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EX-99.3 - VISUAL PRESENTATION - REGIONS FINANCIAL CORPdex993.htm
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EX-99.1 - PRESS RELEASE - REGIONS FINANCIAL CORPdex991.htm

Exhibit 99.2

 

LOGO    FINANCIAL SUPPLEMENT TO FIRST QUARTER 2011 EARNINGS RELEASE

Summary

Quarterly profit of $0.01 per diluted share reflects improved core business performance; Credit trends continue to improve; Commercial and Industrial loans continue to grow

 

 

Strong taxable-equivalent net interest income and lower loan loss provision propel first quarter performance

 

 

First quarter results include:

 

   

$82 million in securities gains

 

   

Loan loss provision declined 29% to $482 million

 

 

Inflows of non-performing loans declined 23% linked quarter to $730 million

 

 

Pre-tax pre-provision net revenue totaled $539 million; on an adjusted basis, was $460 million, or 16% higher compared to the same period a year ago

Credit trends continue to improve

 

 

Non-performing loans, excluding loans held for sale, decreased $73 million or 2% linked quarter, and have declined for four consecutive quarters

 

 

Net charge-offs decreased $201 million or 29% to $481 million; or an annualized 2.37% of loans as compared to fourth quarter’s 3.22%.

 

 

Loan loss provision essentially matched net charge-offs resulting in an 8 basis points increase to 3.92 percent in the allowance for loan losses to net loans

 

 

Allowance coverage ratio (ALL/NPL, excluding loans held for sale) rose to 1.03x as of March 31, 2011, as compared to 1.01x at December 31, 2010 and 0.86x at March 31, 2010

Focus on customers remains a strategic priority; C&I lending continues its momentum

 

 

According to a report issued by the Temkin Group, Regions ranked as the top bank for customer experience, and as one of the top companies in America for customer service across all industries.

 

 

Independent research by TNS, the world’s largest custom research company, awarded Regions two of its inaugural Choice Awards (a National and a Regional) based on the company’s leading “Competitive Momentum” as measured by bank’s customer growth, service quality, brand health and marketing communications.

 

 

According to Gallup, Regions ranked in the top decile in customer loyalty among retail banks the last 5 quarters

 

 

Average commercial & industrial loans, primarily middle market, increased $933 million or 4% linked quarter. Notably, the company experienced increases in 65% of its markets and commercial and industrial balances have grown for nine consecutive months.

 

 

Average loans outstanding declined $1.7 billion or 2% linked quarter, due to our continued de-risking efforts, particularly involving investor real estate, which decreased $1.4 billion in the first quarter.

Net interest margin expansion driven by improving funding mix and slower prepayments resulting in lower investment portfolio premium amortization

 

 

Net interest income decreased $14 million, or 2% linked quarter, due to the decline in number of days in the first quarter versus the fourth quarter

 

 

Net interest margin improved 7 basis points to 3.07 percent as slower prepayments resulted in lower investment portfolio premium amortization in mortgage-backed securities, lower deposit costs, and lower average cash balances at the Federal Reserve

 

 

Deposit costs declined another 5 basis points to 0.59%, driven by the company’s improvement in funding mix; ending low-cost deposits increased $1.9 billion linked quarter or 3% linked quarter

 

 

Aggregate loan yield decreased 3 basis points linked quarter to 4.31% due to interest rate hedges that matured during the quarter

Modest decline in non-interest revenue; Non-interest expenses show improvement

 

 

Non-interest income decreased $370 million, but $31 million or 4% linked quarter adjusted for the following: $333 million and $82 million in securities gains in fourth quarter 2010 and first quarter 2011, respectively, a $26 million gain and $3 million loss on sale of mortgage loans, respectively, and $59 million in leveraged lease terminations gains in fourth quarter 2010.

 

 

Securities gains in 1Q11 and 4Q10 reflect the sale of approximately $2.4 billion and $8.1 billion, respectively, of agency mortgage-backed securities. The proceeds were reinvested in similar securities with slightly longer durations.

 

 

Non-interest expenses decreased 8% linked quarter, however after adjusting for prior quarter’s $55 million loss on early extinguishment of debt, non-interest expenses decreased 4% driven by lower professional and legal fees, other real estate owned expenses, and salaries and benefits.

Strong capital and liquidity profile

 

 

Tier 1 capital ratio of 12.5% (1)

 

 

Tier 1 common ratio of 7.9% (1)

 

 

As the rules are currently being interpreted, Basel III is expected to have a minimal impact to Regions

 

 

Tangible common stockholders’ equity to tangible assets of 5.98%

 

 

Loan to deposit ratio of 84.4%

 

(1) 

estimated


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 2

 

 

Regions Financial Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

($ amounts in millions)

 

     3/31/11     12/31/10     9/30/10     6/30/10     3/31/10  

Assets:

          

Cash and due from banks

   $ 2,042      $ 1,643      $ 1,898      $ 2,097      $ 2,252   

Interest-bearing deposits in other banks

     4,937        4,880        3,852        4,562        4,295   

Federal funds sold and securities purchased under agreements to resell

     341        396        1,137        752        324   

Trading account assets

     1,284        1,116        1,580        1,261        1,238   

Securities available for sale

     24,702        23,289        23,555        24,166        24,219   

Securities held to maturity

     22        24        26        28        30   

Loans held for sale

     1,552        1,485        1,587        1,162        1,048   

Loans, net of unearned income

     81,371        82,864        84,420        85,945        88,174   

Allowance for loan losses

     (3,186     (3,185     (3,185     (3,185     (3,184
                                        

Net loans

     78,185        79,679        81,235        82,760        84,990   

Other interest-earning assets

     1,214        1,219        1,043        1,082        819   

Premises and equipment, net

     2,528        2,569        2,564        2,588        2,637   

Interest receivable

     441        421        512        466        503   

Goodwill

     5,561        5,561        5,561        5,561        5,559   

Mortgage servicing rights (MSRs)

     282        267        204        220        270   

Other identifiable intangible assets

     358        385        414        443        472   

Other assets

     8,307        9,417        8,330        8,192        8,574   
                                        

Total Assets

   $ 131,756      $ 132,351      $ 133,498      $ 135,340      $ 137,230   
                                        

Liabilities and Stockholders’ Equity:

          

Deposits:

          

Non-interest-bearing

   $ 27,480      $ 25,733      $ 25,300      $ 22,993      $ 23,391   

Interest-bearing

     68,889        68,881        69,678        73,257        74,941   
                                        

Total deposits

     96,369        94,614        94,978        96,250        98,332   

Borrowed funds:

          

Short-term borrowings:

          

Federal funds purchased and securities sold under agreements to repurchase

     2,218        2,716        2,451        1,929        1,687   

Other short-term borrowings

     964        1,221        1,210        1,035        997   
                                        

Total short-term borrowings

     3,182        3,937        3,661        2,964        2,684   

Long-term borrowings

     12,197        13,190        14,335        15,415        15,683   
                                        

Total borrowed funds

     15,379        17,127        17,996        18,379        18,367   

Other liabilities

     3,389        3,876        3,361        3,248        2,893   
                                        

Total Liabilities

     115,137        115,617        116,335        117,877        119,592   

Stockholders’ equity:

          

Preferred stock, Series A

     3,389        3,380        3,370        3,360        3,351   

Preferred stock, Series B

     —          —          —          —          259   

Common stock

     13        13        13        13        12   

Additional paid-in capital

     19,047        19,050        19,047        19,038        18,781   

Retained earnings (deficit)

     (4,043     (4,047     (4,070     (3,849     (3,502

Treasury stock, at cost

     (1,400     (1,402     (1,405     (1,405     (1,407

Accumulated other comprehensive income (loss), net

     (387     (260     208        306        144   
                                        

Total Stockholders’ Equity

     16,619        16,734        17,163        17,463        17,638   
                                        

Total Liabilities and Stockholders’ Equity

   $ 131,756      $ 132,351      $ 133,498      $ 135,340      $ 137,230   
                                        


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 3

 

 

Regions Financial Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 

 

