UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 24, 2012
REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE | 000-50831 | 63-0589368 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1900 FIFTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
(Address, including zip code, of principal executive office)
Registrants telephone number, including area code: (205) 944-1300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition |
Item 7.01 | Regulation FD Disclosure |
On April 24, 2012 Regions Financial Corporation issued a press release announcing its preliminary results of operations for the quarter ended March 31, 2012. A copy of the press release is attached hereto as Exhibit 99.1. Supplemental financial information for the quarter ended March 31, 2012 is attached as Exhibit 99.2. Executives from Regions will review the results via teleconference and live audio webcast at 11:00 a.m. Eastern time today. A copy of a visual presentation that will be a part of that review is attached as Exhibit 99.3. All of the attached exhibits are incorporated herein and may also be found on Regions website at www.regions.com.
In accordance with general instruction B.2 of Form 8-K, this information is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
99.1 | Press Release dated April 24, 2012 | |
99.2 | Supplemental Financial Information | |
99.3 | Visual Presentation of April 24, 2012 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
REGIONS FINANCIAL CORPORATION | ||
By: | /s/ Fournier J. Gale, III | |
Name: | Fournier J. Gale, III | |
Title: | Senior Executive Vice President, General Counsel and Corporate Secretary |
Date: April 24, 2012
Exhibit 99.1
Media Contact: | Investor Relations Contact: | |
Tim Deighton | List Underwood | |
(205) 264-4551 | (205) 801-0265 |
Regions Reports Earnings for First Quarter 2012
Successful execution of business plans, capital actions and broad based improvement in asset quality bolster financial strength and position the company for profitable growth
BIRMINGHAM, Ala. (BUSINESS WIRE) April 24, 2012 Regions Financial Corporation (NYSE:RF) today reported earnings for the quarter ending March 31, 2012.
Key points:
| Reported net income available to common shareholders of $0.11 per diluted share and $0.14 per diluted share from continuing operations reflecting solid business performance and broad-based improvement in asset quality metrics; a net loss from discontinued operations of $0.03 per diluted share is attributable to an increase in professional and legal fees |
| Successful completion of an approximate $900 million common equity offering |
| Completed the sale of Morgan Keegan & Company, Inc. and related affiliates on April 2, 2012 resulting in total proceeds of approximately $1.2 billion |
| Repurchased $3.5 billion of Series A Preferred Stock issued to the U.S. Treasury on April 4, 2012 |
| Strong capital position with an estimated Tier 1 ratio of 14.3 percent and Tier 1 Common ratio1 of 9.6 percent at March 31, 2012; adjusted for the redemption of Series A Preferred Stock the Tier 1 ratio is 10.6 percent1 |
| Liquidity position remains solid with a loan-to-deposit ratio of 79 percent |
| Non-performing loans, excluding loans held for sale, declined $221 million or 9 percent linked quarter; inflows of non-performing loans declined to $381million from $561 million or 32 percent from the fourth quarter |
| Net charge-offs declined $98 million or 23 percent linked quarter; loan loss provision of $117 million was $215 million less than net charge-offs in the quarter |
| Allowance for loan losses as a percentage of loans declined 24 basis points linked quarter to 3.30 percent, while the coverage ratio of non-performing loans increased 2 basis points to 1.18x |
| Loan growth in the middle market commercial and industrial loan portfolio continued, with ending loans up 2.3 percent linked quarter, while consumer loans declined 1.8 percent |
| Net interest income was down $22 million linked quarter and totaled $827 million, while the net interest margin increased 1 basis point to 3.09 percent |
| Loan yields declined 6 basis points linked quarter to 4.29 percent primarily attributable to previously terminated balance sheet hedges |
| Funding mix continued to improve while deposit costs declined to 37 basis points down 3 basis points from fourth quarter and down 22 basis points from the prior year |
| Adjusted pre-tax pre-provision income2 (PPI) from continuing operations totaled $419 million, an 11 percent decline from the prior quarter reflecting an expected seasonal increase in expenses from payroll taxes and a subsidiarys annual dividend payment |
| Non-interest revenue from continuing operations was $524 million, a 3 percent improvement on a linked quarter basis as growth in mortgage income more than offset the slight reduction in service charges |
| Non-interest expenses from continuing operations totaled $913 million; excluding last quarters $253 million goodwill impairment charge, non-interest expenses1 increased 5 percent linked quarter reflecting higher salaries and benefits offset by lower other real estate expense |
1 Non-GAAP, refer to pages 17-19 of the financial supplement to this earnings release
2 Non-GAAP, refer to page 8 of the financial supplement to this earnings release
Highlights | Three months ended: | |||||||||||
(In millions, except per share data) | March 31, 2012 | December 31, 2011 | March 31, 2011 | |||||||||
Amount | Amount | Amount | ||||||||||
Net Income (Loss) |
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Net interest income |
$827 | $849 | $855 | |||||||||
Provision for loan losses |
117 | 295 | 482 | |||||||||
Securities gains, net |
12 | 7 | 82 | |||||||||
Non-interest income, excluding securities gains |
512 | 500 | 498 | |||||||||
Goodwill impairment |
- | 253 | - | |||||||||
Non-interest expense, excluding goodwill impairment |
913 | 871 | 932 | |||||||||
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Pre-tax income (loss) |
321 | (63 | ) | 21 | ||||||||
Income tax expense (benefit) |
82 | 18 | (29 | ) | ||||||||
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Income (loss) from continuing operations (A) |
239 | (81 | ) | 50 | ||||||||
Income (loss) from discontinued operations, net of tax |
(40 | ) | (467 | ) | 19 | |||||||
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Net income (loss) |
199 | (548 | ) | 69 | ||||||||
Preferred dividends and accretion (B) |
54 | 54 | 52 | |||||||||
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Net income (loss) available to common shareholders |
$145 | ($602 | ) | $17 | ||||||||
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Income (loss) from continuing operations available to common shareholders (A) (B) |
$185 | ($135 | ) | ($2 | ) | |||||||
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Three Months Ended |
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March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Amount/Dil. EPS | Amount/ Dil. EPS | Amount/Dil. EPS | ||||||||||
Pre-tax Pre-Provision Income (non-GAAP) |
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Income (loss) from continuing operations available to common shareholders (GAAP) (A) (B) |
$185 | ($135 | ) | ($2 | ) | |||||||
Plus: Preferred dividends and accretion (GAAP) |
54 | 54 | 52 | |||||||||
Plus: Income tax expense (benefit) (GAAP) |
82 | 18 | (29 | ) | ||||||||
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Pre-tax income (loss) from continuing operations (GAAP) |
321 | (63 | ) | 21 | ||||||||
Plus: Provision for loan losses (GAAP) |
117 | 295 | 482 | |||||||||
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Pre-tax pre-provision income from continuing operations (non-GAAP) |
438 | 232 | 503 | |||||||||
Plus: Goodwill impairment from continuing operations |
- | 253 | - | |||||||||
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Pre-tax pre-provision income from continuing operations, excluding goodwill impairment (non-GAAP) |
$438 | $485 | $503 | |||||||||
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GAAP to non-GAAP EPS Reconciliation |
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Earnings (loss) per share (GAAP) |
$0.11 | ($0.48 | ) | $0.01 | ||||||||
Earnings (loss) per share from discontinued operations (GAAP) |
(0.03 | ) | (0.37 | ) | 0.01 | |||||||
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Earnings (loss) per share from continuing operations (GAAP) |
0.14 | (0.11 | ) | (0.00 | ) | |||||||
Goodwill impairment from continuing operations |
- | (0.20 | ) | - | ||||||||
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Adjusted earnings per share from continuing operations, excluding goodwill impairment (non-GAAP) |
$0.14 | $0.09 | ($0.00 | ) | ||||||||
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Three Months Ended |
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March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Key ratios* |
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Net interest margin (FTE) |
3.09 | % | 3.08 | % | 3.09 | % | ||||||
Tier 1 capital |
14.3 | % | 13.3 | % | 12.5 | % | ||||||
Tier 1 common1 risk-based ratio (non-GAAP) |
9.6 | % | 8.5 | % | 7.9 | % | ||||||
Tangible common stockholders equity to tangible assets1 (non-GAAP) |
7.35 | % | 6.57 | % | 5.98 | % | ||||||
Tangible common book value per share1 (non-GAAP) |
$6.42 | $6.37 | $6.00 | |||||||||
Asset quality |
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Allowance for loan losses as % of net loans |
3.30 | % | 3.54 | % | 3.92 | % | ||||||
Net charge-offs as % of average net loans~ |
1.73 | % | 2.16 | % | 2.37 | % | ||||||
Non-accrual loans, excluding loans held for sale, as % of loans |
2.80 | % | 3.06 | % | 3.79 | % | ||||||
Non-performing assets as % of loans, foreclosed properties and non-performing loans held for sale |
3.42 | % | 3.83 | % | 4.78 | % | ||||||
Non-performing assets (including 90+ past due) as % of loans, foreclosed properties and non-performing loans held for sale |
3.97 | % | 4.40 | % | 5.42 | % |
*Tier 1 Common and Tier 1 Capital ratios for the
current quarter are estimated.
~ Annualized
Disciplined execution of business plans
Regions reported first quarter net income available to common shareholders of $145 million or $0.11 per diluted share, driven by continued execution of the companys business plans. First quarter income from continuing operations was $185 million or $0.14 per diluted share. From discontinued operations, Regions reported a net loss of $40 million or $0.03 per share attributable to an increase in professional and legal fees. Pre-tax pre-provision income totaled $438 million as compared to $485 million in the prior quarter. Excluding fourth quarters goodwill impairment of $253 million1, first quarter pre-tax pre-provision income declined $47 million due to lower net interest income and higher expected seasonal expenses partially offset by an increase in mortgage income.
During the first quarter, we achieved several important milestones that position us well to continue growing profitable customer relationships, expanding our market share and helping our customers become more successful financially, said Grayson Hall, president and chief executive officer. We are poised to build on Regions strong foundation to benefit our shareholders, customers and associates.
Key milestones position the company for profitable growth
On January 9, 2012, the company submitted a capital plan to the Federal Reserve as part of the comprehensive capital analysis and review. After review by the Federal Reserve, Regions received permission to execute on its plan which demonstrates the strength of the companys capital plan and process. As the analysis shows, execution of the companys capital plan including the sale of Morgan Keegan and the capital raise positions
Regions among the top large U.S. banks in terms of key capital ratios under the stress scenario. In executing the plan, the company has already taken several important steps to ensure its long term financial strength:
| March 13 completed a highly successful approximate $900 million common equity raise, yielding $875 million in net proceeds |
| April 2 completed the sale of Morgan Keegan to Raymond James Financial resulting in proceeds of approximately $1.2 billion |
| April 4 repaid the U.S. Treasury Departments $3.5 billion preferred stock investment |
Strong capital and solid liquidity
Tier 1 and Tier 1 common1 capital ratios remained strong, ending the first quarter at an estimated 14.3 percent and 9.6 percent, respectively. On a Basel III basis1, they were estimated to be 12.5 percent and 8.9 percent, which are above the 8.5 percent and 7 percent minimum requirements, respectively. Adjusted to exclude the governments preferred stock investment, which was repaid shortly after the quarters end, the Tier 1 ratio stood at 10.6 percent1. The companys liquidity position at both the bank and the holding company remains solid as well. As of March 31, 2012, the companys loan-to-deposit ratio was 79 percent.
Asset quality improvement continues
First quarter resulted in significant asset quality improvement. The provision for loan losses totaled $117 million or $215 million less than net charge-offs; the lowest quarterly loan loss provision in more than four years. Total net charge-offs declined $98 million or 23 percent linked quarter. The companys loan loss allowance to non-performing loan coverage ratio increased from 1.03x to 1.18x year-over-year and the allowance for loan losses as a percent of loans was 3.30 percent as of March 31, 2012.
Non-performing loans, excluding loans held for sale, were down $221 million or 9 percent linked quarter. Inflows of non-performing loans declined to $381 million or 32 percent from the fourth quarter. In addition, 49 percent or nearly half of ending Business Services non-performing loans were current and paying as agreed as of March 31, 2012, up from 38 percent in the prior year. Business Services criticized loans also declined 6 percent in the quarter and are down 35 percent year-over-year.
Focused on growing profitable customer relationships
With a strong financial and customer service foundation in place, Regions is focused on profitable growth across all lines of business to advance its strategic priorities and improve its performance.
Total loan production for the quarter was $12.6 billion. Commercial loan production (including renewals) constituted the majority of that total at $10.3 billion, of which $4 billion was new loan production. Growth in lending to middle market commercial and industrial customers continued,
with average loans in this category up 8.1 percent compared to prior year. Total commercial and industrial commitments grew $872 million, or 3 percent linked quarter. This growth was driven primarily by broad based geographic growth and continued momentum in our specialized industries. Consumer loan production totaled $2.3 billion in first quarter 2012, which reflected strength in mortgage and indirect auto.
Overall, ending loans declined 1 percent linked quarter reflecting a further $616 million decline in the investor real estate portfolio. The companys aggregate loan yield decreased 6 basis points linked quarter to 4.29 percent, primarily due to the impact of previously terminated balance sheet hedges. Ending earning assets increased 2 percent attributable to growth in the securities portfolio.
Improving funding mix
The companys funding mix continued to improve during the quarter, as average low-cost deposits as a percentage of total deposits rose to 80 percent compared to 76 percent last year. This positive mix shift resulted in deposit costs declining to 37 basis points for the quarter, down 3 basis points from fourth quarter and a 3 basis points decline in total funding costs to 65 basis points.
Net interest income from continuing operations was $827 million, a $22 million decline linked quarter, driven by a $1.2 billion decline in average earning assets and higher mortgage prepayments. The net interest margin was up slightly linked quarter at 3.09 percent. The net interest margin benefited from lower deposit costs and a $530 million decrease in average cash reserves at the Federal Reserve as well as lower non-accrual levels. These benefits were partially offset by the impact of previously terminated balance sheet hedges.
The securities portfolio increased $2.7 billion during the quarter and now totals $27 billion as part of the strategic decision to deploy excess cash into earning assets.
Growing fee income and expanding services
Non-interest revenues from continuing operations totaled $524 million, up 3 percent linked quarter as a result of higher mortgage income. Excluding security gains and leveraged lease termination gains, adjusted non-interest revenue1 increased $15 million or 3 percent reflecting higher mortgage income partially offset by lower service charges. Mortgage revenue increased 35 percent linked quarter or $20 million, as customers took advantage of the extended Home Affordable Refinance Program, or HARP II.
Improving productivity and reducing non-interest expenses
Non-interest expenses from continuing operations declined $211 million linked quarter due to fourth quarters goodwill impairment charge. Excluding the $253 million goodwill impairment1, non-interest expenses increased 5 percent linked quarter, reflecting a $50 million increase in salaries and benefits related to payroll taxes and pension costs as well as a $13 million annual subsidiary dividend.
1Non-GAAP, refer to the following pages of the financial supplement to this earnings release:
| Pre-tax pre-provision income from continuing operations on page 8 |
| Non-interest revenue from continuing operations and non-interest expense from continuing operations before goodwill impairment on page 17 |
| Reconciliation to GAAP Financial Measures on pages 16-20 |
About Regions Financial Corporation
Regions Financial Corporation, with $128 billion in assets, is a member of the S&P 500 Index and is one of the nations largest full-service providers of consumer and commercial banking, wealth management, mortgage, and insurance products and services. Regions serves customers in 16 states across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates approximately 1,700 banking offices and 2,100 ATMs. Additional information about Regions and its full line of products and services can be found at www.regions.com.
Forward-looking statements
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 that 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 managements 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 (the Dodd-Frank Act) became law in July 2010, but a number of legislative and regulatory proposals remain pending. Additionally, the Treasury Department 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. Future and proposed rules, including those that are related to the various regulatory capital and liquidity proposals and standards, referred to as Basel III, adopted by the Basel Committee on Banking Supervision, could require banking institutions to increase levels of capital and to satisfy liquidity requirements. All of the foregoing may have significant effects on Regions and the financial services industry, the exact nature and extent of which cannot be fully determined at this time. |
| Regions ability to mitigate the impact of the Dodd-Frank Act on debit interchange fees through revenue enhancements and other revenue measures, which will depend on various factors, including the acceptance by our customers of modified fee structures for Regions products and services. |
| 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. |
| Possible 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, reputational 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, wind, tornados and hurricanes, and the effects of man-made disasters. |
| Possible downgrades in ratings issued by rating agencies. |
| Potential dilution of holders of shares of Regions common stock resulting from the U.S. Treasurys ownership of a warrant to purchase up to 48,253,677 shares of common stock. |
| Potential dilution of holders of shares of common stock resulting from any future efforts by Regions to raise additional capital. |
| 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. |
| With regard to the sale of Morgan Keegan the possibility of business disruption following the transaction; reputational risks and the reaction of customers and counterparties to the transaction; and occurrences which could cause post-closing adjustments to the purchase price. |
| 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, 2011. |
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.
Use of non-GAAP financial measures
Pages two and three of this earnings release present computations of earnings and certain other financial measures excluding goodwill impairment (non-GAAP), Tier 1 common risk-based ratio (non-GAAP) and tangible common ratios (non-GAAP). Page three of the financial supplement shows additional ratios based on return on average assets, tangible common stockholders equity, efficiency ratio, as well as the Tier 1 common risk-based ratio and computations of earnings and certain other financial measures excluding goodwill impairment (non-GAAP), the regulatory charge and the federal income tax benefit related to the regulatory charge (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 banks capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. In connection with the Companys Comprehensive Capital Assessment and Review process, these regulators supplement 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 equity 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 companys 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.
Regions currently calculates its risk-based capital ratios under guidelines adopted by the Federal Reserve based on the 1988 Capital Accord (Basel I) of the Basel Committee on Banking Supervision (the Basel Committee). In December 2010, the Basel Committee released its final framework for Basel III, which will strengthen international capital and liquidity regulation. When implemented by U.S. bank regulatory agencies and fully phased-in, Basel III will change capital requirements and place greater emphasis on common equity. Implementation of Basel III will begin on January 1, 2013, and will be phased in over a multi-year period. The U.S. bank regulatory agencies have not yet finalized regulations governing the implementation of Basel III. Accordingly, the calculations provided on page 20 are estimates, based on Regions current understanding of the framework, including the Companys reading of the requirements, and informal feedback received through the regulatory process. Regions understanding of the framework is evolving and will likely change as the regulations are finalized. Because the Basel III implementation regulations are not formally defined by GAAP and have not yet been finalized and codified, these measures are considered to be non-GAAP financial measures, and other entities may calculate them differently from Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using the Basel III framework, we believe that it is useful to provide investors the ability to assess Regions capital adequacy on the same basis.
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 goodwill impairment, the regulatory charge and the federal income tax benefit related to the regulatory charge does not represent the amount that effectively accrues directly to stockholders (i.e. goodwill impairment and the regulatory charge is a reduction in earnings and stockholders equity).
Management and the Board of Directors utilize non-GAAP measures as follows:
| Preparation of Regions operating budgets |
| Calculation of performance-based annual incentive bonuses for certain executives |
| Monthly financial performance reporting |
| Monthly close-out flash reporting of consolidated results (management only) |
| Presentation to investors of Company performance |
See page 8 of the supplement to this earnings release for the computation of income (loss) from continuing operations available to common shareholders (GAAP) to pre-tax pre-provision income (non-GAAP) to adjusted pre-tax pre-provision income (non-GAAP). See page 9 of the supplement to this earnings release for the computation of non-interest expense from continuing operations (GAAP) to non-interest expense from continuing operations excluding goodwill impairment (non-GAAP). See pages 16,17,18, 19 and 20 of the supplement to this earnings release for 1) computation of GAAP net income (loss) available to common shareholders, earnings (loss) per common share and return on average assets to non-GAAP financial measures, 2) income (loss) and earnings per common share from continuing operations (GAAP) to continuing operations excluding goodwill impairment, regulatory charge and related tax benefit (non-GAAP), 3) a reconciliation of average and ending stockholders equity (GAAP) to average and ending tangible common stockholders equity (non-GAAP), 4) a reconciliation of stockholders equity (GAAP) to Tier 1 capital (regulatory) and to Tier 1 common equity (non-GAAP), 5) a reconciliation of ending stockholder equity (GAAP) to Tier 1 capital(regulatory) excluding series A preferred stock 6) a reconciliation of non-interest expense (GAAP) to adjusted non-interest expense (non-GAAP), 7) a reconciliation of non-interest income (GAAP) to adjusted non-interest income (non-GAAP), 8) a computation of the efficiency ratio and fee ratio (non-GAAP), and 9) a reconciliation of stockholders equity (GAAP) to Basel III Tier 1 capital (non-GAAP) and Basel III Tier 1 common (non-GAAP).
