AmSouth's John Woods Sees Smooth Flying Ahead

BIRMINGHAM, Ala. -- It was in Air Force flight school, four decades ago, that John W. Woods mastered many of the skills needed to run AmSouth Bancorp., Alabama's largest bank.

As part of the last Air Force class to train on propeller-driven T-28s and B-25s, Mr. Woods says he gained the self-confidence every leader needs.

"There are tough moments in everybody's career - and every time there's been a tough moment, I think about that Air Force training and think, by golly, I can whip this, too."

AmSouth, based in Birmingham, experienced its toughest moments during the past four years when it was rocked by credit woes and executive turmoil. Mr. Woods, 60, managed to pilot the company through those troubles and now seems headed back into bright blue skies.

True to form, Mr. Woods does not plan any daredevil maneuvers. His goal, until he retires in five years, is to achieve cautious growth while maintaining tight expense controls.

Focus Is on the Mid-South

Unlike many of his Southeast banking peers, Mr. Woods is little troubled by the industry's merger mania. He says he will consider buying banks and busted thrifts in an area he terms the "mid-South" - Alabama, northern Florida, Tennessee, and Mississippi - but is not obsessed with growth for growth's sake.

"Profits will help more than asset size," he says. "The last time I looked, we don't pay our dividends out of assets. And we're at a size where we can do more for our customers than if we were twice as large."

Mr. Woods makes clear that he wants AmSouth, with $8.5 billion in assets, to remain independent. But he says shareholder voices "will be heard" if a respectable offer is forthcoming.

A Slow-Growth Market

Most analysts say that's unlikely until the current round of in-market consolidation runs its course. The Alabama market is growing slower than in most of the region's other states.

In the mid-1980s, AmSouth was touted as an acquisition target, but the takeover premium in the company's stock has since disappeared. AmSouth is trading at 123% of its book value, below the 143% composite for 11 regional banks followed by Raymond James & Associates Inc. in St. Petersburg, Fla.

"With AmSouth, you're basically buying solid banking fundamentals, conservative management, and a predictable growth rate," says banking analyst J. Frederick Meinke of Raymond James.

|Bottom-Line Mentality'

Fundamentals do seem to be improving at AmSouth after several lean years. Mr. Woods "proved he's got a good bottom-line mentality," says Dennis F. Shea, banking analyst with Morgan Stanley & Co. in New York. "He's really helped AmSouth weather the economic storm better than many of its competitors."

During the third quarter, AmSouth's nonperforming assets fell by $8.9 million or 5% to $159 million, which represents 2.91% of total loans and foreclosed real estate. Annualized return on assets reached 0.91%, one of the best rankings among large southeastern banks.

In August, AmSouth took advantage of a climbing stock price to raise $77 million in new capital. Shareholder equity of $703.7 million now provides an equity-to-assets ratio of 7.71%, one of the highest in the region.

Mr. Woods' reign at AmSouth began in 1969, when he became president of the lead Birmingham bank after 12 years with New York-based Chemical Bank.

Rapid Rise to the Top

As a vice president in charge of Chemical's southern division, Mr. Woods had called on banks throughout the region to sell correspondent banking services and loan syndications. By 1972, he was chairman and chief executive of the AmSouth holding company.

During the 1970s, after Alabama loosened its restrictions on bank holding company expansion, Mr. Woods managed an acquisition program that built the AmSouth franchise into the state's largest, with a 19% share of all bank deposits.

When interstate banking barriers fell, in the late 1980s, Mr. Woods went acquiring again. He assembled a major bank in the Panhandle region of Florida, with assets of $974 million. He also established a toehold in Nashville, where the bank has $27 million in assets.

Mr. Woods views his acquisition program as his greatest accomplishment. But ironically, it also produced AmSouth's major headache, one that leaves a lingering hangover to this day.

Somber Era of Bad Loans

The 1987 acquisition of First Mutual Savings Association of Florida, the largest thrift in Pensacola, left AmSouth sitting on a pile of bad real estate loans.

By the time its problems peaked last year, AmSouth's Florida bank was responsible for $65 million in nonperforming assets, or 42% of the company's total. At midyear, AmSouth earned 1.19% on assets in Alabama, but only 0.32% in Florida.