($ amounts in millions, except per share data)    Quarter Ended  
     3/31/11     12/31/10      9/30/10     6/30/10     3/31/10  

Interest income on:

           

Loans, including fees

   $ 867      $ 911       $ 919      $ 930      $ 945   

Securities:

           

Taxable

     207        193         214        224        242   

Tax-exempt

     —          —           —          —          1   
                                         

Total securities

     207        193         214        224        243   

Loans held for sale

     13        12         10        9        8   

Federal funds sold and securities purchased under agreements to resell

     —          1         1        1        —     

Trading account assets

     7        12         8        9        12   

Other interest-earning assets

     6        7         6        7        7   
                                         

Total interest income

     1,100        1,136         1,158        1,180        1,215   

Interest expense on:

           

Deposits

     139        152         167        194        242   

Short-term borrowings

     3        2         3        2        3   

Long-term borrowings

     95        105         120        128        139   
                                         

Total interest expense

     237        259         290        324        384   
                                         

Net interest income

     863        877         868        856        831   

Provision for loan losses

     482        682         760        651        770   
                                         

Net interest income after provision for loan losses

     381        195         108        205        61   

Non-interest income:

           

Service charges on deposit accounts

     287        290         294        302        288   

Brokerage, investment banking and capital markets

     267        312         257        254        236   

Mortgage income

     45        51         66        63        67   

Trust department income

     50        50         49        49        48   

Securities gains, net

     82        333         2        —          59   

Other

     112        177         82        88        114   
                                         

Total non-interest income

     843        1,213         750        756        812   

Non-interest expense:

           

Salaries and employee benefits

     594        601         582        560        575   

Net occupancy expense

     109        108         110        110        120   

Furniture and equipment expense

     77        76         75        79        74   

Other-than-temporary impairments

     —          —           1        —          1   

Regulatory charge

     —          —           —          200        —     

Other

     387        481         395        377        460   
                                         

Total non-interest expense

     1,167        1,266         1,163        1,326        1,230   
                                         

Income (loss) before income taxes

     57        142         (305     (365     (357

Income tax expense (benefit)

     (12     53         (150     (88     (161
                                         

Net income (loss)

   $ 69      $ 89       $ (155   $ (277   $ (196
                                         

Net income (loss) available to common shareholders

   $ 17      $ 36       $ (209   $ (335   $ (255
                                         

Weighted-average shares outstanding - during quarter:

           

Basic

     1,257        1,257         1,257        1,200        1,194   

Diluted

     1,259        1,259         1,257        1,200        1,194   

Actual shares outstanding - end of quarter

     1,256        1,256         1,256        1,256        1,192   

Earnings (loss) per common share (1):

           

Basic

   $ 0.01      $ 0.03       $ (0.17   $ (0.28   $ (0.21

Diluted

   $ 0.01      $ 0.03       $ (0.17   $ (0.28   $ (0.21

Cash dividends declared per common share

   $ 0.01      $ 0.01       $ 0.01      $ 0.01      $ 0.01   

Taxable-equivalent net interest income from continuing operations

   $ 872      $ 886       $ 876      $ 863      $ 839   

 

(1) Includes preferred stock dividends.


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 4

 

 

Regions Financial Corporation and Subsidiaries

Consolidated Average Daily Balances and Yield/Rate Analysis

 

($ amounts in millions; yields on taxable-equivalent basis)

 

    Quarter Ended                    
    3/31/11     12/31/10     9/30/10     6/30/10     3/31/10  
    Average     Income/     Yield/     Average     Income/     Yield/     Average     Income/     Yield/     Average     Income/     Yield/     Average     Income/     Yield/  
    Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate  

Assets

                             

Interest-earning assets:

                             

Federal funds sold and securities purchased under agreements to resell

  $ 305      $ —          —     $ 952      $ 1        0.42   $ 1,096      $ 1        0.36   $ 345      $ 1        1.16   $ 373      $ —          —  

Trading account assets

    1,162        8        2.79        1,255        13        4.11        1,214        9        2.94        1,186        9        3.04        1,288        13        4.09   

Securities:

                             

Taxable

    24,758        207        3.39        23,878        193        3.21        23,863        214        3.56        23,862        224        3.77        23,811        242        4.12   

Tax-exempt

    30        —          —          47        —          —          39        —          —          41        —          —          51        1        7.95   

Loans held for sale

    1,486        13        3.55        1,486        12        3.20        1,213        10        3.27        1,031        9        3.50        1,392        8        2.33   

Loans, net of unearned income

    82,412        875        4.31        84,108        920        4.34        85,616        926        4.29        87,266        936        4.30        89,723        952        4.30   

Other interest-earning assets

    4,989        6        0.49        5,188        6        0.46        4,308        6        0.55        6,745        8        0.48        5,973        7        0.48   
                                                                                                                       

Total interest-earning assets

    115,142        1,109        3.91        116,914        1,145        3.89        117,349        1,166        3.94        120,476        1,187        3.95        122,611        1,223        4.04   

Allowance for loan losses

    (3,209         (3,164         (3,223         (3,215         (3,144    

Cash and due from banks

    2,164            2,069            2,059            2,112            2,181       

Other non-earning assets

    17,115            17,515            17,544            17,912            17,917       
                                                           
  $ 131,212          $ 133,334          $ 133,729          $ 137,285          $ 139,565       
                                                           

Liabilities and Stockholders’ Equity

                             

Interest-bearing liabilities:

                             

Savings accounts

  $ 4,837        1        0.08      $ 4,622        1        0.09      $ 4,517        1        0.09      $ 4,478        1        0.09      $ 4,215        1        0.10   

Interest-bearing transaction accounts

    13,228        7        0.21        12,690        6        0.19        13,606        7        0.20        15,651        8        0.21        15,709        11        0.28   

Money market accounts

    27,816        21        0.31        28,273        23        0.32        28,088        22        0.31        27,302        32        0.47        25,715        40        0.63   

Time deposits

    22,971        110        1.94        23,369        122        2.07        25,161        137        2.16        26,933        153        2.28        29,779        190        2.59   
                                                                                                                       

Total interest-bearing deposits (1)

    68,852        139        0.82        68,954        152        0.87        71,372        167        0.93        74,364        194        1.05        75,418        242        1.30   

Federal funds purchased and securities sold under agreements to repurchase

    2,167        1        0.19        3,162        —          —          2,176        1        0.18        1,798        1        0.22        1,989        1        0.20   

Other short-term borrowings

    1,068        2        0.76        1,056        2        0.75        866        2        0.92        847        1        0.47        1,086        2        0.75   

Long-term borrowings

    12,891        95        2.99        14,006        105        2.97        14,878        120        3.20        15,933        128        3.22        17,417        139        3.24   
                                                                                                                       

Total interest-bearing liabilities

    84,978        237        1.13        87,178        259        1.18        89,292        290        1.29        92,942        324        1.40        95,910        384        1.62   
                                                           

Net interest spread

        2.78            2.71            2.65            2.55            2.42   
                                                           

Non-interest-bearing deposits (1)

    26,405            25,688            23,706            23,688            22,817       

Other liabilities

    3,145            3,422            3,349            3,063            3,040       

Stockholders’ equity

    16,684            17,046            17,382            17,592            17,798       
                                                           
  $ 131,212          $ 133,334          $ 133,729          $ 137,285          $ 139,565       
                                                           

Net interest income/margin FTE basis

    $ 872        3.07     $ 886        3.00     $ 876        2.96     $ 863        2.87     $ 839        2.77
                                                                                         

 

(1) Total deposit costs may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs equal 0.59%, 0.64%, 0.70%, 0.79% and 1.00% for the quarters ended March 31, 2011, December 31, 2010, September 30, 2010, June 30, 2010 and March 31, 2010, respectively.