Exhibit 99.2
Regions Financial Corporation and Subsidiaries
Financial Supplement
First Quarter 2012
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Table of Contents
Page | ||||
Consolidated Balance Sheets |
1 | |||
Consolidated Statements of Operations |
2 | |||
Selected Ratios and Other Information from Continuing Operations |
3 | |||
Consolidated Average Daily Balances and Yield / Rate Analysis from Continuing Operations |
4-5 | |||
Loans |
6 | |||
Deposits |
7 | |||
Pre-Tax Pre-Provision Income (PPI) and Adjusted PPI from Continuing Operations |
8 | |||
Non-Interest Income and Expense from Continuing Operations |
9 | |||
Credit Quality |
||||
Allowance for Credit Losses, Net Charge-Offs and Related Ratios |
10 | |||
Troubled Debt Restructurings and Credit Costs |
11 | |||
NPL, Foreclosed Property and Held for Sale Migration |
12 | |||
Early and late stage delinquencies |
13 | |||
Non-Accrual Loans (excludes loans held for sale) and IRE portfolio analysis |
14 | |||
Residential lending net charge-off analysis |
15 | |||
Reconciliation to GAAP Financial Measures |
||||
Net Income and EPS |
16 | |||
Fee Income Ratios, Efficiency Ratios and Adjusted Non-Interest Income / Expense |
17 | |||
Return Ratios, Tangible Common Ratios and Capital |
18 | |||
Tier 1 Capital Adjusted to exclude Series A Preferred Stock |
19 | |||
Basel III |
20 | |||
Statement of Discontinued Operations |
21 | |||
Forward-Looking Statements |
22 |
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Consolidated Balance Sheets (unaudited)
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Assets: |
||||||||||||||||||||
Cash and due from banks |
$ | 2,036 | $ | 2,132 | $ | 2,000 | $ | 2,271 | $ | 2,042 | ||||||||||
Interest-bearing deposits in other banks |
5,270 | 4,913 | 6,009 | 5,452 | 4,937 | |||||||||||||||
Federal funds sold and securities purchased under agreements to resell |
167 | 200 | 254 | 251 | 341 | |||||||||||||||
Trading account assets |
1,127 | 1,266 | 1,462 | 1,223 | 1,284 | |||||||||||||||
Securities available for sale |
27,177 | 24,471 | 24,635 | 23,828 | 24,702 | |||||||||||||||
Securities held to maturity |
15 | 16 | 18 | 21 | 22 | |||||||||||||||
Loans held for sale |
1,054 | 1,193 | 1,012 | 1,141 | 1,552 | |||||||||||||||
Loans, net of unearned income |
76,720 | 77,594 | 79,447 | 81,176 | 81,371 | |||||||||||||||
Allowance for loan losses |
(2,530 | ) | (2,745 | ) | (2,964 | ) | (3,120 | ) | (3,186 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loans |
74,190 | 74,849 | 76,483 | 78,056 | 78,185 | |||||||||||||||
Other interest-earning assets |
1,054 | 1,085 | 1,081 | 1,207 | 1,214 | |||||||||||||||
Premises and equipment, net |
2,350 | 2,375 | 2,399 | 2,481 | 2,528 | |||||||||||||||
Interest receivable |
397 | 361 | 422 | 354 | 441 | |||||||||||||||
Goodwill |
4,816 | 4,816 | 5,561 | 5,561 | 5,561 | |||||||||||||||
Mortgage servicing rights (MSRs) |
199 | 182 | 182 | 268 | 282 | |||||||||||||||
Other identifiable intangible assets |
420 | 449 | 478 | 420 | 358 | |||||||||||||||
Other assets |
8,010 | 8,742 | 7,766 | 8,374 | 8,307 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total assets |
$ | 128,282 | $ | 127,050 | $ | 129,762 | $ | 130,908 | $ | 131,756 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities and stockholders equity: |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Non-interest-bearing |
$ | 29,707 | $ | 28,266 | $ | 28,296 | $ | 28,148 | $ | 27,480 | ||||||||||
Interest-bearing |
67,431 | 67,361 | 67,642 | 68,183 | 68,889 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total deposits |
97,138 | 95,627 | 95,938 | 96,331 | 96,369 | |||||||||||||||
Borrowed funds: |
||||||||||||||||||||
Short-term borrowings: |
||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase |
2,287 | 2,333 | 1,969 | 1,740 | 2,218 | |||||||||||||||
Other short-term borrowings |
621 | 734 | 974 | 982 | 964 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total short-term borrowings |
2,908 | 3,067 | 2,943 | 2,722 | 3,182 | |||||||||||||||
Long-term borrowings |
7,196 | 8,110 | 10,140 | 11,646 | 12,197 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total borrowed funds |
10,104 | 11,177 | 13,083 | 14,368 | 15,379 | |||||||||||||||
Other liabilities |
3,506 | 3,747 | 3,478 | 3,321 | 3,389 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities |
110,748 | 110,551 | 112,499 | 114,020 | 115,137 | |||||||||||||||
Stockholders equity: |
||||||||||||||||||||
Preferred stock, Series A |
3,429 | 3,419 | 3,409 | 3,399 | 3,389 | |||||||||||||||
Common stock |
15 | 13 | 13 | 13 | 13 | |||||||||||||||
Additional paid-in capital |
19,939 | 19,060 | 19,059 | 19,052 | 19,047 | |||||||||||||||
Retained earnings (deficit) |
(4,395 | ) | (4,527 | ) | (3,913 | ) | (4,000 | ) | (4,043 | ) | ||||||||||
Treasury stock, at cost |
(1,394 | ) | (1,397 | ) | (1,397 | ) | (1,399 | ) | (1,400 | ) | ||||||||||
Accumulated other comprehensive income (loss), net |
(60 | ) | (69 | ) | 92 | (177 | ) | (387 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total stockholders equity |
17,534 | 16,499 | 17,263 | 16,888 | 16,619 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total liabilities and stockholders equity |
$ | 128,282 | $ | 127,050 | $ | 129,762 | $ | 130,908 | $ | 131,756 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Page 1
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Consolidated Statements of Operations (unaudited)
Quarter Ended | ||||||||||||||||||||
($ amounts in millions, except per share data) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Interest income on: |
||||||||||||||||||||
Loans, including fees |
$ | 812 | $ | 854 | $ | 867 | $ | 856 | $ | 867 | ||||||||||
Securities: |
||||||||||||||||||||
Taxable |
174 | 166 | 177 | 208 | 207 | |||||||||||||||
Tax-exempt |
| | | | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total securities |
174 | 166 | 177 | 208 | 207 | |||||||||||||||
Loans held for sale |
7 | 7 | 7 | 9 | 13 | |||||||||||||||
Trading account assets |
1 | 1 | | | | |||||||||||||||
Other interest-earning assets |
3 | 3 | 4 | 3 | 3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest income |
997 | 1,031 | 1,055 | 1,076 | 1,090 | |||||||||||||||
Interest expense on: |
||||||||||||||||||||
Deposits |
88 | 95 | 112 | 126 | 139 | |||||||||||||||
Short-term borrowings |
| (2 | ) | | | 1 | ||||||||||||||
Long-term borrowings |
82 | 89 | 93 | 94 | 95 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total interest expense |
170 | 182 | 205 | 220 | 235 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income |
827 | 849 | 850 | 856 | 855 | |||||||||||||||
Provision for loan losses |
117 | 295 | 355 | 398 | 482 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net interest income after provision for loan losses |
710 | 554 | 495 | 458 | 373 | |||||||||||||||
Non-interest income: |
||||||||||||||||||||
Service charges on deposit accounts |
254 | 263 | 310 | 308 | 287 | |||||||||||||||
Capital markets and investment income |
28 | 19 | (5 | ) | 19 | 31 | ||||||||||||||
Mortgage income |
77 | 57 | 68 | 50 | 45 | |||||||||||||||
Trust department income |
49 | 49 | 49 | 51 | 50 | |||||||||||||||
Securities gains (losses), net |
12 | 7 | (1 | ) | 24 | 82 | ||||||||||||||
Other |
104 | 112 | 92 | 91 | 85 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-interest income |
524 | 507 | 513 | 543 | 580 | |||||||||||||||
Non-interest expense: |
||||||||||||||||||||
Salaries and employee benefits |
442 | 392 | 383 | 401 | 428 | |||||||||||||||
Net occupancy expense |
94 | 95 | 95 | 98 | 100 | |||||||||||||||
Furniture and equipment expense |
64 | 63 | 70 | 72 | 70 | |||||||||||||||
Goodwill impairment |
| 253 | | | | |||||||||||||||
Other |
313 | 321 | 302 | 385 | 334 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total non-interest expense |
913 | 1,124 | 850 | 956 | 932 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) before income taxes |
321 | (63 | ) | 158 | 45 | 21 | ||||||||||||||
Income tax expense (benefit) |
82 | 18 | 17 | (34 | ) | (29 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations |
239 | (81 | ) | 141 | 79 | 50 | ||||||||||||||
Discontinued operations: |
||||||||||||||||||||
Income (loss) from discontinued operations before income taxes |
(65 | ) | (472 | ) | 24 | 4 | 36 | |||||||||||||
Income tax expense (benefit) |
(25 | ) | (5 | ) | 10 | (26 | ) | 17 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from discontinued operations, net of tax |
(40 | ) | (467 | ) | 14 | 30 | 19 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) |
$ | 199 | $ | (548 | ) | $ | 155 | $ | 109 | $ | 69 | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from continuing operations available to common shareholders (1) |
$ | 185 | $ | (135 | ) | $ | 87 | $ | 25 | $ | (2 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) available to common shareholders (1) |
$ | 145 | $ | (602 | ) | $ | 101 | $ | 55 | $ | 17 | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Weighted-average shares outstanding - during quarter: |
||||||||||||||||||||
Basic |
1,282 | 1,259 | 1,259 | 1,258 | 1,257 | |||||||||||||||
Diluted |
1,283 | 1,259 | 1,261 | 1,260 | 1,259 | |||||||||||||||
Actual shares outstanding - end of quarter |
1,412 | 1,259 | 1,259 | 1,259 | 1,256 | |||||||||||||||
Earnings (loss) per common share from continuing operations (1): |
||||||||||||||||||||
Basic |
$ | 0.14 | $ | (0.11 | ) | $ | 0.07 | $ | 0.02 | $ | (0.00 | ) | ||||||||
Diluted |
$ | 0.14 | $ | (0.11 | ) | $ | 0.07 | $ | 0.02 | $ | (0.00 | ) | ||||||||
Earnings (loss) per common share (1): |
||||||||||||||||||||
Basic |
$ | 0.11 | $ | (0.48 | ) | $ | 0.08 | $ | 0.04 | $ | 0.01 | |||||||||
Diluted |
$ | 0.11 | $ | (0.48 | ) | $ | 0.08 | $ | 0.04 | $ | 0.01 | |||||||||
Cash dividends declared per common share |
$ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||||
Taxable-equivalent net interest income from continuing operations |
$ | 839 | $ | 858 | $ | 859 | $ | 864 | $ | 864 |
(1) | Includes preferred stock dividends and accretion |
Page 2
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Selected Ratios and Other Information from Continuing Operations
As of and for Quarter Ended | ||||||||||||||||||||
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | ||||||||||||||||
Return on average assets from continuing operations |
0.59 | % | (0.43 | %) | 0.26 | % | 0.08 | % | (0.01 | %) | ||||||||||
Return on average assets from continuing operations, excluding goodwill impairment and regulatory charge related tax benefit (non-GAAP)* (1) |
0.59 | % | 0.37 | % | 0.26 | % | 0.03 | % | (0.01 | %) | ||||||||||
Return on average common equity |
4.38 | % | (17.39 | %) | 2.92 | % | 1.66 | % | 0.51 | % | ||||||||||
Return on average tangible common stockholders equity (non-GAAP)* (1) |
7.08 | % | (30.12 | %) | 5.05 | % | 2.88 | % | 0.89 | % | ||||||||||
Return on average tangible common stockholders equity, excluding goodwill impairment and regulatory charge related tax benefit (non-GAAP)* (1) |
7.08 | % | 6.45 | % | 5.05 | % | 5.14 | % | 0.89 | % | ||||||||||
Efficiency ratio from continuing operations (non-GAAP) (1) |
67.9 | % | 64.6 | % | 61.8 | % | 63.6 | % | 68.3 | % | ||||||||||
Common equity per share |
$ | 9.99 | $ | 10.39 | $ | 11.00 | $ | 10.71 | $ | 10.53 | ||||||||||
Tangible common book value per share (non-GAAP) (1) |
$ | 6.42 | $ | 6.37 | $ | 6.38 | $ | 6.15 | $ | 6.00 | ||||||||||
Stockholders equity to total assets |
13.67 | % | 12.99 | % | 13.30 | % | 12.90 | % | 12.61 | % | ||||||||||
Tangible common stockholders equity to tangible assets (non-GAAP) (1) |
7.35 | % | 6.57 | % | 6.48 | % | 6.18 | % | 5.98 | % | ||||||||||
Tier 1 Common risk-based ratio (non-GAAP) (1) (2) |
9.6 | % | 8.5 | % | 8.2 | % | 7.9 | % | 7.9 | % | ||||||||||
Tier 1 Capital (2) |
14.3 | % | 13.3 | % | 12.8 | % | 12.6 | % | 12.5 | % | ||||||||||
Tier 1 Capital adjusted for retirement of Series A preferred stock (1) (2) |
10.6 | % | 9.4 | % | 9.1 | % | 8.8 | % | 8.8 | % | ||||||||||
Total Risk-Based Capital (2) |
18.0 | % | 16.9 | % | 16.5 | % | 16.2 | % | 16.5 | % | ||||||||||
Leverage (2) |
11.0 | % | 9.9 | % | 9.7 | % | 9.5 | % | 9.4 | % | ||||||||||
Allowance for credit losses as a percentage of loans, net of unearned income (3) |
3.42 | % | 3.64 | % | 3.84 | % | 3.95 | % | 4.01 | % | ||||||||||
Allowance for loan losses as a percentage of loans, net of unearned income |
3.30 | % | 3.54 | % | 3.73 | % | 3.84 | % | 3.92 | % | ||||||||||
Allowance for loan losses to non-performing loans, excluding loans held for sale |
1.18 | x | 1.16 | x | 1.09 | x | 1.12 | x | 1.03 | x | ||||||||||
Net interest margin (FTE) from continuing operations |
3.09 | % | 3.08 | % | 3.04 | % | 3.07 | % | 3.09 | % | ||||||||||
Loans, net of unearned income, to total deposits |
79.0 | % | 81.1 | % | 82.8 | % | 84.3 | % | 84.4 | % | ||||||||||
Net charge-offs as a percentage of average loans* |
1.73 | % | 2.16 | % | 2.52 | % | 2.71 | % | 2.37 | % | ||||||||||
Non-accrual loans, excluding loans held for sale as a percentage of loans |
2.80 | % | 3.06 | % | 3.41 | % | 3.43 | % | 3.79 | % | ||||||||||
Non-performing assets (excluding loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale |
3.42 | % | 3.83 | % | 4.23 | % | 4.39 | % | 4.78 | % | ||||||||||
Non-performing assets (including loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale |
3.97 | % | 4.40 | % | 4.75 | % | 4.98 | % | 5.42 | % | ||||||||||
Associate headcount (4) |
23,619 | 23,707 | 23,713 | 23,966 | 24,356 | |||||||||||||||
Total branch outlets |
1,722 | 1,726 | 1,767 | 1,769 | 1,771 | |||||||||||||||
ATMs |
2,070 | 2,083 | 2,130 | 2,132 | 2,144 |
* | Annualized |
(1) | See reconciliation of GAAP to non-GAAP Financial Measures on pages 16-19 |
(2) | Current quarter Tier 1 Common, Tier 1, Total Risk-Based Capital and Leverage ratios are estimated |
(3) | 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 |
(4) | Excludes Morgan Keegan Associates |
Page 3
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations
Quarter Ended | ||||||||||||||||||||||||
3/31/12 | 12/31/11 | |||||||||||||||||||||||
($ amounts in millions; yields on taxable-equivalent basis) |
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
||||||||||||||||||
Assets |
||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Federal funds sold and securities purchased under agreements to resell |
$ | | $ | | | % | $ | | $ | | | % | ||||||||||||
Trading account assets |
182 | 2 | 4.42 | 175 | 1 | 2.27 | ||||||||||||||||||
Securities: |
||||||||||||||||||||||||
Taxable |
25,659 | 173 | 2.71 | 24,731 | 166 | 2.66 | ||||||||||||||||||
Tax-exempt |
33 | | | 32 | | | ||||||||||||||||||
Loans held for sale |
1,047 | 7 | 2.69 | 1,057 | 7 | 2.63 | ||||||||||||||||||
Loans, net of unearned income: |
||||||||||||||||||||||||
Commercial and industrial |
24,748 | 258 | 4.19 | 24,310 | 263 | 4.29 | ||||||||||||||||||
Commercial real estate mortgage - owner-occupied |
11,077 | 130 | 4.72 | 11,404 | 140 | 4.87 | ||||||||||||||||||
Commercial real estate construction - owner-occupied |
311 | 4 | 5.17 | 346 | 5 | 5.73 | ||||||||||||||||||
Commercial investor real estate mortgage |
9,492 | 85 | 3.60 | 10,357 | 91 | 3.49 | ||||||||||||||||||
Commercial investor real estate construction |
994 | 8 | 3.24 | 1,152 | 9 | 3.10 | ||||||||||||||||||
Residential first mortgage |
13,651 | 149 | 4.39 | 13,925 | 153 | 4.36 | ||||||||||||||||||
Home equity lending |
12,845 | 113 | 3.54 | 13,172 | 118 | 3.55 | ||||||||||||||||||
Indirect |
1,908 | 25 | 5.27 | 1,825 | 25 | 5.43 | ||||||||||||||||||
Consumer credit card |
952 | 30 | 12.67 | 1,002 | 37 | 14.65 | ||||||||||||||||||
Other consumer |
1,190 | 22 | 7.44 | 1,209 | 22 | 7.22 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total loans, net of unearned income |
77,168 | 824 | 4.29 | 78,702 | 863 | 4.35 | ||||||||||||||||||
Other interest-earning assets |
5,140 | 3 | 0.23 | 5,690 | 4 | 0.28 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-earning assets |
109,229 | 1,009 | 3.72 | 110,387 | 1,041 | 3.74 | ||||||||||||||||||
Allowance for loan losses |
(2,745 | ) | (2,901 | ) | ||||||||||||||||||||
Cash and due from banks |
1,987 | 1,974 | ||||||||||||||||||||||
Other non-earning assets |
15,285 | 15,440 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
$ | 123,756 | $ | 124,900 | |||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Liabilities and Stockholders Equity |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Savings accounts |
$ | 5,362 | 1 | 0.08 | $ | 5,153 | 1 | 0.08 | ||||||||||||||||
Interest-bearing transaction accounts |
19,657 | 6 | 0.12 | 18,602 | 7 | 0.15 | ||||||||||||||||||
Money market accounts |
23,488 | 12 | 0.21 | 23,308 | 13 | 0.22 | ||||||||||||||||||
Time deposits |
19,053 | 69 | 1.46 | 19,774 | 74 | 1.48 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-bearing deposits (1) |
67,560 | 88 | 0.52 | 66,837 | 95 | 0.56 | ||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase |
1,572 | | | 1,912 | (2 | ) | (0.41 | ) | ||||||||||||||||
Other short-term borrowings |
63 | | | 77 | | | ||||||||||||||||||
Long-term borrowings |
7,585 | 82 | 4.35 | 9,630 | 90 | 3.71 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-bearing liabilities (3) |
76,780 | 170 | 0.89 | 78,456 | 183 | 0.93 | ||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest spread |
2.83 | 2.81 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Non-interest-bearing deposits (1) (3) |
28,501 | 28,318 | ||||||||||||||||||||||
Other liabilities |
2,745 | 2,569 | ||||||||||||||||||||||
Stockholders equity |
15,730 | 15,557 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
$ | 123,756 | $ | 124,900 | |||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income/margin FTE basis (2) |
$ | 839 | 3.09 | % | $ | 858 | 3.08 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Total deposit costs from continuing operations 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 from continuing operations equal 0.37% and 0.40% for the quarters ended March 31, 2012 and December 31 2011, respectively. |
(2) | Including both continuing and discontinued operations, the net interest income and margin on a taxable equivalent basis is $846 million and 3.07%, respectively, for the quarter ended March 31, 2012. |
(3) | Total funding costs from continuing operations may be calculated by dividing total interest expense on interest-bearing liabilities by the sum of interest-bearing liabilities and non-interest bearing deposits. The rates for total funding costs from continuing operations equal 0.65% and 0.68% for the quarters ended March 31, 2012 and December 31 2011, respectively. |
Page 4
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations
Quarter Ended | ||||||||||||||||||||||||||||||||||||
9/30/11 | 6/30/11 | 3/31/11 | ||||||||||||||||||||||||||||||||||
($ amounts in millions; yields on taxable-equivalent basis) |
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
|||||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||||||||||||||
Federal funds sold and securities purchased under agreements to resell |
$ | | $ | | | % | $ | | $ | | | % | $ | 17 | $ | | | % | ||||||||||||||||||
Trading account assets |
182 | 1 | 2.18 | 164 | 1 | 2.45 | 143 | 1 | 2.84 | |||||||||||||||||||||||||||
Securities: |
||||||||||||||||||||||||||||||||||||
Taxable |
24,098 | 177 | 2.91 | 24,765 | 208 | 3.37 | 24,755 | 207 | 3.39 | |||||||||||||||||||||||||||
Tax-exempt |
31 | | | 33 | | | 30 | | | |||||||||||||||||||||||||||
Loans held for sale |
847 | 7 | 3.28 | 1,141 | 9 | 3.16 | 1,486 | 13 | 3.55 | |||||||||||||||||||||||||||
Loans, net of unearned income |
||||||||||||||||||||||||||||||||||||
Commercial and industrial |
23,953 | 249 | 4.12 | 23,506 | 249 | 4.25 | 22,890 | 246 | 4.36 | |||||||||||||||||||||||||||
Commercial real estate mortgage - owner-occupied |
11,661 | 163 | 5.55 | 11,826 | 161 | 5.46 | 12,012 | 163 | 5.50 | |||||||||||||||||||||||||||
Commercial real estate construction - owner-occupied |
376 | 4 | 4.22 | 404 | 4 | 3.97 | 438 | 5 | 4.63 | |||||||||||||||||||||||||||
Commercial investor real estate mortgage |
