Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (May 2009)
36 slides from Regions Financial's investor presentation, May 20, 2009
Slide 1: Regions Common Stock Offering
Exhibit 99.2 Regions Common Stock Offering May 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. Forward-looking statements are not based on historical information, but rather are related to
Slide 3: Common Offering Summary
Common Offering Summary Issuer Regions Financial Ticker / Listing RF / NYSE Offering Size $1.0 billion of common stock 1; 100% primary shares Concurrent offering of $250 million of Mandatory Convertible Preferred Securities that qualify towards SCAP capital buffer Expected Pricing May 20, 2009 Green
Slide 4: Regions Investment Highlights
Regions Investment Highlights › Diversified Southeastern Franchise › Strong Share in Core Markets › Continued Growth in Low Cost Core Deposit Base › Customer Retention and Account Growth › Attractive Investment and Brokerage Business › Successful Focus on Expense Containment › Aggressively Managing
Slide 5: Created Through a Merger-of-Equals
Created Through a Merger-of-Equals › Merger of Birmingham-based AmSouth and Regions completed in late 2006 › Centralized credit management, single technology platform and integrated systems › Annual cost saves of approximately $800mm well above original $400mm estimates › Further cost save initiativ
Slide 6: Regions is Among the Largest U.S. Banks
Regions is Among the Largest U.S. Banks Amount U.S. Rank Deposits $93.5bn 9 Top 5 Deposit Market Share Alabama ($17.2bn) 23 % 1 Tennessee ($16.3bn) 16 1 Florida ($14.3bn) 4 4 Mississippi ($9.7bn) 21 1 Louisiana ($7.2bn) 10 3 Arkansas ($4.2bn) 9 2 Branches 1,904 6 Loans $95.7bn 10 Tangible Common Equ
Slide 7: Diversified Southeastern Franchise
Diversified Southeastern Franchise › Strategically important position across a number of Southeastern markets % of Mkt. % of Cum. State Dep. ($B) Share Rank Total Total AL $ 17.2 23 % 1 20 % 20 % TN 16.3 16 1 19 38 FL 14.3 4 4 16 55 MS 9.7 21 1 11 66 LA 7.2 10 3 8 74 GA 6.4 4 6 7 81 AR 4.2 9 2 5 86
Slide 8: High Relative Market Density
High Relative Market Density Weighted Average Bank Market Share¹ BB&T 22.2 % Regions 20.7 Wells Fargo 20.3 Comerica 18.8 M&T 18.1 Regions compares M&I 17.8 favorably in terms of Bank of America 16.6 weighted average market J.P. Morgan Chase 16.3 share relative to other U.S. Bancorp 16.3 top banking
Slide 9: Customer Retention and Account Growth
Customer Retention and Account Growth › Continued customer and deposit growth › Opened a record 243,000 new consumer and business checking accounts in 1Q 2009, up 26% from 1Q 2008 › Top quartile in customer satisfaction based on Gallup consumer survey › Retention remains better than industry norms a
Slide 10: Strong and Stable Deposit Base
Strong and Stable Deposit Base Deposit Profile Deposit / Funding Statistics Other Funding 1% › Total = $125.2bn Jumbo Time › 1Q 2009 Average Cost = 1.82% 14% Transaction Acct Deposits Retail Time 37% › Total = $93.5bn 22% › Deposits % of Total Funding = 75% MMDA › 1Q 2009 Average Cost = 1.61% & Savi
Slide 11: #4 Regional Retail Brokerage Business
#4 Regional Retail Brokerage Business¹ Poised for Strong Results as Market Recovers Morgan Keegan Highlights › 1,303 Financial Advisors › 328 Offices in 19 States › $61 billion of customer assets › $63 billion of trust assets › $56 million assets per financial advisor › $1.1 billion of new brokerage
Slide 12: Costs Continue to be Well Contained