 

4


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 5

  

 

Regions Financial Corporation and Subsidiaries

Selected Ratios

 

 

     As of and for Quarter Ended  
     3/31/11     12/31/10     9/30/10     6/30/10     3/31/10  

Return on average assets (non-GAAP)*

     0.05     0.11     (0.62 %)      (0.98 %)      (0.74 %) 

Return on average assets, excluding regulatory charge (non-GAAP)*

     0.05     0.11     (0.62 %)      (0.40 %)      (0.74 %) 

Return on average common equity*

     0.51     1.04     (5.91 %)      (9.62 %)      (7.28 %) 

Return on average tangible common equity (non-GAAP)*

     0.89     1.78     (10.00 %)      (16.36 %)      (12.29 %) 

Return on average tangible common equity, excluding regulatory charge (non-GAAP)*

     0.89     1.78     (10.00 %)      (6.60 %)      (12.29 %) 

Efficiency Ratio (non-GAAP) (3)

     71.3     72.0     71.6     69.5     74.3

Common equity per share

   $ 10.53      $ 10.62      $ 10.98      $ 11.23      $ 11.77   

Tangible common book value per share (non-GAAP)

   $ 6.00      $ 6.09      $ 6.42      $ 6.65      $ 6.93   

Stockholders’ equity to total assets

     12.61     12.64     12.86     12.90     12.85

Tangible common stockholders’ equity to tangible assets (non-GAAP)

     5.98     6.04     6.31     6.45     6.28

Tier 1 Common risk-based ratio (non-GAAP) (1)

     7.9     7.9     7.6     7.7     7.1

Tier 1 Capital (1)

     12.5     12.4     12.1     12.0     11.7

Total Risk-Based Capital (1)

     16.5     16.4     16.0     15.9     15.8

Allowance for credit losses as a percentage of loans, net of unearned income (2)

     4.01     3.93     3.86     3.79     3.69

Allowance for loan losses as a percentage of loans, net of unearned income

     3.92     3.84     3.77     3.71     3.61

Allowance for loan losses to non-performing loans, excluding loans held for sale

     1.03x        1.01x        0.94x        0.92x        0.86x   

Net interest margin (FTE)

     3.07     3.00     2.96     2.87     2.77

Loans, net of unearned income, to total deposits

     84.4     87.6     88.9     89.3     89.7

Net charge-offs as a percentage of average loans*

     2.37     3.22     3.52     2.99     3.16

Non-performing assets (excluding loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale (4)

     4.78     4.69     4.96     4.93     5.13

Non-performing assets (including loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale (4)

     5.42     5.38     5.65     5.63     5.92

 

* Annualized
(1) Current quarter Tier 1 Common, Tier 1 and Total Risk-Based Capital ratios are estimated
(2) The allowance for credit losses reflects the allowance related to both loans on the balance sheet and exposure related to unfunded commitments and standby letters of credit
(3) Efficiency ratio is shown on an operating basis and excludes adjustments as noted on page 25 in the Reconciliation to GAAP Financial Measures schedule
(4) Beginning in the first quarter of 2011, non-performing assets ratios include non-performing loans held for sale in the denominator, in addition to portfolio loans and foreclosed properties. Prior quarters have been revised to conform to current period presentation.


FINANCIAL SUPPLEMENT TO

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PAGE 6

Loans

 

Loan Portfolio - Period End Data

 
($ amounts in millions)                                 3/31/11     3/31/11  
    3/31/11     12/31/10     9/30/10     6/30/10     3/31/10     vs. 12/31/10     vs. 3/31/10  

Commercial and industrial

  $ 23,149      $ 22,540      $ 21,501      $ 21,096      $ 21,220      $ 609        2.7   $ 1,929        9.1

Commercial real estate mortgage - owner-occupied

    11,889        12,046        11,850        11,967        12,028        (157     –1.3     (139     –1.2

Commercial real estate construction - owner-occupied

    430        470        522        547        598        (40     –8.5     (168     –28.1
                                                                       

Total commercial

    35,468        35,056        33,873        33,610        33,846        412        1.2     1,622        4.8

Commercial investor real estate mortgage

    12,932        13,621        14,489        15,152        15,702        (689     –5.1     (2,770     –17.6

Commercial investor real estate construction

    1,895        2,287        2,975        3,778        4,703        (392     –17.1     (2,808     –59.7
                                                                       

Total investor real estate

    14,827        15,908        17,464        18,930        20,405        (1,081     –6.8     (5,578     –27.3

Residential first mortgage

    14,404        14,898        15,723        15,567        15,592        (494     –3.3     (1,188     –7.6

Home equity

    13,874        14,226        14,534        14,802        15,066        (352     –2.5     (1,192     –7.9

Indirect

    1,626        1,592        1,657        1,900        2,162        34        2.1     (536     –24.8

Other consumer

    1,172        1,184        1,169        1,136        1,103        (12     –1.0     69        6.3
                                                                       
  $ 81,371      $ 82,864      $ 84,420      $ 85,945      $ 88,174      $ (1,493     –1.8   $ (6,803     –7.7
                                                                       

Loan Portfolio - Average Balances

 
($ amounts in millions)                                 1Q11     1Q11  
    1Q11     4Q10     3Q10     2Q10     1Q10     vs. 4Q10     vs. 1Q10  

Commercial and industrial

  $ 22,889      $ 21,956      $ 21,313      $ 21,109      $ 21,429      $ 933        4.2   $ 1,460        6.8

Commercial real estate mortgage - owner-occupied

    12,012        11,944        11,944        12,005        12,056        68        0.6     (44     –0.4

Commercial real estate construction - owner-occupied

    438        503        516        563        686        (65     –12.9     (248     –36.2
                                                                       

Total commercial

    35,339        34,403        33,773        33,677        34,171        936        2.7     1,168        3.4

Commercial investor real estate mortgage

    13,393        14,223        15,090        15,586        16,220        (830     –5.8     (2,827     –17.4

Commercial investor real estate construction

    2,100        2,649        3,477        4,340        5,071        (549     –20.7     (2,971     –58.6
                                                                       

Total investor real estate

    15,493        16,872        18,567        19,926        21,291        (1,379     –8.2     (5,798     –27.2

Residential first mortgage

    14,692        15,620        15,632        15,537        15,567        (928     –5.9     (875     –5.6

Home equity

    14,053        14,389        14,684        14,947        15,237        (336     –2.3     (1,184     –7.8

Indirect

    1,628        1,606        1,776        2,028        2,310        22        1.4     (682     –29.5

Other consumer

    1,207        1,218        1,184        1,151        1,147        (11     –0.9     60        5.2
                                                                       
  $ 82,412      $ 84,108      $ 85,616      $ 87,266      $ 89,723      $ (1,696     –2.0   $ (7,311     –8.1
                                                                       


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FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 7

Deposits

 

Deposit Portfolio - Period End Data

 
($ amounts in millions)                                 3/31/11     3/31/11  
    3/31/11     12/31/10     9/30/10     6/30/10     3/31/10     vs. 12/31/10     vs. 3/31/10  

Customer Deposits

                     

Interest-free deposits

  $ 27,480      $ 25,733      $ 25,300      $ 22,993      $ 23,391      $ 1,747        6.8   $ 4,089        17.5

Interest-bearing checking

    13,365        13,423        12,409        15,148        15,715        (58     –0.4     (2,350     –15.0

Savings

    5,064        4,668        4,544        4,475        4,394        396        8.5     670        15.2

Money market - domestic

    27,261        27,420        27,983        26,773        26,196        (159     –0.6     1,065        4.1

Money market - foreign

    533        569        509        502        635        (36     –6.3     (102     –16.1
                                                                       

Low-cost deposits

    73,703        71,813        70,745        69,891        70,331        1,890        2.6     3,372        4.8

Time deposits

    22,656        22,784        24,177        26,298        27,939        (128     –0.6     (5,283     –18.9
                                                                       

Total customer deposits

    96,359        94,597        94,922        96,189        98,270        1,762        1.9     (1,911     –1.9
                                                                       

Corporate Treasury Deposits

                     

Time deposits

    10        17        56        61        62        (7     –41.2     (52     –83.9
                                                                       

Total Deposits

  $ 96,369      $ 94,614      $ 94,978      $ 96,250      $ 98,332      $ 1,755        1.9   $ (1,963     –2.0
                                                                       