11,395 | 100 | 3.48 | 12,607 | 108 | 3.44 | 13,393 | 113 | 3.42 | |||||||||||||||||||||||||||
Commercial investor real estate construction |
1,411 | 9 | 2.53 | 1,805 | 12 | 2.67 | 2,100 | 14 | 2.70 | |||||||||||||||||||||||||||
Residential first mortgage |
14,207 | 160 | 4.47 | 14,329 | 164 | 4.59 | 14,692 | 168 | 4.64 | |||||||||||||||||||||||||||
Home equity lending |
13,454 | 119 | 3.51 | 13,745 | 119 | 3.47 | 14,053 | 120 | 3.46 | |||||||||||||||||||||||||||
Indirect |
1,755 | 25 | 5.65 | 1,681 | 24 | 5.73 | 1,627 | 24 | 5.98 | |||||||||||||||||||||||||||
Consumer credit card |
1,095 | 24 | 8.70 | 12 | | | | | | |||||||||||||||||||||||||||
Other consumer |
1,206 | 22 | 7.24 | 1,191 | 22 | 7.41 | 1,207 | 22 | 7.39 | |||||||||||||||||||||||||||
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|||||||||||||||||||
Total loans, net of unearned income |
80,513 | 875 | 4.31 | 81,106 | 863 | 4.27 | 82,412 | 875 | 4.31 | |||||||||||||||||||||||||||
Other interest-earning assets |
6,544 | 4 | 0.24 | 5,662 | 3 | 0.21 | 4,573 | 3 | 0.27 | |||||||||||||||||||||||||||
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|||||||||||||||||||
Total interest-earning assets |
112,215 | 1,064 | 3.76 | 112,871 | 1,084 | 3.85 | 113,416 | 1,099 | 3.93 | |||||||||||||||||||||||||||
Allowance for loan losses |
(3,150 | ) | (3,200 | ) | (3,209 | ) | ||||||||||||||||||||||||||||||
Cash and due from banks |
1,972 | 2,027 | 1,980 | |||||||||||||||||||||||||||||||||
Other non-earning assets |
15,549 | 15,740 | 15,800 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
$ | 126,586 | $ | 127,438 | $ | 127,987 | |||||||||||||||||||||||||||||||
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|
|
|
|
|||||||||||||||||||||||||||||||
Liabilities and Stockholders Equity |
||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||
Savings accounts |
$ | 5,148 | 1 | 0.08 | $ | 5,107 | 1 | 0.08 | $ | 4,837 | 1 | 0.08 | ||||||||||||||||||||||||
Interest-bearing transaction accounts |
16,651 | 7 | 0.17 | 13,898 | 7 | 0.20 | 13,228 | 7 | 0.21 | |||||||||||||||||||||||||||
Money market accounts |
24,571 | 18 | 0.29 | 26,805 | 20 | 0.30 | 27,815 | 21 | 0.31 | |||||||||||||||||||||||||||
Time deposits |
21,369 | 86 | 1.60 | 22,507 | 98 | 1.75 | 22,971 | 110 | 1.94 | |||||||||||||||||||||||||||
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|
|
|||||||||||||||||||
Total interest-bearing deposits (1) |
67,739 | 112 | 0.66 | 68,317 | 126 | 0.74 | 68,851 | 139 | 0.82 | |||||||||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase |
1,604 | | | 1,752 | 1 | 0.23 | 1,937 | 1 | 0.21 | |||||||||||||||||||||||||||
Other short-term borrowings |
148 | | | 122 | | | 401 | | | |||||||||||||||||||||||||||
Long-term borrowings |
10,786 | 93 | 3.42 | 11,726 | 93 | 3.18 | 12,857 | 95 | 3.00 | |||||||||||||||||||||||||||
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|
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|
|
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|
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|
|||||||||||||||||||
Total interest-bearing liabilities (2) |
80,277 | 205 | 1.01 | 81,917 | 220 | 1.08 | 84,046 | 235 | 1.13 | |||||||||||||||||||||||||||
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|
|
|
|||||||||||||||||||||||||||||||
Net interest spread |
2.75 | 2.77 | 2.80 | |||||||||||||||||||||||||||||||||
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|
|
|
|
|||||||||||||||||||||||||||||||
Non-interest-bearing deposits (1) (2) |
28,408 | 27,806 | 26,405 | |||||||||||||||||||||||||||||||||
Other liabilities |
2,496 | 2,455 | 2,362 | |||||||||||||||||||||||||||||||||
Stockholders equity |
15,405 | 15,260 | 15,174 | |||||||||||||||||||||||||||||||||
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|
|
|
|||||||||||||||||||||||||||||||
$ | 126,586 | $ | 127,438 | $ | 127,987 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Net interest income/margin FTE basis |
$ | 859 | 3.04 | % | $ | 864 | 3.07 | % | $ | 864 | 3.09 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Total deposit costs from continuing operations 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 from continuing operations equal 0.46%, 0.53% and 0.59% for the quarters ended September 30, 2011, June 30, 2011 and March 31, 2011, respectively. |
(2) | Total funding costs from continuing operations may be calculated by dividing total interest expense on interest-bearing liabilities by the sum of interest-bearing liabilities and non-interest bearing deposits. The rates for total funding costs from continuing operations equal 0.75%, 0.80% and 0.86% for the quarters ended September 30, 2011, June 30, 2011 and March 31, 2011, respectively. |
Page 5
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Loans
Quarter Ended | ||||||||||||||||||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | 3/31/12 vs. 12/31/11 |
3/31/12 vs. 3/31/11 |
|||||||||||||||||||||||||||||
Commercial and industrial |
$ | 25,098 | $ | 24,522 | $ | 24,273 | $ | 23,644 | $ | 23,149 | $ | 576 | 2.3 | % | $ | 1,949 | 8.4 | % | ||||||||||||||||||
Commercial real estate mortgage - owner-occupied |
10,931 | 11,166 | 11,537 | 11,797 | 11,889 | (235 | ) | -2.1 | % | (958 | ) | -8.1 | % | |||||||||||||||||||||||
Commercial real estate construction - owner-occupied |
281 | 337 | 356 | 377 | 430 | (56 | ) | -16.6 | % | (149 | ) | -34.7 | % | |||||||||||||||||||||||
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|
|
|
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|
|
|
|
|
|||||||||||||||||||
Total commercial |
36,310 | 36,025 | 36,166 | 35,818 | 35,468 | 285 | 0.8 | % | 842 | 2.4 | % | |||||||||||||||||||||||||
Commercial investor real estate mortgage |
9,156 | 9,702 | 10,696 | 11,836 | 12,932 | (546 | ) | -5.6 | % | (3,776 | ) | -29.2 | % | |||||||||||||||||||||||
Commercial investor real estate construction |
955 | 1,025 | 1,188 | 1,595 | 1,895 | (70 | ) | -6.8 | % | (940 | ) | -49.6 | % | |||||||||||||||||||||||
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|
|
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|
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|
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|
|
|
|
|
|||||||||||||||||||
Total investor real estate |
10,111 | 10,727 | 11,884 | 13,431 | 14,827 | (616 | ) | -5.7 | % | (4,716 | ) | -31.8 | % | |||||||||||||||||||||||
Residential first mortgage |
13,611 | 13,784 | 14,083 | 14,306 | 14,404 | (173 | ) | -1.3 | % | (793 | ) | -5.5 | % | |||||||||||||||||||||||
Home equity - first lien |
5,760 | 5,884 | 5,954 | 6,011 | 6,100 | (124 | ) | -2.1 | % | (340 | ) | -5.6 | % | |||||||||||||||||||||||
Home equity - second lien |
6,882 | 7,137 | 7,362 | 7,582 | 7,774 | (255 | ) | -3.6 | % | (892 | ) | -11.5 | % | |||||||||||||||||||||||
Indirect |
1,938 | 1,848 | 1,774 | 1,704 | 1,626 | 90 | 4.9 | % | 312 | 19.2 | % | |||||||||||||||||||||||||
Consumer credit card |
939 | 987 | 1,024 | 1,134 | | (48 | ) | -4.9 | % | 939 | NM | |||||||||||||||||||||||||
Other consumer |
1,169 | 1,202 | 1,200 | 1,190 | 1,172 | (33 | ) | -2.7 | % | (3 | ) | -0.3 | % | |||||||||||||||||||||||
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|
|
|
|
|
|
|||||||||||||||||||
Total Loans |
$ | 76,720 | $ | 77,594 | $ | 79,447 | $ | 81,176 | $ | 81,371 | $ | (874 | ) | -1.1 | % | $ | (4,651 | ) | -5.7 | % | ||||||||||||||||
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|
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|
|
|
|
|
|
|
|||||||||||||||||||
Average Balances | ||||||||||||||||||||||||||||||||||||
($ amounts in millions) |
1Q12 | 4Q11 | 3Q11 | 2Q11 | 1Q11 | 1Q12 vs. 4Q11 |
1Q12 vs. 1Q11 |
|||||||||||||||||||||||||||||
Commercial and industrial |
$ | 24,748 | $ | 24,310 | $ | 23,953 | $ | 23,506 | $ | 22,889 | $ | 438 | 1.8 | % | $ | 1,859 | 8.1 | % | ||||||||||||||||||
Commercial real estate mortgage - owner-occupied |
11,077 | 11,404 | 11,661 | 11,826 | 12,012 | (327 | ) | -2.9 | % | (935 | ) | -7.8 | % | |||||||||||||||||||||||
Commercial real estate construction - owner-occupied |
311 | 346 | 375 | 404 | 438 | (35 | ) | -10.1 | % | (127 | ) | -29.0 | % | |||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total commercial |
36,136 | 36,060 | 35,989 | 35,736 | 35,339 | 76 | 0.2 | % | 797 | 2.3 | % | |||||||||||||||||||||||||
Commercial investor real estate mortgage |
9,492 | 10,357 | 11,395 | 12,607 | 13,393 | (865 | ) | -8.4 | % | (3,901 | ) | -29.1 | % | |||||||||||||||||||||||
Commercial investor real estate construction |
994 | 1,152 | 1,411 | 1,805 | 2,100 | (158 | ) | -13.7 | % | (1,106 | ) | -52.7 | % | |||||||||||||||||||||||
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|
|
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|
|
|
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|
|
|
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|
|||||||||||||||||||
Total investor real estate |
10,486 | 11,509 | 12,806 | 14,412 | 15,493 | (1,023 | ) | -8.9 | % | (5,007 | ) | -32.3 | % | |||||||||||||||||||||||
Residential first mortgage |
13,651 | 13,925 | 14,207 | 14,329 | 14,692 | (274 | ) | -2.0 | % | (1,041 | ) | -7.1 | % | |||||||||||||||||||||||
Home equity - first lien |
5,835 | 5,927 | 6,003 | 6,066 | 6,162 | (92 | ) | -1.6 | % | (327 | ) | -5.3 | % | |||||||||||||||||||||||
Home equity - second lien |
7,010 | 7,245 | 7,451 | 7,678 | 7,891 | (235 | ) | -3.2 | % | (881 | ) | -11.2 | % | |||||||||||||||||||||||
Indirect |
1,908 | 1,825 | 1,755 | 1,681 | 1,628 | 83 | 4.5 | % | 280 | 17.2 | % | |||||||||||||||||||||||||
Consumer credit card |
952 | 1,002 | 1,095 | 13 | | (50 | ) | -5.0 | % | 952 | NM | |||||||||||||||||||||||||
Other consumer |
1,190 | 1,209 | 1,207 | 1,191 | 1,207 | (19 | ) | -1.6 | % | (17 | ) | -1.4 | % | |||||||||||||||||||||||
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|
|
|
|
|
|||||||||||||||||||
Total Loans |
$ | 77,168 | $ | 78,702 | $ | 80,513 | $ | 81,106 | $ | 82,412 | $ | (1,534 | ) | -1.9 | % | $ | (5,244 | ) | -6.4 | % | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
Loan Portfolio Balances by Percentage
Quarter Ended | ||||||||||||||||||||
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | ||||||||||||||||
Commercial and industrial |
32.7 | % | 31.6 | % | 30.6 | % | 29.1 | % | 28.5 | % | ||||||||||
Commercial real estate mortgage - owner-occupied |
14.2 | % | 14.4 | % | 14.5 | % | 14.5 | % | 14.6 | % | ||||||||||
Commercial real estate construction - owner-occupied |
0.4 | % | 0.4 | % | 0.4 | % | 0.5 | % | 0.5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total commercial |
47.3 | % | 46.4 | % | 45.5 | % | 44.1 | % | 43.6 | % | ||||||||||
Commercial investor real estate mortgage |
11.9 | % | 12.5 | % | 13.5 | % | 14.6 | % | 15.9 | % | ||||||||||
Commercial investor real estate construction |
1.3 | % | 1.3 | % | 1.5 | % | 2.0 | % | 2.3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total investor real estate |
13.2 | % | 13.8 | % | 15.0 | % | 16.6 | % | 18.2 | % | ||||||||||
Residential first mortgage |
17.8 | % | 17.8 | % | 17.7 | % | 17.6 | % | 17.7 | % | ||||||||||
Home equity - first lien |
7.5 | % | 7.6 | % | 7.5 | % | 7.4 | % | 7.5 | % | ||||||||||
Home equity - second lien |
9.0 | % | 9.2 | % | 9.3 | % | 9.3 | % | 9.6 | % | ||||||||||
Indirect |
2.5 | % | 2.4 | % | 2.2 | % | 2.1 | % | 2.0 | % | ||||||||||
Consumer credit card |
1.2 | % | 1.3 | % | 1.3 | % | 1.4 | % | | |||||||||||
Other consumer |
1.5 | % | 1.5 | % | 1.5 | % | 1.5 | % | 1.4 | % | ||||||||||
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|
|
|
|
|
|
|
|||||||||||
Total Loans |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
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|
Page 6
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Deposits
Quarter Ended | ||||||||||||||||||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | 3/31/12 vs. 12/31/11 |
3/31/12 vs. 3/31/11 |
|||||||||||||||||||||||||||||
Customer Deposits |
||||||||||||||||||||||||||||||||||||
Interest-free deposits |
$ | 29,707 | $ | 28,266 | $ | 28,296 | $ | 28,148 | $ | 27,480 | $ | 1,441 | 5.1 | % | $ | 2,227 | 8.1 | % | ||||||||||||||||||
Interest-bearing checking |
19,805 | 19,388 | 18,317 | 15,982 | 13,365 | 417 | 2.2 | % | 6,440 | 48.2 | % | |||||||||||||||||||||||||
Savings |
5,632 | 5,159 | 5,155 | 5,118 | 5,064 | 473 | 9.2 | % | 568 | 11.2 | % | |||||||||||||||||||||||||
Money market - domestic |
23,513 | 23,053 | 23,284 | 24,650 | 27,261 | 460 | 2.0 | % | (3,748 | ) | -13.7 | % | ||||||||||||||||||||||||
Money market - foreign |
271 | 378 | 423 | 476 | 533 | (107 | ) | -28.3 | % | (262 | ) | -49.2 | % | |||||||||||||||||||||||
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|
|||||||||||||||||||
Low-cost deposits |
78,928 | 76,244 | 75,475 | 74,374 | 73,703 | 2,684 | 3.5 | % | 5,225 | 7.1 | % | |||||||||||||||||||||||||
Time deposits |
18,207 | 19,378 | 20,455 | 21,947 | 22,656 | (1,171 | ) | -6.0 | % | (4,449 | ) | -19.6 | % | |||||||||||||||||||||||
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|
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|
|||||||||||||||||||
Total customer deposits |
97,135 | 95,622 | 95,930 | 96,321 | 96,359 | 1,513 | 1.6 | % | 776 | 0.8 | % | |||||||||||||||||||||||||
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|
|||||||||||||||||||
Corporate Treasury Deposits |
||||||||||||||||||||||||||||||||||||
Time deposits |
3 | 5 | 8 | 10 | 10 | (2 | ) | -40.0 | % | (7 | ) | -70.0 | % | |||||||||||||||||||||||
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|
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|
|||||||||||||||||||
Total Deposits |
$ | 97,138 | $ | 95,627 | $ | 95,938 | $ | 96,331 | $ | 96,369 | $ | 1,511 | 1.6 | % | $ | 769 | 0.8 | % | ||||||||||||||||||
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|
|||||||||||||||||||
Average Balances | ||||||||||||||||||||||||||||||||||||
($ amounts in millions) |
1Q12 | 4Q11 | 3Q11 | 2Q11 | 1Q11 | 1Q12 vs. 4Q11 |
1Q12 vs. 1Q11 |
|||||||||||||||||||||||||||||
Customer Deposits |
||||||||||||||||||||||||||||||||||||
Interest-free deposits |
$ | 28,501 | $ | 28,318 | $ | 28,408 | $ | 27,806 | $ | 26,405 | $ | 183 | 0.6 | % | $ | 2,096 | 7.9 | % | ||||||||||||||||||
Interest-bearing checking |
19,657 | 18,602 | 16,651 | 13,898 | 13,228 | 1,055 | 5.7 | % | 6,429 | 48.6 | % | |||||||||||||||||||||||||
Savings |
5,362 | 5,153 | 5,148 | 5,107 | 4,837 | 209 | 4.1 | % | 525 | 10.9 | % | |||||||||||||||||||||||||
Money market - domestic |
23,166 | 22,951 | 24,098 | 26,302 | 27,276 | 215 | 0.9 | % | (4,110 | ) | -15.1 | % | ||||||||||||||||||||||||
Money market - foreign |
322 | 357 | 473 | 503 | 540 | (35 | ) | -9.8 | % | (218 | ) | -40.4 | % | |||||||||||||||||||||||
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Low-cost deposits |
77,008 | 75,381 | 74,778 | 73,616 | 72,286 | 1,627 | 2.2 | % | 4,722 | 6.5 | % | |||||||||||||||||||||||||
Time deposits |
19,049 | 19,767 | 21,359 | 22,496 | 22,956 | (718 | ) | -3.6 | % | (3,907 | ) | -17.0 | % | |||||||||||||||||||||||
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Total customer deposits |
96,057 | 95,148 | 96,137 | 96,112 | 95,242 | 909 | 1.0 | % | 815 | 0.9 | % | |||||||||||||||||||||||||
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Corporate Treasury Deposits |
||||||||||||||||||||||||||||||||||||
Time deposits |
4 | 7 | 10 | 10 | 15 | (3 | ) | -42.9 | % | (11 | ) | -73.3 | % | |||||||||||||||||||||||
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Total Deposits |
$ | 96,061 | $ | 95,155 | $ | 96,147 | $ | 96,122 | $ | 95,257 | $ | 906 | 1.0 | % | $ | 804 | 0.8 | % | ||||||||||||||||||
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Deposits by Percentage
Quarter Ended | ||||||||||||||||||||
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | ||||||||||||||||
Customer Deposits |
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Interest-free deposits |
30.6 | % | 29.5 | % | 29.5 | % | 29.2 | % | 28.5 | % | ||||||||||
Interest-bearing checking |
20.4 | % | 20.3 | % | 19.1 | % | 16.6 | % | 13.9 | % | ||||||||||
Savings |
5.8 | % | 5.4 | % | 5.4 | % | 5.3 | % | 5.2 | % | ||||||||||
Money market - domestic |
24.2 | % | 24.1 | % | 24.3 | % | 25.6 | % | 28.3 | % | ||||||||||
Money market - foreign |
0.3 | % | 0.4 | % | 0.4 | % | 0.5 | % | 0.6 | % | ||||||||||
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Low-cost deposits |
81.3 | % | 79.7 | % | 78.7 | % | 77.2 | % | 76.5 | % | ||||||||||
Time deposits |
18.7 | % | 20.3 | % | 21.3 | % | 22.8 | % | 23.5 | % | ||||||||||
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Total customer deposits |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
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Corporate Treasury Deposits |
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Time deposits |
| | | | | |||||||||||||||
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Total Deposits |
100.0 | % | 100.00 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
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Page 7
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Pre-Tax Pre-Provision Income from Continuing Operations (non-GAAP)
Quarter Ended | ||||||||||||||||||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | 1Q12 vs. 4Q11 |
1Q12 vs. 1Q11 |
|||||||||||||||||||||||||||||
Income (loss) from continuing operations available to common shareholders (GAAP) |
$ | 185 | $ | (135 | ) | $ | 87 | $ | 25 | $ | (2 | ) | $ | 320 | NM | $ | 187 | NM | ||||||||||||||||||
Preferred dividends (GAAP) |
54 | 54 | 54 | 54 | 52 | | | 2 | 3.8 | % | ||||||||||||||||||||||||||
Income tax expense (benefit) (GAAP) |
82 | 18 | 17 | (34 | ) | (29 | ) | 64 | NM | 111 | NM | |||||||||||||||||||||||||
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Income (loss) from continuing operations before income taxes (GAAP) |
321 | (63 | ) | 158 | 45 | 21 | 384 | NM | 300 | NM | ||||||||||||||||||||||||||
Provision for loan losses (GAAP) |
117 | 295 | 355 | 398 | 482 | (178 | ) | -60.3 | % | (365 | ) | -75.7 | % | |||||||||||||||||||||||
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Pre-tax pre-provision income from continuing operations (non-GAAP) |
438 | 232 | 513 | 443 | 503 | 206 | 88.8 | % | (65 | ) | -12.9 | % | ||||||||||||||||||||||||
Goodwill impairment |
| 253 | | | | (253 | ) | -100.0 | % | | NM | |||||||||||||||||||||||||
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Pre-tax pre-provision income from continuing operations, excluding goodwill impairment (non-GAAP) |
438 | 485 | 513 | 443 | 503 | (47 | ) | -9.7 | % | (65 | ) | -12.9 | % | |||||||||||||||||||||||
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Other Adjustments: |
||||||||||||||||||||||||||||||||||||
Securities (gains) losses, net |
(12 | ) | (7 | ) | 1 | (24 | ) | (82 | ) | (5 | ) | 71.4 | % | 70 | 85.4 | % | ||||||||||||||||||||
Loss (gain) on sale of mortgage loans |
| | | | 3 | | | (3 | ) | -100.0 | % | |||||||||||||||||||||||||
Leveraged lease termination (gains) losses, net (1) |
(7 | ) | (10 | ) | 2 | | | 3 | -30.0 | % | (7 | ) | NM | |||||||||||||||||||||||
Securities impairment, net |
| 2 | | | | (2 | ) | -100.0 | % | | NM | |||||||||||||||||||||||||
Branch consolidation and equipment costs |
| (2 | ) | | 77 | | 2 | -100.0 | % | | NM | |||||||||||||||||||||||||
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Total other adjustments |
(19 | ) | (17 | ) | 3 | 53 | (79 | ) | (2 | ) | 11.8 | % | 60 | 75.9 | % | |||||||||||||||||||||
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Adjusted pre-tax pre-provision income from continuing operations (non-GAAP) |
$ | 419 | $ | 468 | $ | 516 | $ | 496 | $ | 424 | $ | (49 | ) | -10.5 | % | $ | (5 | ) | -1.2 | % | ||||||||||||||||
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The Pre-Tax Pre-Provision Income from Continuing Operations table above presents computations of pre-tax pre-provision income from continuing operations 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 income that excludes certain adjustments does not represent the amount that effectively accrues directly to stockholders.
