            | 0.0   |            |       |         | 0.0  |             |      |       | 0.0  |     |     |   | 74.4  |       |        |   | 74.4  |      
|                          |                |            |      |                                       |      |            |       |            |       |         |      |             |      |       |      |     |     |   |       |       |        |   |       |      
|                          |                | Net income |      | $                                     | 63.1 |            |       | $          | 104.3 |         |      | $           | 73.7 |       |      | $   | 5.6 |   |       | $     | (104.6 | ) |       | $     | 142.1 | 
|                          |                |            |      |                                       |      |            |       |            |       |         |      |             |      |       |      |     |     |   |       |       |        |   |       |      

|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |       |          | 
|------------------------- | -------------- | ------------- | ----- | ------------------------------------ | -------- | ---------- | ----- | ---------- | -------- | ------- | ----- | ----------- | -------- | ----- | ---- | ---- | ----- | - | ------ | ------ | ------- | - | ------- | ----- | -------- | 
|                          |                |               |       | Nine months ended September 30, 2001
|                          |                |               |       |                                     
|                          |                |               |       | Commercial                           |          | Regional   |       | Funds      |          | Capital |       | Reconciling |          | Total
|(In millions)             |                | Banking       |       | Banking                              |          | Management |       | Management |          | Items   |       | Company    
|                          |                |               |       |                                      |          |            |       |            |          |         |       |            
|Net interest margin (FTE) |                | $             | 238.7 |                                      |          | $          | 804.5 |            |          | $       | 193.4 |             |          | $     | 0.1  |      |       | $ | (111.8 | )      |         | $ | 1,124.9 |      
|                         
|                         
|                         
|                         
|Provision for loan losses |                |               | 18.4  |                                      |          |            | 58.2  |            |          |         | 0.0   |             |          |       | 0.0  |      |       |   | 2.3    |        |         |   | 78.9    |      
|                         
|                         
|                         
|                         
|Non-interest income       |                |               | 18.2  |                                      |          |            | 292.6 |            |          |         | 1.2   |             |          |       | 62.6 |      |       |   | 35.6   |        |         |   | 410.2   |      
|                         
|                         
|                         
|                         
|Non-interest expense      |                |               | 36.2  |                                      |          |            | 722.7 |            |          |         | 5.1   |             |          |       | 49.3 |      |       |   | 22.5   |        |         |   | 835.8   |      
|                          |                |               |       |                                      |          |            |       |            |          |         |       |            
|                         
|                         
|                         
|                         
|                          | Pre-tax income |               |       | 202.3                                |          |            |       | 316.2      |          |         |       | 189.5       |          |       |      | 13.4 |       |   |        | (101.0 | )       |   |         | 620.4 |         
|                         
|                         
|                         
|                         
|Income tax expense (FTE)  |                |               | 0.0   |                                      |          |            | 0.0   |            |          |         | 0.0   |             |          |       | 0.0  |      |       |   | 210.8  |        |         |   | 210.8   |      
|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |      
|                          |                | Net income    |       | $                                    | 202.3    |            |       | $          | 316.2    |         |       | $           | 189.5    |       |      | $    | 13.4  |   |        | $      | (311.8  | ) |         | $     | 409.6    | 
|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |      
|                          |                | Ending assets |       | $                                    | 10,916.5 |            |       | $          | 23,569.5 |         |       | $           | 10,200.2 |       |      | $    | 109.1 |   |        | $      | 2,472.6 |   |         | $     | 47,267.9 | 
|                          |                |               |       |                                      |          |            |       |            |          |         |       |             |          |       |      |      |       |   |        |        |         |   |         |      

14



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##### Table of Contents



Note F  Business Combinations

During the first nine months of 2002, the Company completed the following
acquisition:

|              |  |                           |  |            |  |        |       |       |  |          |       |      |  |        |       |  |  |               |      |  |  |       
|------------- |  | ------------------------- |  | ---------- |  | ------ | ----- | ----- |  | -------- | ----- | ---- |  | ------ | ----- |  |  | ------------- | ---- |  |  | ------
|(In Millions) |  |                           |  |            |  |        |       |       |  |          |       |      |  |        |       |  |  | Consideration
|              |  |                           |  |            |  |        |       |       |  |          |       |      |  |        |       |  |  |              
|              |  |                           |  |            |  |        |       |       |  |          |       |      |  |        |       |  |  |               |      |  |  | Common
|Date          |  | Institution               |  | Location   |  | Assets |       | Loans |  | Deposits |       | Cash |  | Shares
|              |  |                           |  |            |  |        |       |       |  |          |       |      |  |       
|March 1, 2002 |  | Landmark Bancshares, Inc. |  | Euless, TX |  | $      | 170.8 |       |  | $        | 108.4 |      |  | $      | 154.6 |  |  | $             | 38.9 |  |  |      

In addition, on May 10, 2002, the Company purchased the remaining 25%
ownership interest in OmniServe, LLC for $0.8 million. The Company now owns
100% of OmniServe, LLC.

Under purchase accounting, the results of operations, subsequent to the
acquisition date, are included in the Consolidated Condensed Financial
Statements.

15



---



##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations




Item 3. Quantitative and Qualitative Disclosures About Market Risk

Business

SouthTrust Corporation (SouthTrust or the Company) is a registered
financial holding company incorporated under the laws of Delaware in 1968. The
Company is headquartered in Birmingham, Alabama, and engages, through its
subsidiary bank, SouthTrust Bank and its non-banking subsidiaries, in a full
range of banking services from 704 banking locations in Alabama, Florida,
Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas and
Virginia. As of September 30, 2002, the Company had consolidated total assets
of $49.8 billion, which ranked it among the top twenty bank holding companies
in the United States.

SouthTrust Bank offers a broad range of banking services, either directly
or through other affiliated bank-related subsidiaries. Services to business
customers include providing checking and time deposit accounts, cash management
services, various types of lending and credit services, and corporate and other
trust services. Services provided to individual customers directly or through
other affiliated corporations include checking accounts, money market
investment and money market checking accounts, personal money management
accounts, passbook savings accounts and various other time deposit savings
programs, loans (including business, personal, automobile, mortgage, home
improvement and educational loans), and a variety of trust services.
SouthTrust Bank also offers Visa and/or MasterCard multi-purpose nationally
recognized credit card services. The Company also offers brokerage and other
investment services through its subsidiary SouthTrust Securities, Inc.

Information relating to the Companys business segments can be found in
Note E to the unaudited Consolidated Condensed Financial Statements.

Forward-Looking Statements

This report and documents incorporated herein by reference may contain
certain statements relating to the future results of the Company based upon
information currently available. These forward-looking statements (as defined
in Section 21E of The Securities and Exchange Act of 1934) are typically
identified by words such as believes, expects, anticipates, intends,
estimates, projects, and similar expressions. These forward-looking
statements are based upon assumptions the Company believes are reasonable and
may relate to, among other things, the allowance for loan loss adequacy,
simulation of changes in interest rates and litigation results. Such
forward-looking statements are subject to risks and uncertainties, which could
cause the Companys actual results to differ materially from those included in
these statements. These risks and uncertainties include, but are not limited to
the following: (1) changes in political and economic conditions; (2) interest
rate fluctuations; (3) competitive product and pricing pressures within the
Companys markets; (4) equity and fixed income market fluctuations; (5)
personal and corporate customers bankruptcies; (6) inflation; (7) acquisitions
and integration of acquired businesses; (8) technological changes; (9) changes
in law; (10) changes in fiscal, monetary, regulatory and tax policies; (11)
monetary fluctuations; (12) success in gaining regulatory approvals when
required; and (13) other risks and uncertainties listed from time to time in
the Companys SEC reports and announcements.

16



---



##### Table of Contents



|                                                                             |  |        
|---------------------------------------------------------------------------- |  | -------
|Selected Quarterly Financial Data(Dollars in millions except per share data) |  | Table 1