Deposit Portfolio - Average Balances

 
($ amounts in millions)                                 1Q11     1Q11  
    1Q11     4Q10     3Q10     2Q10     1Q10     vs. 4Q10     vs. 1Q10  

Customer Deposits

                     

Interest-free deposits

  $ 26,405      $ 25,688      $ 23,706      $ 23,688      $ 22,817      $ 717        2.8   $ 3,588        15.7

Interest-bearing checking

    13,228        12,690        13,606        15,651        15,709        538        4.2     (2,481     –15.8

Savings

    4,837        4,622        4,517        4,478        4,215        215        4.7     622        14.8

Money market - domestic

    27,276        27,767        27,574        26,670        24,961        (491     –1.8     2,315        9.3

Money market - foreign

    540        506        514        632        754        34        6.7     (214     –28.4
                                                                       

Low-cost deposits

    72,286        71,273        69,917        71,119        68,456        1,013        1.4     3,830        5.6

Time deposits

    22,956        23,347        25,100        26,872        29,707        (391     –1.7     (6,751     –22.7
                                                                       

Total customer deposits

    95,242        94,620        95,017        97,991        98,163        622        0.7     (2,921     –3.0
                                                                       

Corporate Treasury Deposits

                     

Time deposits

    15        22        61        61        72        (7     –31.8     (57     –79.2
                                                                       

Total Deposits

  $ 95,257      $ 94,642      $ 95,078      $ 98,052      $ 98,235      $ 615        0.6   $ (2,978     –3.0
                                                                       


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 8

Pre-Tax Pre-Provision Net Revenue (“PPNR”) and Adjusted PPNR (non-GAAP)

The table below presents computations of pre-tax pre-provision net revenue excluding certain adjustments (non-GAAP). Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes certain adjustments does not represent the amount that effectively accrues directly to stockholders.

 

($ amounts in millions)

   1Q11     4Q10     3Q10     2Q10      1Q10     1Q11
vs. 4Q10
    1Q11
vs. 1Q10
 

Net Interest Income (GAAP)

   $ 863      $ 877      $ 868      $ 856       $ 831      $ (14     –1.6   $ 32        3.9

Non-Interest Income (GAAP)

     843        1,213        750        756         812        (370     –30.5     31        3.8
                                                                         

Total Revenue (GAAP)

     1,706        2,090        1,618        1,612         1,643        (384     –18.4     63        3.8

Non-Interest Expense (GAAP)

     1,167        1,266        1,163        1,326         1,230        (99     –7.8     (63     –5.1
                                                                         

Pre-tax Pre-provision Net Revenue (GAAP)

   $ 539      $ 824      $ 455      $ 286       $ 413        (285     –34.6     126        30.5

Adjustments:

                       

Regulatory charge, net of tax

     —          —          —          200         —          —          —          —          —     

Securities gains, net

     (82     (333     (2     —           (59     251      75.4     (23     39.0

Loss (gain) on sale of mortgage loans

     3        (26     —          —           —          29      111.5     3        NM   

Leveraged lease termination gains

     —          (59     —          —           (19     59        NM        19        NM   

Loss on early extinguishment of debt

     —          55        —          —           53        (55     NM        (53     NM   

Securities impairment, net

     —          —          1        —           1        —          —          (1     NM   

Branch consolidation costs (1)

     —          —          —          —           8        —          —          (8     NM   
                                                                         

Total adjustments

     (79     (363     (1     200         (16     284        NM        (63     393.8
                                                                         

Adjusted PPNR (non-GAAP)

   $ 460      $ 461      $ 454      $ 486       $ 397      $ (1     –0.2   $ 63        15.9
                                                                         

 

(1) Includes $7 million of net occupancy expense and $1 million in valuation charges in 1Q10.

Categorization of Income (Loss) Related to

Mortgage Servicing Rights (MSRs) (2)

 

($ amounts in millions)

   1Q11     4Q10     3Q10      2Q10      1Q10      1Q11
vs. 4Q10
     1Q11
vs. 1Q10
 

Net interest income (3)

   $ —        $ —        $ —         $ —         $ 3         —           —           (3     NM   

Brokerage, investment banking and capital markets (4)

     —          —          —           —           4         —           —           (4     NM   

Mortgage income (loss) (5)

     (11     (13     2         12         16         2         NM         (27     NM   
                                                                             
   $ (11   $ (13   $ 2       $ 12       $ 23         2         NM         (34     –147.8
                                                                             

 

(2) This table details the impact of changes in valuation of mortgage servicing rights and related hedging instruments on various categories in the consolidated statements of operations.
(3) Interest earned on trading securities used to hedge MSRs.
(4) Mark-to-market impact of trading securities used to hedge MSRs.
(5) Net effect of mark-to-market impact of MSRs and derivatives used to hedge MSRs.


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 9

Non-Interest Income and Expense

 

 

Non-Interest Income and Expense

 

Non-Interest Income

 

($ amounts in millions)

   1Q11     4Q10      3Q10      2Q10      1Q10      1Q11
vs. 4Q10
    1Q11
vs. 1Q10
 

Service charges on deposit accounts

   $ 287      $ 290       $ 294       $ 302       $ 288       $ (3     –1.0   $ (1     –0.3

Brokerage, investment banking and capital markets

     267        312         257         254         236         (45     –14.4     31        13.1

Mortgage income

     45        51         66         63         67         (6     –11.8     (22     –32.8

Trust department income

     50        50         49         49         48         —          0.0     2        4.2

Securities gains, net

     82        333         2         —           59         (251     NM        23        39.0

Insurance income

     28        25         25         26         27         3        12.0     1        3.7

Leveraged lease termination gains

     —          59         —           —           19         (59     NM        (19     NM   

(Loss) gain on sale of mortgage loans

     (3     26         —           —           —           (29     NM        (3     NM   

Other

     87        67         57         62         68         20        29.9     19        27.9
                                                                            

Total non-interest income

   $ 843      $ 1,213       $ 750       $ 756       $ 812       $ (370     –30.5   $ 31        3.8
                                                                            
   
Non-Interest Expense                           

($ amounts in millions)

   1Q11     4Q10      3Q10      2Q10      1Q10      1Q11
vs. 4Q10
    1Q11
vs. 1Q10
 

Salaries and employee benefits

   $ 594      $ 601       $ 582       $ 560       $ 575       $ (7     –1.2   $ 19        3.3

Net occupancy expense

     109        108         110         110         120         1        0.9     (11     –9.2

Furniture and equipment expense

     77        76         75         79         74         1        1.3     3        4.1

Professional and legal fees

     81        92         71         75         66         (11     –12.0     15        22.7

Marketing expense

     13        14         22         18         15         (1     –7.1     (2     –13.3

Amortization of core deposit intangible

     25        26         27         27         28         (1     –3.8     (3     –10.7

Other real estate owned expense

     39        61         65         41         42         (22     –36.1     (3     –7.1

Other-than-temporary impairments, net

     —          —           1         —           1         —          —          (1     NM   

FDIC premiums

     52        52         51         58         59         —          0.0     (7     –11.9

Valuation charges associated with branch consolidations

     —          —           —           —           1         —          —          (1     NM   

Loss on early extinguishment of debt

     —          55         —           —           53         (55     NM        (53     NM   

Regulatory charge

     —          —           —           200         —           —          —          —          —     

Other

     177        181         159         158         196         (4     –2.2     (19     –9.7
                                                                            

Total non-interest expense

   $ 1,167      $ 1,266       $ 1,163       $ 1,326       $ 1,230       $ (99     –7.8   $ (63     –5.1
                                                                            

 

   

Non-interest income decreased $370 million, but $31 million or 4% linked quarter adjusted for the following: $333 million and $82 million in securities gains in fourth quarter 2010 and first quarter 2011, respectively, a $26 million gain and $3 million loss on sale of mortgage loans, respectively, and $59 million in leveraged lease terminations gains in fourth quarter 2010.

 

   

Service charges income declined $3 million or 1% linked quarter, primarily reflecting seasonality. This quarter reflected solid interchange income due to increased debit card volume and fee-based account growth. As of March 1, 2011, all checking accounts are fee eligible.

