Credit Suisse Financial Services Conference February 5, 2009 Exhibit 99.1 |
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. The Private Securities Litigation Reform Act of 1995 ("the Act") provides a safe harbor for forward-looking statements which are identified as such and are accompanied by the identification of important factors that could cause actual results to differ materially from the forward-looking statements. For these statements, we, together with our subsidiaries, unless the context implies otherwise, claim the protection afforded by the safe harbor in the Act. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management's expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. These risks, uncertainties and other factors include, but are not limited to, those described below: • Regions' ability to achieve the earnings expectations related to businesses that have been acquired, including its merger with AmSouth Bancorporation, or that may be acquired in the future. • Regions' ability to expand into new markets and to maintain profit margins in the face of competitive pressures. • Regions’ ability to keep pace with technological changes. • Regions’ ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support Regions’ business • Regions' ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by Regions' customers and potential customers. • Regions' ability to effectively manage interest rate risk, market risk, credit risk, operational risk, legal risk, liquidity risk, and regulatory and compliance risk. •The current stresses in the financial and real estate markets, including possible continued deterioration in property values • The cost and other effects of material contingencies, including litigation contingencies. • The effects of increased competition from both banks and non-banks. • Possible changes in interest rates may increase funding costs and reduce earning asset yields, thus reducing margins. • Possible changes in general economic and business conditions in the United States in general and in the communities Regions serves in particular. • Possible changes in the creditworthiness of customers and the possible impairment of collectibility of loans. • The effects of geopolitical instability and risks such as terrorist attacks. • Possible changes in trade, monetary and fiscal policies, laws, and regulations, and other activities of governments, agencies, and similar organizations, including changes in accounting standards, may have an adverse effect on business. • Possible changes in consumer and business spending and saving habits could affect Regions' ability to increase assets and to attract deposits. • The effects of weather and natural disasters such as droughts and hurricanes. • Congress recently enacted the Emergency Economic Stabilization Act of 2008, and the U.S. Treasury and banking regulators are implementing a number of programs to address capital and liquidity issues in the banking system, all of which may have significant effects on Regions and the financial services industry, the exact nature of which cannot be determined at this time. The foregoing list of factors is not exhaustive; for discussion of these and other risks that may cause actual results to differ from expectations, please look under the caption “Forward-Looking Statements” in Regions’ Annual Report on Form 10-K for the year ended December 31, 2007 and Form 10-Q for the quarters ended September 30, 2008, June 30, 2008, and March 31, 2008, as on file with the Securities and Exchange Commission. The words "believe," "expect," "anticipate," "project," and similar expressions often signify forward-looking statements. You should not place undue reliance on any forward-looking statements, which speak only as of the date made. Regions assumes no obligation to update or revise any forward-looking statements that are made from time to time. |
› Company Profile › Financial Performance › Credit › Capital › Liquidity |
Regions is Among the Largest U.S. Banks › Market Capitalization $5.5 billion › Assets $146 billion › Loans, net of unearned income $97 billion › Deposits $91 billion › Branches 1,900 › ATMs 2,336 NOTE: As of December 31, 2008. |
Source: Based on June 30, 2008 FDIC Data obtained from SNL State Dep. ($B) Mkt. Share Rank AL $17.2 23% #1 TN 16.3 16 #1 FL 14.3 4 #4 MS 9.7 21 #1 LA 7.2 10 #3 GA 6.1 3 #6 AR 4.2 9 #2 TX 3.0 1 #17 IL 2.4 1 #24 MO 2.2 2 #9 IN 2.1 2 #9 Other 2.5 — — Regions Morgan Keegan Insurance Strong Southeastern Franchise |