Understandably, AmSouth will now buy thrifts only with government assistance. Mr. Woods says he is interested in three large S&Ls that may be marketed next year by the Resolution Trust Corp.: Metropolitan Federal, Nashville; Altus Bank, Mobile, Ala.; and Jefferson Federal, Birmingham.

Mr. Woods attempted to expand AmSouth's northern Florida franchise earlier this year by purchasing 18 branches of the now-defunct Southeast Banking Corp. The deal was abrogated when federal regulators seized the Miami-based bank in September. But AmSouth can use the $77 million in new capital raised for that purchase to do other acquisitions.

Acquisition Guidelines

Bank deals might be possible. Mr. Woods says he would consider acquiring companies with up to $2 billion in assets, but would not do any deals that dilute shareholder equity "for any period of time."

AmSouth reported a profit for 1990 of $76.7 million, or $3.26 a share. In the first nine months of this year, the company earned $58.9 million or $2.45 a share.

To boost AmSouth's bottom line, Mr. Woods has moved aggressively to cut costs by adopting a "line of business" strategy in which every operation is scrutinized for its ability to meet return-on-equity goals.

As the first phase of a three-year restructuring plan, AmSouth has contracted to sell three outlying branches, a move that raised eyebrows in a state where intense competition among the major banks has fostered an emphasis on growth.

Bad Day at the Races

AmSouth's image also suffered from the failed attempt to bring horse racing to Birmingham. Since the bankruptcy of the Birmingham Turf Club two years ago, AmSouth has charged off its entire $17 million share of a $40 million loan syndicated among five banks. After writing off the last $6 million in the third quarter, it still holds a $3 million first mortgage.

Former senior executive vice president William L. Marks says AmSouth viewed the racetrack, which would have produced 1,000 jobs, "as maybe something that would help the community. So a little bit of that was integrated into the credit decision." Mr. Marks left AmSouth in February 1990 to become chairman and chief executive of Whitney Holding Corp.'s Whitney National Bank, New Orleans.

Before he retires, Mr. Woods must address the management-succession issue at AmSouth, which fell into limbo after his heir apparent, Dan L. Hendley, abruptly resigned last year. Mr. Hendley had been president of the holding company and lead bank, AmSouth NA.

Now vice president of business affairs at Birmingham-based Samford University, Mr. Hendley still won't comment on his decision to leave. Mr. Woods admits the two men "had some differences." Local banking sources say Mr. Hendley's emphasis on centralized management conflicted with Mr. Woods' more laid-back style.

Mr. Hendley's responsibilities were parceled out to several different executives, with Mr. Woods himself taking over the presidency of the holding company.

Retirement Plans

As a board committee begins looking for a successor, Mr. Woods insists he has no intention of remaining past age 65. He has too many other things to do, such as breeding purebred Simmental cattle on his 700-acre farm near Birmingham.

Mr. Woods and his wife, Loti, already spend three nights a week on the farm, returning to Birmingham on Monday. "It's kind of my entrepreneurial outlook," he explains. "On the farm, if I make a bad decision, I pay for it pretty quickly."

When he isn't farming, Mr. Woods expects to be making furniture in his shop on the farm, or serving on various boards of directors, including that of the Alabama Institute for the Deaf and Blind.

He'll also have time to catch up with his reading, which leans heavily toward military history. His father and brother served in the Marines, but that branch rejected Mr. Woods because of color-blindness. Then he managed to pass the Air Force test and served as a pilot from 1955 to 1957.

Mr. Woods enjoys studying the World War II bombing campaigns over Europe, and the Pacific naval and air battles. He recently purchased and read the entire 15-volume history of the naval war, by Samuel Eliot Morison.

"I'm not ready for a pop quiz on volume seven, but I did read the whole thing over about nine months," Mr. Woods says.

He does not particularly care to devote his leisure time to the subjects of banking theory or management technique. "That type of stuff bores the hell out of me," he says, grimacing like a child who has just been dosed with cough syrup. "I'm not sure you can buy a book at age 60 and learn much about how to change your management style. You've just got to be yourself."

PHOTO : AT EASE: John W. Woods is confident that AmSouth Bancorp., which he has headed since 1972, will continue its cautions growth.

PHOTO : JOHN W. WOODS stands in the main downtown branch of AmSouth Bancorp., the biggest bank in Alabama.

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