(1) | After tax amounts for leveraged lease terminations gains are $3.1 million for 3/31/2012, $2.8 million for 12/31/11 and $5.4 million for 9/30/11. |
Page 8
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Non-Interest Income and Expense from Continuing Operations
Non-Interest Income from Continuing Operations | Quarter Ended | |||||||||||||||||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | 1Q12 vs. 4Q11 |
1Q12 vs. 1Q11 |
|||||||||||||||||||||||||||||
Service charges on deposit accounts |
$ | 254 | $ | 263 | $ | 310 | $ | 308 | $ | 287 | $ | (9 | ) | -3.4 | % | $ | (33 | ) | -11.5 | % | ||||||||||||||||
Capital markets and investment income |
28 | 19 | (5 | ) | 19 | 31 | 9 | 47.4 | % | (3 | ) | -9.7 | % | |||||||||||||||||||||||
Mortgage income |
77 | 57 | 68 | 50 | 45 | 20 | 35.1 | % | 32 | 71.1 | % | |||||||||||||||||||||||||
Trust department income |
49 | 49 | 49 | 51 | 50 | | | (1 | ) | -2.0 | % | |||||||||||||||||||||||||
Commercial credit income |
19 | 20 | 20 | 20 | 20 | (1 | ) | -5.0 | % | (1 | ) | -5.0 | % | |||||||||||||||||||||||
Securities gains (losses), net |
12 | 7 | (1 | ) | 24 | 82 | 5 | 71.4 | % | (70 | ) | -85.4 | % | |||||||||||||||||||||||
Insurance income |
28 | 26 | 27 | 25 | 28 | 2 | 7.7 | % | | | ||||||||||||||||||||||||||
Leveraged lease termination gains (losses), net |
7 | 10 | (2 | ) | | | (3 | ) | -30.0 | % | 7 | NM | ||||||||||||||||||||||||
Bank-owned life insurance |
21 | 24 | 18 | 20 | 21 | (3 | ) | -12.5 | % | | | |||||||||||||||||||||||||
Net revenue (loss) from affordable housing |
(14 | ) | (20 | ) | (18 | ) | (17 | ) | (14 | ) | 6 | -30.0 | % | | | |||||||||||||||||||||
Other |
43 | 52 | 47 | 43 | 30 | (9 | ) | -17.3 | % | 13 | 43.3 | % | ||||||||||||||||||||||||
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Total non-interest income from continuing operations |
$ | 524 | $ | 507 | $ | 513 | $ | 543 | $ | 580 | $ | 17 | 3.4 | % | $ | (56 | ) | -9.7 | % | |||||||||||||||||
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Non-Interest Expense from Continuing Operations | Quarter Ended | |||||||||||||||||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | 1Q12 vs. 4Q11 |
1Q12 vs. 1Q11 |
|||||||||||||||||||||||||||||
Salaries and employee benefits |
$ | 442 | $ | 392 | $ | 383 | $ | 401 | $ | 428 | $ | 50 | 12.8 | % | $ | 14 | 3.3 | % | ||||||||||||||||||
Net occupancy expense |
94 | 95 | 95 | 98 | 100 | (1 | ) | -1.1 | % | (6 | ) | -6.0 | % | |||||||||||||||||||||||
Furniture and equipment expense |
64 | 63 | 70 | 72 | 70 | 1 | 1.6 | % | (6 | ) | -8.6 | % | ||||||||||||||||||||||||
Professional and legal fees |
27 | 40 | 42 | 38 | 55 | (13 | ) | -32.5 | % | (28 | ) | -50.9 | % | |||||||||||||||||||||||
Amortization of core deposit intangible |
22 | 23 | 23 | 24 | 25 | (1 | ) | -4.3 | % | (3 | ) | -12.0 | % | |||||||||||||||||||||||
Other real estate owned expense |
23 | 38 | 48 | 37 | 39 | (15 | ) | -39.5 | % | (16 | ) | -41.0 | % | |||||||||||||||||||||||
Credit/checkcard expenses |
20 | 18 | 18 | 7 | 8 | 2 | 11.1 | % | 12 | 150.0 | % | |||||||||||||||||||||||||
FDIC premiums |
47 | 46 | 47 | 72 | 52 | 1 | 2.2 | % | (5 | ) | -9.6 | % | ||||||||||||||||||||||||
Marketing |
17 | 18 | 14 | 17 | 13 | (1 | ) | -5.6 | % | 4 | 30.8 | % | ||||||||||||||||||||||||
Subsidiary dividend |
16 | 3 | 3 | 3 | 15 | 13 | 433.3 | % | 1 | 6.7 | % | |||||||||||||||||||||||||
Branch consolidation and property and equipment charges |
| (2 | ) | | 77 | | 2 | -100.0 | % | | NM | |||||||||||||||||||||||||
Other |
141 | 137 | 107 | 110 | 127 | 4 | 2.9 | % | 14 | 11.0 | % | |||||||||||||||||||||||||
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Total non-interest expense from continuing operations before goodwill impairment (non-GAAP) |
913 | 871 | 850 | 956 | 932 | $ | 42 | 4.8 | % | $ | (19 | ) | -2.0 | % | ||||||||||||||||||||||
Goodwill impairment |
| 253 | | | | (253 | ) | -100.0 | % | | NM | |||||||||||||||||||||||||
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Total non-interest expense from continuing operations |
$ | 913 | $ | 1,124 | $ | 850 | $ | 956 | $ | 932 | $ | (211 | ) | -18.8 | % | $ | (19 | ) | -2.0 | % | ||||||||||||||||
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| Non-interest income increased $17 million linked quarter to $524 million. Included in the 1Q12 amount were $12 million in securities gains and $7 million in leveraged lease termination gains. The leveraged lease termination gain was offset by $4 million in increased tax expense, resulting in a nominal impact to net income. |
| Service charges decreased $9 million linked quarter, reflecting seasonality. The negative impact of Regulation E and debit interchange legislation which began in 2011 has been in line with expectations and was partially offset by ongoing actions, including restructuring certain deposit accounts from free to fee-eligible, re-entry into the credit card business and the NOW banking product suite launch. |
| Capital markets and investment income increased $9 million to $28 million reflecting increased capital markets revenue and deferred compensation adjustments which are offset by increases in salaries and benefits. |
| Mortgage income increased $20 million linked quarter, aided by the governments HARP II program, which is increasing refinance volume. Mortgage origination volume in the first quarter totaled $1.6 billion. |
| Non-interest expenses decreased $211 million linked quarter due to the fourth quarters $253 million goodwill impairment charge from continuing operations. Excluding goodwill impairment, non-interest expenses increased 5 percent linked quarter. This includes $50 million increase in salaries and benefits primarily related to a seasonal increase in payroll taxes as well as increased expenses related to pension and 401(K). In addition, there is a $13 million annual dividend paid to a subsidiary that is incurred during the first quarter each year. These items were partialy offset by a $15 million decline in other real estate expense and $13 million decline in professional and legal fees. |
| Other real estate owned expense decreased $15 million linked quarter to $23 million, reflecting a decline in valuation adjustments. |
Page 9
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Credit Quality
As of and for Quarter Ended | ||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Allowance for credit losses (ACL) |
$ | 2,621 | $ | 2,823 | $ | 3,050 | $ | 3,204 | $ | 3,264 | ||||||||||
Allowance allocated to purchased loans (1) |
| | 84 | 84 | | |||||||||||||||
Provision for loan losses |
117 | 295 | 355 | 398 | 482 | |||||||||||||||
Provision (credit) for unfunded credit losses |
13 | (8 | ) | 2 | 6 | 7 | ||||||||||||||
Net loans charged-off: |
||||||||||||||||||||
Commercial and industrial |
61 | 65 | 72 | 49 | 72 | |||||||||||||||
Commercial real estate mortgage - owner-occupied |
46 | 63 | 62 | 43 | 66 | |||||||||||||||
Commercial real estate construction - owner-occupied |
2 | 1 | 2 | 1 | 4 | |||||||||||||||
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Total commercial |
109 | 129 | 136 | 93 | 142 | |||||||||||||||
Commercial investor real estate mortgage |
64 | 112 | 167 | 247 | 132 | |||||||||||||||
Commercial investor real estate construction |
19 | 39 | 52 | 56 | 42 | |||||||||||||||
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Total investor real estate |
83 | 151 | 219 | 303 | 174 | |||||||||||||||
Residential first mortgage |
39 | 47 | 59 | 55 | 56 | |||||||||||||||
Home equity - first lien |
18 | 16 | 19 | 17 | 22 | |||||||||||||||
Home equity - second lien |
57 | 56 | 60 | 66 | 72 | |||||||||||||||
Indirect |
4 | 4 | 2 | 3 | 4 | |||||||||||||||
Consumer credit card |
12 | 12 | 1 | | | |||||||||||||||
Other consumer |
10 | 15 | 15 | 11 | 11 | |||||||||||||||
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Total |
$ | 332 | $ | 430 | $ | 511 | $ | 548 | $ | 481 | ||||||||||
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Net loan charge-offs as a % of average loans, annualized: |
||||||||||||||||||||
Commercial and industrial |
0.99 | % | 1.06 | % | 1.19 | % | 0.85 | % | 1.27 | % | ||||||||||
Commercial real estate mortgage - owner-occupied |
1.67 | % | 2.18 | % | 2.13 | % | 1.45 | % | 2.23 | % | ||||||||||
Commercial real estate construction - owner-occupied |
2.02 | % | 0.82 | % | 2.01 | % | 1.08 | % | 3.74 | % | ||||||||||
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Total commercial |
1.21 | % | 1.41 | % | 1.50 | % | 1.05 | % | 1.63 | % | ||||||||||
Commercial investor real estate mortgage |
2.70 | % | 4.28 | % | 5.81 | % | 7.85 | % | 4.00 | % | ||||||||||
Commercial investor real estate construction |
7.64 | % | 13.61 | % | 14.45 | % | 12.56 | % | 8.07 | % | ||||||||||
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Total investor real estate |
3.17 | % | 5.21 | % | 6.76 | % | 8.44 | % | 4.56 | % | ||||||||||
Residential first mortgage |
1.16 | % | 1.34 | % | 1.64 | % | 1.54 | % | 1.55 | % | ||||||||||
Home equity - first lien |
1.25 | % | 1.11 | % | 1.26 | % | 1.11 | % | 1.47 | % | ||||||||||
Home equity - second lien |
3.28 | % | 3.06 | % | 3.21 | % | 3.46 | % | 3.68 | % | ||||||||||
Indirect |
0.76 | % | 0.78 | % | 0.64 | % | 0.57 | % | 1.05 | % | ||||||||||
Consumer credit card |
4.95 | % | 4.62 | % | 0.42 | % | | | ||||||||||||
Other consumer |
3.38 | % | 4.92 | % | 4.93 | % | 3.70 | % | 3.70 | % | ||||||||||
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Total |
1.73 | % | 2.16 | % | 2.52 | % | 2.71 | % | 2.37 | % | ||||||||||
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Non-accrual loans, excluding loans held for sale |
$ | 2,151 | $ | 2,372 | $ | 2,710 | $ | 2,784 | $ | 3,087 | ||||||||||
Non-performing loans held for sale |
249 | 328 | 344 | 381 | 381 | |||||||||||||||
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Non-accrual loans, including loans held for sale |
$ | 2,400 | $ | 2,700 | $ | 3,054 | $ | 3,165 | $ | 3,468 | ||||||||||
Foreclosed properties |
241 | 296 | 337 | 437 | 465 | |||||||||||||||
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Non-performing assets (NPAs) |
$ | 2,641 | $ | 2,996 | $ | 3,391 | $ | 3,602 | $ | 3,933 | ||||||||||
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Loans past due > 90 days |
$ | 427 | $ | 447 | $ | 412 | $ | 483 | $ | 527 | ||||||||||
Restructured loans not included in categories above (2) |
$ | 2,944 | $ | 2,850 | $ | 2,817 | $ | 1,664 | $ | 1,553 | ||||||||||
Credit Ratios: |
||||||||||||||||||||
ACL/Loans, net |
3.42 | % | 3.64 | % | 3.84 | % | 3.95 | % | 4.01 | % | ||||||||||
ALL/Loans, net |
3.30 | % | 3.54 | % | 3.73 | % | 3.84 | % | 3.92 | % | ||||||||||
Allowance for loan losses to non-performing loans, excluding loans held for sale |
1.18 | x | 1.16 | x | 1.09 | x | 1.12 | x | 1.03 | x | ||||||||||
Non-accrual loans, excluding loans held for sale/Loans, net |
2.80 | % | 3.06 | % | 3.41 | % | 3.43 | % | 3.79 | % | ||||||||||
NPAs (ex. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale |
3.42 | % | 3.83 | % | 4.23 | % | 4.39 | % | 4.78 | % | ||||||||||
NPAs (inc. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale |
3.97 | % | 4.40 | % | 4.75 | % | 4.98 | % | 5.42 | % |
Allowance for Credit Losses
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Components: |
||||||||||||||||||||
Allowance for loan losses |
$ | 2,530 | $ | 2,745 | $ | 2,964 | $ | 3,120 | $ | 3,186 | ||||||||||
Reserve for unfunded credit commitments |
91 | 78 | 86 | 84 | 78 | |||||||||||||||
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Allowance for credit losses |
$ | 2,621 | $ | 2,823 | $ | 3,050 | $ | 3,204 | $ | 3,264 | ||||||||||
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(1) | During the second quarter of 2011, Regions purchased a credit card portfolio for approximately $1.1 billion and recorded an allowance for loan losses and related premium of approximately $84 million. Upon finalization of the purchase price in the fourth quarter of 2011, Regions reclassified the $84 million allowance and premium. The impact of these reclassification entries was not material to the financial results in any of the quarters of 2011. |
(2) | See page 11 for detail of restructured loans. |
Page 10
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Troubled Debt Restructurings
Quarter Ended | ||||||||||||||||||||
(in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Current: |
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Commercial |
$ | 445 | $ | 452 | $ | 437 | $ | 62 | $ | 66 | ||||||||||
Investor Real Estate |
1,016 | 967 | 923 | 257 | 193 | |||||||||||||||
Residential First Mortgage |
815 | 767 | 774 | 760 | 737 | |||||||||||||||
Home Equity |
383 | 377 | 373 | 352 | 328 | |||||||||||||||
Other Consumer |
49 | 50 | 54 | 58 | 59 | |||||||||||||||
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Total Current |
$ | 2,708 | $ | 2,613 | $ | 2,561 | $ | 1,489 | $ | 1,383 | ||||||||||
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Accruing 30-89 DPD: |
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Commercial |
$ | 44 | $ | 40 | $ | 39 | $ | 7 | $ | 6 | ||||||||||
Investor Real Estate |
40 | 28 | 67 | 16 | 15 | |||||||||||||||
Residential First Mortgage |
118 | 133 | 114 | 116 | 117 | |||||||||||||||
Home Equity |
30 | 30 | 30 | 31 | 27 | |||||||||||||||
Other Consumer |
4 | 6 | 6 | 5 | 5 | |||||||||||||||
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Total Accruing 30-89 DPD |
$ | 236 | $ | 237 | $ | 256 | $ | 175 | $ | 170 | ||||||||||
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Non-accrual or 90+ DPD: |
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Commercial |
$ | 344 | $ | 353 | $ | 373 | $ | 164 | $ | 120 | ||||||||||
Investor Real Estate |
507 | 473 | 475 | 200 | 230 | |||||||||||||||
Residential First Mortgage |
205 | 210 | 214 | 207 | 221 | |||||||||||||||
Home Equity |
31 | 33 | 30 | 29 | 28 | |||||||||||||||
Other Consumer |
| | 1 | | 1 | |||||||||||||||
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Total Non-accrual or 90+DPD |
$ | 1,087 | $ | 1,069 | $ | 1,093 | $ | 600 | $ | 600 | ||||||||||
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Total TDRs |
$ | 4,031 | $ | 3,919 | $ | 3,910 | $ | 2,264 | $ | 2,153 | ||||||||||
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Credit Costs
Quarter Ended | ||||||||||||||||||||
(in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Net Charge-offs |
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Investor Real Estate (IRE) |
$ | 47 | $ | 54 | $ | 60 | $ | 99 | $ | 84 | ||||||||||
Commercial |
89 | 87 | 100 | 91 | 126 | |||||||||||||||
Consumer Real Estate |
115 | 117 | 134 | 138 | 150 | |||||||||||||||
Other Consumer |
26 | 31 | 19 | 13 | 15 | |||||||||||||||
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Net Charge-offs excluding charge-offs from Sales / Transfers to HFS |
$ | 277 | $ | 289 | $ | 313 | $ | 341 | $ | 375 | ||||||||||
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Sales/Transfer to HFS |
55 | 141 | 198 | 207 | 106 | |||||||||||||||
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Total Net Charge-offs |
$ | 332 | $ | 430 | $ | 511 | $ | 548 | $ | 481 | ||||||||||
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Net Loss / (Gain) - HFS Sales |
$ | (10 | ) | $ | (12 | ) | $ | (2 | ) | $ | (1 | ) | $ | | ||||||
HFS Write-downs (1) |
2 | 7 | 2 | 5 | 2 | |||||||||||||||
OREO expense |
23 | 39 | 48 | 37 | 39 | |||||||||||||||
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Total Credit Costs before Reserve Change |
$ | 347 | $ | 464 | $ | 559 | $ | 589 | $ | 522 | ||||||||||
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Loan Loss Reserve Increase / (Reduction) |
(215 | ) | (135 | ) | (156 | ) | (150 | ) | 1 | |||||||||||
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Total Credit Costs after Reserve Change |
$ | 132 | $ | 329 | $ | 403 | $ | 439 | $ | 523 | ||||||||||
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(1) | Reflects write-downs subsequent to initial move to held for sale and write-downs upon transfer to OREO |
Page 11
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Gross and Net NPL Migration
Quarter Ended | ||||||||||||||||||||
($ in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Beginning Non-Performing Loans (1) |
$ | 2,372 | $ | 2,710 | $ | 2,784 | $ | 3,087 | $ | 3,160 | ||||||||||
Additions (2): |
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Land/Single Family/Condo Investor Real Estate |
$ | 57 | $ | 58 | $ | 189 | $ | 73 | $ | 93 | ||||||||||
Income Producing IRE |
105 | 199 | 273 | 134 | 224 | |||||||||||||||
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Total Investor Real Estate |
162 | 257 | 462 | 207 | 317 | |||||||||||||||
Commercial |
76 | 140 | 161 | 207 | 197 | |||||||||||||||
Business and Community |
150 | 165 | 144 | 158 | 185 | |||||||||||||||
Consumer |
(7 | ) | (1 | ) | (12 | ) | (17 | ) | 31 | |||||||||||
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Total Gross NPL Additions |
$ | 381 | $ | 561 | $ | 755 | $ | 555 | $ | 730 | ||||||||||
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Resolutions (3) |
(267 | ) | (340 | ) | (253 | ) | (216 | ) | (207 | ) | ||||||||||
Charge-Offs (4) |
(212 | ) | (305 | ) | (354 | ) | (329 | ) | (325 | ) | ||||||||||
Home Equity Reclassification (5) |
| | 56 | | | |||||||||||||||
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Net Additions (Reductions) |
