![]() Regions Financial 4 Quarter Earnings Conference Call January 20, 2009 Exhibit 99.3 th |
![]() 1 Fourth Quarter 2008 Results › Earnings per diluted share of ($9.01), ($0.35) excluding goodwill impairment › $6 billion, ($8.66) non-cash goodwill impairment charge › Full-year profit of $0.74 per share before goodwill impairment and merger charges › Credit quality › Sold or moved to held for sale (HFS) $1.0 billion of non-performing assets (NPAs) › NPAs, excluding HFS, declined $347 million due to aggressive management › Provision for loan losses increased to $1.15 billion, or $354 million above net charge-offs › Ratio of allowance for credit losses to non-performing loans (excluding loans held for sale) increased from 1.07x to 1.81x › Allowance for credit losses to total loans increased 38 basis points to 1.95% › Annualized net charge-offs of 3.19% impacted by proactive NPL management › Tax settlement benefits earnings and capital by $275 million, essentially closes 1999- 2006 tax years › Net interest margin declined to 2.96% › Non-interest revenues affected by worsening economy › Regulatory capital ratios strengthened, liquidity remains strong |
![]() 2 Significant Earnings Drivers 4Q08 Goodwill Impairment Charge (8.66) $ Tax Settlement 0.40 Losses on Loan Sales/Held for Sale Markdowns (0.42) Provision above Net Charge-offs (0.32) MSR Impairment (0.09) Preferred Stock Issuance Impact (0.04) All Other 0.12 Earnings Per Diluted Share (9.01) $ |
![]() 3 Credit Perspective Portion of the loan portfolio that is under stress comprises 9% of the total, down $3.1 billion over the past year. 12/31/2008 % of Total 12/31/2007 ($ in millions) Balance Portfolio Balance Change Homebuilder Lots $967 1.0% $1,608 ($641) Residential Presold 300 0.3% 618 (318) Residential Spec 1,297 1.3% 1,893 (596) Land 1,553 1.6% 2,926 (1,373) National Homebuilders/Other 286 0.3% 160 126 $4,403 4.5% $7,205 ($2,802) Home Equity Lending Florida - 2nd lien 3,663 3.8% 3,285 378 Condominium 946 1.0% 1,614 (668) Stressed Portfolio $9,012 9.3% $12,104 ($3,092) Remaining Loan Portfolio $88,407 90.7% $83,275 $5,132 |
![]() 4 Losses Contained in Smaller Portfolios 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Total Loan Portfolio ($ in billions) Note: Bar height represents charge-off percentage and width represents average balances as of December 31, 2008. |
![]() 5 Increasing Florida Stress |
![]() 6 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x Non-performing Assets (NPAs) NPAs exc. Held for Sale (HFS) ($) Allowance for Credit Losses (ACL) / Non-performing Loans (NPLs) exc. HFS Increases in Charge-Offs and Loan Loss Provision Improvements in NPAs and Coverage Ratio 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 Net Charge-Offs (NCOs) / Average Loans (%) Loan Loss Provision ($) Net Charge-Offs ($) Net C/O % LLP NPAs ACL/NPL exc. HFS |
![]() 7 Aggressive Non-performing Asset Management (in millions) 1Q 2Q 3Q 4Q Beginning NPAs 864 1,204 1,621 1,642 Additions 523 730 721 1,004 Payments (62) (52) (70) (82) Returned to Accruing Status (4) (9) (19) (44) Charge-Offs/OREO Write-downs (92) (105) (180) (243) Dispositions/Held for Sale (25) (147) (431) (982) Ending NPAs 1,204 1,621 1,642 1,295 (1) Excluding non-performing assets transferred to held for sale 2008 1 1 |
![]() 8 Net Interest Income and Margin › Taxable-equivalent net interest income of $933 million › Down $41 million, excluding $43 million third quarter SILO impact › Stable earning asset volumes excluding proceeds from Government programs › Net interest margin of 2.96%, declined 28 basis points excluding third quarter SILO impact › Falling short-term interest rates › 55% of loan portfolio tied to Prime or LIBOR › Deposits rates have not declined as much due to competitive pressures |
![]() 9 Growing Customer Deposits ($ amount in millions) 6/30/2008 9/30/2008 12/31/2008 % Change 4Q08 vs 3Q08 Low Cost Deposits 58,448 $ 56,690 $ 56,422 $ -0.5% Customer Deposits 85,696 84,460 87,864 4.0% Corporate Treasury Deposits 5,207 4,131 1,669 -59.6% Total Deposits 90,903 88,591 89,533 1.1% ($ amount in millions) 6/30/2008 9/30/2008 12/31/2008 % Change 4Q08 vs 3Q08 Low Cost Deposits 58,649 $ 55,922 $ 58,425 $ 4.5% Customer Deposits 86,025 85,210 90,794 6.6% Corporate Treasury Deposits 3,878 4,011 110 -97.3% Total Deposits 89,903 89,221 90,904 1.9% Deposit Portfolio - Average Balances Deposit Portfolio - Ending Balances |
![]() 10 Q3 to Q4 2008 Non-Interest Revenue and Expense Changes Primarily Driven by Continued Economic Distress Non-Interest Revenue declined $18 million driven by lower market values on trust accounts and lower service charge revenue. Non-Interest Expense rose 7%, excluding Goodwill and MSR impairment charges. (in millions) 3Q08 4Q08 % Change Non-Interest expense 1,103 $ 7,273 $ MSR impairment 11 99 Goodwill impairment - 6,000 Adjusted Non-interest expense 1,092 1,174 7% |
![]() 11 Capital Ratios › Tier 1 and total capital strengthened by Capital Purchase Program › Tangible ratio affected by an increase in tangible assets, a result of improved liquidity Estimate 3Q08 4Q08 Tier 1 Capital Ratio 7.47% 10.39% Total Risk-Based Capital Ratio 11.70% 14.65% Tangible Equity to Tangible Assets 5.68% 5.23% |
![]() 12 Strong Funding and Liquidity Liquidity › Combined available liquidity from the Fed, FHLB, unpledged securities and unused lines exceeds $45 billion › Large excess reserve balances › Minimal Holding Company long-term debt maturities › Avg Loans/Avg Deposits 111% › Average non-interest-bearing deposits/ Average interest-earning assets 14% Funding › Customer core deposits fund 59% of total assets and 88% of loans › Customer core deposits are 98% of total deposits $4 billion TLGP remaining capacity › Issuances performing well › Short-term funding markets loosening |
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