Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (August 2010)
46 slides from Regions Financial's investor presentation, Aug 5, 2010
Slide 1: Exhibit 99.1
Exhibit 99.1 * * *
Slide 2: Earnings: Improving trends in PPNR and LLP
Earnings: Improving trends in PPNR and LLP Q2 Q3 Q4 Q1 Q2 ($ in millions) Stable and Improving PPNR Net Interest Income $ 831 $ 845 $ 850 $ 831 $ 856 Core Non-Interest Income* Core Revenue* 1,592 1,609 1,593 1,565 1,612 Net Interest Margin 2.62% 2.73% 2.72% 2.77% 2.87% Core Non-Interest Expense* 1,0
Slide 3: Margin: Declining deposit costs drive net interest margin improvement
Margin: Declining deposit costs drive net interest margin improvement Loan Yields Net Interest Margin Deposit Costs
Slide 4: Credit: Net charge offs stabilized and NPLs declined
Credit: Net charge offs stabilized and NPLs declined ALLL / NPLs 0.87x 0.82x 0.89x 0.86x 0.92x
Slide 5: Total Wholesale funding
Total Wholesale funding $33.6B $22.8B $17.9B % of Total Funding 27% 18% 15% December 31, 2008 December 31, 2009 June 30, 2010 Improved Funding Mix
Slide 6: Capital Update
2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010* Capital Update Tier 1 Common Ratio 8.1% 7.9% 7.1% 7.1% 7.7% Tangible Common Equity Ratio 6.6% 6.6% 6.0% 6.1% 6.3% Tier 1 Capital Ratio 12.2% 12.2% 11.5% 11.7% 12.0% Total Capital Ratio 16.2% 16.3% 15.8% 15.8% 15.9% Tangible Book Value per Share $7.58 $7.40 $6
Slide 7: Capital Update: Capital vs. Peers
Capital Update: Capital vs. Peers Peers include BAC, BBT, CMA, FITB, KEY, MI, MTB, PNC, STI, USB, WFC
Slide 8: Have Strengthened Our Core Franchise Through Productivity and Efficiency Initiatives
We Have Strengthened Our Core Franchise Through Productivity and Efficiency Initiatives ($ in millions) Branches 1,965 1,900 1,895 › Further reduced branch count by 120 in 1Q10 Employees 33,161 30,784 28,509 › Headcount declined 4,652 or 14% Core Expenses* $3,991 $3,936 $3,704 › Total core expenses
Slide 9: Investor Real Estate $18.9B 22%
Investor Real Estate $18.9B 22% Total Loan Portfolio $85.9B Investor Real Estate $18.9B Commercial and Industrial $21.1B / 25% Owner Occupied Real Estate $12.5B / 15% Residential First Mortgage $15.6B / 18% Indirect $1.9B / 2% Direct and Other $1.1B 1% Home Equity $14.8B 17% Land $2.3B / 12% Single
Slide 10: Investor Real Estate Portfolio is Diversified
Investor Real Estate Portfolio is Diversified 22% of Total Portfolio Other* $3.1B / 17% FL $4.4B / 23% TX $2.1B / 11% GA $1.9B / 10% TN $1.7B / 9% AL $1.6B / 9% NC $1.1B / 6% LA - $0.9B / 4% MO - $0.6B / 3% SC - $0.6B / 3% AR - $0.5B / 3% Loan Size Geography * Other includes states with exposure of
Slide 11: Net Charge-offs Moderating
Net Charge-offs Moderating (in millions) 2Q09 3Q09 4Q09 1Q10 2Q10 Net Charge-offs IRE Valuation Losses $129 $191 $215 $198 $142 Investor Real Estate (IRE) Commercial Consumer Real Estate Other Consumer Net Charge-offs excluding charge-offs from Sales / Transfers to HFS Sales/Transfer to HFS Total Ne
Slide 12: NPA Migration Moderates
($500) $0 $500 $1,000 $1,500 $2,000 2Q09 3Q09 4Q09 1Q10 2Q10 0% 5% 10% 15% 20% 25% 30% 35% 40% Gross Additions Dispositions Net NPA Change Charge-Offs Discount on Disposition Activity NPA Migration Moderates 1,758 1,667 1,404 1,306 1,122 (297) Dispositions includes OREO Sales, Problem Loan and HFS S
Slide 13: Provision Stabilized and Matched Charge Offs
Provision Stabilized and Matched Charge Offs $0 $200 $400 $600 $800 $1,000 $1,200 2Q09 3Q09 4Q09 1Q10 2Q10 Net Charge Offs Provision over Net Charge Offs $912 $1,025 $1,179 $770 $651 Loan Loss Provision
Slide 14: Total TDRs - $1.6B
Total TDRs - $1.6B* $0 $400 $800 $1,200 $1,600 $2,000 2Q09 3Q09 4Q09 1Q10 2Q10 Accruing Non-Accruing $ millions › Modifications are a result of our proactive outreach efforts › Any concession to a customer experiencing financial difficulty creates a TDR Residential Mortgage - 65% Home Equity - 20% O
Slide 15: Consumer Services Overview
2 Consumer Services Overview Diversified Offerings Multi Channel Delivery Deposits Mortgage Consumer Lending Insurance Credit/Debit Cards Focused on the Customer
Slide 16: Customer Loyalty is the Foundation for Growth
Customer Loyalty is the Foundation for Growth Regions – Q1 2008 Ranked in Middle of the Pack Regions Ranked in Top 10% Excellent - Gallup 90th percentile Average - Gallup 50th percentile Good - Gallup 75th percentile