|                  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |          |         | 
|----------------- | --------------------------------------------------------- | ------- | - | -------------- | ------- | ------ | - | -------- | ------- | ------ | - | -------- | ------- |  | - | -------- | ------- |  | - | -------- | ------- | 
|                  |                                                           |         |   | Quarters Ended
|                  |                                                           |         |   |               
|                  |                                                           |         |   | 2002           |         | 2001  
|                  |                                                           |         |   |                |         |       
|                  |                                                           |         |   | Sept 30        |         | Jun 30 |   | Mar 31   |         | Dec 31 |   | Sep 30  
|                  |                                                           |         |   |                |         |        |   |          |         |        |   |         
|Earnings Summary: |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |         
|                 
|                 
|                 
|                 
|                  | Interest income                                           |         | $ | 664.7          |         |        | $ | 671.8    |         |        | $ | 681.9    |         |  | $ | 732.0    |         |  | $ | 782.4    |        
|                 
|                 
|                 
|                 
|                  | Interest expense                                          |         |   | 235.7          |         |        |   | 243.9    |         |        |   | 261.4    |         |  |   | 318.6    |         |  |   | 392.6    |        
|                  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |          |        
|                  | Net interest income                                       |         |   | 429.0          |         |        |   | 427.9    |         |        |   | 420.5    |         |  |   | 413.4    |         |  |   | 389.8    |        
|                 
|                 
|                 
|                 
|                  | Provision for loan losses                                 |         |   | 36.3           |         |        |   | 28.7     |         |        |   | 27.7     |         |  |   | 39.3     |         |  |   | 30.4     |        
|                  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |          |        
|                  | Net interest income after
provision for loan losses       |         |   | 392.7          |         |        |   | 399.2    |         |        |   | 392.8    |         |  |   | 374.1    |         |  |   | 359.4    |        
|                 
|                 
|                 
|                 
|                  | Non-interest income                                       |         |   | 167.2          |         |        |   | 158.7    |         |        |   | 151.6    |         |  |   | 156.8    |         |  |   | 138.8    |        
|                 
|                 
|                 
|                 
|                  | Securities gains (losses)                                 |         |   | (0.8           | )       |        |   | 1.2      |         |        |   | 2.2      |         |  |   | 4.0      |         |  |   | 0.6      |        
|                 
|                 
|                 
|                 
|                  | Non-interest expense                                      |         |   | 316.0          |         |        |   | 320.8    |         |        |   | 312.3    |         |  |   | 317.6    |         |  |   | 285.6    |        
|                  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |          |        
|                  | Income before income taxes                                |         |   | 243.1          |         |        |   | 238.3    |         |        |   | 234.3    |         |  |   | 217.3    |         |  |   | 213.2    |        
|                 
|                 
|                 
|                 
|                  | Income taxes                                              |         |   | 78.8           |         |        |   | 77.4     |         |        |   | 76.5     |         |  |   | 72.4     |         |  |   | 71.1     |        
|                  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |          |        
|                  | Net income                                                |         | $ | 164.3          |         |        | $ | 160.9    |         |        | $ | 157.8    |         |  | $ | 144.9    |         |  | $ | 142.1    |        
|                  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |          |        
|Per common share: |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |         
|                 
|                 
|                 
|                 
|                  | Net income  basic                                        |         | $ | 0.47           |         |        | $ | 0.46     |         |        | $ | 0.46     |         |  | $ | 0.42     |         |  | $ | 0.41     |        
|                 
|                 
|                 
|                 
|                  | Net income- diluted                                       |         |   | 0.47           |         |        |   | 0.46     |         |        |   | 0.45     |         |  |   | 0.42     |         |  |   | 0.41     |        
|                 
|                 
|                 
|                 
|                  | Cash dividends declared                                   |         |   | 0.17           |         |        |   | 0.17     |         |        |   | 0.17     |         |  |   | 0.14     |         |  |   | 0.14     |        
|                 
|                 
|                 
|                 
|                  | Book value                                                |         |   | 13.07          |         |        |   | 12.47    |         |        |   | 11.65    |         |  |   | 11.44    |         |  |   | 11.38    |        
|                 
|                 
|                 
|                 
|                  | Market value-high                                         |         |   | 27.14          |         |        |   | 27.20    |         |        |   | 27.32    |         |  |   | 25.93    |         |  |   | 27.18    |        
|                 
|                 
|                 
|                 
|                  | Market value-low                                          |         |   | 20.52          |         |        |   | 24.86    |         |        |   | 23.33    |         |  |   | 21.69    |         |  |   | 19.97    |        
|                 
|                 
|                 
|                 
|Ending balances:  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |         
|                 
|                 
|                 
|                 
|                  | Loans, net of unearned income                             |         | $ | 33,600.0       |         |        | $ | 33,180.7 |         |        | $ | 32,870.4 |         |  | $ | 33,422.6 |         |  | $ | 32,813.2 |        
|                 
|                 
|                 
|                 
|                  | Total assets                                              |         |   | 49,753.7       |         |        |   | 48,429.8 |         |        |   | 48,250.7 |         |  |   | 48,754.5 |         |  |   | 47,267.9 |        
|                 
|                 
|                 
|                 
|                  | Deposits                                                  |         |   | 31,563.9       |         |        |   | 31,586.9 |         |        |   | 30,749.8 |         |  |   | 32,634.1 |         |  |   | 30,038.3 |        
|                 
|                 
|                 
|                 
|                  | Federal Home Loan Bank advances                           |         |   | 4,471.0        |         |        |   | 4,271.0  |         |        |   | 4,221.0  |         |  |   | 4,221.1  |         |  |   | 4,221.2  |        
|                 
|                 
|                 
|                 
|                  | Long-term debt                                            |         |   | 2,185.1        |         |        |   | 2,144.3  |         |        |   | 1,511.4  |         |  |   | 1,263.4  |         |  |   | 1,071.1  |        
|                 
|                 
|                 
|                 
|                  | Stockholders equity                                      |         |   | 4,534.3        |         |        |   | 4,322.6  |         |        |   | 4,040.7  |         |  |   | 3,962.4  |         |  |   | 3,900.1  |        
|                 
|                 
|                 
|                 
|                  | Common shares (in thousands)                              |         |   | 346,844        |         |        |   | 346,766  |         |        |   | 346,706  |         |  |   | 346,273  |         |  |   | 342,685  |        
|                 
|                 
|                 
|                 
|Average balances: |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |         
|                 
|                 
|                 
|                 
|                  | Loans, net of unearned income                             |         | $ | 33,314.6       |         |        | $ | 32,967.1 |         |        | $ | 33,367.9 |         |  | $ | 32,960.3 |         |  | $ | 32,428.4 |        
|                 
|                 
|                 
|                 
|                  | Earning assets                                            |         |   | 44,779.3       |         |        |   | 44,373.9 |         |        |   | 44,514.8 |         |  |   | 44,243.4 |         |  |   | 43,271.0 |        
|                 
|                 
|                 
|                 
|                  | Total assets                                              |         |   | 48,638.8       |         |        |   | 48,086.8 |         |        |   | 48,284.4 |         |  |   | 47,885.0 |         |  |   | 46,669.3 |        
|                 
|                 
|                 
|                 
|                  | Deposits                                                  |         |   | 30,937.3       |         |        |   | 31,690.4 |         |        |   | 31,505.7 |         |  |   | 30,612.5 |         |  |   | 30,138.1 |        
|                 
|                 
|                 
|                 
|                  | Stockholders equity                                      |         |   | 4,428.5        |         |        |   | 4,159.1  |         |        |   | 4,042.6  |         |  |   | 3,973.5  |         |  |   | 3,721.5  |        
|                 
|                 
|                 
|                 
|                  | Common shares (in thousands)                              |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |          |        
|                 
|                 
|                 
|                 
|                  |                                                           | Basic   |   |                | 346,802 |        |   |          | 346,741 |        |   |          | 346,506 |  |   |          | 344,815 |  |   |          | 342,184 | 
|                 
|                 
|                 
|                 
|                  |                                                           | Diluted |   |                | 351,008 |        |   |          | 351,464 |        |   |          | 350,403 |  |   |          | 348,769 |  |   |          | 346,541 | 
|                 
|                 
|                 
|                 
|Selected ratios:  |                                                           |         |   |                |         |        |   |          |         |        |   |          |         |  |   |          |         |  |   |         
|                 
|                 
|                 
|                 
|                  | Return on average total assets                            |         |   | 1.34           | %       |        |   | 1.34     | %       |        |   | 1.33     | %       |  |   | 1.20     | %       |  |   | 1.21     | %      
|                 
|                 
|                 
|                 
|                  | Return on average stockholders equity                    |         |   | 14.71          |         |        |   | 15.52    |         |        |   | 15.83    |         |  |   | 14.47    |         |  |   | 15.15    |        
|                 
|                 
|                 
|                 
|                  | Net interest margin (FTE)                                 |         |   | 3.86           |         |        |   | 3.92     |         |        |   | 3.87     |         |  |   | 3.74     |         |  |   | 3.61     |        
|                 
|                 
|                 
|                 
|                  | Average equity to average assets                          |         |   | 9.10           |         |        |   | 8.65     |         |        |   | 8.37     |         |  |   | 8.30     |         |  |   | 7.97     |        
|                 
|                 
|                 
|                 
|                  | Non-interest expense as a percent
of average total assets |         |   | 2.58           |         |        |   | 2.68     |         |        |   | 2.62     |         |  |   | 2.63     |         |  |   | 2.43     |        
|                 
|                 
|                 
|                 
|                  | Efficiency ratio                                          |         |   | 52.74          |         |        |   | 54.37    |         |        |   | 54.28    |         |  |   | 55.40    |         |  |   | 53.70    |        

17



---



##### Table of Contents



|                                                                                                                                         |  |        
|---------------------------------------------------------------------------------------------------------------------------------------- |  | -------
|Average Balances, Interest Income and Expense andAverage Yields Earned and Rates Paid(Dollars in millions; yields except per share data) |  | Table 2

|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |      |      |  
|------------------------------------ | ----------- | ------------------------------------------ | -------- | ------------------ | -------- | ------------- | ----- | ----- | ----- | ------- | ---- | -------- | ---- | ---- | -------- | ------- | -------- | ------ | ----- | ----- | ----- | --- | ---- | ---- | ---- | -
|                                     |             |                                            |          | Quarters Ended    
|                                     |             |                                            |          |                   
|                                     |             |                                            |          | September 30, 2002 |          | June 30, 2002
|                                     |             |                                            |          |                    |          |              
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      | (1)      |      |      |          |         |          |        |       |       |       | (1)
|                                     |             |                                            |          | Average            |          |               |       |       |       | Yield/  |      | Average  |      |      |          |         |          | Yield/
|                                     |             |                                            |          | Balance            |          | Interest      |       | Rate  |       | Balance |      | Interest |      | Rate
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |     
|Assets                               |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|Loans, net of unearned
income (2)    |             | $                                          | 33,314.6 |                    |          | $             | 487.5 |       |       |         | 5.81 | %        |      | $    | 32,967.1 |         |          | $      | 491.3 |       |       |     | 5.98 | %   
|                                    
|                                    
|                                    
|                                    
|Available-for-sale securities:       |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Taxable     |                                            |          | 10,007.1           |          |               |       | 156.8 |       |         |      | 6.46     |      |      |          | 9,973.3 |          |        |       | 160.8 |       |     |      | 6.59 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Non-taxable |                                            |          | 370.4              |          |               |       | 5.7   |       |         |      | 6.39     |      |      |          | 357.3   |          |        |       | 6.1   |       |     |      | 6.94 |     
|                                    
|                                    
|                                    
|                                    
|Held-to-maturity securities:         |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Taxable     |                                            |          | 375.2              |          |               |       | 6.9   |       |         |      | 7.30     |      |      |          | 416.4   |          |        |       | 7.4   |       |     |      | 7.14 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Non-taxable |                                            |          | 44.9               |          |               |       | 1.0   |       |         |      | 8.96     |      |      |          | 48.6    |          |        |       | 1.1   |       |     |      | 9.11 |     
|                                    
|                                    
|                                    
|                                    
|Short-term investments               |             |                                            | 667.1    |                    |          |               | 9.7   |       |       |         | 5.79 |          |      |      | 611.2    |         |          |        | 8.5   |       |       |     | 5.54 |     
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                     |             | Total interest-earning assets              |          |                    | 44,779.3 |               |       | $     | 667.6 |         |      |          | 5.97 | %    |          |         | 44,373.9 |        |       | $     | 675.2 |     |      |      | 6.13 | %
|                                    
|                                    
|                                    
|                                    
|Allowance for loan losses            |             |                                            | (490.4   | )                  |          |               |       |       |       |         |      |          |      |      | (487.4   | )       |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|Other assets                         |             |                                            | 4,349.9  |                    |          |               |       |       |       |         |      |          |      |      | 4,200.3  |         |          |        |       |       |       |     |      |     
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                     |             | Total assets                               |          | $                  | 48,638.8 |               |       |       |       |         |      |          |      |      |          | $       | 48,086.8 |        |       |       |       |     |      |      |      |  
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|Liabilities                          |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|Savings deposits                     |             | $                                          | 2,332.2  |                    |          | $             | 7.3   |       |       |         | 1.24 | %        |      | $    | 2,356.1  |         |          | $      | 7.6   |       |       |     | 1.29 | %   
|                                    
|                                    
|                                    
|                                    
|Interest-bearing demand deposits     |             |                                            | 4,012.6  |                    |          |               | 10.5  |       |       |         | 1.04 |          |      |      | 4,014.4  |         |          |        | 9.3   |       |       |     | 0.93 |     
|                                    
|                                    
|                                    
|                                    
|Time deposits                        |             |                                            | 20,390.9 |                    |          |               | 125.2 |       |       |         | 2.44 |          |      |      | 21,139.1 |         |          |        | 137.0 |       |       |     | 2.60 |     
|                                    
|                                    
|                                    
|                                    
|Short-term borrowings                |             |                                            | 5,701.3  |                    |          |               | 25.0  |       |       |         | 1.74 |          |      |      | 5,420.1  |         |          |        | 23.7  |       |       |     | 1.76 |     
|                                    
|                                    
|                                    
|                                    
|Federal Home Loan Bank advances      |             |                                            | 4,447.1  |                    |          |               | 50.4  |       |       |         | 4.50 |          |      |      | 4,261.1  |         |          |        | 50.8  |       |       |     | 4.78 |     
|                                    
|                                    
|                                    
|                                    
|Long-term debt                       |             |                                            | 2,164.8  |                    |          |               | 17.3  |       |       |         | 3.17 |          |      |      | 1,724.3  |         |          |        | 15.5  |       |       |     | 3.60 |     
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                     |             | Total interest-bearing liabilities         |          |                    | 39,048.9 |               |       | $     | 235.7 |         |      |          | 2.39 | %    |          |         | 38,915.1 |        |       | $     | 243.9 |     |      |      | 2.51 | %
|                                    
|                                    
|                                    
|                                    
|Non-interest bearing demand deposits |             |                                            | 4,201.6  |                    |          |               |       |       |       |         |      |          |      |      | 4,180.8  |         |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |             |                                            | 959.8    |                    |          |               |       |       |       |         |      |          |      |      | 831.8    |         |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|Total liabilities                    |             |                                            | 44,210.3 |                    |          |               |       |       |       |         |      |          |      |      | 43,927.7 |         |          |        |       |       |       |     |      |     
|                                    
|                                    
|                                    
|                                    
|Stockholders Equity                 |             |                                            | 4,428.5  |                    |          |               |       |       |       |         |      |          |      |      | 4,159.1  |         |          |        |       |       |       |     |      |     
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|                                     |             | Total liabilities and stockholders
equity |          | $                  | 48,638.8 |               |       |       |       |         |      |          |      |      |          | $       | 48,086.8 |        |       |       |       |     |      |      |      |  
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|Net interest income                  |             |                                            |          |                    |          | $             | 431.9 |       |       |         |      |          |      |      |          |         |          | $      | 431.3 |       |       |     |      |      |      |  
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|Net interest margin                  |             |                                            |          |                    |          |               |       |       |       |         | 3.86 | %        |      |      |          |         |          |        |       |       |       |     | 3.92 | %   
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     
|Net interest spread                  |             |                                            |          |                    |          |               |       |       |       |         | 3.58 | %        |      |      |          |         |          |        |       |       |       |     | 3.62 | %   
|                                     |             |                                            |          |                    |          |               |       |       |       |         |      |          |      |      |          |         |          |        |       |       |       |     |      |     



---

|(1) |  | Yields were calculated using the average amortized cost of the
underlying assets. All yields and rates are presented on an
annualized basis.                                                                                                                                                                                       
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Included in interest are net loan fees of $10.9 million, $11.3
million, $12.6 million, $13.1 million, and $14.8 million
for the five quarters ended September 30, 2002, respectively. The
averages include loans on which the accrual of interest
has been discontinued. Income on non-accrual loans is recognized on a
cash-basis.

