Regions Financial Corporation · NYSE:RF
Regions Financial — Q3 2009 Earnings Presentation
24 slides from Regions Financial's earnings presentation, Oct 20, 2009
Slide 1: Regions Financial 3rd Quarter Earnings Conference Call
Exhibit 99.3 * * * * * * * Regions Financial * 3rd Quarter Earnings Conference Call * October 20, 2009 * * *
Slide 2: Forward Looking Statements
Forward Looking Statements The information contained in 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
Slide 3: Summary of Third Quarter 2009 Results
Summary of Third Quarter 2009 Results › Loss per diluted share of $0.37 › Average low-cost customer deposit growth again strong, up $1.3 billion, reflective of: › $701 million or 3% increase in non-interest bearing deposits; › $969 million or 4% increase in money market deposits › Loans declined $1
Slide 4: Elevated Loan Loss Provision Driven by Real Estate Portfolios
Elevated Loan Loss Provision Driven by Real Estate Portfolios (in millions) 4Q08 1Q09 2Q09 3Q09 Net Charge-offs CRE Valuation Losses $124 $92 $129 $191 Commercial Real Estate 13 24 39 45 Other Commercial 67 70 99 136 Consumer Real Estate 95 134 164 150 Other Consumer 31 29 24 30 Net Charge-offs excl
Slide 5: Focused on Resolution of Non-Performing Assets
Focused on Resolution of Non-Performing Assets ($ in millions) 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009 Beginning Non-Performing Assets¹ $ 1,621 $ 1,642 $ 1,295 $ 1,935 $ 3,057 Additions $ 721 $ 1,004 $ 1,116 $ 1,758 $ 1,667 Payments (70) (82) (55) (116) (90) Returned to Accruing Status (19) (44) (34
Slide 6: Gross NPA Migration Lower than Prior Quarter
Gross NPA Migration Lower than Prior Quarter $ Millions $2,000 › Income producing CRE, $1,758 $1,667 principally Multi-Family and Retail, continued to $1,500 increase while the $1,116 combined Homebuilder and Condo migration declined $1,000 › 51% of Total CRE non- performing loans are in $500 Florid
Slide 7: Problem Asset Dispositions
Problem Asset Dispositions ($ in millions) 1Q 2009 2Q 2009 3Q 2009 2009 YTD OREO $ 57 $ 65 $ 111 $ 233 Problem Loan Sales 24 15 170 209 Held for Sale 56 67 72 195 Total Sales $ 137 $ 147 $ 353 $ 637 Transfer to Held for Sale 91 134 201 426 Total Dispositions $ 228 $ 281 $ 554 $ 1,063 Held for Sale B
Slide 8: Homebuilder
% of Total % of Total CRE Portfolio NOO Homebuilder $3.4bn / 3.6% of Total Portfolio; 14.6% of NOO-CRE 3.6% 14.6% Continue to Reduce Exposure ($mm) Observations › Reduced exposure by 53% FL / N. GA since 12/31/07 Remaining Portfolio › Transferred 68 Real Estate $6,231 bankers to workout positions $5
Slide 9: Condominium
% of Total % of Total CRE Portfolio NOO Condominium $647mm / 0.7% of Total Portfolio › Minimal exposure remaining 0.7% 2.8% › 50% of portfolio is in Florida Effectively Reducing Exposure ($mm) Florida Remaining Portfolio $ 1,367 $ 1,266 $ 1,082 $ 946 $ 850 $ 711 $ 647 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3
Slide 10: Multi-Family and Retail
% of Total % of Total CRE Portfolio NOO Multi-Family and Retail Including Business and Community 41.3% $9.4bn / 10% of Total Portfolio 10.2% By Geography Observations $ Millions $1,500 › More subject to workout and restructure and subsequent return to accrual status $1,000 › Well-diversified by type
Slide 11: Home Equity - $15.6bn / 17% of Total Loans
Home Equity - $15.6bn / 17% of Total Loans nd Most Stressed Portion is Florida 2 Liens - 3.8% of Total Loans Observations Entire Home Equity Portfolio: Florida st 1 Lien › Branch originated, in-footprint balances 14% › Active monitoring and management of lines Other States nd 2 Lien › Home equity ch
Slide 12: Appropriate Reserve Coverage
Appropriate Reserve Coverage ALLL as % of Total Loan NPL Total Balances Balances Allowance Loans NPLs Specific Analysis Loans (loans over $2.5 million) 2,039 2,039 404 19.8% 0.20x All Other Loans 90,715 1,177 2,223 2.5% 1.89x Total 92,754 3,216 2,627 2.8% 0.82x
Slide 13: Loan Trends
