Regions Financial Corporation · NYSE:RF
Regions Financial — Merger or Acquisition (January 2004)
33 slides from Regions Financial's merger presentation, Jan 26, 2004
Slide 1: Creating a New Regional Force in Banking and Financial Services
Creating a New Regional Force in Banking and Financial Services January 23, 2004
Slide 2: Disclaimer
Disclaimer Statements made in this investor presentation and in oral statements by the management of Regions Financial Corporation ("Regions" or "RF") and Union Planters Corporation ("Union Planters" or "UPC"), other than those containing historical information, are forward-looking statements made p
Slide 3: Strategic Vision - Creating a New Regional Force
Strategic Vision - Creating a New Regional Force Leading market share in the Mid-South region with high returns and low risk Meaningful positions in surrounding high-growth markets with significant opportunities for investment; and Diversified, well positioned mix of businesses Leading regional brok
Slide 4: Strategy
Improve capital generation in our high return markets through cost / scale advantages Leverage pro forma scale and breadth of the combined organizations to: Invest in our high growth markets; Overlay proven ability of Morgan Keegan to leverage enhanced retail footprint; and Extract synergies from ov
Slide 5: A Low Risk Transaction
A Low Risk Transaction Friendly merger No premium to overcome Important decisions have been made Key executive management on board Other key social issues decided Integration risk mitigated by: Conservative cost savings assumptions Modest branch overlap Slow and careful approach to cost savings real
Slide 6: Compatible Corporate Culture / Strategy
Compatible Corporate Culture / Strategy Regions Union Planters Similar Customer Base ? ? Approach Community Banking ? ? Superior Customer Service ? ? Organization Geography ? ? Business Lines ? ? Uniform Operational Processes ? ?
Slide 7: Transaction Summary
Transaction Summary Regions Financial Corporation 1.0000x Newco share per Union Planters share 1.2346x Newco share per Regions share 59% Regions / 41% Union Planters 50% Regions / 50% Union Planters Birmingham, AL Morgan Keegan, headquartered in Memphis, TN Union Planters Mortgage, headquartered in
Slide 8: Executive Management
Executive Management Carl Jones Chairman & CEO Jack Moore President & CEO Designate Allen Morgan Morgan Keegan & Company, Inc Robert Goethe Mortgage Banking Richard Horsley COO Bobby Doxey Senior EVP Transition Team Leaders Bryan Jordan CFO Regional Presidents John Fleischauer Adolfo Henriques Peter
Slide 9: A New Regional Force in Banking and Financial Services: Distribution Strength
A New Regional Force in Banking and Financial Services Distribution Strength 5mm Customers 1,400 Branches 1,700 ATMs 1,225 Financial Advisors 450K Online Customers
Slide 10: Enhanced Scale and Scope
A New Regional Force in Banking and Financial Services Market Capitalization1 Enhanced Scale and Scope Source: SNL Financial, company reports Notes: 1 Market data as of January 22, 2004; excludes Mellon, Bank of New York, Northern Trust, State Street, and Synovus 2 Top U.S. banks ranked by tangible
Slide 11: Balanced and Diversified Business Mix
Balanced and Diversified Business Mix Combined Revenue Composition1 Source: Company reports Notes: 1 FY 2003; excludes securities gains/(losses) 2 Excludes MSR amortization, MSR recovery/(impairment), and income related to MSR derivatives hedge for Union Planters to equate reporting 3 Includes inves
Slide 12: Leading Franchise in the Mid-South
Leading Franchise in the Mid-South Approximately 60% of franchise located in the Mid-South market, where Regions will have a leading deposit market share1
Slide 13: Mid-South Profile
Mid-South Profile 29.1 million total population 1.1 million businesses Top Mid-South MSAs Median Household Income Top Mid-South MSAs Projected Household Income Growth 11.1 million households 6.0% overall projected household growth Source: SNL Financial Note: 1 All MSAs in Mid-South with greater than
Slide 14: We Will Invest in Our Key Growth Markets
We Will Invest in Our Key Growth Markets Approximately 50% of franchise in markets with high growth / investment potential1 Source: SNL Financial Note: 1 Percent of franchise based on combined total deposits
Slide 15: Asset Quality Leverage
Asset Quality Leverage Regions' strong credit culture accelerates credit leverage in Union Planters' franchise Pre-Tax Net Income / EPS Impact from Improvement in Union Planters' Credit Quality Credit Quality Ratios1 Net Charge-Off Ratio Improvement Note: 1 As of and for year ended 12/31/03 1.6% of
Slide 16: Morgan Keegan - Leading Regional Brokerage Platform