18



---



##### Table of Contents



Table 2

|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|-------------- | -------- | ----------------- |  | ------------------ | ----- | ------- |  | -------- | ---- | ---- |  | ------- | -------- | -------- |  | ------- | ----- | --- |  |  | ---- | ------ |  | - | -------- | - |  | --- | ----- |  |  |  | ---- | -
|Quarters Ended
|              
|March 31, 2002 |          | December 31, 2001 |  | September 30, 2001
|               |          |                   |  |                   
|               |          |                   |  |                    |       |         |  | (1)      |      |      |  |         |          |          |  |         |       | (1) |  |  |      |        |  |   |          |   |  | (1)
|Average        |          |                   |  |                    |       | Yield/  |  | Average  |      |      |  |         |          | Yield/   |  | Average |       |     |  |  |      | Yield/
|Balance        |          | Interest          |  | Rate               |       | Balance |  | Interest |      | Rate |  | Balance |          | Interest |  | Rate   
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |        
|$              | 33,367.9 |                   |  | $                  | 505.2 |         |  |          | 6.14 | %    |  | $       | 32,960.3 |          |  | $       | 550.9 |     |  |  | 6.63 | %      |  | $ | 32,428.4 |   |  | $   | 603.9 |  |  |  | 7.39 | %
|              
|              
|              
|              
|               | 9,612.9  |                   |  |                    | 155.1 |         |  |          | 6.64 |      |  |         | 9,587.9  |          |  |         | 155.8 |     |  |  | 6.48 |        |  |   | 8,727.2  |   |  |     | 143.3 |  |  |  | 6.56 |  
|              
|              
|              
|              
|               | 349.1    |                   |  |                    | 5.8   |         |  |          | 6.85 |      |  |         | 392.5    |          |  |         | 6.9   |     |  |  | 7.04 |        |  |   | 377.3    |   |  |     | 6.5   |  |  |  | 6.90 |  
|              
|              
|              
|              
|               | 462.3    |                   |  |                    | 8.2   |         |  |          | 7.23 |      |  |         | 512.7    |          |  |         | 9.2   |     |  |  | 7.12 |        |  |   | 1,122.8  |   |  |     | 20.5  |  |  |  | 7.26 |  
|              
|              
|              
|              
|               | 52.3     |                   |  |                    | 1.2   |         |  |          | 9.43 |      |  |         | 56.2     |          |  |         | 1.3   |     |  |  | 8.97 |        |  |   | 61.7     |   |  |     | 1.5   |  |  |  | 9.44 |  
|              
|              
|              
|              
|               | 670.3    |                   |  |                    | 9.7   |         |  |          | 5.86 |      |  |         | 733.8    |          |  |         | 10.9  |     |  |  | 5.93 |        |  |   | 553.6    |   |  |     | 10.0  |  |  |  | 7.18 |  
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|               | 44,514.8 |                   |  | $                  | 685.2 |         |  |          | 6.26 | %    |  |         | 44,243.4 |          |  | $       | 735.0 |     |  |  | 6.60 | %      |  |   | 43,271.0 |   |  | $   | 785.7 |  |  |  | 7.21 | %
|              
|              
|              
|              
|               | (487.5   | )                 |  |                    |       |         |  |          |      |      |  |         | (476.2   | )        |  |         |       |     |  |  |      |        |  |   | (470.9   | ) |  |     |       |  |  |  |      |  
|              
|              
|              
|              
|               | 4,257.1  |                   |  |                    |       |         |  |          |      |      |  |         | 4,117.8  |          |  |         |       |     |  |  |      |        |  |   | 3,869.2  |   |  |     |       |  |  |  |      |  
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|$              | 48,284.4 |                   |  |                    |       |         |  |          |      |      |  | $       | 47,885.0 |          |  |         |       |     |  |  |      |        |  | $ | 46,669.3 |   |  |     |       |  |  |  |      |  
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|$              | 2,308.5  |                   |  | $                  | 7.6   |         |  |          | 1.34 | %    |  | $       | 2,186.4  |          |  | $       | 8.8   |     |  |  | 1.61 | %      |  | $ | 2,104.6  |   |  | $   | 12.4  |  |  |  | 2.34 | %
|              
|              
|              
|              
|               | 3,891.8  |                   |  |                    | 9.5   |         |  |          | 0.99 |      |  |         | 3,628.3  |          |  |         | 12.3  |     |  |  | 1.35 |        |  |   | 3,336.4  |   |  |     | 15.8  |  |  |  | 1.88 |  
|              
|              
|              
|              
|               | 21,208.2 |                   |  |                    | 150.1 |         |  |          | 2.87 |      |  |         | 20,845.7 |          |  |         | 188.9 |     |  |  | 3.60 |        |  |   | 20,919.0 |   |  |     | 234.8 |  |  |  | 4.45 |  
|              
|              
|              
|              
|               | 6,427.1  |                   |  |                    | 28.3  |         |  |          | 1.79 |      |  |         | 6,979.5  |          |  |         | 39.3  |     |  |  | 2.23 |        |  |   | 6,745.4  |   |  |     | 58.3  |  |  |  | 3.43 |  
|              
|              
|              
|              
|               | 4,221.0  |                   |  |                    | 52.4  |         |  |          | 5.03 |      |  |         | 4,221.1  |          |  |         | 55.1  |     |  |  | 5.18 |        |  |   | 4,235.2  |   |  |     | 56.9  |  |  |  | 5.33 |  
|              
|              
|              
|              
|               | 1,300.6  |                   |  |                    | 13.5  |         |  |          | 4.22 |      |  |         | 1,262.3  |          |  |         | 14.2  |     |  |  | 4.45 |        |  |   | 1,047.4  |   |  |     | 14.4  |  |  |  | 5.46 |  
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|               | 39,357.2 |                   |  | $                  | 261.4 |         |  |          | 2.69 | %    |  |         | 39,123.3 |          |  | $       | 318.6 |     |  |  | 3.23 | %      |  |   | 38,388.0 |   |  | $   | 392.6 |  |  |  | 4.06 | %
|              
|              
|              
|              
|               | 4,097.3  |                   |  |                    |       |         |  |          |      |      |  |         | 3,952.1  |          |  |         |       |     |  |  |      |        |  |   | 3,778.2  |   |  |     |       |  |  |  |      |  
|              
|              
|              
|              
|               | 787.3    |                   |  |                    |       |         |  |          |      |      |  |         | 836.1    |          |  |         |       |     |  |  |      |        |  |   | 781.6    |   |  |     |       |  |  |  |      |  
|              
|              
|              
|              
|               | 44,241.8 |                   |  |                    |       |         |  |          |      |      |  |         | 43,911.5 |          |  |         |       |     |  |  |      |        |  |   | 42,947.8 |   |  |     |       |  |  |  |      |  
|              
|              
|              
|              
|               | 4,042.6  |                   |  |                    |       |         |  |          |      |      |  |         | 3,973.5  |          |  |         |       |     |  |  |      |        |  |   | 3,721.5  |   |  |     |       |  |  |  |      |  
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|$              | 48,284.4 |                   |  |                    |       |         |  |          |      |      |  | $       | 47,885.0 |          |  |         |       |     |  |  |      |        |  | $ | 46,669.3 |   |  |     |       |  |  |  |      |  
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|               |          |                   |  | $                  | 423.8 |         |  |          |      |      |  |         |          |          |  | $       | 416.4 |     |  |  |      |        |  |   |          |   |  | $   | 393.1 |  |  |  |      |  
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|               |          |                   |  |                    |       |         |  |          | 3.87 | %    |  |         |          |          |  |         |       |     |  |  | 3.74 | %      |  |   |          |   |  |     |       |  |  |  | 3.61 | %
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  
|               |          |                   |  |                    |       |         |  |          | 3.57 | %    |  |         |          |          |  |         |       |     |  |  | 3.37 | %      |  |   |          |   |  |     |       |  |  |  | 3.15 | %
|               |          |                   |  |                    |       |         |  |          |      |      |  |         |          |          |  |         |       |     |  |  |      |        |  |   |          |   |  |     |       |  |  |  |      |  

19



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##### Table of Contents



Net Interest Income / Margin

Net interest income is the principal component of SouthTrusts earnings
and represents the difference between revenue generated by interest-earning
assets and the interest cost related to funding those assets. The net interest
margin and net interest spread are affected by the composition of
interest-earning assets and interest-bearing liabilities, competitive
pressures, Federal Reserve Bank (the Fed) monetary policies, and external
economic shocks. For purposes of discussion, income that is either exempt from
federal income taxes or taxed at a preferential rate has been adjusted to fully
taxable equivalent (FTE) amounts, using a statutory federal tax rate of 35%.

The Companys net interest margin increased 25 basis points from the third
quarter of 2001 to 3.86% for the 2002-third quarter period. The net interest
spread between interest-earning assets and interest-bearing liabilities
increased 43 basis points from the third quarter of 2001 to 3.58%. The
improvement in the net interest margin resulted from the interest rate cuts
made by the Fed during 2001. The Company has benefited from lower funding
costs during these periods, as liabilities have repriced downward more quickly
than assets during this time.

However, the Companys net interest margin for the third quarter of 2002
decreased 6 basis points from the second quarter of 2002, while the net
interest spread decreased 4 basis points during the same period. Current
economic conditions are weaker at this stage of the economic cycle than
originally anticipated. These weaker conditions have contributed to a low
treasury yield, leading to higher prepayments of mortgage-backed securities,
1-4 family mortgage loans, and other fixed-rate interest-earning assets.
Prepayments from these assets are being reinvested at lower rates, while
liability costs, which are tied to indexes other than treasuries, are
relatively flat. This basis risk is leading to a compression of the net
interest margin, which will continue until economic conditions improve and the
yield curve becomes more upward sloping rather than flat. Since the Company is
in a slightly asset sensitive interest rate position, an increase in interest
rates would improve the net interest margin in the short term. Management has
taken steps to improve the interest rate sensitivity position of the Company,
and financial models project that a significant increase in interest rates over
the next two years should not have an adverse impact on the net interest margin
in the remainder of 2002 and 2003.

See Table 2 for detailed information concerning quarterly average volumes,
interest, yields earned and rates paid.

Provision for Loan Losses

During the third quarter of 2002, the Company recorded a $36.4 million
provision for loan losses. This compares to a provision of $30.4 million for
the quarter ended September 30, 2001. For the nine months ended September 30,
2002 and 2001, the provision for loan losses was $92.7 million and $79.0
million, respectively. Provisions for loan losses are charged to income to
bring the allowance to a level deemed appropriate by Management based on the
factors as described in Allowance for Loan Losses later in Managements
Discussion and Analysis of Financial Condition and Results of Operations
Earnings Summary.