 

   

Brokerage, investment banking and capital markets income decreased $45 million to $267 million, driven by the decline in investment banking revenue, which had several sizable investment banking transactions in 4Q10

 

   

Mortgage income declined $6 million linked quarter, primarily reflecting a linked quarter decline in origination volumes. However, on a year-over-year basis, origination volumes of $1.6 billion were 13% higher. Year-over-year mortgage income decline reflects MSR/hedge activity.

 

   

Securities gains in 1Q11 and 4Q10 reflect the sale of approximately $2.4 billion and $8.1 billion, respectively, of agency mortgage-backed securities. In both quarters, the proceeds were reinvested in similar securities with slightly longer durations.

 

   

Other non-interest income included a $20 million and $15 million insurance recovery for previously incurred legal expenses in 1Q11 and 1Q10, respectively

 

   

Non-interest expenses decreased 8% linked quarter, however after adjusting for prior quarter’s $55 million loss on early extinguishment of debt, non-interest expenses decreased 4% driven by lower professional and legal fees and other real estate owned expenses

 

   

Salaries and benefits expense decreased 1% linked quarter, due to lower headcount, lower incentives from brokerage, investment banking and capital markets, offset by higher payroll taxes

 

   

Other real estate owned expense declined $22 million reflecting less valuation adjustments


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 10

Morgan Keegan

 

 

Morgan Keegan

 

Summary Income Statement (1)

 

($ amounts in millions)

   1Q11      4Q10      3Q10      2Q10     1Q10      1Q11
vs. 4Q10
    1Q11
vs. 1Q10
 

Net interest income (3)

   $ 15       $ 21       $ 15       $ 15      $ 14       $ (6   28.6   $ 1         7.1

Non-interest income

     314         342         309         292        297         (28   8.2     17         5.7

Non-interest expense

     273         320         289         275        272         (47   14.7     1         0.4

Regulatory charge

     —           —           —           200        —           —          NM        —           NM   
                                                                             

Pre-tax Income

     56         43         35         (168     39         13        30.2     17         43.6

Income tax expense (benefit)

     25         26         13         12        14         (1   3.8     11         78.6
                                                                             

Net income (loss)

   $ 31       $ 17       $ 22       $ (180   $ 25         14        82.4     6         24.0
                                                                             

Breakout of Revenue by Division (2)

 

($ amounts in millions)

   Private
Client
    Fixed-
Income
Capital
Markets
    Equity
Capital
Markets
    Investment
Banking
    Regions
MK
Trust
    Asset
Management
    Interest
& Other
 

Three months ended March 31, 2011

              

$ amount of revenue

   $ 125      $ 66      $ 16      $ 30      $ 56      $ 3      $ 37   

% of gross revenue

     37.6     19.8     4.8     9.0     16.8     0.9     11.1

Three months ended December 31, 2010

              

$ amount of revenue

   $ 124      $ 82      $ 15      $ 57      $ 56      $ 3      $ 30   

% of gross revenue

     33.8     22.3     4.1     15.5     15.3     0.8     8.2

Three Months Ended March 31, 2010

              

$ amount of revenue

   $ 114      $ 72      $ 13      $ 27      $ 49      $ 4      $ 35   

% of gross revenue

     36.3     22.9     4.1     8.6     15.6     1.3     11.2

 

(1) Certain amounts in the prior periods have been reclassified to reflect the current period presentation
(2) “Breakout of Revenue by Division” has been adjusted to reflect changes in the company’s reporting structure
(3) Net interest income in the Summary Income Statement is illustrated on a net basis, whereas the Breakout of Revenue by Division, revenue is illustrated on a gross basis. 1Q11 and 4Q10 in the Summary Income Statement excludes $4 million each quarter of gross interest income and 3Q10, 2Q10 and 1Q10 in the Summary Income Statement excludes $3 million each quarter of gross interest income.

 

   

Private Client division continues to benefit from improvement in the equities market and is experiencing growth from opening new offices.

 

   

According to ThomsonReuters, Morgan Keegan was the 9th leading firm nationally and #1 in Arkansas, Mississippi, Tennessee and Texas for municipal underwritings.

 

   

Fixed income Capital Markets and Investment Banking revenues were negatively impacted by the uncertainty in the municipal markets and the ending of the Build America Bonds program.


FINANCIAL SUPPLEMENT TO

FIRST QUARTER 2011 EARNINGS RELEASE

PAGE 11

Credit Quality

 

 

Credit Quality

 

 

    As of and for Quarter Ended  

($ amounts in millions)

  3/31/11     12/31/10     9/30/10     6/30/10     3/31/10  

Allowance for credit losses (ACL)

  $ 3,264      $ 3,256      $ 3,256      $ 3,256      $ 3,250   

Provision for loan losses

    482        682        760        651        770   

Provision for unfunded credit losses

    7        —          —          5        (8

Net loans charged-off:

         

Commercial and industrial

    72        128        89        87        92   

Commercial real estate mortgage - owner-occupied

    66        80        64        39        32   

Commercial real estate construction - owner-occupied

    4        4        3        3        14   
                                       

Total commercial

    142        212        156        129        138   

Commercial investor real estate mortgage

    132        202        254        203        207   

Commercial investor real estate construction

    42        99        171        133        150   
                                       

Total investor real estate

    174        301        425        336        357   

Residential first mortgage

    56        56        58        61        62   

Home equity

    94        92        102        106        116   

Indirect

    4        4        3        4        8   

Other consumer

    11        17        15        15        19   
                                       

Total

  $ 481      $ 682      $ 759      $ 651      $ 700   
                                       

Net loan charge-offs as a % of average loans, annualized

         

Commercial and industrial

    1.27     2.31     1.66     1.65     1.74

Commercial real estate mortgage - owner-occupied

    2.23     2.64     2.12     1.28     1.09

Commercial real estate construction - owner-occupied

    3.74     3.54     1.95     2.17     8.41
                                       

Total commercial

    1.63     2.44     1.83     1.53     1.64

Commercial investor real estate mortgage

    4.00     5.63     6.67     5.22     5.17

Commercial investor real estate construction

    8.07     14.91     19.57     12.33     12.00
                                       

Total investor real estate

    4.56     7.09     9.09     6.77     6.80

Residential first mortgage

    1.55     1.42     1.48     1.58     1.63

Home equity

    2.71     2.53     2.74     2.84     3.07

Indirect

    1.05     1.09     0.64     0.72     1.38

Other consumer

    3.70     5.54     5.03     5.23     6.68
                                       

Total

    2.37     3.22     3.52     2.99     3.16
                                       

Non-accrual loans, excluding loans held for sale

  $ 3,087      $ 3,160      $ 3,372      $ 3,473      $ 3,706   

Non-performing loans held for sale

    381        304        393        256        256   
                                       

Non-accrual loans, including loans held for sale

  $ 3,468      $ 3,464      $ 3,765      $ 3,729      $ 3,962   

Foreclosed properties

    465        454        461        546        610   
                                       

Non-performing assets (NPAs)

  $ 3,933      $ 3,918      $ 4,226      $ 4,275      $ 4,572   
                                       

Loans past due > 90 days

  $ 527      $ 585      $ 593      $ 612      $ 700   

Restructured loans not included in categories above

  $ 1,553      $ 1,483      $ 1,299      $ 1,239      $ 1,306   

Credit Ratios:

         

ACL/Loans, net

    4.01     3.93     3.86     3.79     3.69

ALL/Loans, net

    3.92     3.84     3.77     3.71     3.61

Allowance for loan losses to non-performing loans, excluding loans held for sale

    1.03x        1.01x        0.94x        0.92x        0.86x   

NPAs (ex. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale (2)

    4.78     4.69     4.96     4.93     5.13

NPAs (inc. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale (2)

    5.42     5.38     5.65     5.63     5.92

 

(1) See page 20 for detail of restructured loans.
(2) Beginning in the first quarter of 2011, non-performing assets ratios include non-performing loans held for sale in the denominator, in addition to portfolio loans and foreclosed properties. Prior quarters have been revised to conform to current period presentation.

