Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - REGIONS FINANCIAL CORP | d8k.htm |
 Morgan Stanley
Financials Conference
February 1, 2011
Grayson Hall,
Chief Executive Officer
Exhibit 99.1 |
 ›This presentation
may
include
forward-looking
statements
which
reflect
Regions’
current
views
with
respect
to
future
events
and
financial
performance.
The
Private
Securities
Litigation
Reform
Act
of
1995
(“the
Act”)
provides
a “safe harbor”
for forward-looking statements which are identified as such and are accompanied by the
identification of important factors that could cause actual results to differ materially from the forward-looking statements.
For these statements, we, together with our subsidiaries, claim the protection afforded by the safe
harbor in the Act. Forward-looking statements are not based on historical information, but rather are related to future
operations,
strategies,
financial
results
or
other
developments.
Forward-looking
statements
are
based
on
management’s
expectations
as
well
as
certain
assumptions
and
estimates
made
by,
and
information
available
to,
management at the time the statements are made. Those statements are based on general assumptions
and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from
the
views,
beliefs
and
projections
expressed
in
such
statements.
These
risks,
uncertainties
and
other
factors
include,
but
are
not
limited
to,
those
described
below:
›
The Dodd-Frank Wall Street Reform and Consumer Protection Act became law on July 21, 2010, and a
number of legislative, regulatory and tax proposals remain pending. Additionally, the U.S. Treasury and federal
banking
regulators
continue
to
implement,
but
are
also
beginning
to
wind
down,
a
number
of
programs
to
address
capital
and
liquidity
in
the
banking
system.
All
of
the
foregoing
may
have
significant
effects
on
Regions
and
the
financial
services
industry,
the
exact
nature
of
which
cannot
be
determined
at
this
time.
›
The impact of compensation and other restrictions imposed under the Troubled Asset Relief Program
(“TARP”) until Regions repays the outstanding preferred stock and warrant issued under the TARP, including
restrictions on Regions’
ability to attract and retain talented executives and associates.
›
Possible
additional
loan
losses,
impairment
of
goodwill
and
other
intangibles,
and
adjusted
valuation
allowances
on
deferred
tax
assets
and
the
impact
on
earnings
and
capital.
›
Possible changes in interest rates may increase funding costs and reduce earning asset yields, thus
reducing margins. ›
Possible changes in general economic and business conditions in the United States in general and in the
communities Regions serves in particular, including any prolonging or worsening of the current unfavorable
economic conditions including unemployment levels.
›
Possible changes in the creditworthiness of customers and the possible impairment of the collectability
of loans. ›
Possible
changes
in
trade,
monetary
and
fiscal
policies,
laws
and
regulations
and
other
activities
of
governments,
agencies,
and
similar
organizations,
may
have
an
adverse
effect
on
business.
›
The current stresses in the financial and real estate markets, including possible continued
deterioration in property values. ›
Regions' ability to manage fluctuations in the value of assets and liabilities and off-balance
sheet exposure so as to maintain sufficient capital and liquidity to support Regions' business.
›
Regions' ability to expand into new markets and to maintain profit margins in the face of competitive
pressures. ›
Regions' ability to develop competitive new products and services in a timely manner and the acceptance
of such products and services by Regions' customers and potential customers. ›
Regions' ability to keep pace with technological changes.
›
Regions' ability to effectively manage credit risk, interest rate risk, market risk, operational risk,
legal risk, liquidity risk, and regulatory and compliance risk. ›
Regions’
ability to ensure adequate capitalization which is impacted by inherent uncertainties in forecasting
credit losses. ›
The cost and other effects of material contingencies, including litigation contingencies, and any
adverse judicial, administrative or arbitral rulings or proceedings. ›
The effects of increased competition from both banks and non-banks.
›
The effects of geopolitical instability and risks such as terrorist attacks.
›
Possible changes in consumer and business spending and saving habits could affect Regions' ability to
increase assets and to attract deposits. ›
The effects of weather and natural disasters such as floods, droughts and hurricanes, and the effects
of the Gulf of Mexico oil spill. ›
Possible downgrades
in ratings issued by rating agencies.
›
Potential
dilution
of
holders
of
shares
of
Regions’
common
stock
resulting
from
the
U.S.
Treasury’s
investment
in
TARP.
›
Possible
changes
in
the
speed
of
loan
prepayments
by
Regions’
customers
and
loan
origination
or
sales
volumes.
›
Possible acceleration of prepayments on mortgage-backed securities due to low interest rates and
the related acceleration of premium amortization on those securities. ›
The effects of problems encountered by larger or similar financial institutions that adversely affect
Regions or the banking industry generally. ›
Regions’
ability to receive dividends from its subsidiaries.
›
The
effects
of
the
failure
of
any
component
of
Regions’
business
infrastructure
which
is
provided
by
a
third
party.
›
Changes in accounting policies or procedures as may be required by the Financial Accounting Standards
Board or other regulatory agencies. ›
The
effects
of
any
damage
to
Regions’
reputation
resulting
from
developments
related
to
any
of
the
items
identified
above.