20



---



##### Table of Contents



Non-Interest Income

Total non-interest income for the quarter ended September 30, 2002 was
$166.4 million, an increase of $27.0 million or 19% over the same period in
2001. For the nine-month period ended September 30, 2002, non-interest income
was $480.1 million, up $69.9 million or 17% from the comparable period in 2001.

Service charges on deposit accounts, which represent the largest portion
of non-interest income, increased 20% and 18% in the third quarter and first
nine months of 2002, respectively, from the comparable year-ago periods. These
increases are attributable to increases in the number of deposit accounts,
mainly through internal growth, along with an increase in certain service
charge rates.

Mortgage banking operations income increased 46% for the quarter ended
September 30, 2002 compared to the quarter ended September 30, 2001. On a
year-to-date basis, mortgage-banking operations increased 14%. Mortgage loan
production in the third quarter and first nine months of 2002 was higher when
compared to the same periods in 2001. Mortgage loans closed during the third
quarter of 2002 and 2001 totaled $1,380.9 million and $1,010.8 million,
respectively. Mortgage loans closed during the first nine months of 2002 and
2001 totaled $3,148.8 million and $ 2,941.4 million, respectively. This
years significant increase in mortgage loan production and volume is a direct
result of mortgage rates being at historically low levels. The Company expects
that as mortgage rates begin to rise, loan production and related income will
decrease accordingly.

Fee income related to Bank cards also increased in the third quarter and
first nine months of 2002 by 2% and 7%, respectively, from the comparable
year-ago periods. Debit card fees increased 19% in the third quarter of 2002
compared to the same period in 2001, and for the comparable nine-month period,
the increase was 22%. The increases in each of these categories are the result
of increased volume. Trust fees also increased in the third quarter and first
nine months of 2002 by 7% and 6%, respectively, from the comparable year-ago
periods. Significant increases due to higher volume have been partially offset
by declining market conditions, as many trust fees are earned as a percentage
of the underlying market values of trust account assets.

Investment fee income increased 16% for the quarter ended September 30,
2002 compared to the quarter ended September 30, 2001. For the nine-month
period ended September 30, 2002, investment fee income was up 23% from the
comparable period in 2001. The increases in investment fee income were driven
by market conditions and annuity sales. Income from bank owned life insurance
(BOLI) for the third quarter of 2002 decreased 1% compared to the same
year-ago period. For the nine-month period ended September 30, 2002, income
from bank owned life insurance was down 10% from the comparable period in 2001.

Sales of loans during the third quarter and nine-month periods ended
September 30, 2002 resulted in net gains of approximately $6.2 million and
$22.5 million, respectively. Net securities losses were $0.8 million in the
third quarter of 2002, while net securities gains were $2.5 million in the
first nine months of 2002.

There were no other significant non-recurring non-interest income items
recorded in the first nine months of 2002 or 2001.

21



---



##### Table of Contents



|                                 |  |        
|-------------------------------- |  | -------
|Non-Interest Income(In millions) |  | Table 3

|                                    |  |                |       |        |  |        |       |        |  |         |       |  |  |   |       |  |  |   |       | 
|----------------------------------- |  | -------------- | ----- | ------ |  | ------ | ----- | ------ |  | ------- | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                    |  | Quarters Ended
|                                    |  |               
|                                    |  | 2002           |       | 2001  
|                                    |  |                |       |       
|                                    |  | Sept 30        |       | Jun 30 |  | Mar 31 |       | Dec 31 |  | Sept 30
|                                    |  |                |       |        |  |        |       |        |  |        
|Service charges on deposit accounts |  | $              | 72.1  |        |  | $      | 68.5  |        |  | $       | 62.3  |  |  | $ | 63.8  |  |  | $ | 60.2  | 
|                                   
|                                   
|                                   
|                                   
|Mortgage banking operations         |  |                | 17.2  |        |  |        | 13.8  |        |  |         | 12.6  |  |  |   | 15.4  |  |  |   | 11.8  | 
|                                   
|                                   
|                                   
|                                   
|Bank card fees                      |  |                | 10.9  |        |  |        | 11.4  |        |  |         | 10.6  |  |  |   | 10.9  |  |  |   | 10.7  | 
|                                   
|                                   
|                                   
|                                   
|Debit card fees                     |  |                | 9.9   |        |  |        | 9.8   |        |  |         | 8.5   |  |  |   | 8.5   |  |  |   | 8.3   | 
|                                   
|                                   
|                                   
|                                   
|Trust fees                          |  |                | 8.5   |        |  |        | 8.9   |        |  |         | 8.0   |  |  |   | 8.5   |  |  |   | 7.9   | 
|                                   
|                                   
|                                   
|                                   
|Investment fees                     |  |                | 15.8  |        |  |        | 15.1  |        |  |         | 13.5  |  |  |   | 16.1  |  |  |   | 13.6  | 
|                                   
|                                   
|                                   
|                                   
|Bank owned life insurance           |  |                | 12.6  |        |  |        | 12.6  |        |  |         | 12.2  |  |  |   | 12.9  |  |  |   | 12.7  | 
|                                   
|                                   
|                                   
|                                   
|Gains on loans held-for-sale, net   |  |                | 6.2   |        |  |        | 6.9   |        |  |         | 9.4   |  |  |   | 6.7   |  |  |   | 5.9   | 
|                                   
|                                   
|                                   
|                                   
|Securities gains (losses)           |  |                | (0.8  | )      |  |        | 1.2   |        |  |         | 2.2   |  |  |   | 4.0   |  |  |   | 0.6   | 
|                                   
|                                   
|                                   
|                                   
|Other                               |  |                | 14.0  |        |  |        | 11.7  |        |  |         | 14.5  |  |  |   | 14.0  |  |  |   | 7.7   | 
|                                    |  |                |       |        |  |        |       |        |  |         |       |  |  |   |       |  |  |   |       | 
|Total                               |  | $              | 166.4 |        |  | $      | 159.9 |        |  | $       | 153.8 |  |  | $ | 160.8 |  |  | $ | 139.4 | 
|                                    |  |                |       |        |  |        |       |        |  |         |       |  |  |   |       |  |  |   |       | 

Non-Interest Expense

Total non-interest expense increased 11% to $ 316.0 million in the third
quarter of 2002 as compared to the same period in 2001. On a year-to-date
basis, total non-interest expense increased 14% from 2001 to $949.1 million.
The efficiency ratio, a measure of non-interest expense to net interest income
plus non-interest income, was 52.74% and 53.79% for the three and nine-month
periods ended September 30, 2002, respectively. The efficiency ratio for the
three and nine-month periods ended September 30, 2001 was 53.70 % and 54.53%,
respectively.

Salaries and employee benefits expense is the largest component of
non-interest expense, accounting for 59% of total non-interest expense for the
quarter ended September 30, 2002 and 58% of total non-interest expense for the
first nine months of 2002. Salary and employee benefits expense increased
during the third quarter and first nine months of 2002 by 11% and 15%,
respectively, over the same year-ago periods. These increases were driven by
annual merit and incentive increases, an increase in the number of full-time
equivalent employees primarily due to acquisitions, and increases in certain
employee benefit costs.

Occupancy expense was up in the third quarter of 2002 versus the third
quarter of 2001 by 7%. On a year-to-date basis, the increase was 9% in 2002 as
compared to the same period in 2001. Equipment expense was also up in the
third quarter and first nine months of 2002 by 10% and 9%, respectively, as
compared to the same periods in 2001. These increases are attributable to a
higher number of banking offices, primarily from acquisitions, as of September
30, 2002 compared to September 30, 2001. Also, certain rental rates and
depreciation on new equipment have increased during these same periods.

22



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##### Table of Contents



Data Processing expense increased 14% during the third quarter of 2002
versus the third quarter of 2001. On a year-to-date basis, the increase was 19%
for 2002 as compared to the same period in 2001. These increases are primarily
related to an increase in system licenses for various projects and expenses
related to upgrades for computer desktops and various systems. Communications
expense decreased 1% during the third quarter of 2002 versus the third quarter
of 2001. On a year-to-date basis however, the communications expense increased
by 11% as compared to the same period in 2001. The year to date increase is
related primarily to the implementation of a new phone system during the first
nine months of 2002. Once the previous phone system is completely phased out,
overall communication expense is expected to settle at levels similar to those
in 2001. Professional services expense increased 50% during the third quarter
of 2002 versus the third quarter of 2001. On a year-to-date basis, the increase
was 45% for 2002 as compared to the same period in 2001. These increases were
due primarily to an increase in advertising co-op fees and higher fees from
outsourcing.

Intangible amortization decreased during the third quarter and first nine
months of 2002 by 63% and 64% respectively, over the same periods in 2001.
Beginning January 1, 2002, the Company ceased amortization of goodwill as
provided in SFAS 142, Goodwill and Other Intangible Assetsand SFAS 147,
Acquisitions of Certain Financial Institutions,which were adopted as of that
date. In lieu of amortization, goodwill will be periodically tested for
impairment, also as required by these new Statements. See Note A to the
Consolidated Condensed Financial Statements (Unaudited) for more information
regarding SFAS 142 and SFAS 147.

There were no other significant non-recurring non-interest expense items
recorded in the first nine months of 2002 or 2001.

|                                  |  |        
|--------------------------------- |  | -------
|Non-Interest Expense(In millions) |  | Table 4

|                               |       |   |                |       |        |   |        |       |        |   |         |       |  |   |       |       |  |   |       |       | 
|------------------------------ | ----- | - | -------------- | ----- | ------ | - | ------ | ----- | ------ | - | ------- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                               |       |   | Quarters Ended
|                               |       |   |               
|                               |       |   | 2002           |       | 2001  
|                               |       |   |                |       |       
|                               |       |   | Sept 30        |       | Jun 30 |   | Mar 31 |       | Dec 31 |   | Sept 30
|                               |       |   |                |       |        |   |        |       |        |   |        
|Salaries and employee benefits |       | $ | 186.4          |       |        | $ | 183.4  |       |        | $ | 182.1   |       |  | $ | 176.5 |       |  | $ | 168.1 |      
|                              
|                              
|                              
|                              
|Net occupancy                  |       |   | 27.0           |       |        |   | 28.1   |       |        |   | 26.6    |       |  |   | 27.4  |       |  |   | 25.2  |      
|                              
|                              
|                              
|                              
|Equipment                      |       |   | 17.1           |       |        |   | 16.7   |       |        |   | 16.5    |       |  |   | 17.2  |       |  |   | 15.6  |      
|                              
|                              
|                              
|                              
|Data processing                |       |   | 10.6           |       |        |   | 10.5   |       |        |   | 10.2    |       |  |   | 10.5  |       |  |   | 9.3   |      
|                              
|                              
|                              
|                              
|Professional services          |       |   | 15.3           |       |        |   | 18.5   |       |        |   | 14.2    |       |  |   | 16.5  |       |  |   | 10.2  |      
|                              
|                              
|                              
|                              
|Communications                 |       |   | 13.6           |       |        |   | 15.7   |       |        |   | 14.5    |       |  |   | 14.0  |       |  |   | 13.7  |      
|                              
|                              
|                              
|                              
|Intangible amortization        |       |   | 3.7            |       |        |   | 3.5    |       |        |   | 3.6     |       |  |   | 10.3  |       |  |   | 10.0  |      
|                              
|                              
|                              
|                              
|Other                          |       |   | 42.3           |       |        |   | 44.4   |       |        |   | 44.6    |       |  |   | 45.2  |       |  |   | 33.5  |      
|                               |       |   |                |       |        |   |        |       |        |   |         |       |  |   |       |       |  |   |       |      
|                               | Total |   | $              | 316.0 |        |   | $      | 320.8 |        |   | $       | 312.3 |  |   | $     | 317.6 |  |   | $     | 285.6 | 
|                               |       |   |                |       |        |   |        |       |        |   |         |       |  |   |       |       |  |   |       |      

23



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##### Table of Contents



Income Tax Expense

Income tax expense for the third quarter of 2002 was $78.8 million for an
effective tax rate of 32.4% compared to $71.1 million or an effective rate of
33.4 % in the third quarter of 2001. For the nine months ended September 30,
2002, income tax expense was $232.8 million for an effective tax rate of 32.5%
compared to tax expense of $200.6 million and an effective tax rate of 32.9%
during the first nine months of 2001. The statutory federal income tax rate was
35% in 2002 and 2001.