Costs Continue to be Well Contained › Non-interest expense declined 10%, excluding 4Q08 Goodwill and MSR impairment charges › Management of personnel-related expenses › Streamlining operations and technology › Further cost containment initiatives underway 12
Slide 13: SCAP Update and Capital Plan
SCAP Update and Capital Plan 13
Slide 14: Regions SCAP Update
Regions SCAP Update › “What-if” scenario representing potential losses over a two year period in an extremely adverse environment › Loss estimates based on asset class and geographic exposures › Regions’ loss history and stress loss estimates well below $9.2 billion of losses assumed by the SCAP › $
Slide 15: Conservative Loss Assumptions vs. Peers
Conservative Loss Assumptions vs. Peers Peer Range1 Multiple of Implied 1Q 2009 Losses 4.1% Losses (1Q NCOs x 8)² First Lien 3.4% 11.9% $1.0bn 2.5 x Mortgages 11.9% Second / Junior 6.3% 13.7% $1.1bn 1.5 x Lien Mortgages 7.0% C&I 4.5% 11.0% $1.2bn 3.4 x 13.7% CRE 5.9% 13.9% $4.9bn 3.8 x Other $0.8bn
Slide 16: Regions Capital Action Plan
Regions Capital Action Plan › Committed to satisfy $2.5bn capital need without use of government sources › Announced Capital Actions (Total ~$1.5bn) › Common Equity Offering - $1.0bn › Concurrent Mandatory Convertible Issuance - $250mm › Equity Exchange for Trust Preferred Securities - $200-400mm ›
Slide 17: Actions Create Strong Pro Forma Capital Ratios
Actions Create Strong Pro Forma Capital Ratios Pro Forma Pro Forma for $1.5bn of for $2.5bn of Pro Forma 1 1Q 2009 Tier 1 Common Tier 1 Common 1 Peer Median 1,2 TCE / TA 5.41 % 6.44 % 7.12 % 5.30 % Tier 1 Common 6.49 7.82 8.70 6.60 Tier 1 Capital 10.41 11.74 12.62 11.94 › Approximately $2.1 billion
Slide 18: Credit Quality
Credit Quality Ma REGIONS 18
Slide 19: Diverse, Relationship-Driven Loan Portfolio; High Quality Securities Portfolio
Diverse, Relationship-Driven Loan Portfolio; High Quality Securities Portfolio Loans - $95.7bn Securities - $21.0bn › Diversified portfolio › 91% Government-backed or issued – › Minimal exposure to high risk FNMA / FHLMC / GNMA / Muni’s consumer products (i.e., credit cards, › 96% AAA or Government-
Slide 20: Focus on Credit Risk Management
Focus on Credit Risk Management › Sold Equifirst (subprime originations) immediately post merger in 1Q 2007 › Remaining exposure under $75mm › No structured investment vehicles, no option ARMS, no negative amortization loans, or Collateral Debt Obligations › Moratoriums on higher risk asset classes
Slide 21: Credit Quality Consistent with Peer Levels
Credit Quality Consistent with Peer Levels Nonperforming Loans¹ / Loans Net Charge-Offs / Average Loans 2.5% 2.22% 3.5% 3.19% $982mm of NPAs sold / 1.76% 3.0% transferred to HFS 2.0% 1.46% 2.5% 1.5% 1.43% 1.68% 1.65% 1.06% 1.71% 2.0% 1.40% 1.5% 1.0% 1.26% 0.99% 1.68% 1.08% 0.85% 1.64% 0.92% 1.0% 0.5
Slide 22: Focused on Resolution of Non-Performing Assets
Focused on Resolution of Non-Performing Assets › Special Assets Group enhanced to better manage non-performing assets › Redirected efforts of top commercial lenders to focus on mitigating NPA exposure › Loan Evaluation Office (“LEO”) created to facilitate identification of assets for potential sale
Slide 23: Reducing Highest Risk Exposures
Reducing Highest Risk Exposures › Stress portfolio comprises 9% of the total portfolio, down $2.3 billion since 1Q 2008 (down 21%) 23
Slide 24: Florida Second Lien Home Equity
% of Total % of Stress Portfolio Portfolio Florida Second Lien Home Equity $3.7bn / 3.8% of Total Loans 42% › Customer Assistance program in place 4% › Separate collections team created to focus on Florida Home Equity › Contacted approximately 185,000 customers in 2008 (40% Home Equity & Residential
Slide 25: Homebuilder