Morgan Keegan - Leading Regional Brokerage Platform 147 brokerage locations in 15 states and Canada 900 financial advisors Brokerage assets of $40 billion1 Presence in 90 Regions bank branches Morgan Keegan 717 bank branches Approx. 325 series 6 / 7 brokers Brokerage assets of $2 billion1 Potential
Slide 17: Proven Ability to Leverage Enhanced Retail Footprint
Proven Ability to Leverage Enhanced Retail Footprint 23% CAGR Retail Revenue Per Regions Financial Advisor (Dollars in Thousands) 17% CAGR Average Assets Per Regions Financial Advisor (Dollars in Millions)
Slide 18: A Balanced Mortgage Business with Scale
A Balanced Mortgage Business with Scale Multiple Channels Retail (38%), Correspondent (8%), Agency Conforming Wholesale (39%), Non-Conforming Wholesale (15%) Geographic Distribution 22 states Gov't (8%), Secondary Mkt Conforming (62%), Portfolio (15%), Non-Conforming (15%) Product DIversification Lo
Slide 19: Improved Mortgage Banking Profitability
Improved Mortgage Banking Profitability Expense Rationalization Potential Revenue Enhancements Rightsizing Opportunity Greater servicing efficiencies through economies of scale 20th largest servicing platform in the U.S. Focus origination / servicing on core footprint Evaluate feasibility of selling
Slide 20: Pro Forma Financial Impact
Pro Forma Financial Impact
Slide 21: Transaction Assumptions
Transaction Assumptions 1.0000x Newco Share per Union Planters Share 1.2346x Newco Share per Regions Share 2004 of $3.06 and 2005 of $3.31 for Regions1 2004 of $2.252 and 2005 of $2.541 for Union Planters $200 million pre-tax Phased-in 15% in 2004, 60% in 2005, 85% in 2006, 100% thereafter 7.0% of t
Slide 22: Pro Forma Financial Results
Pro Forma Financial Results Note: 1 CDI amortization, net of Union Planters' existing CDI amortization, and funding of restructuring costs (4.50% pre-tax). Excludes impact of purchase accounting mark to market adjustments
Slide 23: Realizable Cost Savings
Realizable Cost Savings Estimated cost savings already identified $200 million or 7% of combined expense base Phased-in 15% in 2004, 60% in 2005, 85% in 2006, and 100% thereafter Anticipated $300 million pre-tax restructuring costs Pro forma efficiency ratio (excluding Morgan Keegan) decreases from
Slide 24: Attractive Investment Opportunity
Attractive Investment Opportunity
Slide 25: Significant Upside Valuation Potential
Significant Upside Valuation Potential Notes: 1 Median of BBT, KEY, MTB, NCC, PNC, SOTR and STI 2 As of January 22, 2004 3 Cost savings phased-in 15% 4 Includes fully phased-in cost savings 5 Shown as a percent of total shareholders
Slide 26: Creating Value For All Shareholders
Creating Value For All Shareholders Note: 1 Utilizes management's estimated cost savings of $200 million pre-tax with an 11% discount rate, 3% perpetuity growth rate; less impact of estimated restructuring costs which is assumed to be fully expensed at transaction close; includes funding of restruct
Slide 27: Conclusion
Conclusion Creates Significant Franchise and Shareholder Value Cash accretive to all shareholders in 2004 Accelerated EPS growth Significantly enhanced scale and scope Attractive market positions in key MSAs Enhanced profitability ratios Low risk / high valuation potential transaction Attractive div
Slide 28: Appendix
Appendix
Slide 29: Combined Balance Sheet
Combined Balance Sheet Note: 1 Does not include purchase accounting adjustments and/or merger synergies/costs
Slide 30: Loan Composition
Es Loan Composition Regions Union Planters Combined Total % of Total % of Total % of (Oolars in Mticns) 128103 __ Total 12/3103 __ Total 12/3103 __ Total Commercial $10,182 30.8% $5,861 25.6% $16,044 28.5% Residential Mortgages 8319 249 5878 244 13,896 24.7 Other Real Estate Loans 5,879 176 6470-283
Slide 31: Deposit Composition
Es Deposit Composition Regions Union Planters Combined Total % of ‘Total % of Total % of (Coir in Witions) 12/3103 __Total_ 128103 _ Total 12/3103 __Total Interest-free Deposits $5,718 17.5% $5,384 23.3% «$11,102 19.9% Interest-bearing Checking 2,648 a4 3467 15.0 6115 109 Savings 1,421 43 1476 64 2,
Slide 32: Realistic Cost Savings Compared to Other Mergers
Realistic Cost Savings Compared to Other Mergers Cost Savings as % of Combined Expense Base
Slide 33: Top Ten Pro Forma Markets
Top Ten Pro Forma Markets Regions & Union Planters To Merge Analyst/Investor Conference Call Transcript January 23, 2004 Presentation Operator: Good morning, everyone, and welcome to the analyst investor conference call discussing the merger of Regions Financial Corp. and Union Planters Corporation.
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