Loans

Loans, net of unearned income at September 30, 2002 were $33,600.0
million, a net increase of $177.5 million over the December 31, 2001 level.
During the first nine months of 2002, $108.4 million of loans were obtained in
an acquisition. Also during the first quarter of 2002, $401.0 million of 1-4
family loans were securitized and classified in the available-for-sale
securities portfolio. Demand for loans has decreased in recent quarters,
partially as a result of the general slowdown in the economy. In addition, the
Company is emphasizing more variable-rate commercial lending than in the past
as part of its asset/liability management strategy. Also, the Company is
experiencing loan run-off in certain consumer lending areas in which the
Company is no longer originating new loans such as indirect auto lending and
manufactured housing. This trend of slower growth may continue in the near
future, given the uncertainty in the economy at this time.

The Company regularly participates in loan sales in the secondary market,
which facilitate the management of its loan portfolio. Specifically, these
sales allow the Company to manage credit concentrations, while continuing to
extend credit to customers. Loans sold, consisting mainly of 1-4 family
mortgages, amounted to approximately $2,785.9 million during the nine-month
period ended September 30, 2002. These sales move in tandem with production of
new 1-4 family loans, which is currently at a high level due to low mortgage
interest rates. A slowdown in loan sales should be expected if mortgage rates
rise and new loan production returns to lower levels.

|                            |  |        
|--------------------------- |  | -------
|Loan Portfolio(In millions) |  | Table 5

|                                       |  |                |          |        |  |        |          |        |  |         |          |   |  |   |          |   |  |   |          |  
|-------------------------------------- |  | -------------- | -------- | ------ |  | ------ | -------- | ------ |  | ------- | -------- | - |  | - | -------- | - |  | - | -------- | -
|                                       |  | Quarters Ended
|                                       |  |               
|                                       |  | 2002           |          | 2001  
|                                       |  |                |          |       
|                                       |  | Sept 30        |          | Jun 30 |  | Mar 31 |          | Dec 31 |  | Sept 30
|                                       |  |                |          |        |  |        |          |        |  |        
|Commercial, financial and agricultural |  | $              | 13,018.4 |        |  | $      | 12,738.8 |        |  | $       | 12,791.2 |   |  | $ | 12,984.5 |   |  | $ | 12,674.9 |  
|                                      
|                                      
|                                      
|                                      
|Real estate construction               |  |                | 4,929.2  |        |  |        | 4,870.0  |        |  |         | 4,627.9  |   |  |   | 4,388.0  |   |  |   | 4,269.9  |  
|                                      
|                                      
|                                      
|                                      
|Commercial real estate mortgage        |  |                | 7,212.3  |        |  |        | 7,113.6  |        |  |         | 7,036.2  |   |  |   | 7,136.4  |   |  |   | 7,004.0  |  
|                                      
|                                      
|                                      
|                                      
|Residential real estate mortgage       |  |                | 6,021.7  |        |  |        | 5,918.8  |        |  |         | 5,772.4  |   |  |   | 6,114.2  |   |  |   | 6,030.3  |  
|                                      
|                                      
|                                      
|                                      
|Loans to individuals                   |  |                | 2,657.7  |        |  |        | 2,781.8  |        |  |         | 2,894.3  |   |  |   | 3,072.4  |   |  |   | 3,087.2  |  
|                                       |  |                |          |        |  |        |          |        |  |         |          |   |  |   |          |   |  |   |          |  
|                                       |  |                | 33,839.3 |        |  |        | 33,423.0 |        |  |         | 33,122.0 |   |  |   | 33,695.5 |   |  |   | 33,066.3 |  
|                                      
|                                      
|                                      
|                                      
|Unearned income                        |  |                | (239.3   | )      |  |        | (242.3   | )      |  |         | (251.6   | ) |  |   | (272.9   | ) |  |   | (253.1   | )
|                                       |  |                |          |        |  |        |          |        |  |         |          |   |  |   |          |   |  |   |          |  
|Loans, net of unearned income          |  |                | 33,600.0 |        |  |        | 33,180.7 |        |  |         | 32,870.4 |   |  |   | 33,422.6 |   |  |   | 32,813.2 |  
|                                      
|                                      
|                                      
|                                      
|Allowance for loan losses              |  |                | (497.6   | )      |  |        | (488.3   | )      |  |         | (485.4   | ) |  |   | (483.1   | ) |  |   | (471.1   | )
|                                       |  |                |          |        |  |        |          |        |  |         |          |   |  |   |          |   |  |   |          |  
|Net loans                              |  | $              | 33,102.4 |        |  | $      | 32,692.4 |        |  | $       | 32,385.0 |   |  | $ | 32,939.5 |   |  | $ | 32,342.1 |  
|                                       |  |                |          |        |  |        |          |        |  |         |          |   |  |   |          |   |  |   |          |  

24



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##### Table of Contents



Allowance for Loan Losses

The Company maintains an allowance for loan losses to absorb probable
losses inherent in the loan portfolio and is based upon Managements estimated
range of those losses. Actual losses for these loans can vary significantly
from this estimate. The Companys subsidiary bank is regulated by the State
Banking Department of the State of Alabama. SouthTrust Bank is a member bank
of the Federal Reserve System, and as such, is also subject to the regulations
of the Federal Reserve Board applicable to state member banks. Management may
also consider recommendations from these regulators in assessing the adequacy
of the allowance for loan losses. The methodology and assumptions used to
calculate the allowance are continually reviewed as to their appropriateness
given the most recent losses realized and other factors that influence the
estimation process. The model assumptions and resulting allowance level are
adjusted accordingly as these factors change. The historical loss rates
described below which are used in determining the allowance also provide a
self-correcting feature to the methodology.

Loans are separated by internal risk ratings into two categories for
assessment of their estimated allowance level needs  Non-problem and
Watch-list. The allowance for loan losses is calculated by applying historical
loss factors to outstanding Non-problem loans within each loan type. The loss
factors represent either the average of the last four years losses or, in some
cases, the most recent years loss experience if in Managements judgement that
loss rate is more representative of current trends in a particular loan type.
The allocation of the allowance on Non-problem loans is based on estimates of
losses inherent in this portfolio, which have not yet been specifically
identified in the Companys problem loan rating process. Watch-list loans
include any loans that have an internal credit review or regulatory rating of
less than pass, plus pass rated loans that are sound and collectible, but
contain certain characteristics that require review by Management. The
allowance associated with Watch-list loans is calculated by applying loss
factors determined through an average of the last four years loss experience,
specific to Watch-list loans. Additionally, certain Watch-list loans
(generally large commercial credits that the Company considers to be impaired)
are specifically reviewed. The specific review considers estimates of future
cash flows, fair values of collateral and other indicators of the borrowers
ability to repay the loan.

In addition to the above, the Company considers other risk elements in
establishing the allowance for both Non-problem and Watch-list loans. These
risk elements are based on Managements evaluation of various conditions that
affect inherent losses, which are not directly measured by applying the
historical loss rates. Also, in most cases, the impact of these risk elements
has not yet been reflected in the level of non-performing loans or in the
internal risk grading process. Evaluation of these elements involves a higher
degree of uncertainty since they are not directly associated with specific
problem credits. These elements are discussed below.

The Companys loan portfolio has historically experienced growth rates in
excess of our peers. While the Company strives to use prudent underwriting and
credit management standards, such growth and related underwriting risks lead to
increased losses that are not realized until after period end. Additionally,
loans acquired through the various business combinations carry additional
credit risk due to uncertainties associated with the underwriting process and
deviations from the Companys credit underwriting standards at the acquired
institutions. The Company is also subject to risk associated with certain
industry concentrations. Commercial real estate mortgage loans represent the
Companys largest concentration, and although this segment of the portfolio has
performed well in recent years, Management considers the associated risk within
the commercial real estate portfolio as part of the other risk elements. The
Company believes it has established a sound credit policy, which guides the
manner in which loans are underwritten. Exceptions from this policy may be
necessary to facilitate the lending process and have been considered in
computing the allowance.

25



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##### Table of Contents



The allowance allocated to Watch-list loans at September 30, 2002 totaled
$111.3 million, and the allowance allocated to Non-problem loans totaled $386.3
million. Based on the methodology outlined above, the total allowance for loan
losses was $497.6 million at September 30, 2002 and $483.1 million at December
31, 2001. As a percentage of outstanding loans, the total allowance for loan
losses was 1.48 % at September 30, 2002, compared to the December 31, 2001
level of 1.45%. Net charge-offs during the three months ended September 30,
2002 totaled $27.1 million or 0.32% of average net loans on an annualized
basis, a decrease of $2.6 million over the 2001-third quarter period. For the
nine months ended September 30, 2002, net charge-offs were $80.4 million or
0.32% of average net loans on an annualized basis, an increase of $4.6 million
compared to the first nine months of 2001.

|                                        |  |        
|--------------------------------------- |  | -------
|Allowance for Loan Losses(In thousands) |  | Table 6