Loan Trends Loan Portfolio - Average Balances ($ in millions) 6/30/2009 9/30/2009 $ Change % Change Commercial & Industrial $ 22,707 $ 22,443 $ (264) -1% Commercial Real Estate - Non Owner-Occupied 16,081 16,470 389 2% Commercial Real Estate - Owner-Occupied 11,983 12,188 205 2% Construction - Non O
Slide 14: Strong Account Growth and High Customer Retention Lead to Rising Customer Deposits
Strong Account Growth and High Customer Retention Lead to Rising Customer Deposits › Opened a record 270,000 new retail and business checking accounts in 3Q09 YTD up 29% versus 3Q08; 762,000 new accounts YTD; On the road to 1 MM new accounts in 2009 › Retention remains better than industry norms and
Slide 15: Improving Margin and Net Interest Income
Improving Margin and Net Interest Income Loan Yields and Deposit Costs 6.00 › Taxable-equivalent net interest 5.00 income of $853 million - up $13 4.00 million 3.00 2.00 › Higher net interest margin of 1.00 2.73% - up 11 basis points 0.00 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 › Continued non-interest b
Slide 16: Non-Interest Revenues Level with Prior Quarter
Non-Interest Revenues Level with Prior Quarter Difference B/(W) ($ in millions) Q2' 09 Q3' 09 $ % Non-interest revenue $ 1,199 $ 772 $ (427) -36% - Leveraged lease termination gains 189 4 - Securities gains 108 4 - VISA shares sale gain 80 - - Trust preferred exchange gain 61 - Non-interest revenue
Slide 17: Solid Morgan Keegan results
Solid Morgan Keegan results › Fixed Income Capital Markets solid but lower versus an especially strong second quarter › Private Client revenue rises › Reflects strong equity markets and new financial advisors › Trust and Asset Management revenues higher › Customer and trust assets trending upward ›
Slide 18: Non-interest Expenses
Non-interest Expenses › As reported non-interest expense up 1% linked quarter › Branch consolidation expenses totaled $41 million › Core non-interest expenses increased 9%, drivers included: › Other Real Estate costs › Professional fees › FDIC insurance expense, excluding special assessment › Salari
Slide 19: Branch Consolidation Plan
Branch Consolidation Plan › $41 million in branch consolidation costs › 121 branches consolidated into existing locations › Branches will be consolidated due to proximity and opportunity for combined performance improvement st › Execution will occur in 1 Quarter of 2010 › Expected annual net savings
Slide 20: PPNR Adversely Impacted by Higher Credit-related Costs
PPNR Adversely Impacted by Higher Credit- related Costs Difference B/(W) ($ in millions) Q2' 09 Q3' 09 $ % Pre-tax, Pre-provision Net Revenue $ 799 $ 374 $ (425) -53% - Leveraged lease termination impact (189) (4) 185 - Securities gains / VISA / TRUPS exchange (249) (4) 245 - FDIC special assessment
Slide 21: After three quarters, over $1 billion favorable to SCAP Stress Case scenario
After three quarters, over $1 billion favorable to SCAP Stress Case scenario (in millions) Difference 1 RF SCAP 2 B/(W) Net Charge-offs $ (1,561) $ (3,450) $ 1,889 Provision Over Charge-offs (801) - (801) Total Loan Loss Provision (2,362) (3,450) 1,088 PPNR* 1,741 1,638 103 Pre-tax $ (621) $ (1,812)
Slide 22: Net Charge-Offs Below Fed Stress Test Level - Cumulative
Net Charge-Offs Below Fed Stress Test Level - Cumulative $ millions 1,400 1,200 $9.2B 1,000 800 $5.9B 600 400 $3.4B 200 0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Regulators - Stress Net Charge-Offs Regions - Base Net Charge-Offs Regions - Stress Net Charge-Offs Regions - Actual Net Charge-Offs Does
Slide 23: Capital Ratios Remain Strong
Capital Ratios Remain Strong 2Q09 3Q09 (1) Total Risk-Based Capital Ratio 16.2% 16.2% Tier 1 Capital Ratio 12.2% 12.1% Tier 1 Common 8.1% 7.8% (1) Current quarter ratios are estimated › Tier 1 and Total Risk-Based capital very strong › Tier 1 Capital $6.5 billion in excess of “Well Capitalized” mini
Slide 24: REGIONS
IN REGIONS