›The
foregoing
list
of
factors
is
not
exhaustive.
For
discussion
of
these
and
other
factors
that
may
cause
actual
results
to
differ
from
expectations,
look
under
the
captions
“Forward-Looking
Statements”
and
“Risk
Factors”
in
Regions’
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2009
and
Quarterly
Reports
on
Form
10-Q
for
the
quarters
ended
September
30,
2010,
June
30,
2010
and
March
31,
2010,
as
on
file
with
the
Securities and Exchange Commission.
›The words "believe," "expect," "anticipate,"
"project," and similar expressions often signify forward-looking statements. You should not place undue reliance on any
forward-looking statements, which speak only as of the date
made. We assume no obligation to update or revise any forward-looking statements that are made from
time to time. Forward-Looking Statements
2 |
 Our primary focus is
returning to sustainable profitability through
disciplined execution of our
strategic priorities
3 |
 Why Regions?
•
Strong Southeastern franchise with comprehensive line
of business offerings
•
Leading brand favorability and exceptional service
quality
•
Solid core business performance
•
Aggressively identifying and disposing of problem assets
•
Capital and liquidity remain solid
4 |
 Targeted Growth
Areas # 1 Market Share in Alabama,
Tennessee and Mississippi
Strong Southeastern Franchise
5
* As of 12/31/2010
Ranked 5
th
or Better in Market Share
Headquarters Birmingham, AL
Associates
27,829
Branches
1,772
Morgan Keegan Offices
321
Regions Insurance Offices
30
ATMs
2,148
Deposits*
$95 Billion
Loans*
$83 Billion
Projected population growth for
Regions footprint is above US
average growth
Operate on one fully integrated
technology platform |
 Consumer Services
6
Deposits
Mortgage
Consumer
Lending
Insurance
Credit/Debit
Cards
Branches
Online
Banking
Mobile
Banking
Telebanking
ATMs
Diversified Offerings
Multi-Channel Delivery
Private
Banking |
 Business Services
7
Business Segments
Small Business
Middle Market
Real Estate
Core Middle Market
Sales > $20MM
Specialized Groups
Public, Institutional, Not for Profit,
Healthcare, Transportation,
Franchise Restaurant, Energy,
Regions Business Capital
Commercial Real Estate
Affordable Housing
Homebuilders
Real Estate Corporate
Banking
Product Groups
Treasury Management
Capital Markets /
Syndications
Equipment Finance
Relationship Managed
›
Business Banking (Metro
Markets)
Sales $2-20MM
›
Community Banking
Sales > $2MM
Branches
Sales < $2MM |
 Morgan Keegan
8
Business Units
Fixed Income
Capital Markets
Equity Capital
Markets
Investment
Banking
Private Client
Group
Regions
Morgan
Keegan Trust
Services
Institutional
Sales &
Trading,
Fixed Income
Research
Equity
Research,
Institutional
Sales &
Trading
Municipal
Finance, M&A
Public
Offerings,
Corporate
Debt
Retail
Brokerage
Personal &
Institutional
Trust, Timber
Management |
 Excellent Service Quality
and Brand Strength being Recognized
9
›
Regions has the highest brand favorability
(1)
›
Regions continues to perform in the top 10% in customer loyalty
and top 20% for branch service quality
(2)
›
Regions ranked top in customer loyalty
(3)
›
Regions named “Friendliest Bank”
(4)
(1)
Based on TNS survey 3Q10 Consumer Banking Market Effectiveness Study
(2)
Based on Gallup survey
(3)
Based on Bain survey
(4)
Based on Prime Performance study |
 Strong Low-Cost
Deposit Growth While Driving Lower Deposit Costs
10
(1)
Full Year Average
Low Cost Deposits
(1)
Deposit Costs
(1) |
 Improved Deposit
Mix •
Reduced Average Time Deposit mix from 35% in 2009 to 27% in 2010
•
Grew Low-Cost Deposits 13.4% year-over-year
11
Average Deposits $94.6B
Average Deposits $96.5B |
 Disciplined Focus on New
Checking Account Growth •
Approximately 1 million new checking accounts in 2009 and 2010
•
Grew quality checking accounts
(1)
by 3% over 2009
•
Increased sales productivity with new account sales per branch improving
3.4% from 2009
•
Continued efforts to improve checking portfolio profitability through fee
generating accounts that provide customer value and fairly compensate
Regions
•
Fee based accounts grew 262% over 2009
•
Realize full potential of new accounts by selling deeper to new relationships
through new account conversations and onboarding
12
(1)
Quality
checking
accounts
are
those
accounts
that
have
a
average
balance
of
$500
and
/
or
have
at
least
10
customer transactions |
 Consumer Loan Production
Improving; However Consumers Continue to De-Leverage
13
Mortgage Production remains strong –