|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |        |        | 
|-------------------------------------------------------- | ---------------------------------------------- | ----------------- | -------- | -------------- | ------ | ------ | -------- | ------ | ------ | ------ | -------- | ------- | ------ | - | -------- | ------ | ------ | - | -------- | ------ | ------ | 
|                                                         |                                                |                   |          | Quarters Ended
|                                                         |                                                |                   |          |               
|                                                         |                                                |                   |          | 2002           |        | 2001  
|                                                         |                                                |                   |          |                |        |       
|                                                         |                                                |                   |          | Sept 30        |        | Jun 30 |          | Mar 31 |        | Dec 31 |          | Sept 30
|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |        
|Balance beginning of quarter                             |                                                | $                 | 488,340  |                |        | $      | 485,389  |        |        | $      | 483,124  |         |        | $ | 471,133  |        |        | $ | 462,905  |       
|                                                        
|                                                        
|                                                        
|                                                        
|Loans charged-off:                                       |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Commercial, financial and agricultural         |                   |          | 12,824         |        |        |          | 14,538 |        |        |          | 17,858  |        |   |          | 24,672 |        |   |          | 18,374 |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Real estate construction                       |                   |          | 54             |        |        |          | 0      |        |        |          | 0       |        |   |          | 0      |        |   |          | 15     |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Commercial real estate mortgage                |                   |          | 1,275          |        |        |          | 912    |        |        |          | 197     |        |   |          | 541    |        |   |          | 37     |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Residential real estate mortgage               |                   |          | 2,758          |        |        |          | 2,471  |        |        |          | 1,455   |        |   |          | 2,356  |        |   |          | 2,577  |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Loans to individuals                           |                   |          | 12,837         |        |        |          | 11,760 |        |        |          | 11,071  |        |   |          | 12,375 |        |   |          | 11,774 |       
|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|                                                         |                                                | Total charge-offs |          |                | 29,748 |        |          |        | 29,681 |        |          |         | 30,581 |   |          |        | 39,944 |   |          |        | 32,777 | 
|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|Recoveries of loans previously charged-off:              |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Commercial, financial and agricultural         |                   |          | 1,136          |        |        |          | 1,295  |        |        |          | 982     |        |   |          | 2,244  |        |   |          | 956    |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Real estate construction                       |                   |          | 4              |        |        |          | 0      |        |        |          | 1       |        |   |          | 1      |        |   |          | 1      |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Commercial real estate mortgage                |                   |          | 1              |        |        |          | 175    |        |        |          | 26      |        |   |          | 4      |        |   |          | 13     |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Residential real estate mortgage               |                   |          | 248            |        |        |          | 529    |        |        |          | 162     |        |   |          | 219    |        |   |          | 326    |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Loans to individuals                           |                   |          | 1,289          |        |        |          | 1,884  |        |        |          | 1,883   |        |   |          | 1,671  |        |   |          | 1,787  |       
|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|                                                         |                                                | Total recoveries  |          |                | 2,678  |        |          |        | 3,883  |        |          |         | 3,054  |   |          |        | 4,139  |   |          |        | 3,083  | 
|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|Net loans charged-off                                    |                                                |                   | 27,070   |                |        |        | 25,798   |        |        |        | 27,527   |         |        |   | 35,805   |        |        |   | 29,694   |       
|                                                        
|                                                        
|                                                        
|                                                        
|Additions to allowance charged to expense                |                                                |                   | 36,354   |                |        |        | 28,728   |        |        |        | 27,650   |         |        |   | 39,334   |        |        |   | 30,400   |       
|                                                        
|                                                        
|                                                        
|                                                        
|Subsidiaries allowance at date of purchase              |                                                |                   | 0        |                |        |        | 21       |        |        |        | 2,142    |         |        |   | 8,462    |        |        |   | 7,522    |       
|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|Balance at end of quarter                                |                                                | $                 | 497,624  |                |        | $      | 488,340  |        |        | $      | 485,389  |         |        | $ | 483,124  |        |        | $ | 471,133  |       
|                                                         |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|(In millions)                                            |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|                                                        
|                                                        
|                                                        
|                                                        
|Loans outstanding at quarter end,
net of unearned income |                                                | $                 | 33,600.0 |                |        | $      | 33,180.7 |        |        | $      | 32,870.4 |         |        | $ | 33,422.6 |        |        | $ | 32,813.2 |       
|                                                        
|                                                        
|                                                        
|                                                        
|Average loans outstanding,
net of unearned income        |                                                | $                 | 33,314.6 |                |        | $      | 32,967.1 |        |        | $      | 33,367.9 |         |        | $ | 32,960.3 |        |        | $ | 32,428.4 |       
|                                                        
|                                                        
|                                                        
|                                                        
|Ratios:                                                  |                                                |                   |          |                |        |        |          |        |        |        |          |         |        |   |          |        |        |   |          |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Allowance to net loans outstanding             |                   |          | 1.48           | %      |        |          | 1.47   | %      |        |          | 1.48    | %      |   |          | 1.45   | %      |   |          | 1.44   | %     
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Net loans charged-off to average net loans     |                   |          | 0.32           |        |        |          | 0.31   |        |        |          | 0.33    |        |   |          | 0.43   |        |   |          | 0.36   |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Provision for loan losses to net charge-offs   |                   |          | 134.30         |        |        |          | 111.36 |        |        |          | 100.45  |        |   |          | 109.86 |        |   |          | 102.38 |       
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Provision for loan losses to average net loans |                   |          | 0.43           |        |        |          | 0.35   |        |        |          | 0.34    |        |   |          | 0.47   |        |   |          | 0.37   |       

26



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##### Table of Contents



Non-Performing Assets

Non-performing assets, which include non-accrual and restructured loans,
other real estate owned and other repossessed assets were $251.3 million at
September 30, 2002, a decrease of $41.1 million from December 31, 2001. The
ratio of non-performing assets to total loans plus other non-performing assets
was 0.75% at September 30, 2002, while the allowance to non-performing loans
ratio was 281.75% for the same period. The Company has historically maintained
high credit underwriting standards, and expects the trend in non-performing
assets to be stable for the remainder of 2002.

|                                           |  |        
|------------------------------------------ |  | -------
|Non-performing Assets(Dollars in millions) |  | Table 7

|                                        |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |         |       |   |      |        |       |   |      |        |       | 
|--------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------- | ---- | -------------- | ----- | ------ | ---- | ------ | ----- | ------ | ---- | ------- | ----- | - | ---- | ------ | ----- | - | ---- | ------ | ----- | 
|                                        |                                                                                                                   |                             |      | Quarters Ended
|                                        |                                                                                                                   |                             |      |               
|                                        |                                                                                                                   |                             |      | 2002           |       | 2001  
|                                        |                                                                                                                   |                             |      |                |       |       
|                                        |                                                                                                                   |                             |      | Sept 30        |       | Jun 30 |      | Mar 31 |       | Dec 31 |      | Sept 30
|                                        |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |        
|Non-performing loans                    |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |         |       |   |      |        |       |   |      |       
|                                       
|                                       
|                                       
|                                       
|                                        | Commercial, financial, and agricultural                                                                           |                             | $    | 115.6          |       |        | $    | 131.5  |       |        | $    | 145.2   |       |   | $    | 153.2  |       |   | $    | 152.8  |      
|                                       
|                                       
|                                       
|                                       
|                                        | Real estate construction                                                                                          |                             |      | 24.1           |       |        |      | 22.1   |       |        |      | 21.0    |       |   |      | 28.6   |       |   |      | 31.0   |      
|                                       
|                                       
|                                       
|                                       
|                                        | Commercial real estate mortgage                                                                                   |                             |      | 4.6            |       |        |      | 9.3    |       |        |      | 10.4    |       |   |      | 7.9    |       |   |      | 5.9    |      
|                                       
|                                       
|                                       
|                                       
|                                        | Residential real estate mortgage                                                                                  |                             |      | 19.6           |       |        |      | 20.1   |       |        |      | 23.8    |       |   |      | 16.5   |       |   |      | 21.5   |      
|                                       
|                                       
|                                       
|                                       
|                                        | Loans to individuals                                                                                              |                             |      | 12.7           |       |        |      | 11.2   |       |        |      | 10.1    |       |   |      | 11.3   |       |   |      | 12.0   |      
|                                        |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |         |       |   |      |        |       |   |      |        |      
|                                        |                                                                                                                   | Total non-performing loans  |      |                | 176.6 |        |      |        | 194.2 |        |      |         | 210.5 |   |      |        | 217.5 |   |      |        | 223.2 | 
|                                        |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |         |       |   |      |        |       |   |      |        |      
|Other real estate owned                 |                                                                                                                   |                             | 65.5 |                |       |        | 59.5 |        |       |        | 56.2 |         |       |   | 53.5 |        |       |   | 42.4 |       
|                                       
|                                       
|                                       
|                                       
|Other repossessed assets                |                                                                                                                   |                             | 9.2  |                |       |        | 14.6 |        |       |        | 16.6 |         |       |   | 21.4 |        |       |   | 8.7  |       
|                                        |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |         |       |   |      |        |       |   |      |        |      
|                                        |                                                                                                                   | Total non-performing assets |      | $              | 251.3 |        |      | $      | 268.3 |        |      | $       | 283.3 |   |      | $      | 292.4 |   |      | $      | 274.3 | 
|                                        |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |         |       |   |      |        |       |   |      |        |      
|Accruing loans past due 90 days or more |                                                                                                                   | $                           | 76.3 |                |       | $      | 73.0 |        |       | $      | 82.8 |         |       | $ | 74.2 |        |       | $ | 66.6 |       
|                                       
|                                       
|                                       
|                                       
|Ratios:                                 |                                                                                                                   |                             |      |                |       |        |      |        |       |        |      |         |       |   |      |        |       |   |      |       
|                                       
|                                       
|                                       
|                                       
|                                        | Non-performing loans to total loans                                                                               |                             |      | 0.53           | %     |        |      | 0.59   | %     |        |      | 0.64    | %     |   |      | 0.65   | %     |   |      | 0.68   | %    
|                                       
|                                       
|                                       
|                                       
|                                        | Non-performing assets to total loans
plus other non-performing assets                                             |                             |      | 0.75           |       |        |      | 0.81   |       |        |      | 0.86    |       |   |      | 0.87   |       |   |      | 0.83   |      
|                                       
|                                       
|                                       
|                                       
|                                        | Non-performing assets and accruing loans
90 days or more past due to total loans
plus other non-performing assets |                             |      | 0.97           |       |        |      | 1.03   |       |        |      | 1.11    |       |   |      | 1.09   |       |   |      | 1.04   |      
|                                       
|                                       
|                                       
|                                       
|                                        | Allowance to non-performing loans                                                                                 |                             |      | 281.75         |       |        |      | 251.41 |       |        |      | 230.62  |       |   |      | 222.18 |       |   |      | 211.07 |      

27



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##### Table of Contents



Available-for-Sale and Held-to-Maturity Securities

The investment portfolio is managed to maximize yield over an entire
interest rate cycle while providing liquidity and minimizing risk. Securities
classified as held-to-maturity are carried at amortized cost, as the Company
has the ability, and Management currently intends to hold these securities to
maturity. All securities not considered held-to-maturity or part of the
trading portfolio have been designated as available-for-sale and are carried at
fair value. Unrealized gains and losses on available-for-sale securities are
excluded from earnings and are reported net of deferred taxes as other
comprehensive income, a component of stockholders equity. This caption
includes securities that Management intends to use as part of its asset /
liability management strategy or that may be sold in response to changes in
interest rates, changes in prepayment risk, liquidity needs, or for other
purposes.

Total securities, including those designated as available-for-sale and
held-to-maturity, have increased $397.1 million since December 31, 2001.
Securities obtained through the acquisition of another financial institution
were $33.1 million during the first nine months of 2002.

During the second quarter of 2002, held-to-maturity securities with a net
carrying amount of $10.0 million were sold due to credit deterioration, and a
loss of $1.4 million was recognized.

|                                                   |  |        
|-------------------------------------------------- |  | -------
|Available-for-Sale and Held-to-Maturity Securities |  | Table 8

|                                                                   |       |      |                               |          |                   |      |           |          |      |   |         |         |  |   |         |         | 
|------------------------------------------------------------------ | ----- | ---- | ----------------------------- | -------- | ----------------- | ---- | --------- | -------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                   |       |      | Available-for-Sale Securities
|                                                                   |       |      |                              
|                                                                   |       |      | September 30, 2002            |          | December 31, 2001
|                                                                   |       |      |                               |          |                  
|                                                                   |       |      | Amortized                     |          | Fair              |      | Amortized |          | Fair
|(Dollars in millions)                                              |       | Cost |                               | Value    |                   | Cost |           | Value   
|                                                                   |       |      |                               |          |                   |      |           |         
|U.S. Treasury securities                                           |       | $    | 32.0                          |          |                   | $    | 34.5      |          |      | $ | 38.2    |         |  | $ | 38.5    |        
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|U.S. Government agency securities                                  |       |      | 1,853.7                       |          |                   |      | 1,906.7   |          |      |   | 336.5   |         |  |   | 333.1   |        
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Mortgage-backed securities and
collateralized mortgage obligations |       |      | 7,311.2                       |          |                   |      | 7,636.3   |          |      |   | 8,719.1 |         |  |   | 8,799.7 |        
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Obligations of states and political
subdivisions                   |       |      | 335.1                         |          |                   |      | 359.7     |          |      |   | 319.5   |         |  |   | 324.2   |        
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Other debt securities                                              |       |      | 110.0                         |          |                   |      | 110.1     |          |      |   | 98.4    |         |  |   | 95.0    |        
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Equity securities                                                  |       |      | 422.0                         |          |                   |      | 441.9     |          |      |   | 364.3   |         |  |   | 364.3   |        
|                                                                   |       |      |                               |          |                   |      |           |          |      |   |         |         |  |   |         |        
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|                                                                   | Total |      | $                             | 10,064.0 |                   |      | $         | 10,489.2 |      |   | $       | 9,876.0 |  |   | $       | 9,954.8 | 
|                                                                   |       |      |                               |          |                   |      |           |          |      |   |         |         |  |   |         |        

|                                                                   |       |   |                             |       |                   |   |           |       |       |   |       |       |  |   |       |       | 
|------------------------------------------------------------------ | ----- | - | --------------------------- | ----- | ----------------- | - | --------- | ----- | ----- | - | ----- | ----- |  | - | ----- | ----- | 
|                                                                   |       |   | Held-to-Maturity Securities
|                                                                   |       |   |                            
|                                                                   |       |   | September 30, 2002          |       | December 31, 2001
|                                                                   |       |   |                             |       |                  
|                                                                   |       |   | Amortized                   |       | Fair              |   | Amortized |       | Fair 
|                                                                   |       |   | Cost                        |       | Value             |   | Cost      |       | Value
|                                                                   |       |   |                             |       |                   |   |           |       |      
|U.S. Treasury securities                                           |       | $ | 1.5                         |       |                   | $ | 1.6       |       |       | $ | 2.5   |       |  | $ | 2.6   |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|U.S. Government agency securities                                  |       |   | 24.5                        |       |                   |   | 25.3      |       |       |   | 25.6  |       |  |   | 26.7  |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Mortgage-backed securities and
collateralized mortgage obligations |       |   | 191.6                       |       |                   |   | 202.5     |       |       |   | 306.1 |       |  |   | 314.6 |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Obligations of states and political
subdivisions                   |       |   | 44.5                        |       |                   |   | 49.5      |       |       |   | 55.1  |       |  |   | 58.7  |      
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Other debt securities                                              |       |   | 145.4                       |       |                   |   | 162.9     |       |       |   | 155.4 |       |  |   | 159.7 |      
|                                                                   |       |   |                             |       |                   |   |           |       |       |   |       |       |  |   |       |      
|                                                                   | Total |   | $                           | 407.5 |                   |   | $         | 441.8 |       |   | $     | 544.7 |  |   | $     | 562.3 | 
|                                                                   |       |   |                             |       |                   |   |           |       |       |   |       |       |  |   |       |      