% of Total % of Stress Portfolio Portfolio Homebuilder $4.1bn / 4.3% of Total Portfolio 48% 4% Continue to Reduce Exposure ($mm) 1Q09 By Type 1Q09 By Geography FL / N. GA Remaining Portfolio $ 6,231 $ 5,758 $ 5,202 $ 4,402 $ 4,148 1Q08 2Q08 3Q08 4Q08 1Q09 NCOs / Avg. Homebuilder Loans NPLs / Homebui
Slide 26: Condominium
% of Total % of Stress Portfolio Portfolio Condominium $850mm / 0.9% of Total Portfolio 10% 1% › Small remaining exposure Effectively Reducing Exposure ($mm) 26
Slide 27: Non-Stress Asset Classes are Expected to Remain Relatively Low
Non-Stress Asset Classes are Expected to Remain Relatively Low NCOs / Avg. Loans NPLs / Loans 20.0 % 9.0 % 8.20 % 17.26 % 18.0 % $982mm of NPAs sold / 8.0 % transferred to HFS 7.15 % 16.0 % 6.80 % 7.0 % 14.0 % 6.0 % 12.0 % 5.0 % 4.44 % 10.0 % 10.02 % 4.0 % 4.51 % 8.0 % 6.60 % 6.0 % 3.0 % 4.0 % 3.26
Slide 28: Maintaining Focus Through the Cycle
Maintaining Focus Through the Cycle › Stress portfolio comprises 9% of the total portfolio, down $2.3 billion since 1Q 2008 (down 21%) › Nature of problem credits has not changed – continued focus on identification and resolution › Proactive disposition of problem assets › Conservative, consistent l
Slide 29: Regions Investment Highlights
Regions Investment Highlights › Diversified Southeastern Franchise › Strong Share in Core Markets › Continued Growth in Low Cost Core Deposit Base › Customer Retention and Account Growth › Attractive Investment and Brokerage Business › Successful Focus on Expense Containment › Aggressively Managing
Slide 30: Appendix: Loan Portfolio Breakdown
Appendix: Loan Portfolio Breakdown 30
Slide 31: Residential First Mortgage
Regions Stress Portfolio Residential First Mortgage › None $15.7bn / 16.4% of Total Loans By Product By Geography Observations › No exotic residential products (subprime, Alt-A options ARM, neg. am.); no broker originations 16% Florida › Alt-A performance similar to prime 39% Other › Weighted Averag
Slide 32: Home Equity
Regions Stress Portfolio Home Equity › 100% of $3,678mm of FL 2nd Lien $16.0bn / 16.7% of Total Loans By Lien By Geography Observations › All branch originated, in-footprint balances › Active monitoring and management of lines › Florida 1Q 2009 charge-offs of 4.91% vs. 0.93% for remainder of portfol
Slide 33: Commercial & Industrial
Regions Stress Portfolio Commercial & Industrial › 1% of $4.1bn of Homebuilder $34.5bn / 36.1% of Total Loans By Type By Industry Observations › Diversified by industry and geography Commercial Real Estat 14% › Emphasis on customer relationships vs. Real Estate - Owner- Other Retail lending 37% 10%
Slide 34: CRE (Non-Owner Occupied / Non-Construction)
Regions Stress Portfolio CRE (Non-Owner Occupied / Non-Construction) › ~24% of $850mm of Condo $16.0bn / 16.7% of Total Loans › Remainder in Construction By Type By Geography Observations Other Southwest Other 4% › Underwritten and approved by commercial Hospitality 8% 5% 8% real estate specialists
Slide 35: Construction
Regions Stress Portfolio Construction › ~ 76% of Condo › Remainder in CRE (24%) $8.9bn / 9.3% of Total Loans › ~ 54% of $4.1bn of Homebuilder › Remaining in CRE (44%) and C&I (1%) By Type By Geography Observations Owner Occupied 15% Southwest Other › Conservatively underwritten to permanent market s
Slide 36: Indirect / Other Consumer
Indirect / Other Consumer $4.6bn / 4.8% of Total Portfolio By Type Observations › $2.7 billion of prime indirect auto exposure; no new originations since October 2008 Other › Average FICO of 740 24% › 2008 Losses of 1.01%; Industry loss rate of 3.22% › $0.7 billion of marine / RV exposure; no new or