$ | (98 | ) | $ | (84 | ) | $ | 204 | $ | 10 | $ | 198 | ||||||||
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Non-Accrual Loan Sales |
(5 | ) | (8 | ) | (37 | ) | (61 | ) | (9 | ) | ||||||||||
Transfer to HFS |
(93 | ) | (196 | ) | (206 | ) | (176 | ) | (188 | ) | ||||||||||
Transfer to OREO |
(25 | ) | (50 | ) | (35 | ) | (76 | ) | (74 | ) | ||||||||||
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Ending Non-Performing Loans (1) |
$ | 2,151 | $ | 2,372 | $ | 2,710 | $ | 2,784 | $ | 3,087 | ||||||||||
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(1) | Does not include Loans Held for Sale |
(2) | All net activity within the consumer portfolio other than sales and transfers to held for sale is included as a single net number within the additions line, due to the relative immateriality of consumer non-accrual loans. |
(3) | Includes payments and returned to accruals |
(4) | Includes charge-offs on loans on non-accrual status and charge-offs taken upon sale and transfer of non-accrual loans to held for sale |
(5) | Beginning in 3Q11, credit policy on home equity lines and loans in second lien position changed such that they are placed on non-accrual by the end of the month in which the loan becomes 120 days past due. Prior policy required all real estate secured loans to be placed on non-accrual by the end of the month in which the loan becomes 180 days past due unless the loan is fully secured and in process of collection. The effect of the reclassification was to increase non-accrual loans and to decrease 90 days past due loans. |
Foreclosed Properties
Quarter Ended | ||||||||||||||||||||
($ in millions) |
03/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Beginning Foreclosed Properties |
$ | 296 | $ | 337 | $ | 437 | $ | 465 | $ | 454 | ||||||||||
Transfers in |
$ | 94 | $ | 119 | $ | 94 | $ | 152 | $ | 167 | ||||||||||
Sales |
(129 | ) | (121 | ) | (146 | ) | (138 | ) | (113 | ) | ||||||||||
Writedowns / Other Activity |
(20 | ) | (39 | ) | (48 | ) | (42 | ) | (43 | ) | ||||||||||
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Ending Foreclosed Properties |
$ | 241 | $ | 296 | $ | 337 | $ | 437 | $ | 465 | ||||||||||
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Non-Performing Loans Held for Sale
Quarter Ended | ||||||||||||||||||||
($ in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Beginning Non-Performing Loans Held for Sale |
$ | 328 | $ | 344 | $ | 381 | $ | 381 | $ | 304 | ||||||||||
Transfers in (1) |
$ | 93 | $ | 196 | $ | 218 | $ | 176 | $ | 188 | ||||||||||
Sales |
(145 | ) | (175 | ) | (244 | ) | (151 | ) | (96 | ) | ||||||||||
Writedowns |
(2 | ) | (7 | ) | (2 | ) | (5 | ) | (2 | ) | ||||||||||
Loan moved from HFS / Other Activity |
(8 | ) | (21 | ) | (6 | ) | (7 | ) | (6 | ) | ||||||||||
Transfers to OREO |
(17 | ) | (9 | ) | (3 | ) | (13 | ) | (7 | ) | ||||||||||
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Ending Non-Performing Loans Held for Sale |
$ | 249 | $ | 328 | $ | 344 | $ | 381 | $ | 381 | ||||||||||
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(1) | During the Quarter-ended 9/30/11, there were approximately $12 million in transfers from Accruing Loans Held for Sale to Non-Performing Loans Held for Sale. |
Composition of Non-Performing Loans Held for Sale
Timing of Transfer to HFS |
Percent | |||
1Q12 |
37.5 | % | ||
2011 |
53.3 | % | ||
Pre-2011 |
9.2 | % | ||
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Total |
100.0 | % |
Page 12
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Early and Late Stage Delinquencies
30-89 Days Past Due Loans
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||
($ millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||||||||||||||||||||||
Commercial and Industrial |
$ | 43 | 0.17 | % | $ | 61 | 0.25 | % | $ | 87 | 0.36 | % | $ | 118 | 0.50 | % | $ | 104 | 0.45 | % | ||||||||||||||||||||
Commercial Real Estate Mortgage - OO |
68 | 0.62 | % | 70 | 0.63 | % | 87 | 0.76 | % | 71 | 0.60 | % | 99 | 0.83 | % | |||||||||||||||||||||||||
Commercial Real Estate Construction - OO |
1 | 0.28 | % | 4 | 1.12 | % | 1 | 0.20 | % | 2 | 0.56 | % | 2 | 0.44 | % | |||||||||||||||||||||||||
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Total Commercial |
$ | 112 | 0.31 | % | $ | 135 | 0.37 | % | $ | 175 | 0.48 | % | $ | 191 | 0.53 | % | $ | 205 | 0.58 | % | ||||||||||||||||||||
Commercial Investor Real Estate Mortgage |
$ | 122 | 1.33 | % | $ | 76 | 0.78 | % | $ | 126 | 1.18 | % | $ | 146 | 1.23 | % | $ | 332 | 2.57 | % | ||||||||||||||||||||
Commercial Investor Real Estate Construction |
3 | 0.37 | % | 28 | 2.76 | % | 17 | 1.42 | % | 25 | 1.57 | % | 35 | 1.86 | % | |||||||||||||||||||||||||
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Total Investor Real Estate |
$ | 125 | 1.24 | % | $ | 104 | 0.97 | % | $ | 143 | 1.21 | % | $ | 171 | 1.27 | % | $ | 367 | 2.48 | % | ||||||||||||||||||||
Residential First Mortgage |
$ | 258 | 1.89 | % | $ | 287 | 2.08 | % | $ | 269 | 1.91 | % | $ | 265 | 1.85 | % | $ | 277 | 1.92 | % | ||||||||||||||||||||
Home Equity |
158 | 1.24 | % | 198 | 1.52 | % | 180 | 1.36 | % | 168 | 1.23 | % | 185 | 1.33 | % | |||||||||||||||||||||||||
Direct |
9 | 1.12 | % | 13 | 1.56 | % | 12 | 1.44 | % | 12 | 1.39 | % | 11 | 1.27 | % | |||||||||||||||||||||||||
Indirect |
25 | 1.30 | % | 33 | 1.80 | % | 30 | 1.66 | % | 25 | 1.44 | % | 27 | 1.69 | % | |||||||||||||||||||||||||
Consumer Credit Card |
12 | 1.28 | % | 14 | 1.39 | % | 14 | 1.40 | % | 11 | 1.00 | % | | 0.00 | % | |||||||||||||||||||||||||
Other Consumer |
9 | 2.74 | % | 12 | 3.45 | % | 12 | 3.46 | % | 10 | 3.10 | % | 9 | 2.57 | % | |||||||||||||||||||||||||
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Total Consumer |
$ | 471 | 1.55 | % | $ | 557 | 1.81 | % | $ | 517 | 1.65 | % | $ | 491 | 1.54 | % | $ | 509 | 1.64 | % | ||||||||||||||||||||
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Total 30-89 Days Past Due Loans |
$ | 708 | 0.92 | % | $ | 796 | 1.03 | % | $ | 835 | 1.05 | % | $ | 853 | 1.05 | % | $ | 1,081 | 1.33 | % | ||||||||||||||||||||
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90+ Days Past Due Loans
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||
($ millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||||||||||||||||||||||
Commercial & Industrial |
$ | 9 | 0.03 | % | $ | 28 | 0.11 | % | $ | 10 | 0.04 | % | $ | 7 | 0.03 | % | $ | 10 | 0.04 | % | ||||||||||||||||||||
Commercial Real Estate Mortgage - OO |
9 | 0.08 | % | 9 | 0.08 | % | 6 | 0.05 | % | 11 | 0.09 | % | 8 | 0.07 | % | |||||||||||||||||||||||||
Commercial Real Estate Construction - OO |
| 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.05 | % | | 0.09 | % | |||||||||||||||||||||||||
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Total Commercial |
$ | 18 | 0.05 | % | $ | 37 | 0.10 | % | $ | 16 | 0.04 | % | $ | 18 | 0.05 | % | $ | 18 | 0.05 | % | ||||||||||||||||||||
Commercial Investor Real Estate Mortgage |
$ | 2 | 0.02 | % | $ | 13 | 0.13 | % | $ | 9 | 0.08 | % | $ | 5 | 0.04 | % | $ | 13 | 0.10 | % | ||||||||||||||||||||
Commercial Investor Real Estate Construction |
| 0.00 | % | | 0.01 | % | | 0.01 | % | | 0.02 | % | 1 | 0.04 | % | |||||||||||||||||||||||||
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Total Investor Real Estate |
$ | 2 | 0.02 | % | $ | 13 | 0.12 | % | $ | 9 | 0.07 | % | $ | 5 | 0.04 | % | $ | 14 | 0.09 | % | ||||||||||||||||||||
Residential First Mortgage |
$ | 300 | 2.21 | % | $ | 284 | 2.06 | % | $ | 291 | 2.06 | % | $ | 296 | 2.07 | % | $ | 315 | 2.18 | % | ||||||||||||||||||||
Home Equity (1) |
87 | 0.69 | % | 93 | 0.71 | % | 81 | 0.61 | % | 158 | 1.16 | % | 174 | 1.26 | % | |||||||||||||||||||||||||
Direct |
1 | 0.13 | % | 2 | 0.23 | % | 2 | 0.19 | % | 1 | 0.16 | % | 1 | 0.13 | % | |||||||||||||||||||||||||
Indirect |
2 | 0.09 | % | 2 | 0.13 | % | 1 | 0.08 | % | 2 | 0.10 | % | 2 | 0.13 | % | |||||||||||||||||||||||||
Consumer Credit Card |
14 | 1.50 | % | 13 | 1.38 | % | 10 | 1.03 | % | | 0.00 | % | | 0.00 | % | |||||||||||||||||||||||||
Other Consumer |
3 | 0.90 | % | 3 | 0.75 | % | 2 | 0.50 | % | 3 | 0.79 | % | 3 | 0.86 | % | |||||||||||||||||||||||||
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Total Consumer |
$ | 407 | 1.34 | % | $ | 397 | 1.29 | % | $ | 387 | 1.23 | % | $ | 460 | 1.44 | % | $ | 495 | 1.59 | % | ||||||||||||||||||||
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Total 90+ Days Past Due Loans |
$ | 427 | 0.56 | % | $ | 447 | 0.58 | % | $ | 412 | 0.52 | % | $ | 483 | 0.60 | % | $ | 527 | 0.65 | % | ||||||||||||||||||||
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OO = Owner Occupied
(1) | Refer to page 12 for the home equity reclassification which increased non-accrual loans and decreased 90 days past due loans in 3Q11. |
Page 13
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Non-Accrual Loans (excludes loans held for sale)
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||
($ millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||||||||||||||||||||||
Commercial and Industrial |
$ | 439 | 1.75 | % | $ | 457 | 1.86 | % | $ | 498 | 2.05 | % | $ | 525 | 2.22 | % | $ | 446 | 1.93 | % | ||||||||||||||||||||
Commercial Real Estate Mortgage - OO |
545 | 4.99 | % | 590 | 5.29 | % | 668 | 5.79 | % | 687 | 5.82 | % | 648 | 5.45 | % | |||||||||||||||||||||||||
Commercial Real Estate Construction - OO |
23 | 8.32 | % | 25 | 7.36 | % | 27 | 7.68 | % | 28 | 7.57 | % | 31 | 7.20 | % | |||||||||||||||||||||||||
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Total Commercial |
$ | 1,007 | 2.77 | % | $ | 1,072 | 2.98 | % | $ | 1,193 | 3.30 | % | $ | 1,240 | 3.46 | % | $ | 1,125 | 3.17 | % | ||||||||||||||||||||
Commercial Investor Real Estate Mortgage |
$ | 640 | 6.99 | % | $ | 734 | 7.56 | % | $ | 829 | 7.75 | % | $ | 820 | 6.93 | % | $ | 1,142 | 8.83 | % | ||||||||||||||||||||
Commercial Investor Real Estate Construction |
127 | 13.22 | % | 180 | 17.61 | % | 296 | 24.93 | % | 371 | 23.25 | % | 448 | 23.64 | % | |||||||||||||||||||||||||
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Total Investor Real Estate |
$ | 767 | 7.58 | % | $ | 914 | 8.52 | % | $ | 1,125 | 9.46 | % | $ | 1,191 | 8.87 | % | $ | 1,590 | 10.73 | % | ||||||||||||||||||||
Residential First Mortgage |
241 | 1.77 | % | 250 | 1.81 | % | 261 | 1.85 | % | 288 | 2.01 | % | 303 | 2.10 | % | |||||||||||||||||||||||||
Home Equity (1) |
136 | 1.08 | % | 136 | 1.04 | % | 131 | 0.98 | % | 65 | 0.48 | % | 69 | 0.50 | % | |||||||||||||||||||||||||
Direct |
| 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | |||||||||||||||||||||||||
Indirect |
| 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | |||||||||||||||||||||||||
Consumer Credit Card |
| 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | |||||||||||||||||||||||||
Other Consumer |
| 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.00 | % | |||||||||||||||||||||||||
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Total Consumer |
$ | 377 | 1.25 | % | $ | 386 | 1.25 | % | $ | 392 | 1.25 | % | $ | 353 | 1.11 | % | $ | 372 | 1.20 | % | ||||||||||||||||||||
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Total Non-Accrual Loans |
$ | 2,151 | 2.80 | % | $ | 2,372 | 3.06 | % | $ | 2,710 | 3.41 | % | $ | 2,784 | 3.43 | % | $ | 3,087 | 3.79 | % | ||||||||||||||||||||
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OO = Owner Occupied
(1) | Refer to page 12 for the home equity reclassification which increased non-accrual loans and decreased 90 days past due loans in 3Q11. |
Business Services Credit Quality - Criticized Loans
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||
($ millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||||||||||||||||||||||
Special Mention |
$ | 1,652 | 3.56 | % | $ | 1,637 | 3.50 | % | $ | 1,897 | 3.95 | % | $ | 2,075 | 4.21 | % | $ | 2,455 | 4.88 | % | ||||||||||||||||||||
Classified Loans |
$ | 4,327 | 9.32 | % | $ | 4,733 | 10.12 | % | $ | 5,408 | 11.25 | % | $ | 5,824 | 11.83 | % | $ | 6,687 | 13.30 | % | ||||||||||||||||||||
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Total Business Services |
$ | 5,979 | 12.88 | % | $ | 6,370 | 13.62 | % | $ | 7,305 | 15.20 | % | $ | 7,899 | 16.04 | % | $ | 9,142 | 18.18 | % |
Investor Real Estate Analysis
Represents percent of loan balances in the portfolio
Geographic Region (1) | % of Total IRE |
Construction Mortgage | Non- Performing Loans |
90+ days past due |
30-89 days past due |
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Central (2) | Florida | Midsouth (3) | Southwest (4) | Other (5) | ||||||||||||||||||||||||||||||||||||||||
LAND |
1.5 | % | 3.0 | % | 2.0 | % | 1.1 | % | 0.1 | % | 7.7 | % | 1.7 | % | 6.0 | % | 1.7 | % | 0.0 | % | 0.1 | % | ||||||||||||||||||||||
OTHER |
1.4 | % | 1.8 | % | 1.6 | % | 1.1 | % | 0.1 | % | 6.0 | % | 0.0 | % | 5.9 | % | 0.7 | % | 0.0 | % | 0.2 | % | ||||||||||||||||||||||
HOTEL |
1.0 | % | 2.6 | % | 0.7 | % | 1.9 | % | 0.7 | % | 6.9 | % | 0.1 | % | 6.7 | % | 0.3 | % | 0.0 | % | 0.1 | % | ||||||||||||||||||||||
INDUSTRIAL |
2.7 | % | 1.6 | % | 2.5 | % | 1.2 | % | 0.9 | % | 8.9 | % | 0.1 | % | 8.7 | % | 0.6 | % | 0.0 | % | 0.1 | % | ||||||||||||||||||||||
OFFICE |
4.5 | % | 3.7 | % | 4.5 | % | 3.6 | % | 2.0 | % | 18.3 | % | 1.0 | % | 17.5 | % | 0.8 | % | 0.0 | % | 0.0 | % | ||||||||||||||||||||||
RETAIL |
4.9 | % | 5.0 | % | 4.8 | % | 3.9 | % | 1.5 | % | 20.1 | % | 0.9 | % | 19.2 | % | 1.5 | % | 0.0 | % | 0.1 | % | ||||||||||||||||||||||
SINGLE FAMILY |
2.8 | % | 1.0 | % | 1.8 | % | 1.7 | % | 0.3 | % | 7.6 | % | 3.7 | % | 3.9 | % | 1.1 | % | 0.0 | % | 0.1 | % | ||||||||||||||||||||||
MULTI-FAMILY |
4.6 | % | 4.4 | % | 6.1 | % | 4.9 | % | 3.2 | % | 23.2 | % | 1.8 | % | 21.5 | % | 0.6 | % | 0.0 | % | 0.5 | % | ||||||||||||||||||||||
CONDO |
0.4 | % | 0.7 | % | 0.2 | % | 0.0 | % | 0.0 | % | 1.3 | % | 0.2 | % | 1.1 | % | 0.3 | % | 0.0 | % | 0.0 | % | ||||||||||||||||||||||
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Grand Total |
23.8 | % | 23.8 | % | 24.2 | % | 19.4 | % | 8.8 | % | 100.0 | % | 9.5 | % | 90.5 | % | 7.6 | % | 0.0 | % | 1.2 | % |
(1) | Geographic Region of Regions Banks Footprint in which the underlying collateral is located. |
(2) | Central Region includes AL, GA, SC |
(3) | Midsouth Region includes IA, IL, IN, KY, MO, NC, TN, VA |
(4) | Southwest Region includes AR, LA, MS, TX |
(5) | Other includes locations not in Regions footprint |
Page 14
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Residential Lending Net Charge-off Analysis
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||
3/31/2012 | 12/31/2011 | |||||||||||||||||||||||||||||||||||||||||
First Liens | Junior Liens | Total | First Liens | Junior Liens | Total | |||||||||||||||||||||||||||||||||||||
($ in millions) |
Residential Mortgage |
Home Equity |
Total | Home Equity |
Residential Mortgage |
Home Equity |
Total | Home Equity |
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Florida |
Net Charge-off %* | 1.89 | % | 2.03 | % | 1.93 | % | 5.74 | % | 2.98 | % | 2.20 | % | 1.59 | % | 2.03 | % | 5.37 | % | 2.97 | % | |||||||||||||||||||||
$ Losses |
$ | 24.4 | $ | 9.9 | $ | 34.3 | $ | 39.0 | $ | 73.3 | $ | 29.2 | $ | 7.9 | $ | 37.2 | $ | 38.3 | $ | 75.5 | ||||||||||||||||||||||
Balance |
$ | 5,200.2 | $ | 1,934.2 | $ | 7,134.4 | $ | 2,681.8 | $ | 9,816.2 | $ | 5,237.4 | $ | 1,972.7 | $ | 7,210.0 | $ | 2,786.1 | $ | 9,996.1 | ||||||||||||||||||||||
Original LTV |
72.5 | % | 65.5 | % | 75.9 | % | 72.0 | % | 65.6 | % | 75.9 | % | ||||||||||||||||||||||||||||||
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All Other States |
Net Charge-off %* | 0.72 | % | 0.86 | % | 0.76 | % | 1.70 | % | 1.00 | % | 0.82 | % | 0.87 | % | 0.83 | % | 1.57 | % | 1.02 | % | |||||||||||||||||||||
$ Losses | $ | 15.1 | $ | 8.3 | $ | 23.4 | $ | 18.1 | $ | 41.5 | $ | 17.8 | $ | 8.7 | $ | 26.4 | $ | 17.5 | $ | 43.9 | ||||||||||||||||||||||
Balance |
$ | 8,410.8 | $ | 3,825.6 | $ | 12,236.4 | $ | 4,199.8 | $ | 16,436.2 | $ | 8,546.4 | $ | 3,911.5 | $ | 12,457.9 | $ | 4,350.4 | $ | 16,808.3 | ||||||||||||||||||||||
Original LTV |
74.2 | % | 66.6 | % | 79.3 | % | 74.1 | % | 66.6 | % | 79.3 | % | ||||||||||||||||||||||||||||||
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Totals |
Net Charge-off %* | 1.16 | % | 1.25 | % | 1.19 | % | 3.28 | % | 1.74 | % | 1.34 | % | 1.11 | % | 1.27 | % | 3.06 | % | 1.75 | % | |||||||||||||||||||||
$ Losses |
$ | 39.5 | $ | 18.2 | $ | 57.7 | $ | 57.1 | $ | 114.8 | $ | 47.0 | $ | 16.6 | $ | 63.6 | $ | 55.8 | $ | 119.4 | ||||||||||||||||||||||
Balance |
$ | 13,611.0 | $ | 5,759.8 | $ | 19,370.8 | $ | 6,881.6 | $ | 26,252.4 | $ | 13,783.7 | $ | 5,884.2 | $ | 19,667.9 | $ | 7,136.5 | $ | 26,804.5 | ||||||||||||||||||||||
Original LTV |
73.6 | % | 66.3 | % | 77.9 | % | 73.3 | % | 66.3 | % | 77.9 | % | ||||||||||||||||||||||||||||||
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| 21% Florida junior lien concentration driving results |
| Junior lien, Florida net charge-offs represent 52% of 1Q12 Home Equity net charge-offs but just 21% of Home Equity outstanding balances. |
| Net Home Equity charge-offs in Florida approximately 3 times non-Florida net charge-off rate |
| New Home Equity origination quality solid with an average FICO of 775 and an average LTV of 61%; Property value declines driving losses |
90+ Home Equity Delinquency
Home Equity Losses $
Notes: * Recoveries are pro-rated based on charge-off balances.