28



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##### Table of Contents



Short-Term Investments

Short-term investments at September 30, 2002 totaled $ 1,113.0 million,
reflecting an increase of $184.0 million from the December 31, 2001 level of
$929.0 million. At September 30, 2002, short-term investments consisted of
$230.1 million in federal funds sold and securities purchased under resale
agreements, $5.3 million in time deposits with other banks, $92.4 million in
trading securities and $785.2 million in loans held for sale. Securities held
for trading purposes primarily include inventory at the Companys brokerage
subsidiary and are carried at fair value. Loans held for sale, primarily 1-4
family mortgage loans in the process of being securitized and sold to third
party investors, are carried at the lower of cost or fair value.

The Companys Asset/Liability Management Committee monitors current and
future expected economic conditions, as well as the Companys liquidity
position, in determining desired balances of short-term investments and
alternative uses of such funds.

Funding

The Companys overall funding level is governed by current and expected
asset demand and capital needs. The Companys funding sources can be divided
into four broad categories: deposits, short-term borrowings, Federal Home Loan
Bank (FHLB) advances, and long-term debt. The mixture of these funding types
depends upon the Companys maturity and liquidity needs, the current rate
environment, and the availability of such funds.

The Company monitors certain ratios and liability concentrations to ensure
funding levels are maintained within established policies. These policies
include a maximum short-term liability to total asset ratio of 40% and a limit
on funding concentrations from any one source as a percent of total assets of
20%. Various maturity limits have also been established.

Deposits are the Companys primary source of funding. Total deposits at
September 30, 2002 were $31,563.9 million, down $1,070.2 million or 3% from the
December 31, 2001 level of $32,634.1 million. Of this net decrease, $2,324.5
million was from a reduction in wholesale funding deposits, while core deposits
increased deposits by $1,254.3 million. In the first nine months of 2002,
$154.6 million of deposits were obtained in an acquisition. At September 30,
2002, total deposits included interest-bearing deposits of $27,268.6 million
and other deposits of $4,295.3 million.

Short-term borrowings at September 30, 2002 were $5,961.3 million and
included federal funds purchased of $3,282.7 million, securities sold under
agreements to repurchase of $2,210.0 million and other borrowed funds of $468.6
million. At September 30, 2002, total short-term borrowings were 12% of total
liabilities and stockholders equity. This compares to total short-term
borrowings of $5,925.3 million or 12% of total liabilities and stockholders
equity at December 31, 2001.

FHLB advances totaled $4,471.0 million at September 30, 2002. The current
quarter end balance is up $249.9 million from the level outstanding at December
31, 2001. The Company uses FHLB advances as an alternative to other funding
sources with similar maturities. They are also flexible, allowing the Company
to quickly obtain the necessary maturities and rates that best suit its overall
asset / liability management strategy.

29



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##### Table of Contents



At September 30, 2002 and December 31, 2001, total long-term debt was
$2,185.1 million and $1,263.4 million, respectively. During the first nine
months of 2002, $901.5 million of variable-rate Bank Notes were issued by the
Companys subsidiary bank for general operating purposes, other issuances
totaled $1.0 million, other redemptions totaled $0.1 million, and the fair
value adjustment related to long-term debt hedged increased $19.3 million.
There are no scheduled maturities of long-term debt through 2002.

Capital

The Company continually monitors current and projected capital adequacy
positions of both the Company and its subsidiary bank. Maintaining adequate
capital levels is integral to providing stability to the Company, resources to
achieve the Companys growth objectives, and returns to stockholders in the
form of dividends.

The Company is subject to various regulatory capital requirements that
prescribe quantitative measures of the Companys assets, liabilities, and
certain off-balance sheet items. The Companys regulators have also imposed
qualitative guidelines for capital amounts and classifications such as risk
weighting, capital components, and other details. The quantitative measures to
ensure capital adequacy require that the Company maintain Tier 1 and Total
capital to risk-weighted assets of 4% and 8%, respectively, and Tier 1 capital
to adjusted quarter average total assets of 4%. Failure to meet minimum
capital requirements can initiate certain actions by regulators that, if
undertaken, could have a direct material effect on the Companys financial
statements. As of each of the periods ended below, the Company meets all
capital adequacy requirements imposed by its regulators.

The September 30, 2002 Tier 1 and Total capital to risk weighted assets
were 8.13% and 11.16%, respectively, compared to the December 31, 2001 ratios
of 7.71% and 10.97%.

|                      |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |         |         | 
|--------------------- | --------------------------------------------- | ------------------------ | -------- | ------- | ------- | ------ | -------- | ------- | ------- | ------ | -------- | ------- | ------- | - | -------- | ------- | ------- | ------- | -------- | ------- | ------- | 
|Capital Ratios        |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         | Table 9
|(Dollars in millions) |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |        
|                      |                                               |                          |          |        
|                      |                                               |                          |          | 2002    |         | 2001  
|                      |                                               |                          |          |         |         |       
|                      |                                               |                          |          | Sept 30 |         | Jun 30 |          | Mar 31  |         | Dec 31 |          | Sept 30
|                      |                                               |                          |          |         |         |        |          |         |         |        |          |        
|Tier 1 capital:       |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |        
|                     
|                     
|                     
|                     
|                      | Stockholders equity                          |                          | $        | 4,534.3 |         |        | $        | 4,316.3 |         |        | $        | 4,037.2 |         |   | $        | 3,962.4 |         |         | $        | 3,900.1 |        
|                     
|                     
|                     
|                     
|                      | Intangible assets other than
servicing rights |                          |          | (801.3  | )       |        |          | (789.6  | )       |        |          | (796.9  | )       |   |          | (777.2  | )       |         |          | (666.1  | )      
|                     
|                     
|                     
|                     
|                      | Accumulated other
comprehensive income        |                          |          | (350.6  | )       |        |          | (244.6  | )       |        |          | (65.4   | )       |   |          | (91.0   | )       |         |          | (204.0  | )      
|                      |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |         |        
|                      |                                               | Total Tier 1 capital     |          |         | 3,382.4 |        |          |         | 3,282.1 |        |          |         | 3,174.9 |   |          |         | 3,094.2 |         |          |         | 3,030.0 | 
|                      |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |         |        
|Tier 2 capital:       |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |        
|                     
|                     
|                     
|                     
|                      | Allowable allowance for loan losses           |                          |          | 497.6   |         |        |          | 488.3   |         |        |          | 485.4   |         |   |          | 483.1   |         |         |          | 471.1   |        
|                     
|                     
|                     
|                     
|                      | Allowable long-term debt                      |                          |          | 765.0   |         |        |          | 765.0   |         |        |          | 825.0   |         |   |          | 825.0   |         |         |          | 825.0   |        
|                      |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |         |        
|                      |                                               | Total Tier 2 capital     |          |         | 1,262.6 |        |          |         | 1,253.3 |        |          |         | 1,310.4 |   |          |         | 1,308.1 |         |          |         | 1,296.1 | 
|                      |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |         |        
|                      |                                               | Total risk-based capital |          | $       | 4,645.0 |        |          | $       | 4,535.4 |        |          | $       | 4,485.3 |   |          | $       | 4,402.3 |         |          | $       | 4,326.1 | 
|                      |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |         |        
|Risk-weighted assets  |                                               | $                        | 41,626.6 |         |         | $      | 40,526.2 |         |         | $      | 39,986.0 |         |         | $ | 40,124.6 |         |         | $       | 39,120.8 |        
|                     
|                     
|                     
|                     
|Risk-based ratios:    |                                               |                          |          |         |         |        |          |         |         |        |          |         |         |   |          |         |         |         |          |        
|                     
|                     
|                     
|                     
|                      | Tier 1 capital                                |                          |          | 8.13    | %       |        |          | 8.10    | %       |        |          | 7.94    | %       |   |          | 7.71    | %       |         |          | 7.75    | %      
|                     
|                     
|                     
|                     
|                      | Total capital                                 |                          |          | 11.16   |         |        |          | 11.19   |         |        |          | 11.22   |         |   |          | 10.97   |         |         |          | 11.06   |        
|                     
|                     
|                     
|                     
|Leverage ratio        |                                               |                          | 7.07     |         |         |        | 6.94     |         |         |        | 6.69     |         |         |   | 6.57     |         |         |         | 6.59     |        

30



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The Company may, from time to time, engage in repurchases of common stock
in connection with acquisitions or other such purposes, as Management deems
advisable. No such repurchases were made in the nine-month period ending
September 30, 2002.

Commitments

The Companys subsidiary bank had standby letters of credit outstanding of
approximately $1,299.5 million at September 30, 2002 and $1,127.1 million at
December 31, 2001.

The Companys subsidiary bank had outstanding commitments to extend credit
of approximately $12,855.7 million at September 30, 2002 and $12,183.3 million
at December 31, 2001. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.

The Companys policies as to collateral and assumption of credit risk for
off-balance sheet commitments are essentially the same as those for extension
of credit to its customers.

Interest Rate Risk Management

The Companys primary market risk is its exposure to interest rate
changes. Interest rate risk management strategies are designed to optimize net
interest income while minimizing fluctuations caused by changes in the interest
rate environment. It is through these strategies that the Company seeks to
manage the maturity and repricing characteristics of its balance sheet.

The modeling techniques used by the Company simulate changes in net
interest income under various rate scenarios. Important elements of the
techniques include the mix of floating versus fixed rate assets and
liabilities, the scheduled repricing and maturing volumes and rates of the
existing balance sheet, the slope of the yield curve, and prepayment
assumptions. Changes in the preceding assumptions will cause these results to
change.

As of September 30, 2002, a parallel increase in interest rates of 100
basis points would have increased net interest income by approximately $63.5
million on an annualized basis. For the same period, a parallel decrease in
interest rates of 100 basis points would have decreased net interest income by
approximately $48.7 million on an annualized basis. These projections are
based on a flat rate scenario. Actual interest rate adjustments made by the
Fed, such as the 50 basis point decrease made on November 6, 2002, do not
result in parallel shifts in interest rates because of factors relating to the
sloping yield curve.