Slide 17: Branch Customer Experience At An All-Time High
Branch Customer Experience At An All-Time High Excellent - Gallup 90th percentile Average - Gallup 50th percentile Regions Reached Top 20% Regions – Q1 2008 Ranked in Middle of the Pack Good - Gallup 75th percentile
Slide 18: Strong Low Cost Deposit Growth While Driving Lower Deposit Costs
$60.9 $62.2 $64.3 $68.5 $71.1 0.6% 0.7% 0.8% 0.9% 1.0% 1.1% 1.2% 1.3% 1.4% 54.0 56.0 58.0 60.0 62.0 64.0 66.0 68.0 70.0 72.0 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Low Cost Customer Deposits Deposit Costs Strong Low Cost Deposit Growth While Driving Lower Deposit Costs June balances are 17% higher
Slide 19: Peer Bank Deposit Rate Analysis
Peer Bank Deposit Rate Analysis 1Q 2010 vs 2Q 2010 0.35% 0.50% 0.40% 0.76% 0.79% 1.17% 0.78% 0.90% 1.04% 0.54% 0.39% 0.29% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% Wells BofA US PNC Comerica M&T SunTrust Regions BBT M&I Key 1Q 2Q -0.02% -0.07% -0.08% -0.08% -0.03% -0.05% -0.21% -0.05% -0.05%
Slide 20: Improving Deposit Mix Driving Lower Deposit Costs
Improving Deposit Mix Driving Lower Deposit Costs 36% Time Deposits 27% Time Deposits Q2 2009 Q2 2010 Reduced Time Deposit Concentration by 25% $95.0B $98.1B
Slide 21: Strong Year Over Year Checking Account Growth
Strong Year Over Year Checking Account Growth Exceeded Road to 1 Million Goal in 2009 On Target to Do It Again 488,200 Opened YTD
Slide 22: Regions Mortgage – Expertise, Speed, Simplicity
Regions Mortgage – Expertise, Speed, Simplicity and Exemplary Service Our Customers Count On PORTFOLIO SERVICING PRODUCTION CROSS-SELL • $15.6 Billion June 2010 Portfolio Yield 4.9% • $15.6 Billion June 2009 Portfolio Yield 5.5% • Forecasting $6.8 Billion in 2010 • Second Best Retail Production year
Slide 23: Regions Mortgage vs. Peer Group Average
Regions Mortgage vs. Peer Group Average Revenue per Loan Cost per Loan Income per Loan Regions $5,586 $3,331 $2,255 Peer Group Average $5,248 $3,662 $1,586 $5,586 $3,331 $2,255 $5,248 $3,662 $1,586 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Highly Profitable Mortgage Production Unit Market Share*
Slide 24: Demand Remains Soft for Home Equity Lending
Demand Remains Soft for Home Equity Lending › Demand will improve as unemployment and consumer confidence improve › Current Book of Business is 80% Variable Rate Portfolio Yield vs. Going-on Rate Production Q2 2009 Home Equity Balances Q2 2010 14,802 15,796 Q2 2009 Q2 2010 346.6 339.2
Slide 25: Targeting Growth in Consumer Lending
Targeting Growth in Consumer Lending BRANCH SMALL BUSINESS DIRECT TO CONSUMER LOANS INDIRECT AUTO UNDERSERVED CONSUMER • Targeting small businesses between $250,000 and $2 Million • Targeted industries • Targeted geographies • Re-entering Indirect Auto in September • Cost efficient – Low Risk Busine
Slide 26: We Are Remixing our Loans
We Are Remixing our Loans Dec – Commercial 50% Owner Occupied Real Estate 25% Investor Real Estate 25% Commercial 40% Owner Occupied Real Estate 24% Investor Real Estate 36% Commercial 38% Owner Occupied Real Estate 23% Investor Real Estate 39% Jun – Dec –
Slide 27: Revenue Is Well-Diversified by Line of Business
Revenue Is Well-Diversified by Line of Business Product Groups › Treasury Management › Capital Markets / Syndications (Morgan Keegan) › Equipment Finance Specialized Groups › Business Capital (ABL) › Healthcare › Transportation › Public, Institutional, Non-profit › Franchise Restaurant Middle Market
Slide 28: Loan Pricing Compares Favorably to Market
LIBOR - LIBOR - LIBOR - LIBOR - Loan Pricing Compares Favorably to Market Data Source: Standard & Poor’s Risk Adjusted New and Renewed Credit Spread Trends (excluding fees) Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 C&I Regions Market Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Community Banking Regions Ma
Slide 29: An Intense Focus on Relationship Banking
An Intense Focus on Relationship Banking Results in Stable, Low-Cost Deposits June 2010 61% of all deposits are checking Interest Checking 17% Savings 1% Money Market excl Euro 26% CDs 6% Interest-Free Checking 44% Eurodollar Sweeps 2% Repo Sweeps 4%
Slide 30: We Have Continued to Reduce Interest Bearing Deposit Costs
We Have Continued to Reduce Interest Bearing Deposit Costs 2.55% 0.89% 0.60% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 1Q '08 2Q '09 2Q '10
Slide 31: J.D. Power Ranks Regions Small Business