* Balances shown on an ending basis. Net loss rates calculated using average balances
Page 15
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Reconciliation to GAAP Financial Measures
Net Income (Loss) and Earnings (Loss) Per Share
The table below presents computations of earnings (loss) and certain other financial measures, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP) all recorded in 2011. The goodwill impairment charge and the regulatory charge and related tax benefit are included in financial results presented in accordance with generally accepted accounting principles (GAAP). Regions believes that the exclusion of the goodwill impairment and the regulatory charge and related tax benefit in expressing earnings (loss) and certain other financial measures, including earnings (loss) per common share, excluding goodwill impairment and regulatory charge and related tax benefit, return on average assets, excluding goodwill impairment and regulatory charge and related tax benefit and return on average tangible common stockholders equity, excluding goodwill impairment and regulatory charge and related tax benefit (explained on page 18) 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 goodwill impairment and regulatory charge and related tax benefit 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 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. 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 goodwill impairment charge and the regulatory charge and related tax benefit does not represent the amount that effectively accrues directly to stockholders (i.e. the goodwill impairment charge and the regulatory charge are reductions in earnings and stockholders equity).
As of and for Quarter Ended | ||||||||||||||||||||||||
($ amounts in millions, except per share data) |
03/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 03/31/11 | |||||||||||||||||||
Net income (loss) (GAAP) |
$ | 199 | $ | (548 | ) | $ | 155 | $ | 109 | $ | 69 | |||||||||||||
Preferred dividends and accretion (GAAP) |
(54 | ) | (54 | ) | (54 | ) | (54 | ) | (52 | ) | ||||||||||||||
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Net income (loss) available to common shareholders (GAAP) |
A | $ | 145 | $ | (602 | ) | $ | 101 | $ | 55 | $ | 17 | ||||||||||||
Goodwill impairment, net of tax |
| 731 | | | | |||||||||||||||||||
Regulatory charge and related tax benefit |
| | | 44 | | |||||||||||||||||||
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Income available to common shareholders, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP) |
B | $ | 145 | $ | 129 | $ | 101 | $ | 99 | $ | 17 | |||||||||||||
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Net income (loss) available to common shareholders (GAAP) |
A | $ | 145 | $ | (602 | ) | $ | 101 | $ | 55 | $ | 17 | ||||||||||||
Income (loss) from discontinued operations, net of tax (GAAP) (1) |
(40 | ) | (467 | ) | 14 | 30 | 19 | |||||||||||||||||
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Income (loss) from continuing operations available to common shareholders (GAAP) |
C | 185 | (135 | ) | 87 | 25 | (2 | ) | ||||||||||||||||
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Goodwill impairment from continuing operations (non-deductible) |
| 253 | | | | |||||||||||||||||||
Regulatory charge and related tax benefit from continuing operations (2) |
| | | (17 | ) | | ||||||||||||||||||
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Income (loss) from continuing operations available to common shareholders, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP) |
D | $ | 185 | $ | 118 | $ | 87 | $ | 8 | $ | (2 | ) | ||||||||||||
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Weighted-average diluted shares |
E | 1,283 | 1,259 | 1,261 | 1,260 | 1,259 | ||||||||||||||||||
Earnings (loss) per common share - diluted (GAAP) |
A/E | $ | 0.11 | $ | (0.48 | ) | $ | 0.08 | $ | 0.04 | $ | 0.01 | ||||||||||||
Earnings (loss) per common share from continuing operations - diluted (GAAP) |
C/E | $ | 0.14 | $ | (0.11 | ) | $ | 0.07 | $ | 0.02 | $ | (0.00 | ) | |||||||||||
Earnings (loss) per common share from continuing operations, excluding goodwill impairment and regulatory charge and related tax benefit - diluted (non-GAAP) |
D/E | $ | 0.14 | $ | 0.09 | $ | 0.07 | $ | 0.01 | $ | (0.00 | ) |
(1) | There are no preferred shares allocable to discontinued operations. |
(2) | In the second quarter of 2010, Regions recorded a $200 million charge to account for a probable, reasonably estimable loss related to a pending settlement of regulatory matters. At that time, Regions assumed that the entire charge would be non-deductible for income tax purposes. $75 million of the regulatory charge relates to continuing operations. The settlement was finalized during the second quarter of 2011. At the time of settlement, Regions had better information related to tax implications. Approximately $125 million of the settlement charge will be deductible for federal income tax purposes. Accordingly, during the second quarter of 2011, Regions adjusted federal income taxes to account for the impact of the deduction. The adjustment reduced Regions provision for income taxes by approximately $44 million for the second quarter of 2011, of which approximately $17 million relates to continuing operations. |
Page 16
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Reconciliation to GAAP Financial Measures - Continuing Operations
Fee Income Ratios and Efficiency Ratios
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. The table also shows the fee ratio (non-GAAP), generally calculated as non-interest income divided by total revenue. Management uses these ratios to monitor performance and believes these measures provide 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. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the fee ratio. Net interest income on a fully taxable-equivalent basis (GAAP) and non-interest income 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 fee and efficiency ratios. 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 | ||||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||||
Continuing Operations |
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Non-interest expense (GAAP) |
$ | 913 | $ | 1,124 | $ | 850 | $ | 956 | $ | 932 | ||||||||||||
Adjustments: |
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Securities impairment, net |
| (2 | ) | | | | ||||||||||||||||
Branch consolidation and property and equipment charges |
| 2 | | (77 | ) | | ||||||||||||||||
Goodwill impairment |
| (253 | ) | | | | ||||||||||||||||
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Adjusted non-interest expense (non-GAAP) |
F | $ | 913 | $ | 871 | $ | 850 | $ | 879 | $ | 932 | |||||||||||
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Net interest income, taxable-equivalent basis (GAAP) |
$ | 839 | $ | 858 | $ | 859 | $ | 864 | $ | 864 | ||||||||||||
Non-interest income (GAAP) |
$ | 524 | $ | 507 | $ | 513 | $ | 543 | $ | 580 | ||||||||||||
Adjustments: |
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Securities (gains) losses, net |
(12 | ) | (7 | ) | 1 | (24 | ) | (82 | ) | |||||||||||||
Leveraged lease termination (gains) losses, net |
(7 | ) | (10 | ) | 2 | | | |||||||||||||||
Loss (gain) on sale of mortgage loans |
| | | 3 | ||||||||||||||||||
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Adjusted non-interest income (non-GAAP) |
G | 505 | 490 | 516 | 519 | 501 | ||||||||||||||||
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Adjusted total revenue (non-GAAP) |
H | $ | 1,344 | $ | 1,348 | $ | 1,375 | $ | 1,383 | $ | 1,365 | |||||||||||
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Fee income ratio (non-GAAP) |
G/H | 37.6 | % | 36.4 | % | 37.5 | % | 37.5 | % | 36.7 | % | |||||||||||
Efficiency ratio (non-GAAP) |
F/H | 67.9 | % | 64.6 | % | 61.8 | % | 63.6 | % | 68.3 | % |
Adjusted Non-Interest Income/Expense
The table below presents computations of adjusted non-interest income/expense for the first quarter of 2012 and the fourth quarter of 2011 (non-GAAP). Management uses these measures to monitor performance and believes these measures provide meaningful information to investors. Non-interest income/expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income/expense (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.
Quarter Ended | ||||||||||||||||
Continuing Operations | 3/31/12 | 12/31/11 | $ Change | % Change | ||||||||||||
Non-interest income (GAAP) |
$ | 524 | $ | 507 | $ | 17 | 3.4 | % | ||||||||
Adjustments: |
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Securities (gains) losses, net |
(12 | ) | (7 | ) | (5 | ) | 71.4 | % | ||||||||
Leveraged lease termination (gains) losses, net |
(7 | ) | (10 | ) | 3 | -30.0 | % | |||||||||
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Adjusted non-interest income (non-GAAP) |
$ | 505 | $ | 490 | $ | 15 | 3.1 | % | ||||||||
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Quarter Ended | ||||||||||||||||
Continuing Operations | 3/31/12 | 12/31/11 | $ Change | % Change | ||||||||||||
Non-interest expense (GAAP) |
$ | 913 | $ | 1,124 | $ | (211 | ) | -18.8 | % | |||||||
Adjustments: |
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Goodwill impairment |
| (253 | ) | 253 | -100.0 | % | ||||||||||
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Adjusted non-interest expense (non-GAAP) |
$ | 913 | $ | 871 | $ | 42 | 4.8 | % | ||||||||
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Page 17
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Reconciliation to GAAP Financial Measures
Return Ratios, Tangible Common Ratios, Capital
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 tangible common stockholders equity (non-GAAP), Tier 1 capital (regulatory) and 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 banks capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. In connection with the Companys Comprehensive Capital Assessment and Review (CCAR), these regulators are 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 companys 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 (non-GAAP). Tier 1 common equity (non-GAAP) is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio (non-GAAP). The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements.
As of and for Quarter Ended | ||||||||||||||||||||||
($ amounts in millions, except per share data) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||||
RETURN ON AVERAGE ASSETS FROM CONTINUING OPERATIONS |
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Average assets (GAAP) - continuing operations |
I | $ | 123,756 | $ | 124,900 | $ | 126,586 | $ | 127,438 | $ | 127,987 | |||||||||||
Return on average assets from continuing operations (GAAP) (1) |
C/I | 0.59 | % | (0.43 | %) | 0.26 | % | 0.08 | % | (0.01 | %) | |||||||||||
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Return on average assets from continuing operations, excluding goodwill impairment and regulatory charge related tax benefit (non-GAAP) (1) |
D/I | 0.59 | % | 0.37 | % | 0.26 | % | 0.03 | % | (0.01 | %) | |||||||||||
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RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS EQUITY |
||||||||||||||||||||||
Average stockholders equity (GAAP) |
$ | 16,715 | $ | 17,151 | $ | 17,069 | $ | 16,796 | $ | 16,684 | ||||||||||||
Less: Average intangible assets (GAAP) |
5,253 | 6,019 | 5,998 | 5,909 | 5,935 | |||||||||||||||||
Average deferred tax liability related to intangibles (GAAP) |
(198 | ) | (210 | ) | (224 | ) | (230 | ) | (237 | ) | ||||||||||||
Average preferred equity (GAAP) |
3,423 | 3,413 | 3,402 | 3,392 | 3,383 | |||||||||||||||||
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Average tangible common stockholders equity (non-GAAP) |
J | $ | 8,237 | $ | 7,929 | $ | 7,893 | $ | 7,725 | $ | 7,603 | |||||||||||
Return on average tangible common stockholders equity (GAAP) (1) |
A/J | 7.08 | % | -30.12 | % | 5.05 | % | 2.88 | % | 0.89 | % | |||||||||||
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Return on average tangible common stockholders equity, excluding goodwill impairment and regulatory charge related tax benefit (non-GAAP) (1) |
B/J | 7.08 | % | 6.45 | % | 5.05 | % | 5.14 | % | 0.89 | % | |||||||||||
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TANGIBLE COMMON RATIOS - CONSOLIDATED |
||||||||||||||||||||||
Stockholders equity (GAAP) |
$ | 17,534 | $ | 16,499 | $ | 17,263 | $ | 16,888 | $ | 16,619 | ||||||||||||
Less: Preferred equity (GAAP) |
3,429 | 3,419 | 3,409 | 3,399 | 3,389 | |||||||||||||||||
Intangible assets (GAAP) |
5,236 | 5,265 | 6,039 | 5,981 | 5,919 | |||||||||||||||||
Deferred tax liability related to intangibles (GAAP) |
(195 | ) | (200 | ) | (220 | ) | (227 | ) | (233 | ) | ||||||||||||
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Tangible common stockholders equity (non-GAAP) |
K | $ | 9,064 | $ | 8,015 | $ | 8,035 | $ | 7,735 | $ | 7,544 | |||||||||||
Total assets (GAAP) |
$ | 128,282 | $ | 127,050 | $ | 129,762 | $ | 130,908 | $ | 131,756 | ||||||||||||
Less: Intangible assets (GAAP) |
5,236 | 5,265 | 6,039 | 5,981 | 5,919 | |||||||||||||||||
Deferred tax liability related to intangibles (GAAP) |
(195 | ) | (200 | ) | (220 | ) | (227 | ) | (233 | ) | ||||||||||||
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Tangible assets (non-GAAP) |
L | $ | 123,241 | $ | 121,985 | $ | 123,943 | $ | 125,154 | $ | 126,070 | |||||||||||
Shares outstandingend of quarter |
M | 1,412 | 1,259 | 1,259 | 1,259 | 1,256 | ||||||||||||||||
Tangible common stockholders equity to tangible assets (non-GAAP) |
K/L | 7.35 | % | 6.57 | % | 6.48 | % | 6.18 | % | 5.98 | % | |||||||||||
Tangible common book value per share (non-GAAP) |
K/M | $ | 6.42 | $ | 6.37 | $ | 6.38 | $ | 6.15 | $ | 6.00 | |||||||||||
TIER 1 COMMON RISK-BASED RATIO (2) - CONSOLIDATED |
||||||||||||||||||||||
Stockholders equity (GAAP) |
$ | 17,534 | $ | 16,499 | $ | 17,263 | $ | 16,888 | $ | 16,619 | ||||||||||||
Accumulated other comprehensive (income) loss |
60 | 69 | (92 | ) | 177 | 387 | ||||||||||||||||
Non-qualifying goodwill and intangibles |
(4,881 | ) | (4,900 | ) | (5,649 | ) | (5,668 | ) | (5,686 | ) | ||||||||||||
Disallowed deferred tax assets |
(345 | ) | (432 | ) | (506 | ) | (498 | ) | (463 | ) | ||||||||||||
Disallowed servicing assets |
(36 | ) | (35 | ) | (35 | ) | (35 | ) | (28 | ) | ||||||||||||
Qualifying non-controlling interests |
92 | 92 | 92 | 92 | 92 | |||||||||||||||||
Qualifying trust preferred securities |
846 | 846 | 846 | 846 | 846 | |||||||||||||||||
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Tier 1 capital (regulatory) |
$ | 13,270 | $ | 12,139 | $ | 11,919 | $ | 11,802 | $ | 11,767 | ||||||||||||
Qualifying non-controlling interests |
(92 | ) | (92 | ) | (92 | ) | (92 | ) | (92 | ) | ||||||||||||
Qualifying trust preferred securities |
(846 | ) | (846 | ) | (846 | ) | (846 | ) | (846 | ) | ||||||||||||
Preferred stock |
(3,429 | ) | (3,419 | ) | (3,409 | ) | (3,399 | ) | (3,389 | ) | ||||||||||||
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Tier 1 common equity (non-GAAP) |
N | $ | 8,903 | $ | 7,782 | $ | 7,572 | $ | 7,465 | $ | 7,440 | |||||||||||
Risk-weighted assets (regulatory) |
O | 92,546 | 91,449 | 92,786 | 93,865 | 93,929 | ||||||||||||||||
Tier 1 common risk-based ratio (non-GAAP) |
N/O | 9.6 | % | 8.5 | % | 8.2 | % | 7.9 | % | 7.9 | % | |||||||||||
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(1) | Annualized |
(2) | Current quarter amount and the resulting ratio is estimated |
Page 18
Regions Financial Corporation and Subsidiaries |
Financial Supplement to First Quarter 2012 Earnings Release |
Reconciliation to GAAP Financial Measures
Tier 1 Capital - With History Adjusted for Series A Retirement
Regions Series A preferred stock was retired on April 4, 2012. The following tables present the calculations of Tier 1 capital and the Tier 1 capital ratio, adjusted as if the retirement occurred on the last day of the quarter for each period presented. The amount retired includes the Series A preferred stock plus the remaining balance of the related discount. The tables do not include an adjustment for the retirement of the warrant to purchase 48.3 million shares of Regions common stock at $10.88 as this amount cannot be estimated at this time.
