Justice Department Reaches Agreement Requiring Divestitures in Merger of Regions Financial Corp. and AmSouth

On October 19, the DOJ announced that Regions Financial Corporation and AmSouth Bancorporation agreed to sell 52 AmSouth branch offices with approximately $2.7 billion in deposits in Alabama, Mississippi and Tennessee in order to resolve competitive concerns raised by the companies’ proposed merger. The DOJ said that without the divestitures the merger would adversely affect competition in local markets in the three states for small business lending, resulting in fewer choices for small business customers. The combination of Regions and AmSouth creates the largest bank in Alabama and Mississippi, the 2nd largest bank in Tennessee, and the15th largest bank in the United States.
Under the agreement, the companies will divest 39 branches with two billion in deposits in six Alabama markets, six branches with $304 million in deposits in four Mississippi markets, and seven branches with $408.2 million in deposits in seven Tennessee markets. The divestitures will include the consumer and commercial loans associated with the divested branches. The companies also agreed that in selected areas where the merging firms overlap in Alabama, Florida, Louisiana, Mississippi and Tennessee, if a branch office is closed within three years of the merger, they will sell or lease the office to a commercial bank-buyer so long as there is a bank-buyer offer that meets or exceeds the best offer from a non-bank buyer. The physical branches, absent deposits and loans, are valuable assets because the facility is already set up for the business of banking and may facilitate entry into or expansion within a market.

The proposed merger is subject to the final approval of the Board of Governors of the Federal Reserve System. The DOJ will advise the Federal Reserve Board that subject to the firms’ divestiture of the branch offices specified in the agreement and associated loans and deposits, the Antitrust Division will not challenge the merger.

Authored by

Andre P. Barlow
202-589-1838
abarlow@dbmlawgroup.com