High Relative Market Density Weighted Average Name Market Share (1) BB&T 22.2 Wells Fargo 20.3 Comerica 18.8 M&T 18.1 M&I 17.8 Bank of America 16.6 JP Morgan 16.3 U.S. Bancorp 16.3 PNC 16.2 KeyCorp 14.5 SunTrust 14.3 Capital One 13.0 Fifth Third 13.0 Citi 8.4 Median 16.3% (1) Deposits weighted by county. Excludes deposits from branches with > $10bn of deposits. Based on June 30, 2008 FDIC data. Regions 20.7 Regions compares favorably in terms of weighted average market share relative to other top banking franchises |
332 Office Locations Profile › 1,283 financial advisors › 332 offices in 19 states › $63 billion of customer assets › $62 billion of trust assets › $58 million assets per financial advisor Morgan Keegan – Among the Largest Regional Full-Service Brokerage and Investment Banking Firms As of December 31, 2008 |
Fourth Quarter 2008 Results › Earnings per diluted share of ($9.01), ($0.35) (1) excluding goodwill impairment › $6 billion, ($8.66) non-cash goodwill impairment charge › Full-year profit of $0.74 (1) 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 (1) For a reconciliation of this amount to the same measure on a GAAP basis and a statement of why management believes this measure provides useful information to investors, see Regions’ 8-K filed January 20, 2009 announcing results of operations for the period ended December 31, 2008. |
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) $ |
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 $5,132 |
Losses Contained in Smaller Portfolios 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Total Loan Portfolio ($ in billions) Note: Bar height represents charge-off percentage and width represents average balances as of 4Q08. |
Increasing Florida Stress |
$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 C/O % LLP NPAs ACL/NPL exc. HFS |
Aggressive Non-performing Asset Management Down $347 mm versus prior quarter (in millions) 1Q 2Q 3Q 4Q Beginning NPAs 1 864 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 1,204 1,621 1,642 1,295 (1) Excluding non-performing assets transferred to held for sale 2008 |
While Credit Issues Have Worsened, Metrics are In Line with Peers Net Charge Offs 2.48% 3.19% Regions Peers Non Performing Assets 1.33% 2.81% 1.76% Regions RF Excluding HFS Peers Allowance for Credit Loses 2.09% 1.95% Regions Peers Coverage Ratio 0.91 1.81 Regions Peers x x NOTES: Peers: PNC, BBT, STI, MTB, FITB, KEY, MI, CMA, FHN, CNB NCO Ratio = 4Q08 annualized. Other ratios as of December 31, 2008 Coverage Ratio = Allowance for credit losses divided by non-accrual loans |
Net Interest Income and Margin › Taxable-equivalent net interest income of $933 million › Down $41 million, excluding $43 million third quarter SILO impact › Stable earning asset volumes excluding proceeds from Government programs › Net interest margin of 2.96%, declined 28 basis points excluding third quarter SILO impact › Falling short-term interest rates › 55% of loan portfolio tied to Prime or LIBOR › Deposits rates have not declined as much due to competitive pressures |
Growing Customer Deposits ($ in millions) 9/30/2008 12/31/2008 % Change 4Q08 vs 3Q08 Low Cost Deposits 56,690 $ 56,422 $ -0.5% Customer Deposits 84,460 87,864 4.0% Corporate Treasury Deposits 4,131 1,669 -59.6% Total Deposits 88,591 89,533 1.1% ($ in millions) 9/30/2008 12/31/2008 % Change 4Q08 vs 3Q08 Low Cost Deposits 55,922 $ 58,425 $ 4.5% Customer Deposits 85,210 90,794 6.6% Corporate Treasury Deposits 4,011 110 -97.3% Total Deposits 89,221 90,904 1.9% Deposit Portfolio - Average Balances Deposit Portfolio - Ending Balances |
Loan Trends ($ in millions) 9/30/2008 12/31/2008 % Change 4Q08 vs 3Q08 Commercial & Industrial 22,916 $ 24,122 $ 5.3% Commercial real estate 25,207 25,887 2.7% Construction 12,042 11,584 -3.8% Residential first mortgage 16,304 16,005 -1.8% Home Equity 15,659 16,036 2.4% Indirect and other consumer 6,205 5,500 -11.4% 98,333 99,134 0.8% ($ in millions) 9/30/2008 12/31/2008 % Change 4Q08 vs 3Q08 Commercial & Industrial 23,511 $ 23,596 $ 0.4% Commercial real estate 25,720 26,208 1.9% Construction 11,620 10,634 -8.5% Residential first mortgage 16,191 15,839 -2.2% Home Equity 15,849 16,130 1.8% Indirect and other consumer 5,821 5,012 -13.9% 98,712 97,419 -1.3% Loan Portfolio - Average Balances Loan Portfolio - Ending Balances |
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) Q308 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% |
Regions Capital Levels are Strong Tier 1 10.39% 10.74% Regions Peers Total Capital 14.65 14.70 Regions Peers NOTES: Peers: PNC, BBT, STI, MTB, FITB, KEY, MI, CMA, FHN, CNB Ratios as of December 31, 2008. Risk-based ratios are estimated. Tangible Common Equity 5.23% 5.33% Regions Peers |
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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