Regions Financial Corporation · NYSE:RF
Regions Financial — BancAnalysts Association of Boston 2005
26 slides from Regions Financial's conference presentation, Nov 3, 2005
Slide 1: BancAnalysts Association of Boston
BancAnalysts Association of Boston November 3, 2005 D. Bryan Jordan Executive Vice President and Chief Financial Officer Regions Financial Corporation
Slide 2: Forward-Looking Statement
FORWARD-LOOKING STATEMENT The information contained in this presentation may include forward-looking statements that reflect Regions' current views with respect to future events and financial performance. You should not place undue reliance on these statements as the forward-looking statements are b
Slide 3: Overview of Regions
Overview of Regions How Regions is Improving Profitable Growth
Slide 4: Regions Financial Corporation at a glance
* Based on annualized YTD05 financial results as of September 30 Regions Financial Corporation $85 billion in assets Approximately $15 billion in market capitalization $4.7 billion* in revenues from diversified sources 5 million customers Strong banking franchise in South, Midwest and Texas with ove
Slide 5: Diversified Revenue Stream
Diversified Revenue Stream $4.7 Billion in Annualized Revenues* Net II Other Mortgage Insurance Brokerage Fees 55 3.5 10 2 16 14 Insurance 2% Net Interest Income 55% Mortgage Banking 10% Brokerage & Trust 16% Banking - Fees 14% * Based on annualized YTD05 financial results as of September 30; exclud
Slide 6: Superior Net Interest Margin Performance
Worst in Class Median RF Best in Class East -38 -12 17 24 Superior Net Interest Margin Performance Driven By Disciplined Balance Sheet Management YTD05 Change in Net Interest Margin (bps) +17 bps - -12 bps - -38 bps +24 bps NOTE: Peer group includes Top 25 U.S. banks
Slide 7: Broad-based Revenue Gains Increasing Momentum
Net Interest Income Morgan Keegan Service Fees On Deposits Mortgage Other 2Q05 280 195.6 131.7 78 50.7 3Q05 300 199.4 132.9 95.9 43 13% Annualized Growth Broad-based Revenue Gains Increasing Momentum Dollars in millions $ 750
Slide 8: High Credit Standards
HIGH CREDIT STANDARDS 2002 2003 2004 3Q05 East 0.0103 0.0094 0.0079 0.0075 2002 2003 2004 YTD3Q05 East 0.0036 0.0033 0.0029 0.0022 Low non-performing asset levels Low net-charge off levels Net charge-offs as a percentage of avg. loans NPA's as a percentage of loans and ORE * *Annualized
Slide 9: Efficiency Efforts Underway
Efficiency Efforts Underway 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05* 1Q06* East 5 24 25 30 40 45 50 Merger-related Cost Savings 2004: $30 MM 2005 Projected: $135 - $140 MM *Projected $ in Millions 2006 Projected: $200 MM Run Rate
Slide 10: Integration Efforts Nearing Completion
Integration Efforts Nearing Completion First and second bank branch conversion events were executed according to plan Third and final bank branch conversion event will take place beginning today, November 3 Approximately 320 legacy Union Planters branches in South Florida and the Midwest will be con
Slide 11: How Regions is Improving Profitable Growth
Overview of Regions How Regions is Improving Profitable Growth
Slide 12: Financial Drivers of Value
Financial Drivers of Value Capital Market Evidence Like all companies, Regions' equity value is driven by investor expectations of the company's future cash flow or economic profit stream Discounted Value of Forecasted Cash Flow Market Price per Share ($) 1 10 100 1,000 1 10 100 1,000 Correlation Co
Slide 13: Growth Vs Returns
Growth Vs Returns Note: Cost of Equity of 10%; M/B = Market to Book Ratio Improving shareholder value requires both improved returns and profitable growth Year 5 ROE expectations Growth Creates Value (ROE > COE) Value Neutral (ROE = COE) Growth Consumes Value (ROE < COE) 15% 10% 5% 25% 20% 0% 2% 4%
Slide 14: Top Quartile Shareholder Returns Drivers
Top Quartile 24.4 Average 12.3 Over the past five years, banks that have delivered top quartile shareholder returns have done so by improving ROE's and growing profitably Banks used for analysis for 2000-2004 include BAC, BBT, C, CBSS, FHN, STI, SNV, WB, JPM, FITB, KEY, HIB, WFC, CBH, CMA, UB, HBAN,
Slide 15: Turning financial theory into initiatives
Regions understands that to make the financial theory truly meaningful, it requires the development and implementation of initiatives to realize results Our efforts are not about measurement alone Business unit planning, performance, and management are keys Incentives must be aligned with the goals
Slide 16: Focus on improving ROE and profitable growth
Regions is focused on improving ROE and profitable growth Improving operating efficiencies across our banking groups Focusing investment in areas where we are realizing profitable growth Leveraging our expanded footprint and deepening our profitable customer relationships Supported by a detailed und
Slide 17: Shareholder value contribution by line of business
Regions has a detailed understanding of the shareholder value contribution of its various lines of business and product lines Economic Capital Employed ($MM) 0% Trans. Accts. Consumer Ltd.Trans. Dep. Consumer Installment Indirect (Non DCS) Equity Asset Line Installment Direct CD's - Consumer Retail
Slide 18: Deposits Drive Branch Profitability
Deposits Drive Branch Profitability Opportunities exist for profitable growth in all market types Urbanicity vs. Profitability 139 294 264 338 272 Urbanicity # Branches Urban Suburban Rural EP 1-3 4 5 6 7 Regions has good performing branches in every market type... Median Branch Most profitable Leas
Slide 19: Branch Profitability vs. Deposit Balances
Branch Profitability vs. Deposit Balances Variation in Efficiency for Branches With Similar Deposit Balances Economic Profit Contribution Economic Profit Contribution Deposits Variation due to branch efficiency differences R 2 = 0.71 0 R 2 = 0.73 0 Efficiency Ratio And, we know what is driving busin
Slide 20: Focusing investment to increase share profitably
Mkt A Mkt B Mkt C Mkt D Mkt E Mkt F Mkt G Deposit Growth/Branch 0.313 0.045 0.104 0.045 0.09 0.06 0.045 % New Branches 4.327 1.891 1.6 3.1 6.863 9.157 9.419 Regions is focusing investment to increase share profitably within our existing footprint 2004 New Deposits Per Branch ($MM) Average New Deposi
Slide 21: Productivity Improvement: Central Banking Region Example
Productivity Improvement: Central Banking Region Example We are changing our business models to improve the shareholder value contribution of existing businesses ... 2004 208 2005 Target 231 Current Run Rate 246 Revenue / Per FTE 18% improvement in revenue per FTE Achieved through a combination of b
Slide 22: Central Banking Region 2002 Base Case
Central Banking Region 2002 Base Case
Slide 23: Migration of returns from 2002 to 2005
Growth in economic profit and higher risk-adjusted returns were result of initiative implementation Migration of returns from 2002 to 2005
Slide 24: Expanding profitable customer relationships
Regions is also beginning to capitalize on opportunities to expand profitable customer relationships MK MK and Banking MK & Private Banking Private Banking Banking Wealth and Upper Affluent Households
Slide 25: Strong presence in attractive markets
Regions Bank Morgan Keegan Regions Insurance Group Regions has a strong presence in very attractive markets and is making business model and resource allocation changes to improve profitable growth
Slide 26: Focused on improving shareholder value
Regions is focused on improving shareholder value We have a detailed understanding of where and why shareholder value is being created across and within our business portfolio Our successful merger has provided new opportunities to improve the value contribution of our existing businesses and realiz
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