Regions Financial 4 th Quarter Earnings Conference Call January 25, 2011 Exhibit 99.3 |
›Forward-Looking Statements 2 |
Summary of Fourth Quarter 2010 Results Earnings Highlights › Credit trends are improving › Non-performing loans, excluding loans HFS, declined $212 million to $3.2 billion › Loan loss provision of $682 million; provision essentially equaled net charge-offs Credit Update ($ in millions) 4Q09 3Q10 4Q10 Non-performing loans * $ 3,488 $ 3,372 $ 3,160 Net Charge Offs $ 692 $ 759 $ 682 Provision Build $ 487 $ 1 $ - Loan Loss Provision $ 1,179 $ 760 $ 682 Note: Amounts exclude non-core items impacting the current and prior quarters * Non – GAAP; Refer to Financial Supplement for adjustments to PPNR ($ in millions) 4Q09 3Q10 4Q10 Net Interest Income $ 850 $ 868 $ 877 Adjusted Non-Interest Revenue* $ 743 $ 748 $ 795 Adjusted Non-Interest Expense* $ 1,207 $ 1,162 $ 1,211 Adjusted PPNR* $ 386 $ 454 $ 461 EPS ($0.51) ($0.17) $0.03 › Earnings per diluted share of $0.03 › Adjusted Pre-tax Pre-provision Net Revenue (“PPNR”) of $461 million; compared to 3Q10: › Net interest income increased $9 million and net interest margin expanded 4 bps to 3.00% › Adjusted non-interest revenues increased $47 million or 6% reflecting strong revenue at Morgan Keegan › Adjusted non-interest expenses increased $49 million or 4% primarily due to higher professional and legal fees and Morgan Keegan incentive-based compensation 1 *Excluding loans held for sale |
Non-Performing Loan Inflows Decline 2 |
Non-performing Asset Levels Decline › Non-performing loans declined $212 million › Non-performing assets declined $308 million from third quarter › For the full year non-performing assets declined $494 million 3 |
Loan Charge-Offs and Allowance (1) Loan charge-offs related Sales / Transfer to Held for Sale (2) Excludes loans held for sale 4 |
Commercial and Industrial Growing; Investor Real Estate Reflects De-risking Efforts › Specialty Lending Groups › Small Business Focus › Growth in C&I more broadly distributed across market and in more industries than the 3 rd quarter › Investor Real Estate declined $1.6 billion; down close to $6 billion year-over-year › Targeting Specific Areas for Growth: › Direct Consumer › Underserved Banking Segment ($ in millions) 9/30/2010 12/31/2010 $ Change % Change Commercial & Industrial 21,501 $ 22,540 $ 1,039 $ 5% Commercial Real Estate - Owner-Occupied 12,372 12,516 144 1% Investor Real Estate 17,464 15,908 (1,556) -9% Residential First Mortgage 15,723 14,898 (825) -5% Home Equity 14,534 14,226 (308) -2% Other consumer 2,826 2,776 (50) -2% Total Loans 84,420 $ 82,864 $ (1,556) $ -2% Ending Balances 5 |
Decline in Deposit Costs Driven by Changing Deposit Mix › As anticipated, our improving cost structure impacted overall deposit balances › Deposit costs declined 6 bps linked quarter; down 51 bps year-over-year › Total funding costs declined 11 bps linked quarter to 0.91% ($ in millions) 3Q10 Avg Rate 4Q10 Avg Rate $ Change % Change Low Cost Deposits 69,917 $ 0.17% 71,273 $ 0.17% 1,356 $ 2% Time Deposits 25,100 2.16% 23,347 2.07% (1,753) -7% Customer Deposits 95,017 0.70% 94,620 0.64% (397) 0% Corporate Treasury Deposits 61 1.30% 22 3.61% (39) -64% Total Deposits 95,078 $ 0.70% 94,642 $ 0.64% (436) $ 0% ($ in millions) 9/30/2010 Deposit Mix % 12/31/2010 Deposit Mix % $ Change % Change Low Cost Deposits 70,745 $ 74% 71,813 $ 76% 1,068 $ 2% Time Deposits 24,177 26% 22,784 24% (1,393) -6% Customer Deposits 94,922 100% 94,597 100% (325) 0% Corporate Treasury Deposits 56 0% 17 �� 0% (39) -70% Total Deposits 94,978 $ 100% 94,614 $ 100% (364) $ 0% Ending Balances and Deposit Mix Average Balances and Average Rates 6 |
Decline in Deposit Costs and Improvement in Loan Yields Drive Net Interest Income Higher › Net interest margin climbed 4bps linked quarter; up 28 bps year-to-date › Repricing opportunities remain with over $13.5 billion of CD’s maturing in the next 12 months at an average of 2.05% › Loan yields increased 5 bps linked quarter; improvement going forward will be driven by widening loan spreads › Excess liquidity impacted margin 11 bps compared to 8 bps in Q3 7 |
Solid non-interest revenue; focused expense management › Adjusted non-interest revenue* 6% higher versus prior quarter › Increase in interchange income reflects increased debit card volume and fee- based account growth › Morgan Keegan’s revenues were solid reflecting strength in private client and investment banking revenue › Mortgage revenue down due to MSR valuations › Adjusted non-interest expenses* 4% higher versus prior quarter › Increase in professional and legal fees › Increase in Morgan Keegan incentive-based compensation › Credit-related costs continue to result in higher non-interest expenses 8 * Non – GAAP; Refer to page 26 of the Financial Supplement |
Capital Ratios Remain Strong; Liquidity Profile Solid (1) Current Quarter ratios are estimated (2) Subject to change as interpretation of Basel III rules is ongoing and dependent on guidance from Basel and regulators. › Solid liquidity at both the bank and holding company › Loan-to-deposit ratio of 88 percent › Well-positioned with respect to the Liquidity Coverage Ratio prescribed under Basel III 3Q10 4Q10 (1) Pro forma for Basel III 4Q10 (2) Tier 1 Common 7.6% 7.9% 7.6% Tier 1 Capital 12.1% 12.4% 11.4% Total Risk-Based Capital 16.0% 16.4% 14.9% 9 |