As of March 31, 2012 | ||||||||||||
($ amounts in millions) |
As Reported | Series A Retirement | As Adjusted | |||||||||
TIER 1 RISK-BASED RATIO |
||||||||||||
Stockholders equity |
$ | 17,534 | (3,500 | ) | 14,034 | |||||||
Accumulated other comprehensive loss |
60 | | 60 | |||||||||
Non-qualifying goodwill and intangibles |
(4,881 | ) | | (4,881 | ) | |||||||
Disallowed deferred tax assets |
(345 | ) | | (345 | ) | |||||||
Disallowed servicing assets |
(36 | ) | | (36 | ) | |||||||
Qualifying non-controlling interests |
92 | | 92 | |||||||||
Qualifying trust preferred securities |
846 | | 846 | |||||||||
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Tier 1 capital |
$ | 13,270 | $ | (3,500 | ) | $ | 9,770 | |||||
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Risk-weighted assets |
92,546 | 92,546 | ||||||||||
Tier 1 capital ratio |
14.3 | % | 10.6 | % | ||||||||
As of December 31, 2011 | ||||||||||||
($ amounts in millions) |
As Reported | Series A Retirement | As Adjusted | |||||||||
TIER 1 RISK-BASED RATIO |
||||||||||||
Stockholders equity |
$ | 16,499 | (3,500 | ) | 12,999 | |||||||
Accumulated other comprehensive loss |
69 | | 69 | |||||||||
Non-qualifying goodwill and intangibles |
(4,900 | ) | | (4,900 | ) | |||||||
Disallowed deferred tax assets |
(432 | ) | | (432 | ) | |||||||
Disallowed servicing assets |
(35 | ) | | (35 | ) | |||||||
Qualifying non-controlling interests |
92 | | 92 | |||||||||
Qualifying trust preferred securities |
846 | | 846 | |||||||||
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Tier 1 capital |
$ | 12,139 | $ | (3,500 | ) | $ | 8,639 | |||||
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Risk-weighted assets |
91,449 | 91,449 | ||||||||||
Tier 1 capital ratio |
13.3 | % | 9.4 | % | ||||||||
As of September 30, 2011 | ||||||||||||
($ amounts in millions) |
As Reported | Series A Retirement | As Adjusted | |||||||||
TIER 1 RISK-BASED RATIO |
||||||||||||
Stockholders equity |
$ | 17,263 | (3,500 | ) | 13,763 | |||||||
Accumulated other comprehensive income |
(92 | ) | | (92 | ) | |||||||
Non-qualifying goodwill and intangibles |
(5,649 | ) | | (5,649 | ) | |||||||
Disallowed deferred tax assets |
(506 | ) | | (506 | ) | |||||||
Disallowed servicing assets |
(35 | ) | | (35 | ) | |||||||
Qualifying non-controlling interests |
92 | | 92 | |||||||||
Qualifying trust preferred securities |
846 | | 846 | |||||||||
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Tier 1 capital |
$ | 11,919 | $ | (3,500 | ) | $ | 8,419 | |||||
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Risk-weighted assets |
92,786 | 92,786 | ||||||||||
Tier 1 capital ratio |
12.8 | % | 9.1 | % | ||||||||
As of June 30, 2011 | ||||||||||||
($ amounts in millions) |
As Reported | Series A Retirement | As Adjusted | |||||||||
TIER 1 RISK-BASED RATIO |
||||||||||||
Stockholders equity |
$ | 16,888 | (3,500 | ) | 13,388 | |||||||
Accumulated other comprehensive loss |
177 | | 177 | |||||||||
Non-qualifying goodwill and intangibles |
(5,668 | ) | | (5,668 | ) | |||||||
Disallowed deferred tax assets |
(498 | ) | | (498 | ) | |||||||
Disallowed servicing assets |
(35 | ) | | (35 | ) | |||||||
Qualifying non-controlling interests |
92 | | 92 | |||||||||
Qualifying trust preferred securities |
846 | | 846 | |||||||||
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Tier 1 capital |
$ | 11,802 | $ | (3,500 | ) | $ | 8,302 | |||||
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Risk-weighted assets |
93,865 | 93,865 | ||||||||||
Tier 1 capital ratio |
12.6 | % | 8.8 | % | ||||||||
As of March 31, 2011 | ||||||||||||
($ amounts in millions) |
As Reported | Series A Retirement | As Adjusted | |||||||||
TIER 1 RISK-BASED RATIO |
||||||||||||
Stockholders equity |
$ | 16,619 | (3,500 | ) | 13,119 | |||||||
Accumulated other comprehensive loss |
387 | | 387 | |||||||||
Non-qualifying goodwill and intangibles |
(5,686 | ) | | (5,686 | ) | |||||||
Disallowed deferred tax assets |
(463 | ) | | (463 | ) | |||||||
Disallowed servicing assets |
(28 | ) | | (28 | ) | |||||||
Qualifying non-controlling interests |
92 | | 92 | |||||||||
Qualifying trust preferred securities |
846 | | 846 | |||||||||
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Tier 1 capital |
$ | 11,767 | $ | (3,500 | ) | $ | 8,267 | |||||
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Risk-weighted assets |
93,929 | 93,929 | ||||||||||
Tier 1 capital ratio |
12.5 | % | 8.8 | % |
Page 19
Regions Financial Corporation and Subsidiaries |
Financial Supplement to First Quarter 2012 Earnings Release |
Reconciliation to GAAP Financial Measures Basel III
The following table provides calculations of Tier 1 capital and Tier 1 common, based on Regions current understanding of Basel III requirements. Regions currently calculates its risk-based capital ratios under guidelines adopted by the Federal Reserve based on the 1988 Capital Accord (Basel I) of the Basel Committee on Banking Supervision (the Basel Committee). In December 2010, the Basel Committee released its final framework for Basel III, which will strengthen international capital and liquidity regulation. When implemented by U.S. bank regulatory agencies and fully phased-in, Basel III will change capital requirements and place greater emphasis on common equity. Implementation of Basel III will begin on January 1, 2013, and will be phased in over a multi-year period. The U.S. bank regulatory agencies have not yet finalized regulations governing the implementation of Basel III. Accordingly, the calculations provided below are estimates, based on Regions current understanding of the framework, including the Companys reading of the requirements, and informal feedback received through the regulatory process. Regions understanding of the framework is evolving and will likely change as the regulations are finalized. Because the Basel III implementation regulations are not formally defined by GAAP and have not yet been finalized and codified, these measures are considered to be non-GAAP financial measures, and other entities may calculate them differently from Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using the Basel III framework, we believe that it is useful to provide investors the ability to assess Regions capital adequacy on the same basis.
($ amounts in millions) |
3/31/12 | |||||||
Stockholders equity (GAAP) |
$ | 17,534 | ||||||
Non-qualifying goodwill and intangibles (1) |
(5,041 | ) | ||||||
Adjustments, including other comprehensive income related to cash flow hedges, disallowed deferred tax assets, threshold deductions and other adjustments |
(680 | ) | ||||||
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$ | 11,813 | |||||||
Qualifying non-controlling interests |
4 | |||||||
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Basel III Tier 1 Capital (non-GAAP) |
$ | 11,817 | ||||||
Basel III Tier 1 Capital (non-GAAP) |
$ | 11,817 | ||||||
Preferred Stock |
(3,429 | ) | ||||||
Qualifying non-controlling interests |
(4 | ) | ||||||
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Basel III Tier 1 Common (non-GAAP) |
$ | 8,384 | ||||||
|
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Basel I risk-weighted assets |
92,546 | |||||||
Basel III risk-weighted assets (2) |
94,334 | |||||||
Minimum | ||||||||
Basel III Tier 1 Capital Ratio |
12.5 | % | 8.5 | % | ||||
Basel III Tier 1 Common Ratio |
8.9 | % | 7.0 | % |
(1) | Under Basel III, regulatory capital must be reduced by purchased credit card relationship intangible assets. These assets are partially allowed in Basel I capital. |
(2) | Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III. The amount included above is a reasonable approximation, based on our understanding of the requirements. |
Page 20
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Statements of Discontinued Operations (unaudited)
On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and Company, Inc. and related affiliates to Raymond James Financial Inc. The sale was closed on April 2, 2012. Morgan Asset Management and Regions Morgan Trust are not included in the sale. In connection with the closing, the Company and Raymond James agreed that in lieu of the $250 million pre-closing dividend from Morgan Keegan and Company, Inc. to the Company as contemplated in the original agreement, the parties would increase the purchase price by the same amount. The total purchase price received by the Company was approximately $1.2 billion. In connection with the agreement, the results of the entities being sold are reported as discontinued operations. The following tables represent the unaudited condensed results of operations for discontinued operations.
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) |
3/31/12 | 12/31/11 | 9/30/11 | 6/30/11 | 3/31/11 | |||||||||||||||
Interest income |
$ | 8 | $ | 8 | $ | 9 | $ | 10 | $ | 10 | ||||||||||
Interest expense |
1 | 1 | 1 | 2 | 2 | |||||||||||||||
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|
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Net interest income |
7 | 7 | 8 | 8 | 8 | |||||||||||||||
Non-interest income |
||||||||||||||||||||
Brokerage, investment banking and capital markets |
233 | 251 | 222 | 229 | 236 | |||||||||||||||
Other |
7 | 11 | 10 | 9 | 27 | |||||||||||||||
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|
|
|
|
|
|
|
|
|||||||||||
Total non-interest income |
240 | 262 | 232 | 238 | 263 | |||||||||||||||
Non-interest expense |
||||||||||||||||||||
Salaries and employee benefits |
171 | 172 | 146 | 160 | 166 | |||||||||||||||
Net occupancy expense |
9 | 9 | 9 | 9 | 9 | |||||||||||||||
Furniture and equipment expense |
8 | 9 | 7 | 7 | 7 | |||||||||||||||
Goodwill impairment |
| 492 | | | | |||||||||||||||
Professional and legal fees |
96 | 23 | 22 | 23 | 25 | |||||||||||||||
Other |
28 | 36 | 32 | 43 | 28 | |||||||||||||||
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|
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Total non-interest expense |
312 | 741 | 216 | 242 | 235 | |||||||||||||||
Income (loss) from discontinued operations before income tax |
(65 | ) | (472 | ) | 24 | 4 | 36 | |||||||||||||
Income tax expense (benefit) (1) (2) |
(25 | ) | (5 | ) | 10 | (26 | ) | 17 | ||||||||||||
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|
|
|
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|
|
|
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Income (loss) from discontinued operations, net of tax |
$ | (40 | ) | $ | (467 | ) | $ | 14 | 30 | 19 | ||||||||||
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|
|||||||||||
Weighted-average shares outstanding - during quarter: |
||||||||||||||||||||
Basic |
1,282 | 1,259 | 1,259 | 1,258 | 1,257 | |||||||||||||||
Diluted |
1,282 | 1,259 | 1,261 | 1,260 | 1,259 | |||||||||||||||
Earnings (loss) per common share from discontinued operations: |
||||||||||||||||||||
Basic |
$ | (0.03 | ) | $ | (0.37 | ) | $ | 0.01 | $ | 0.02 | $ | 0.01 | ||||||||
Diluted |
$ | (0.03 | ) | $ | (0.37 | ) | $ | 0.01 | $ | 0.02 | $ | 0.01 |
(1) | In the second quarter of 2010, Regions recorded a $200 million charge to account for a probable, reasonably estimable loss related to a pending settlement of regulatory matters. At that time, Regions assumed that the entire charge would be non-deductible for income tax purposes. $125 million of the regulatory charge relates to discontinued operations. The regulatory settlement was finalized in the second quarter of 2011. At the time of the settlement, Regions had better information related to the tax implications. Approximately $125 million of the $200 million settlement charge will be deductible for federal income tax purposes. Accordingly, during the second quarter of 2011, Regions adjusted federal income taxes to account for the impact of the deduction. The adjustment reduced income tax expense by approximately $44 million for the second quarter of 2011, of which approximately $27 million relates to discontinued operations. |
(2) | The 2011 income tax benefit includes a $14 million benefit related to goodwill impairment recorded in the fourth quarter of 2011. |
Page 21
Regions Financial Corporation and Subsidiaries
Financial Supplement to First Quarter 2012 Earnings Release
Forward-Looking Statements
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 managements 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 (the Dodd-Frank 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. Future and 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. |
| Regions ability to mitigate the impact of the Dodd-Frank Act on debit interchange fees through revenue enhancements and other revenue measures, which will depend on various factors, including the acceptance by our customers of modified fee structures for Regions products and services. |
| 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. |
| Possible 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, wind, tornados and hurricanes, and the effects of man-made disasters. |
| Possible downgrades in ratings issued by rating agencies. |
| Potential dilution of holders of shares of Regions common stock resulting from the U.S. Treasurys ownership of a warrant to purchase up to 48,253,677 shares of common stock. |
| Potential dilution of holders of shares of common stock resulting from any future efforts by Regions to raise additional capital. |
| 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. |
| With regard to the sale of Morgan Keegan the possibility of business disruption following the transaction; reputational risks and the reaction of customers and counterparties to the transaction; and occurrences which could cause post-closing adjustments to the purchase price. |
| 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, 2011. |
| 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. |
Regions Investor Relations contact is List Underwood at (205) 801-0265; Regions Media contact is Tim Deighton at (205) 264-4551
Page 22
Exhibit 99.3
Regions Financial 1st
Quarter Earnings
Conference Call
April 24, 2012
REGIONS
A QUARTER OF SIGNIFICANT ACCOMPLISHMENT
Key Milestones
No objection to Capital Plan
Closed Morgan Keegan Sale
Successful common equity offering
Credit Ratings upgrade
Redeemed $3.5 billion of Series A preferred stock
1Q12 Results
Net income available to common shareholders of $145MM or $0.11 per diluted share
Income from continuing operations $0.14 per diluted share
Broad-Based Asset Quality Improvement
Net charge-offs decreased $98MM or 23% to $332MM
Lowest quarterly loan loss provision in more than four years at $117MM
NPLs declined 9%
Inflows of NPLs down 32% to $381 MM
REGIONS 2
1Q12 FINANCIAL HIGHLIGHTS
($ in millions, except EPS) 1Q11 4Q11 1Q12 1Q12 vs. 4Q11 1Q12 vs. 1Q11
From Continuing Operations
Net Interest Income $ 855 $ 849 $ 827 $ (22) -3% $ (28) -3%
Non-Interest Revenue 580 507 524 17 3% (56) -10%
Non-Interest Expense1 932 871 913 42 5% (19) -2%
Pre-tax Pre-provision Income (PPI) (non-GAAP) 1 503 485 438 (47) -10% (65) -13%
Net Charge-Offs 481 430 332 (98) -23% (149) -31%
Loan Loss Reserve Build / (Reduction) 1 (134) (215) (81) 60% (216) NM
Loan Loss Provision 482 295 117 (178) -60% (365) -76%
Net Income / (Loss) Available to Common
Shareholders from Continuing Operations (2) (135) 185 320 NM 187 NM
Net Income / (Loss) from Discontinued Operations 19 (467) (40) 427 NM (59) NM
Net Income / (Loss) Available to Common $ 17 $ (602) $ 145 $ 747 NM $ 128 NM
Shareholders
Diluted EPS $0.01 ($0.48) $0.11 $0.59 NM $0.10 NM
Diluted EPS from Continuing Operations 2 $0.00 ($0.11) $0.14 $0.25 NM $0.14 NM
Diluted EPS from Discontinued Operations $0.01 ($0.37) ($0.03) $0.34 -92% ($0.04) NM
(1) Non-GAAP excludes goodwill impairment charge of $253M in 4Q11 See slides 14-15 for GAAP to non-GAAP reconciliation
(2) Non-GAAP excludes goodwill impairment charge of $253M in 4Q11 See slide 13 for GAAP to non-GAAP reconciliation
REGIONS 3
MARKED IMPROVEMENT IN ASSET QUALITY METRICS
NPL Gross Migration
$ in millions
48% Decline*
$730 $755 $555 $561 $381
1Q11 2Q11 3Q11 4Q11 1Q12
NPL Balances Paying Current and as Agreed
11 bps Increase*
48% 49% 42% 45% 38%
1Q11 2Q11 3Q11 4Q11 1Q12
*Year-over-year change
**Excludes loans held for sale
NPLs and Coverage Ratio
30% Decline in Total NPLs*
$ in millions
116% 118% $3,087 $2,784 $2,710 $2,372 112% $2,151 109% 103%
1Q11 2Q11 3Q11 4Q11 1Q12
NPLs ALL / NPL**
Loan Loss Provision
$ in millions
$398 $355 76% Decline* $482 151 153 $295 165 $117 148 141 397 358 316 282 191 (150) (156) (134) (215)
1Q11 2Q11 3Q11 4Q11 1Q12
Business Services and HFS Net Charge-offs
Consumer Net Charge-offs
Reserve Reduction
REGIONS 4
CONTINUED COMMERCIAL AND INDUSTRIAL LOAN GROWTH
Commercial and Industrial Loan Balances*
$ in millions
8% increase Y-O-Y
$22,889 $23,506 $23,953 $24,310 $24,748
1Q11 2Q11 3Q11 4Q11 1Q12
Total Loan Balances* and Loan Yields
$ in millions
$82,412 $81,106 $80,513 $78,702 $77,168
4.31% 4.27% 4.31% 4.35% 4.29%
1Q11 2Q11 3Q11 4Q11 1Q12
Avg. Loan Balance Loan Yield
* Average Balances
Commercial & industrial loan balances on an average basis increased $438 million, or 2% linked quarter reflecting strength in our middle market portfolio
Commercial & industrial line utilization rose 45 basis points
Investor real estate totaled $10.1 billion at quarter end and has now been reduced to 13% of total loans down from 18% one year ago
Loan yield decreased 6 bps linked quarter attributable to previously terminated balance sheet hedges
REGIONS 5
LOW COST DEPOSITS GREW 2% LINKED QUARTER, AND
DEPOSIT COSTS DECLINED 3 BPS
Deposit Balances* and Deposit Costs
$ in millions
$95,257 $96,122 $96,147 $95,155 $96,061
22,506 21,369 19,774 19,053 22,971
59 bps 53 bps 46 bps 40 bps 37 bps
72,286 73,616 74,778 75,381 77,008
1Q11 2Q11 3Q11 4Q11 1Q12
Low Cost Deposits Time Deposits + Other Deposit Cost
* Average Balances
Improved deposit mix is resulting in lower deposit costs
Avg. time deposits as a % of avg. deposits decreased to 20% in 1Q12 from 24% in 1Q11
Repricing opportunities remain with over $11 billion of certificate of deposits maturing over the next 4 quarters at an average rate of 1.8%
Deposit costs declined 3 bps linked quarter; down 22 bps year-over-year
REGIONS 6
NET INTEREST MARGIN STABLE
Net interest margin impacted by improvements in deposit costs, offset by impact of previously terminated balance sheet hedges
Cash reserves negatively impacted net interest margin 13 bps in 1Q12 versus 14 bps in 4Q11
Non-accruals negatively impacted net interest margin 10 bps in the first quarter
Securities portfolio totals $27 billion as a result of cash deployment
Net Interest Income and Net Interest Margin1
$ in millions
$864 $864 $859 $857 $839
3.09% 3.07% 3.04% 3.08% 3.09%
1Q11 2Q11 3Q11 4Q11 1Q12
Net Interest Income (FTE) Net Interest Margin
(1) From continuing operations
REGIONS 7
ABILITY TO ADAPT OUR BUSINESS MODEL HELPS
MITIGATE NEW LEGISLATION IMPACT
Fee Income by Quarter 1
$ in millions
$501 $519 $516 $490 $505
60 66 52 60 46
28 25 27 26 28
15 16 23
45 50 68 57 77
81 70 44 68 77
287 308 310 263 254
1Q11 2Q11 3Q11 4Q11 1Q12
Service charges
Capital Markets, Investment Income & Trust
Mortgage Income
Credit Card Income
Insurance Income
Other
Adjusted non-interest revenue1 increased 3% linked quarter
Mortgage revenues increased 35% linked quarter and 71% over last year
Factors offsetting debit card legislation
Ongoing restructuring of our accounts from free to fee-eligible
Increased hurdle to obtain free checking
New revenue initiatives including Now Banking Suite of products (expedited bill pay, check cashing, reloadable prepaid debit card and money transfer services)
(1) From continuing operations adjusted to exclude security gains and leveraged lease terminations gainsNon-GAAP, see appendix for GAAP to Non-GAAP reconciliation
REGIONS 8
SEASONAL INCREASE IN EXPENSES; COST CONTAINMENT
CONTINUES TO BE A FOCUS
Non-interest expenses from continuing operations were $913 million
Adjusted non-interest expenses1 were 5% higher than prior quarter; however, down 2% year-over-year
Salaries and benefits costs increased $50 million linked quarter due to payroll taxes and pension expenses
Headcount reduced 737 positions, down 3% over the last year
Other real estate and HFS expenses decreased $19 million over prior quarter or 56%
Headcount Bank Associates 2
24,356 23,966 23,713 23,707 23,619
1Q11 2Q11 3Q11 4Q11 1Q12
Other Real Estate and HFS Expenses
$ in millions
$41 $41 $48 $34 $15
1Q11 2Q11 3Q11 4Q11 1Q12
(1) Non-GAAP excludes 4Q11 goodwill impairment, see appendix for GAAP to Non-GAAP reconciliation (2) Excludes Morgan Keegan Associates
REGIONS 9
STRONG CAPITAL RATIOS
Tier 1 ratio is estimated at 14.3%, or 100 basis points higher linked quarter
Tier 1 Capital adjusted to exclude TARP(3) stood at 10.6% at quarter end
Basel III Tier 1 ratio estimated at 12.5% (2)
Tier 1 Common ratio is estimated at 9.6%, or an increase of 110 bps linked quarter
The $900 million common stock issuance contributed 95 basis points to quarter over quarter improvement
Basel III Tier 1 Common ratio estimated at 8.9% (2)
Tier 1 Capital Ratio
12.5% 12.6% 12.8% 13.3% 14.3%
3.6% 3.6% 3.7% 3.9% 3.7%
8.9% 9.0% 9.1% 9.5% 10.6%
1Q11 2Q11 3Q11 4Q11 1Q12 (1)
Tier 1 Capital Excluding TARP(3) TARP Impact
(1) Current Quarter ratios are estimated
(2) Non-GAAP - Subject to change as interpretation of Basel III rules is ongoing and dependent on guidance from Basel and regulators; see slide 17 in appendix for reconciliation
(3) Non-GAAP See appendix for reconciliation
(4) Based on ending balances
Loan to Deposit Ratio (4)
84% 84% 83% 81% 79%
1Q11 2Q11 3Q11 4Q11 1Q12
Tier 1 Common Ratio (3)
7.9% 7.9% 8.2% 8.5% 9.6%
1Q11 2Q11 3Q11 4Q11 1Q12 (1)
REGIONS 10
APPENDIX
REGIONS 11
FORWARD-LOOKING STATEMENTS
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 managements 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 (the Dodd-Frank 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. Future and 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.