31



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##### Table of Contents



Derivative Financial Instruments

Derivative financial instruments that are used as a part of the Companys
interest rate risk management strategy include interest rate swap agreements
(swaps). These swaps qualify for hedge accounting treatment and are
designated as follows: (1) Some swaps provide for the Company to pay interest
based on the Floating London Interbank Offered Rate (LIBOR) while receiving
payments on a fixed rate. These swaps are designated as fair value hedges of
pools of fixed-rate deposit liabilities and certain fixed-rate long-term debt.
(2) Some swaps also provide for the Company to pay interest based on LIBOR
while receiving payments on a fixed rate. These swaps are designated as cash
flow hedges of the interest received on pools of floating-rate LIBOR loans.
(3) Other swaps provide for the Company to pay a fixed rate of interest while
receiving payments on a floating rate. These swaps are designated as cash flow
hedges of the interest paid on federal funds purchased and long-term bank
notes.

|                                                     |  |         
|---------------------------------------------------- |  | --------
|End User Derivative Instruments(Dollars in Millions) |  | Table 10

|                   |                               |                                                   |                                                   |         |          |       |           |  |          |    |          |  |       |      |        |  |      |      |                |   |      |      |  |  |   |      |   |       |      |      |  
|------------------ | ----------------------------- | ------------------------------------------------- | ------------------------------------------------- | ------- | -------- | ----- | --------- |  | -------- | -- | -------- |  | ----- | ---- | ------ |  | ---- | ---- | -------------- | - | ---- | ---- |  |  | - | ---- | - | ----- | ---- | ---- | -
|                   |                               |                                                   |                                                   |         |          |       |           |  | Weighted |    |          |  |       |      |        |  |      |      | Carrying Value
|                   |                               |                                                   |                                                   |         |          |       |           |  | Average  |    | Average  |  |       |      |        |  |     
|                   |                               |                                                   |                                                   |         | Notional |       | Maturity  |  | Received |    | Average  |  | Gross |      | Gross  |  |     
|                   |                               |                                                   |                                                   |         | Balance  |       | In Months |  | Rate     |    | Pay Rate |  | Gains |      | Losses |  | Net 
|                   |                               |                                                   |                                                   |         |          |       |           |  |          |    |          |  |       |      |        |  |     
|Fair Value Hedges: |                               |                                                   |                                                   |         |          |       |           |  |          |    |          |  |       |      |        |  |      |      |                |   |      |      |  |  |   |      |   |      
|                  
|                  
|                  
|                  
|                   |                               | Interest
rate swaps  received
fixed/pay floating |                                                   | $       | 1,526.5  |       |           |  | 29       |    |          |  | 6.94  | %    |        |  | 1.97 | %    |                | $ | 99.5 |      |  |  |  |      |   | $     | 99.5 |     
|                  
|                  
|                  
|                  
|Cash Flow Hedges:  |                               |                                                   |                                                   |         |          |       |           |  |          |    |          |  |       |      |        |  |      |      |                |   |      |      |  |  |   |      |   |      
|                  
|                  
|                  
|                  
|                   |                               |                                                   | Interest rate swaps  received
fixed/pay floating |         |          | 450.0 |           |  |          | 52 |          |  |       | 6.77 |        |  |      | 1.87 |                |   |      | 65.5 |  |  |   |     |   |       |      | 65.5 |  
|                  
|                  
|                  
|                  
|                   |                               |                                                   | Interest rate swaps  received
floating/pay fixed |         |          | 700.0 |           |  |          | 4  |          |  |       | 2.00 |        |  |      | 2.40 |                |   |      |     |  |  |   | (3.1 | ) |       |      | (3.1 | )
|                  
|                  
|                  
|                  
|                   | Mortgage Lending Commitments: |                                                   |                                                   |         |          |       |           |  |          |    |          |  |       |      |        |  |      |      |                |   |      |      |  |  |   |      |   |       |     
|                  
|                  
|                  
|                  
|                   |                               |                                                   | Forward contracts                                 |         |          | 796.6 |           |  |          | 2  |          |  |       |     |        |  |      |     |                |   |      |     |  |  |   | (2.3 | ) |       |      | (2.3 | )
|                  
|                  
|                  
|                  
|                   |                               |                                                   | Interest rate lock commitments                    |         |          | 276.0 |           |  |          | 2  |          |  |       |     |        |  |      |     |                |   |      | 5.1  |  |  |   |     |   |       |      | 5.1  |  
|                   |                               |                                                   |                                                   |         |          |       |           |  |          |    |          |  |       |      |        |  |      |      |                |   |      |      |  |  |   |      |   |      
|                   | Total Derivatives             |                                                   | $                                                 | 3,749.1 |          |       |           |  |          |    |          |  |       |      |        |  |      |      |                |   |      |      |  |  |   |      | $ | 164.7 |     
|                   |                               |                                                   |                                                   |         |          |       |           |  |          |    |          |  |       |      |        |  |      |      |                |   |      |      |  |  |   |      |   |      

Some of the Companys derivative financial instruments do not qualify for
hedge accounting. The Companys mortgage banking subsidiary enters into
interest rate locks, where customers have locked into mortgage loans at a set
interest rate, and forward sales commitments, which are sales of mortgage loans
to third parties at a specified price. The Company also enters into various
contracts to provide derivative products to customers and enters into
offsetting positions with third parties. Since the Company offsets its
customer positions with positions through third parties, there is no impact to
net earnings for these derivatives, other than fees associated with
facilitating the transaction for the customer.

Credit risk represents the potential loss that may occur due to the
nonperformance by a party to a contract. The Company controls credit risk for
derivatives by applying uniform credit standards maintained for other
activities with credit risk. The Company monitors transactions under credit
risk limits previously approved as a result of the credit review and also
enters into collateralization agreements with each counterparty.

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Contingencies

Certain of the Companys subsidiaries are defendants in various legal
proceedings arising in the normal course of business. These claims relate to
the lending and investment advisory services provided by the Company and
include alleged compensatory and punitive damages.

In addition, subsidiaries of the Company have been named as defendants in
suits that allege fraudulent, deceptive or collusive practices in connection
with certain financing and deposit-taking activities, including suits filed as
class actions. These suits are typical of complaints that have been filed in
recent years challenging financial transactions between plaintiffs and various
financial institutions. The complaints in such cases frequently seek punitive
damages in transactions involving fairly small amounts of actual damages, and
in recent years, have resulted in large punitive damage awards to plaintiffs.

Although it is not possible to determine with any certainty at this point
in time the potential exposure related to punitive damages in connection with
these suits, Management, based upon consultation with legal counsel, believes
that the ultimate resolutions of these proceedings will not have a material
adverse effect on the Companys financial statements.

33



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##### Table of Contents






Item 4. Controls and Procedures

The Company has evaluated the effectiveness of its disclosure controls and
procedures pursuant to Securities Exchange Act Rule 13a-14. The evaluation was
performed under the supervision and with the participation of the Companys
Disclosure Committee and Management, including the principal executive officer
and the principal financial officer, within 90 days prior to the date of the
filing of this quarterly report. Based on this evaluation, the principal
executive officer and principal financial officer have concluded that the
disclosure controls and procedures are effective in ensuring that all material
information required to be disclosed in this quarterly report has been
communicated to them in a manner appropriate to allow timely decisions
regarding required disclosure.

Subsequent to the date of their evaluation, there were no significant
changes in internal controls or other factors that could significantly affect
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

34



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##### Table of Contents






PART II  OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits
| | --- |  | --------

|  |  |      |  |                                                                                                                                                                                                                                                                                                   
|- |  | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* |  | 3(a) |  | Composite Restated Certificate of Incorporation
of SouthTrust Corporation, which was filed as Exhibit 3(i) to
SouthTrust Corporations Quarterly Report on Form 10-Q for the
quarter ended March 31, 2002 (File No. 0-3613)                                                                       
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|* |  | 3(b) |  | Composite Restated Bylaws of SouthTrust
Corporation, which was filed as Exhibit 4(e) to the Registration
Statement on Form S-4 of SouthTrust Corporation (Registration No.
33-61557)                                                                                                              
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|* |  | 4(a) |  | Articles FOURTH, SIXTH, SEVENTH, and ELEVENTH of the Restated
Certificate of Incorporation of SouthTrust Corporation (included at Exhibit 3(a))                                                                                                                                                   
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|* |  | 4(b) |  | Certificate of Designation of Preferences and Rights of Series 1999 Junior
Participating Preferred Stock, adopted December 16, 1998 and
effective February 22, 1999, which was filed as Exhibit A to
Exhibit 1 to SouthTrust Corporations
Registration Statement on Form 8-A (File No. 001-14781)
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|* |  | 4(c) |  | Amended and Restated Shareholders Rights Agreement, dated as of August 1,
2000 between SouthTrust Corporation and American Stock Transfer
& Trust Company, Rights Agent, which was filed as Exhibit 1 to
SouthTrust Corporations Registration Statement on Form 8-A
(File No. 001-14781)        
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|* |  | 4(d) |  | Indenture, dated as of May 1, 1987, between
SouthTrust Corporation and National Westminster Bank USA, which was
filed as Exhibit 4(a) to SouthTrust Corporations Registration
Statement on Form S-3 (Registration No. 33-13637)                                                                  
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|* |  | 4(e) |  | Subordinated Indenture, dated as of May 1, 1992,
between SouthTrust Corporation and Chemical Bank, which was filed as
Exhibit 4(b)(ii) to the Registration Statement on Form S-3 of
SouthTrust Corporation (Registration No. 33-52717)                                                            
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|* |  | 4(f) |  | Form of Senior Indenture, which was filed as Exhibit 4(b)(i) to the
Registration Statement on Form S-3 of SouthTrust Corporation (Registration No.
33-52717)                                                                                                                                      
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|  |  | 99.1 |  | Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            
| 
| 
| 
| 
|  |  |      |  |                                                                                                                                                                                                                                                                                                   
| 
| 
| 
| 
|  |  | 99.2 |  | Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            



---

|* |  | Incorporated herein by reference
|- |  | --------------------------------

35



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##### Table of Contents





| | (b) |  | Reports on Form 8-K filed in the third quarter of 2002: a Form
8-K was filed on August 13, 2002 pertaining to the following
submissions to the Securities and Exchange Commission by Wallace D.
Malone, Jr., principal executive officer and Alton E. Yother,
principal financial officer: (1) Statements under oath required by
Commission Order No. 4-460 and (2) The certification relating to and
accompanying SouthTrusts Quarterly Report on 10-Q for the quarter
ended June 30, 2002, pursuant to 18 U.S.C. Section 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                                                                   
|----------------------- |  | ------------------------------------------------------------------
|                        |  | SOUTHTRUST CORPORATION                                            
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                        |  | /s/ Wallace D.
Malone, Jr.                                        
|                       
|                       
|                       
|                       
|Date: November 13, 2002 |  |                                                                   
|                       
|                       
|                       
|                       
|                        |  | Wallace D. Malone, Jr.
Chairman and Chief
Executive Officer       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                       
|                        |  | /s/ Alton E.
Yother                                               
|                       
|                       
|                       
|                       
|Date: November 13, 2002 |  |                                                                   
|                       
|                       
|                       
|                       
|                        |  | Alton E. Yother
Executive Vice President,
Treasurer and Controller

37



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##### Table of Contents



CERTIFICATIONS

I, Wallace D. Malone, Jr., certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of SouthTrust
Corporation;                                                                                                                                                                                                                                                 
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as, and for, the periods presented in this
quarterly report;                      
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |  |  |                                                            
|----------------------- |  |  |  | -----------------------------------------------------------
|                        |  |  |  | /s/ Wallace D. Malone, Jr.                                 
|Date: November 13, 2002 |  |  |  | Wallace D. Malone, Jr.
Chairman and Chief Executive Officer

38



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##### Table of Contents



CERTIFICATIONS

I, Alton E. Yother, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of SouthTrust
Corporation;                                                                                                                                                                                                                                                 
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as, and for, the periods presented in this
quarterly report;                      
|
| | 4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                                                   
|----------------------- |  | ------------------------------------------------------------------
|                        |  | /s/ Alton E.
Yother                                               
|Date: November 13, 2002 |  | Alton E. Yother
Executive Vice President, Treasurer and Controller

39