second best year in terms of Mortgage
Production
New Consumer Loan Production
volumes are improving in Branch Small
Business, Direct and Indirect Auto
Consumers De-Leveraging continues
to outpace Loan Production
Consumer Confidence and
Unemployment need to improve before
robust loan growth is achieved
*$5.2B in Mortgage production sold to Agencies
Consumer Loan Production
Consumer Loans
2.7
3.5
3.7
3.0 |
 Small Business
Business Banking (Metro
Markets)
Community Banking
Branch Small Business
Middle Market
Commercial and Industrial
Specialized Groups
Commercial Real Estate
Professional income property
developers, owners and
operators
Public real estate companies
Homebuilders
Affordable housing tax credits
Middle Market and Small Business Comprise
81% of Business Service Revenue
14
Average Loans
(1)
(1) Average balances 4Q10 |
 We are Growing
Commercial Loans Commercial & Owner Occupied Real Estate Loan Growth
15 |
 Core revenue continues
to grow 16
* Non-GAAP; refer to Appendix for Non-GAAP reconciliation
($ in millions)
Net Interest
Income
Core Non-
Interest
Revenue*
Total
Core
Revenue
4Q10
$877
+
$794
=
$1,671
3Q10
$868
+
$748
=
$1,616
2Q10
$856
+
$756
=
$1,612
1Q10
$831
+
$734
=
$1,565
4Q09
$850
+
$743
=
$1,593 |
 Net Interest Margin
Impacted by Excess Liquidity and Non-Accruals
17
Net Income & Net Interest Margin
Impact of Excess Liquidity &
Non-Accruals on NIM |
 Growth of Fee Income and
Debit Card Interchange Migration to Fee Based Accounts
Growth in Debit / ATM Fees
18 |
 Strengthened Our Core
Franchise Through Productivity & Efficiency Initiatives
(1)
Excludes $6 billion goodwill impairment
(2)
Non-GAAP; refer to Appendix for Non-GAAP reconciliation
19
($ in millions)
Branches
1,965
1,900
1,895
1,772
Reduced branch count by 10%
since 2007
Headcount
33,161
30,784
28,509
27,829
Headcount declined 5,332 or
16%
Total
Expenses
$4,660
$4,792
(1)
$4,751
$4,985
Adjusted
Expenses
(2)
$4,246
$4,448
$4,559
$4,667
Expenses continue to be
impacted by credit-related
expenses, elevated FDIC
expenses and professional and
legal fees
Credit-related
expenses
$153
$282
$424
$439
Credit-related costs should
subside as the economy
recovers |
 Non-Performing Loan
Inflows Decline NPL Inflow by Type
Business Services Gross NPLs
20 |
 Non-performing Asset
Levels Decline ›
Non-performing assets declined $308 million from third quarter
›
For the full year declined $494 million
Non-Performing Assets
21 |
 Loan Charge-Offs and
Allowance (1) Loan charge-offs related Sales / Transfer to Held for Sale
(2) Excludes loans held for sale
Loan Charge-Offs
Allowance & Coverage
22 |
 Higher Risk Portfolio
Segments Significantly Reduced
23 |
 Solid Capital; Above
proposed Basel minimum ratios
24 |
 Favorable liquidity
position 25
›
Regions low loan to deposit ratio favorable among peers
›
Favorable funding mix driven by low cost deposits
* Based on 4Q10 ending balances |
 Why Regions?
•
Strong Southeastern franchise with comprehensive line
of business offerings
•
Leading brand favorability and exceptional service quality
•
Solid core business performance
•
Aggressively identifying and disposing of problem assets
•
Capital and liquidity remain solid
26 |
 |
 Non-GAAP
reconciliation - Revenue
Note: The following table illustrates the method of calculating the Non-GAAP financial measures used
in this slide presentation:
28
($ amounts in millions)
4Q09
1Q10
2Q10
3Q10
4Q10
Net Interest Income (GAAP)
850
$
831
$
856
$
868
$
877
$
Non-Interest Revenue (GAAP)
718
812
756
750
1,213
Total Revenue (GAAP)
1,568
1,643
1,612
1,618
2,090
Adjustments:
Securities (gains) losses, net
96
(59)
-
(2)
(333)
Gain on sale of mortgage loans
-
-
-
-
(26)
Leveraged lease termination gains
(71)
(19)
-
-
(59)
Total adjustments
25
(78)
-
(2)
(418)
Adjusted Total Revenue (non-GAAP)
1,593
$
1,565
$
1,612
$
1,616
$
1,672
$ |
 Non-GAAP
reconciliation - Expenses
Note: The following table illustrates the method of calculating the Non-GAAP financial measures used
in this slide presentation:
29
($ in millions)
2007
2008
2009
2010
Total Non-Interest Expenses (GAAP)
$ 4,660
$ 10,792
$ 4,751
$ 4,985
Adjustments:
Goodwill impairment charge
6,000
Regulatory settlement charge
200
Merger-related charges
351
201
FDIC Special Assessment
64
Other-than-temporary impairment expense
6
22
75
2
MSR impairment
6
85
Loss on early extinguishment of debt
65
108
Branch consolidation charges
53
8
VISA settlement
51
(29)
-
-
Adjusted Non-Interest Expenses (non-GAAP)
4,246
$
4,448
$
4,559
$
$ 4,667 |