J.D. Power Ranks Regions Small Business Customer Satisfaction Among Industry Best Source: J.D. Power and Associates Small Business Banking Satisfaction Study SM
Slide 32: Historical Performance
Historical Performance 0% 5% 10% 15% 20% 25% 30% 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Revenue Operating Margin
Slide 33: Geography Review: Bill Ritter
Geography Review: Bill Ritter Total Deposits $24.0B Total Loans $17.6B Associates 4,017 Branches ATMs
Slide 34: Dominant Market Share in Alabama Growth Opportunity in Atlanta
Dominant Market Share in Alabama Growth Opportunity in Atlanta Market Composition Industry Drivers › Manufacturing › Healthcare – Specialty and Research › Aerospace/Defense Economic Stats › High Population Growth – Young, educated workers in Atlanta and military/civilian in Huntsville › Low costs of
Slide 35: Opportunities
Opportunities Accelerate growth in our Atlanta Market › Upgraded talent in all Lines of Business › Increase Market Penetration – Branches and ATMs Capitalize on Market Disruption › Bank Mergers: Wells/Wachovia and BB&T/Colonial › Bank Failures: 44 in 2009 and 2010 Develop Government Contracting Busi
Slide 36: Geography Review: Brett Couch
Geography Review: Brett Couch Total Deposits $18.8B Total Loans $16.2B Associates 3,121 Branches ATMs
Slide 37: Florida market composition and economic stats
Migration of consumers and businesses to Florida (climate, low taxes) RF 4.4% market share and 7.4% outlet share…growth opportunity Market Composition Industry Drivers › Professional / Business Services › Education › Healthcare › Retail Trade › Leisure/Hospitality Economic Stats › 11.7% unemployment
Slide 38: Opportunities
Opportunities Accelerate Small Business Growth › 1.6 million in Florida… 4th in country › Stability, expertise, and personal service › Emphasis in branches Increase Consumer Market Share › Population of 18 million… 4th in country › Market deposits… $400 billion › Market share opportunity Leverage Mo
Slide 39: Geography Review: Keith Herron
Geography Review: Keith Herron Total Deposits $26.9B Total Loans $17.1B Associates 4,239 Branches ATMs
Slide 40: #1 Market Share in Tennessee; Dominant Nashville Bank
#1 Market Share in Tennessee Dominant Nashville Bank – “City on the Move” Midsouth footprint brings economic diversity to Regions Market Composition Industry Drivers › Healthcare › Agriculture › Transportation › Manufacturing Economic Stats › Home to 78 Fortune 500 Companies › Relocations and Expans
Slide 41: Opportunities
Opportunities Accelerate Growth in Midwest Markets › St. Louis (Gateway Initiative) and Indianapolis (Indy Initiative) › Expand agricultural banking into markets with Regions presence Healthcare › Nashville is home to over 20 publically traded healthcare companies › Capture Nashville healthcare mark
Slide 42: Geography Review: Ronnie Smith
Geography Review: Ronnie Smith Total Deposits $21.4B Total Loans $12.4B Associates 3,565 Branches ATMs
Slide 43: Natural Resource Focus
Natural Resource Focus Market Composition Industry Drivers › Water Ports / Waterways › Petro Chemical › Energy / Oil and Gas Economic Stats › Ten Metro Markets across Footprint › Home to 70 Fortune 500 Companies › Unemployment below National Average › Agriculture › Healthcare
Slide 44: Opportunities
Opportunities Leverage Top 3 Market Share in Mississippi, Arkansas and Louisiana › 75% of revenue growth in these markets comes from existing client base › Stronger focus on Business to Business selling through established branch network Growth Market in Texas › Attacking market through strategic ac
Slide 45: Appendix – Non-GAAP Financial Measures
Appendix – Non-GAAP Financial Measures Note: The following tables in the next two slides illustrate the method of calculating the non-GAAP financial measures used in this slide presentation: Q2 Q3 Q4 Q1 Q2 ($ in millions) Net Interest Income (GAAP) $ 831 $ 845 $ 850 $ 831 $ 856 Non-Interest Income (
Slide 46: Appendix – Non-GAAP Financial Measures
Appendix – Non-GAAP Financial Measures Q2 Q3 Q4 Q1 Q2 ($ amounts in millions, except per share data) Net income (loss) available to common shareholders (GAAP) (244) (437) (606) (255) (335) Adjusted Items, Net of Tax (65) (55) Net income (loss) available to common shareholders, excluding adjusted ite
Regions Financial — Investor Presentation (August 2010) on 6ix