Allowance for Credit Losses

 

($ amounts in millions)

   Three Months Ended March 31  
     2011     2010  

Balance at beginning of year

   $ 3,256      $ 3,188   

Net loans charged-off

     (481     (700

Provision for loan losses

     482        770   

Provision for unfunded credit commitments

     7        (8
                

Balance at end of period

   $ 3,264      $ 3,250   
                

Components:

    

Allowance for loan losses

   $ 3,186      $ 3,184   

Reserve for unfunded credit commitments

     78        66   
                

Allowance for credit losses

   $ 3,264      $ 3,250   
                


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PAGE 12

Loan Portfolio - Period End Data

 

     1Q2011     4Q2010     3Q2010     2Q2010     1Q2010  

($ millions)

   $      %
Total
    $      %
Total
    $      %
Total
    $      %
Total
    $      %
Total
 

Commercial and Industrial

     23,149         28.5     22,540         27.2     21,501         25.5     21,096         24.6     21,220         24.1

Commercial Real Estate Mortgage - OO

     11,889         14.6     12,046         14.5     11,850         14.0     11,967         13.9     12,028         13.6

Commercial Real Estate Construction - OO

     430         0.5     470         0.6     522         0.6     547         0.6     598         0.7
                                                                                     

Total Commercial

     35,468         43.6     35,056         42.3     33,873         40.1     33,610         39.1     33,846         38.4
                                                                                     

Commercial Investor Real Estate Mortgage

     12,932         15.9     13,621         16.4     14,489         17.2     15,152         17.6     15,702         17.8

Commercial Investor Real Estate Construction

     1,895         2.3     2,287         2.8     2,975         3.5     3,778         4.4     4,703         5.3
                                                                                     

Total Investor Real Estate

     14,827         18.2     15,908         19.2     17,464         20.7     18,930         22.0     20,405         23.1
                                                                                     

Residential First Mortgage

     14,404         17.7     14,898         18.0     15,723         18.6     15,567         18.1     15,592         17.7

Home Equity

     13,874         17.1     14,226         17.2     14,534         17.2     14,802         17.2     15,066         17.1

Direct

     836         1.0     838         1.0     828         1.0     799         0.9     774         0.9

Indirect

     1,626         2.0     1,592         1.9     1,657         2.0     1,900         2.2     2,162         2.5

Other Consumer

     336         0.4     346         0.4     341         0.4     337         0.4     329         0.4
                                                                                     

Total Consumer

     31,076         38.2     31,900         38.5     33,083         39.2     33,405         38.9     33,923         38.5
                                                                                     

Total Loans

     81,371         100.0     82,864         100.0     84,420         100.0     85,945         100.0     88,174         100.0
                                                                                     

OO = Owner Occupied


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90+ Days Past Due Loans

 

     1Q2011     4Q2010     3Q2010     2Q2010     1Q2010  

($ millions)

   $      %     $      %     $      %     $      %     $      %  

Commercial and Industrial

     10         0.04     9         0.04     5         0.03     7         0.03     24         0.11

Commercial Real Estate Mortgage - OO

     8         0.07     6         0.05     6         0.05     4         0.04     6         0.05

Commercial Real Estate Construction - OO

     —           0.09     1         0.12     —           0.00     —           0.00     —           0.00
                                                                                     

Total Commercial

     18         0.05     16         0.05     11         0.03     11         0.03     30         0.09
                                                                                     

Commercial Investor Real Estate Mortgage

     13         0.10     5         0.04     6         0.04     26         0.17     42         0.27

Commercial Investor Real Estate Construction

     1         0.04     1         0.04     2         0.05     4         0.10     6         0.14
                                                                                     

Total Investor Real Estate

     14         0.09     6         0.04     8         0.04     30         0.16     48         0.24
                                                                                     

Residential First Mortgage

     315         2.18     359         2.41     369         2.35     349         2.24     365         2.34

Home Equity

     174         1.26     198         1.39     198         1.36     215         1.45     249         1.65

Direct

     1         0.13     1         0.13     2         0.21     1         0.14     1         0.17

Indirect

     2         0.13     2         0.13     2         0.14     3         0.12     3         0.16

Other Consumer

     3         0.86     3         0.88     3         0.79     3         0.90     4         1.20
                                                                                     

Total Consumer

     495         1.59     563         1.76     574         1.74     571         1.71     622         1.83
                                                                                     

Total 90+ Days Past Due Loans

     527         0.65     585         0.71     593         0.70     612         0.71     700         0.79
                                                                                     

OO = Owner Occupied

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Non-Accrual Loans (excludes loans held for sale)

 

     1Q2011     4Q2010     3Q2010     2Q2010     1Q2010  

($ millions)

   $      %     $      %     $      %     $      %     $      %  

Total Commercial & Industrial

     446         1.93     467         2.07     502         2.33     479         2.27     517         2.43

Total Commercial Real Estate Mortgage - OO

     648         5.45     606         5.03     616         5.20     680         5.68     623         5.18

Total Commercial Real Estate Construction - OO

     31         7.20     29         6.19     35         6.65     37         6.77     38         6.47
                                                                                     

Total Commercial

     1,125         3.17     1,102         3.14     1,153         3.40     1,196         3.56     1,178         3.48
                                                                                     

Total Commercial Investor Real Estate Mortgage

     1,142         8.83     1,265         9.28     1,347         9.30     1,286         8.49     1,343         8.55

Total Commercial Investor Real Estate Construction

     448         23.64     452         19.76     561         18.87     754         19.94     986         20.97
                                                                                     

Total Investor Real Estate

     1,590         10.73     1,717         10.79     1,908         10.93     2,040         10.77     2,329         11.41
                                                                                     

Residential First Mortgage

     303         2.10     285         1.92     267         1.70     212         1.36     199         1.28

Home Equity

     69         0.50     56         0.40     44         0.30     25         0.17     —           0.00

Direct

     —           0.00     —           0.00     —           0.00     —           0.00     —           0.00

Indirect

     —           0.00     —           0.00     —           0.00     —           0.00     —           0.00

Other Consumer

     —           0.00     —           0.00     —           0.00     —           0.00     —           0.00
                                                                                     

Total Consumer

     372         1.20     341         1.07     311         0.94     237         0.71     199         0.59
                                                                                     

Total Non-Accrual Loans

     3,087         3.79     3,160         3.81     3,372         3.99     3,473         4.04     3,706         4.20
                                                                                     

OO = Owner Occupied


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Troubled Debt Restructurings

 

in millions    1Q11      4Q10      3Q10      2Q10      1Q10  

Accruing:

              

Commercial

     72         77         23         24         27   

Investor Real Estate

     208         192         150         22         21   

Residential First Mortgage

     854         813         746         836         927   

Home Equity

     355         335         314         295         274   

Other Consumer

     64         66         66         62         57   
                                            

Total Accruing

     1,553         1,483         1,299         1,239         1,306   
                                            

Non-accrual or 90+ DPD:

              

Commercial

     120         105         71         34         29   

Investor Real Estate

     230         198         159         99         110   

Residential First Mortgage

     221         240         222         217         216   

Home Equity

     28         30         26         26         24   

Other Consumer

     1         —           —           —           —     
                                            

Total Non-accrual or 90+DPD

     600         573         478         376         379   
                                            

Total TDR

     2,153         2,056         1,777         1,615         1,685   
                                            


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Home Equity Lending Net Charge-off Analysis

 

        1Q11     4Q10     3Q10     2Q10     1Q10  

($ in millions)

  1st Lien     2nd
Lien
    Total     1st Lien     2nd
Lien
    Total     1st Lien     2nd
Lien
    Total     1st Lien     2nd
Lien
    Total     1st Lien     2nd
Lien
    Total  

Florida

  Net Charge-off %*     3.10     6.79     5.33     2.26     6.46     4.81     2.37     6.83     5.09     3.12     7.10     5.57     2.92     7.96     6.04
 

$ Losses

  $ 15.7      $ 52.2      $ 67.9      $ 11.9      $ 52.2      $ 64.2      $ 12.6      $ 56.6      $ 69.2      $ 16.5      $ 59.7      $ 76.2      $ 15.4      $ 68.2      $ 83.6   
 