Regions ability to mitigate the impact of the Dodd-Frank Act on debit interchange fees through revenue enhancements and other revenue measures, which will depend on various factors, including the acceptance by our customers of modified fee structures for Regions products and services.
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.
Possible 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, wind, tornados and hurricanes, and the effects of man-made disasters.
Possible downgrades in ratings issued by rating agencies.
Potential dilution of holders of shares of Regions common stock resulting from the U.S. Treasurys ownership of a warrant to purchase up to 48,253,677 shares of common stock.
Potential dilution of holders of shares of common stock resulting from any future efforts by Regions to raise additional capital.
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.
With regard to the sale of Morgan Keegan the possibility of business disruption following the transaction; reputational risks and the reaction of customers and counterparties to the transaction; and occurrences which could cause post-closing adjustments to the purchase price.
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, 2011.
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.
REGIONS 12
NON-GAAP RECONCILIATION: NET INCOME / (LOSS) AND EARNINGS PER SHARE
The tables below and on the next slide present computations of earnings (loss) and certain other financial measures, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP). The goodwill impairment charge and the regulatory charge and related tax benefit are included in financial results presented in accordance with generally accepted accounting principles (GAAP). A table also presents computations of full year and quarterly pre-tax pre-provision income (non-GAAP). Regions believes that the exclusion of the goodwill impairment and the regulatory charge and related tax benefit in expressing earnings (loss) and certain other financial measures, including earnings (loss) per common share, excluding goodwill impairment and regulatory charge and related tax benefit 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 goodwill impairment and regulatory charge and related tax benefit 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. Management uses these measures to monitor performance and believes these measures provide meaningful information to investors.
As of and for Quarter Ended
($ amounts in millions, except per share data) 03/31/12 12/31/11 9/30/11 6/30/11 03/31/11
Net income (loss) (GAAP) $ 199 $ (548) $ 155 $ 109 $ 69
Preferred dividends and accretion (GAAP) (54) (54) (54) (54) (52)
Net income (loss) available to common shareholders (GAAP) $ 145 $ (602) $ 101 $ 55 $ 17
Goodwill impairment, net of tax - 731- - -
Regulatory charge and related tax benefit - - - 44 -
Income available to common shareholders, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP) $ 145 $ 129 $ 101 $ 99 $ 17
Net income (loss) available to common shareholders (GAAP) $ 145 $ (602) $ 101 $ 55 $ 17
Income (loss) from discontinued operations, net of tax (GAAP) (1) (40) (467) 14 30 19
Income (loss) from continuing operations available to common shareholders (GAAP) 185 (135) 87 25 (2)
Goodwill impairment from continuing operations (non-deductible) - 253 - - -
Regulatory charge and related tax benefit from continuing operations (2) - - - (17) -
Income (loss) from continuing operations available to common shareholders, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP) $ 185 $ 118 $ 87 $ 8 $ (2)
Weighted-average diluted shares 1,283 1,259 1,261 1,260 1,259
Earnings (loss) per common share - diluted (GAAP) $ 0.11 $ (0.48) $ 0.08 $ 0.04 $ 0.01
Earnings (loss) per common share from continuing operations - diluted (GAAP) $ 0.14 $ (0.11) $ 0.07 $ 0.02 $ (0.00)
Earnings (loss) per common share from continuing operations, excluding goodwill impairment and regulatory charge and related tax benefit - diluted (non-GAAP) $ 0.14 $ 0.09 $ 0.07 $ 0.01 $ (0.00)
(1) There are no preferred shares allocable to discontinued operations.
(2) In the second quarter of 2010, Regions recorded a $200 million charge to account for a probable, reasonably estimable loss related to a pending settlement of regulatory matters. At that time, Regions assumed that the entire charge would be non-deductible for income tax purposes. $75 million of the regulatory charge relates to continuing operations. The settlement was finalized during the second quarter of 2011. At the time of settlement, Regions had better information related to tax implications. Approximately $125 million of the settlement charge will be deductible for federal income tax purposes. Accordingly, during the second quarter of 2011, Regions adjusted federal income taxes to account for the impact of the deduction. The adjustment reduced Regions provision for income taxes by approximately $44 million for the second quarter of 2011, of which approximately $17 million relates to continuing operations.
REGIONS 13
NON-GAAP RECONCILIATION: PRE-TAX PRE-PROVISION INCOME
The Pre-Tax Pre-Provision Income from Continuing Operations table above presents computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of income that excludes certain adjustments does not represent the amount that effectively accrues directly to stockholders.
Quarter Ended
($ amounts in millions) 3/31/12 12/31/11 9/30/11 6/30/11 3/31/11 1Q12 vs. 4Q11 1Q12 vs. 1Q11
Income (loss) from continuing operations available to common shareholders (GAAP) $ 185 $ (135) $ 87 $ 25 $ (2) $ 320 NM $ 187 NM
Preferred dividends (GAAP) 54 54 54 54 52 - - 2 3.8%
Income tax expense (benefit) (GAAP) 82 18 17 (34) (29) 64 NM 111 NM
Income (loss) from continuing operations before income taxes (GAAP) 321(63) 158 45 21 384 NM 300 NM
Provision for loan losses (GAAP) 117 295 355 398 482 (178) -60.3% (365) -75.7%
Pre-tax pre-provision income from continuing operations (non-GAAP) 438 232 513 443 503 206 88.8%(65) -12.9%
Goodwill impairment - 253 - - - (253) -100.0% - NM
Pre-tax pre-provision income from continuing operations, excluding goodwill impairment (non-GAAP) 438 485 513 443 503 (47) -9.7% (65) -12.9%
Other Adjustments:
Securities (gains) losses, net (12) (7) 1 (24) (82) (5) 71.4% 70 85.4%
Loss (gain) on sale of mortgage loans - - - - 3 - - (3) -100.0%
Leveraged lease termination (gains) losses, net (1) (7) (10) 2 - - 3 -30.0% (7) NM
Securities impairment, net - 2 - - - (2) -100.0% - NM
Branch consolidation and equipment costs - (2) - 77 - 2 -100.0% - NM
Total other adjustments (19) (17) 3 53 (79) (2) 11.8% 60 75.9%
Adjusted pre-tax pre-provision income from continuing operations (non-GAAP) $ 419 $ 468 $ 516 $ 496 $ 424 $ (49) -10.5% $ (5) -1.2%
(1) After tax amounts for leveraged lease terminations gains are $3.1 million for 3/31/2012, $2.8 million for 12/31/11 and $5.4 million for 9/30/11.
REGIONS 14
NON-GAAP RECONCILIATION: NON-INTEREST EXPENSE AND NON-INTEREST REVENUE
In the table below non-interest expense (GAAP) and non-interest income (GAAP) are presented excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP) and non-interest income (non-GAAP). Net interest income on a fully taxable-equivalent basis (GAAP) and non-interest income are added together to arrive at total revenue (GAAP). Adjustments are made to arrive at adjusted total revenue (non-GAAP). Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.
As of and for Quarter Ended
($ amounts in millions) 3/31/12 12/31/11 9/30/11 6/30/11 3/31/11
Continuing Operations
Non-interest expense (GAAP) $ 913 $ 1,124 $ 850 $ 956 $ 932
Adjustments:
Securities impairment, net -(2) - - -
Branch consolidation and property and equipment charges - 2 - (77) -
Goodwill impairment - (253) - - -
Adjusted non-interest expense (non-GAAP) $ 913 $ 871 $ 850 $ 879 $ 932
Net interest income, taxable-equivalent basis (GAAP) $ 839 $ 858 $ 859 $ 864 $ 864
Non-interest income (GAAP) $ 524 $ 507 $ 513 $ 543 $ 580
Adjustments:
Securities (gains) losses, net (12) (7) 1 (24) (82)
Leveraged lease termination (gains) losses, net (7) (10) 2 - -
Loss (gain) on sale of mortgage loans - - - 3
Adjusted non-interest income (non-GAAP) 505 490 516 519 501
Adjusted total revenue (non-GAAP) $ 1,344 $ 1,348 $ 1,375 $ 1,383 $ 1,365
REGIONS 15
NON-GAAP RECONCILIATION: TIER 1 COMMON
The following table provides a reconciliation of stockholders equity to Tier 1 common equity (non-GAAP). Traditionally, the Federal Reserve and other banking regulatory bodies have assessed a banks capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. In connection with the Companys Comprehensive Capital Assessment and Review (CCAR), these regulators are 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 Tier 1 common equity measure. Because Tier 1 common equity is not formally defined by GAAP or codified in the federal banking regulations, this measure is considered to be non-GAAP and other entities may calculate it differently than Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using 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 companys 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.
TIER 1 COMMON RISK-BASED RATIO (1) CONSOLIDATED
Stockholders equity (GAAP) $ 17,534 $ 16,499 $ 17,263 $ 16,888 $ 16,619
Accumulated other comprehensive (income) loss 60 69 (92) 177 387
Non-qualifying goodwill and intangibles (4,881) (4,900) (5,649) (5,668) (5,686)
Disallowed deferred tax assets (345) (432) (506) (498) (463)
Disallowed servicing assets (36) (35) (35) (35) (28)
Qualifying non-controlling interests 92 92 92 92 92
Qualifying trust preferred securities 846 846 846 846 846
Tier 1 capital (regulatory) $ 13,270 $ 12,139 $ 11,919 $ 11,802 $ 11,767
Qualifying non-controlling interests (92) (92) (92) (92) (92)
Qualifying trust preferred securities (846) (846) (846) (846) (846)
Preferred stock (3,429) (3,419) (3,409) (3,399) (3,389)
Tier 1 common equity (non-GAAP) N $ 8,903 $ 7,782 $ 7,572 $ 7,465 $ 7,440
Risk-weighted assets (regulatory) O 92,546 91,449 92,786 93,865 93,929
Tier 1 common risk-based ratio (non-GAAP) N/O 9.6% 8.5% 8.2% 7.9% 7.9%
(1) Current quarter amount and the resulting ratio is estimated
REGIONS 16
NON-GAAP RECONCILIATION: BASEL III
The following table provides calculations of Tier 1 capital and Tier 1 common, based on Regions current understanding of Basel III requirements. Regions currently calculates its risk-based capital ratios under guidelines adopted by the Federal Reserve based on the 1988 Capital Accord (Basel I) of the Basel Committee on Banking Supervision (the Basel Committee). In December 2010, the Basel Committee released its final framework for Basel III, which will strengthen international capital and liquidity regulation. When implemented by U.S. bank regulatory agencies and fully phased-in, Basel III will change capital requirements and place greater emphasis on common equity. Implementation of Basel III will begin on January 1, 2013, and will be phased in over a multi-year period. The U.S. bank regulatory agencies have not yet finalized regulations governing the implementation of Basel III. Accordingly, the calculations provided below are estimates, based on Regions current understanding of the framework, including the Companys reading of the requirements, and informal feedback received through the regulatory process. Regions understanding of the framework is evolving and will likely change as the regulations are finalized. Because the Basel III implementation regulations are not formally defined by GAAP and have not yet been finalized and codified, these measures are considered to be non-GAAP financial measures, and other entities may calculate them differently from Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using the Basel III framework, we believe that it is useful to provide investors the ability to assess Regions capital adequacy on the same basis.
($ amounts in millions) 3/31/12
Stockholders equity (GAAP) $ 17,534
Non-qualifying goodwill and intangibles (1) (5,041)
Adjustments, including other comprehensive income related to cash flow hedges, disallowed deferred tax assets, threshold deductions and other adjustments (680)
$ 11,813
Qualifying non-controlling interests 4
Basel III Tier 1 Capital (non-GAAP) $ 11,817
Basel III Tier 1 Capital (non-GAAP) $ 11,817
Preferred Stock (3,429)
Qualifying non-controlling interests (4)
Basel III Tier 1 Common (non-GAAP) $ 8,384
Basel I risk-weighted assets 92,546
Basel III risk-weighted assets (2) 94,334
Minimum
Basel III Tier 1 Capital Ratio 12.5% 8.5%
Basel III Tier 1 Common Ratio 8.9% 7.0%
(1) Under Basel III, regulatory capital must be reduced by purchased credit card relationship intangible assets. These assets are partially allowed in Basel I capital.
(2) Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III. The amount included above is a reasonable approximation, based on our understanding of the requirements.
REGIONS 17
NON-GAAP RECONCILIATION: TIER 1 CAPITAL
Regions Series A preferred stock was retired on April 4, 2012. The following tables present the calculations of Tier 1 capital and the Tier 1 capital ratio, adjusted as if the retirement occurred on the last day of the quarter for each period presented. The amount retired includes the Series A preferred stock plus the remaining balance of the related discount. The tables do not include an adjustment for the retirement of the warrant to purchase 48.3 million shares of Regions common stock at $10.88 as this amount cannot be estimated at this time.
As of March 31, 2012
($ amounts in millions) As Reported Series A Retirement As Adjusted
TIER 1 RISK-BASED RATIO
Stockholders equity $ 17,534 (3,500) 14,034
Accumulated other comprehensive loss 60 - 60
Non-qualifying goodwill and intangibles (4,881) - (4,881)
Disallowed deferred tax assets (345) - (345)
Disallowed servicing assets (36) - (36)
Qualifying non-controlling interests 92 - 92
Qualifying trust preferred securities 846 - 846
Tier 1 capital $ 13,270 $ (3,500) $ 9,770
Risk-weighted assets 92,546 92,546
Tier 1 capital ratio 14.3% 10.6%
As of December 31, 2011
($ amounts in millions) As Reported Series A Retirement As Adjusted
TIER 1 RISK-BASED RATIO
Stockholders equity $ 16,499 (3,500) 12,999
Accumulated other comprehensive loss 69 - 69
Non-qualifying goodwill and intangibles (4,900) - (4,900)
Disallowed deferred tax assets (432) - (432)
Disallowed servicing assets (35) - (35)
Qualifying non-controlling interests 92 - 92
Qualifying trust preferred securities 846 - 846
Tier 1 capital $ 12,139 $ (3,500) $ 8,639
Risk-weighted assets 91,449 91,449
Tier 1 capital ratio 13.3% 9.4%
As of September 30, 2011
($ amounts in millions) As Reported Series A Retirement As Adjusted
TIER 1 RISK-BASED RATIO
Stockholders equity $ 17,263 (3,500) 13,763
Accumulated other comprehensive income (92) - (92)
Non-qualifying goodwill and intangibles (5,649) - (5,649)
Disallowed deferred tax assets (506) - (506)
Disallowed servicing assets (35) - (35)
Qualifying non-controlling interests 92 - 92
Qualifying trust preferred securities 846 - 846
Tier 1 capital $ 11,919 $ (3,500) $ 8,419
Risk-weighted assets 92,786 92,786
Tier 1 capital ratio 12.8% 9.1%
As of June 30, 2011
($ amounts in millions) As Reported Series A Retirement As Adjusted
TIER 1 RISK-BASED RATIO
Stockholders equity $ 16,888 (3,500) 13,388
Accumulated other comprehensive loss 177 - 177
Non-qualifying goodwill and intangibles (5,668) - (5,668)
Disallowed deferred tax assets (498) - (498)
Disallowed servicing assets (35) - (35)
Qualifying non-controlling interests 92 - 92
Qualifying trust preferred securities 846 - 846
Tier 1 capital $ 11,802 $ (3,500) $ 8,302
Risk-weighted assets 93,865 93,865
Tier 1 capital ratio 12.6% 8.8%
As of March 31, 2011
($ amounts in millions) As Reported Series A Retirement As Adjusted
TIER 1 RISK-BASED RATIO
Stockholders equity $ 16,619 (3,500) 13,119
Accumulated other comprehensive loss 387 - 387
Non-qualifying goodwill and intangibles (5,686) - (5,686)
Disallowed deferred tax assets (463) - (463)
Disallowed servicing assets (28) - (28)
Qualifying non-controlling interests 92 - 92
Qualifying trust preferred securities 846 - 846
Tier 1 capital $ 11,767 $ (3,500) $ 8,267
Risk-weighted assets 93,929 93,929
Tier 1 capital ratio 12.5% 8.8%
REGIONS 18
REGIONS
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