Balance

  $ 2,040.5      $ 3,067.4      $ 5,107.9      $ 2,074.3      $ 3,166.4      $ 5,240.7      $ 2,090.0      $ 3,253.6      $ 5,343.6      $ 2,098.0      $ 3,333.3      $ 5,431.3      $ 2,126.5      $ 3,424.9      $ 5,551.4   
 

Original LTV

    65.1     75.6     71.4                                
All Other States   Net Charge-off %*     0.65     1.64     1.18     0.75     1.60     1.21     0.98     1.71     1.38     0.75     1.67     1.26     0.74     1.85     1.35
 

$ Losses

  $ 6.6      $ 19.4      $ 26.0      $ 7.9      $ 19.8      $ 27.7      $ 10.5      $ 21.8      $ 32.3      $ 8.0      $ 21.6      $ 29.6      $ 7.9      $ 24.0      $ 31.9   
 

Balance

  $ 4,059.9      $ 4,706.5      $ 8,766.4      $ 4,138.7      $ 4,846.2      $ 8,984.9      $ 4,187.6      $ 5,002.4      $ 9,190.0      $ 4,250.3      $ 5,120.4      $ 9,370.7      $ 4,306.0      $ 5,208.4      $ 9,514.4   
 

Original LTV

    66.8     79.3     73.4                                

Totals

  Net Charge-off %*     1.47     3.68     2.71     1.26     3.52     2.53     1.45     3.72     2.74     1.53     3.81     2.84     1.46     4.27     3.07
 

$ Losses

  $ 22.3      $ 71.6      $ 93.9      $ 19.8      $ 72.1      $ 91.9      $ 23.1      $ 78.4      $ 101.5      $ 24.5      $ 81.3      $ 105.8      $ 23.3      $ 92.2      $ 115.5   
 

Balance

  $ 6,100.4      $ 7,773.9      $ 13,874.3      $ 6,213.0      $ 8,012.6      $ 14,225.6      $ 6,277.6      $ 8,256.0      $ 14,533.6      $ 6,348.3      $ 8,453.7      $ 14,802.0      $ 6,432.5      $ 8,633.3      $ 15,065.8   
 

Original LTV

    66.2     77.8     72.6                                

 

* 22% Florida second lien concentration driving results
* Second lien, Florida net charge-offs represent 56% of 1Q11 net charge-offs but just 22% of outstanding balances.
* Net charge-offs in Florida approximately 4.5 times non-Florida net charge-off rate
* Origination quality solid with an average FICO of 775 and an average LTV of 63%; Property value declines driving losses

LOGO

 

Notes:

   * Recoveries are pro-rated based on charge-off balances.
   * Balances shown on an ending basis. Net loss rates calculated using average balances
   * Original LTVs shown for current period only; prior period LTVs not materially different


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PAGE 22

 

(in millions)

   1Q10      2Q10     3Q10     4Q10     1Q11  

Net Charge-offs

           

Investor Real Estate (IRE)

   $ 257       $ 216      $ 205      $ 205      $ 84   

Commercial

     128         117        143        197        126   

Consumer Real Estate

     177         167        160        148        150   

Other Consumer

     28         19        18        21        15   
                                         

Net Charge-offs excluding charge-offs from Sales / Transfers to HFS

     590         519        526        571        375   

Sales/Transfer to HFS

     110         132        233        111        106   
                                         

Total Net Charge-offs

   $ 700       $ 651      $ 759      $ 682      $ 481   

Net Loss / (Gain) - HFS Sales

     6         (9     (2     (7     —     

HFS Write-downs (1)

     10         5        7        21        2   

OREO expense

     42         40        65        61        39   
                                         

Total Credit Costs

   $ 758       $ 687      $ 829      $ 757      $ 522   
                                         

 

(1) 

Reflects write-downs subsequent to initial move to held for sale and write-downs upon transfer to OREO


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PAGE 23

Gross and Net NPA Migration Elevated

 

($ in millions)

   1Q 2010     2Q 2010     3Q 2010     4Q 2010     1Q 2011  

Beginning Non-Performing Assets¹

   $ 4,412      $ 4,572      $ 4,275      $ 4,226      $ 3,918   

Additions

   $ 1,303      $ 865      $ 1,410      $ 1,021      $ 816   

Resolutions2

     (182     (197     (255     (348     (214

Charge-Offs / OREO Write-Downs

     (473     (458     (497     (576     (368
                                        

Net Additions

   $ 648      $ 210      $ 658      $ 97      $ 234   
                                        

Non-Accrual Asset Sales

     (386     (336     (511     (309     (106

OREO Sales

     (102     (171     (196     (96     (113
                                        

Ending Non-Performing Assets¹

   $ 4,572      $ 4,275      $ 4,226      $ 3,918      $ 3,933   
                                        

Change Versus Previous Quarter

   $ 160        ($297     ($49     ($308   $ 15   

 

1 

Includes Loans Held for Sale

 

2

Includes payments and returned to accruals


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PAGE 24

Additional Financial and Operational Data

 

     3/31/11      12/31/10      9/30/10      6/30/10      3/31/10  

Associate headcount

     27,557         27,829         27,898         27,895         28,213   

Total branch outlets

     1,771         1,772         1,774         1,774         1,774   

ATMs

     2,144         2,148         2,150         2,162         2,198   

Morgan Keegan offices

     319         321         329         325         321   


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PAGE 25

Reconciliation to GAAP Financial Measures

The table below presents computations of earnings and certain other financial measures excluding regulatory charge (non-GAAP). The regulatory charge is included in financial results presented in accordance with generally accepted accounting principles (GAAP). Regions believes that the exclusion of the regulatory charge in expressing earnings and certain other financial measures, including “earnings (loss) per common share, excluding regulatory charge”, “return on average assets, excluding regulatory charge” and “return on average tangible common stockholders’ equity, excluding regulatory charge” (explained on next page) provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business, because management does not consider the regulatory charge to be relevant to ongoing operating results. Management and the Board of Directors utilize these non-GAAP financial measures for the following purposes: preparation of Regions’ operating budgets; monthly financial performance reporting; monthly close-out “flash” reporting of consolidated results (management only); and presentations to investors of company performance. Regions believes that presenting these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management and the Board of Directors. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. To mitigate these limitations, Regions has policies and procedures in place to identify and address expenses that qualify for non-GAAP presentation, including authorization and system controls to ensure accurate period to period comparisons. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes the regulatory charge does not represent the amount that effectively accrues directly to stockholders (i.e. the regulatory charge is a reduction in earnings and stockholders’ equity).

 

            As of and for Quarter Ended  
            03/31/11     12/31/10     09/30/10     06/30/10     03/31/10  
($ amounts in millions, except per share data)                                      

Income (loss):

             

Net income (loss) (GAAP)

      $ 69      $ 89      $ (155   $ (277   $ (196

Preferred dividends and accretion (GAAP)

        (52     (53     (54     (58     (59
                                           

Net income (loss) available to common shareholders (GAAP)

     A       $ 17      $ 36      $ (209   $ (335   $ (255
                                           

Net income (loss) available to common shareholders (GAAP)

      $ 17      $ 36      $ (209   $ (335   $ (255

Regulatory charge, net of tax

        —          —          —          200        —     
                                           

Net income (loss) available to common shareholders, excluding regulatory charge (non-GAAP)

     B       $ 17      $ 36      $ (209   $ (135   $ (255
                                           

Weighted-average diluted shares

     C         1,259        1,259        1,257        1,200        1,194   

Earnings (loss) per common share - diluted (GAAP)

     A/C         0.01        0.03        (0.17     (0.28     (0.21

Earnings (loss) per common share, excluding regulatory charge - diluted (non-GAAP)

     B/C         0.01        0.03        (0.17     (0.11     (0.21

The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. Management uses the efficiency ratio to monitor performance and believes this measure provides meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the efficiency ratio. Net interest income on a fully taxable-equivalent basis (GAAP) and non-interest income (GAAP) are added together to arrive at total revenue (GAAP). Adjustments are made to arrive at adjusted total revenue (non-GAAP), which is the denominator for the efficiency ratio. Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.

 

            As of and for Quarter Ended  
            03/31/11     12/31/10     09/30/10     06/30/10     03/31/10  
($ amounts in millions)                                      

Non-interest expense (GAAP)

      $ 1,167      $ 1,266      $ 1,163      $ 1,326      $ 1,230   

Adjustments:

             

Regulatory charge, net of tax

        —          —          —          (200     —     

Loss on extinguishment of debt

        —          (55     —          —          (53

Securities impairment, net

        —          —          (1     —          (1

Branch consolidation costs

        —          —          —          —          (8
                                           

Adjusted non-interest expense (non-GAAP)

     D       $ 1,167      $ 1,211      $ 1,162      $ 1,126      $ 1,168   
                                           

Net interest income, taxable-equivalent basis (GAAP)

      $ 872      $ 886      $ 876      $ 863      $ 839   

Non-interest income (GAAP)

        843        1,213        750        756        812   

Adjustments:

             

Securities gains, net

        (82     (333     (2     —          (59

Leveraged lease termination gains

        —          (59     —          —          (19

Loss (gain) on sale of mortgage loans

        3        (26     —          —          —     
                                           

Adjusted non-interest income (non-GAAP)

        764        795        748        756        734   
                                           

Adjusted total revenue (non-GAAP)

     E       $ 1,636      $ 1,681      $ 1,624      $ 1,619      $ 1,573   
                                           

Efficiency ratio (non-GAAP)

     D/E         71.3     72.0     71.6     69.5     74.3


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PAGE 26

Reconciliation to GAAP Financial Measures

The following tables provide calculations of “return on average tangible common stockholders’ equity”, end of period “tangible common stockholders’ equity” ratios and a reconciliation of stockholders’ equity (GAAP) to Tier 1 capital (regulatory) and to “Tier 1 common equity” (non-GAAP). Tangible common stockholders’ equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Traditionally, the Federal Reserve and other banking regulatory bodies have assessed a bank’s capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. In connection with the Supervisory Capital Assessment Program (“SCAP”), these regulators began supplementing their assessment of the capital adequacy of a bank based on a variation of Tier 1 capital, known as Tier 1 common equity. While not codified, analysts and banking regulators have assessed Regions’ capital adequacy using the tangible common stockholders’ equity and/or the Tier 1 common equity measure. Because tangible common stockholders’ and Tier 1 common equity are not formally defined by GAAP or codified in the federal banking regulations, these measures are considered to be non-GAAP financial measures and other entities may calculate them differently than Regions’ disclosed calculations. Since analysts and banking regulators may assess Regions’ capital adequacy using tangible common stockholders’ equity and Tier 1 common equity, we believe that it is useful to provide investors the ability to assess Regions’ capital adequacy on these same bases.

Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a company’s balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk-weighted category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity. Tier 1 common equity is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio. The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements.

 

            As of and for Quarter Ended  
            03/31/11     12/31/10     09/30/10     06/30/10     03/31/10  
($ amounts in millions, except per share data)                                      

RETURN ON AVERAGE ASSETS

             

Average assets (GAAP)

     F       $ 131,212      $ 133,334      $ 133,729      $ 137,285      $ 139,565   

Return on average assets (GAAP) (1)

     A/F         0.05     0.11     -0.62     -0.98     -0.74
                                           

Return on average assets, excluding regulatory charge (non-GAAP) (1)

     B/F         0.05     0.11     -0.62     -0.40     -0.74
                                           

RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS’ EQUITY

             

Average stockholders’ equity (GAAP)

      $ 16,684      $ 17,046      $ 17,382      $ 17,559      $ 17,798   

Less: Average intangible assets (GAAP)

        5,935        5,961        5,989        6,019        6,046   

Average deferred tax liability related to intangibles (GAAP)

        (237     (243     (250     (257     (265

Average preferred equity (GAAP)

        3,383        3,374        3,364        3,576        3,605   
                                           

Average tangible common stockholders’ equity (non-GAAP)

     G       $ 7,603      $ 7,954      $ 8,279      $ 8,221      $ 8,412   

Return on average tangible common stockholders’ equity (GAAP) (1)

     A/G         0.89     1.78     -10.00     -16.36     -12.29
                                           

Return on average tangible common stockholders’ equity, excluding regulatory charge (non-GAAP) (1)

     B/G         0.89     1.78     -10.00     -6.60     -12.29
                                           

TANGIBLE COMMON RATIOS

             

Stockholders’ equity (GAAP)

      $ 16,619      $ 16,734      $ 17,163      $ 17,463      $ 17,638   

Less: Preferred equity (GAAP)

        3,389        3,380        3,370        3,360        3,610   

Intangible assets (GAAP)

        5,919        5,946        5,975        6,004        6,031   

Deferred tax liability related to intangibles (GAAP)

        (233     (240     (246     (253     (261
                                           

Tangible common stockholders’ equity (non-GAAP)

     H       $ 7,544      $ 7,648      $ 8,064      $ 8,352      $ 8,258   

Total assets (GAAP)

      $ 131,756      $ 132,351      $ 133,498      $ 135,340      $ 137,230   

Less: Intangible assets (GAAP)

        5,919        5,946        5,975        6,004        6,031   

Deferred tax liability related to intangibles (GAAP)

        (233     (240     (246     (253     (261
                                           

Tangible assets (non-GAAP)

     I       $ 126,070      $ 126,645      $ 127,769      $ 129,589      $ 131,460   

Shares outstanding—end of quarter

     J         1,256        1,256        1,256        1,256        1,192   

Tangible common stockholders’ equity to tangible assets (non-GAAP)

     H/I         5.98     6.04     6.31     6.45     6.28

Tangible common book value per share (non-GAAP)

     H/J       $ 6.00      $ 6.09      $ 6.42      $ 6.65      $ 6.93   

TIER 1 COMMON RISK-BASED RATIO (2)

             

Stockholders’ equity (GAAP)

      $ 16,619      $ 16,734      $ 17,163      $ 17,463      $ 17,638   

Accumulated other comprehensive (income) loss

        387        260        (208     (306     (144

Non-qualifying goodwill and intangibles

        (5,686     (5,706     (5,729     (5,752     (5,771

Disallowed deferred tax assets

        (463     (424     (427     (443     (932

Disallowed servicing assets

        (28     (27     (20     (22     (27

Qualifying non-controlling interests

        92        92        92        92        91   

Qualifying trust preferred securities

        846        846        846        846        846   
                                           

Tier 1 capital (regulatory)

      $ 11,767      $ 11,775      $ 11,717      $ 11,878      $ 11,701   

Qualifying non-controlling interests

        (92     (92     (92     (92     (91

Qualifying trust preferred securities

        (846     (846     (846     (846     (846

Preferred stock

        (3,389     (3,380     (3,370     (3,360     (3,610
                                           

Tier 1 common equity (non-GAAP)

     K       $ 7,440      $ 7,457      $ 7,409      $ 7,580      $ 7,154   

Risk-weighted assets (regulatory)

     L         94,068        94,966        97,088        98,653        100,323   

Tier 1 common risk-based ratio (non-GAAP)

     K/L         7.9     7.9     7.6     7.7     7.1
                                           

 

(1) Income statement amounts have been annualized in calculation
(2) Current quarter amount and the resulting ratio is estimated

 


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PAGE 27

Forward-Looking Statements

This supplement 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 issues in the banking system. Proposed rules, including those that are part of the Basel III process, could require banking institutions to increase levels of capital. 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 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 adjustment of 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. Increases in benchmark interest rates would also increase debt service requirements for customers whose terms include a variable interest rate, which may negatively impact the ability of borrowers to pay as contractually obligated.

 

   

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 of natural disasters such as floods, droughts and hurricanes and the effects of man-made disasters such as 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 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.

The foregoing list of factors is not exhaustive; for discussion of these and other risks 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, 2010 as on file with the Securities and Exchange Commission.

Regions’ Investor Relations contact is List Underwood at (205) 801-0265; Regions’ Media contact is Tim Deighton at (205) 264-4551