![]() Regions Financial 2nd Quarter Earnings Conference Call July 24, 2012 Exhibit 99.3 |
![]() 2 PRUDENT AND PROFITABLE GROWTH DRIVEN BY SOLID BUSINESS PERFORMANCE With each passing quarter, we are better positioned for ultimate outperformance. • Experienced continued growth in commercial and industrial portfolio • Conservative low loan-to-deposit ratio provides considerable flexibility to take advantage of lending opportunities that will benefit future revenue growth • Significantly grew mortgage loan production and related fee income • Reduced operating expenses and credit costs • Continued asset quality improvement 2Q12 Financial Highlights Diluted EPS $0.20 Pre-tax Pre-provision Income $503 million EPS from Continuing Operations $0.20 Impact of Series A Discount $0.05 (1) Non-GAAP– See slides 13-17 for GAAP to non-GAAP reconciliation 1 1 |
![]() 3 2Q12 FINANCIAL HIGHLIGHTS (1) Non-GAAP– See slides 13-17 for GAAP to non-GAAP reconciliation (2) From Continuing Operations ($ in millions, except EPS) 2Q11 1Q12 2Q12 From Continuing Operations Net Interest Income $ 856 $ 827 $ 838 $ 11 1% $ (18) -2% Non-Interest Revenue 543 524 507 (17) -3% (36) -7% Non-Interest Expense 956 913 842 (71) -8% (114) -12% Pre-tax Pre-provision Income (PPI) (non-GAAP) 443 438 503 65 15% 60 14% Net Charge-Offs 548 332 265 (67) -20% (283) -52% Loan Loss Reserve Reduction (150) (215) (239) (24) 11% (89) 59% Loan Loss Provision 398 117 26 (91) -78% (372) -93% Preferred Expense 54 54 71 17 31% 17 31% Net Income Available to Common Shareholders from Continuing Operations 25 185 280 95 51% 255 NM Net Income / (Loss) from Discontinued Operations 30 (40) 4 44 -110% (26) -87% Net Income Available to Common Shareholders $ 55 $ 145 $ 284 $ 139 96% $ 229 NM Diluted EPS $0.04 $0.11 $0.20 $0.09 82% $0.16 NM Diluted EPS from Continuing Operations $0.02 $0.14 $0.20 $0.06 43% $0.18 NM Diluted EPS excluding Preferred Expense 2 $0.06 $0.19 $0.25 $0.06 32% $0.19 NM Diluted EPS from Discontinued Operations $0.02 ($0.03) $0.00 $0.03 NM ($0.02) NM 2Q12 vs. 1Q12 2Q12 vs. 2Q11 1 |
![]() 4 COMMERCIAL AND INDUSTRIAL LOANS GREW 4% OVER LAST QUARTER • Commercial & industrial loan balances on an average basis increased $902 million, or 4% linked quarter reflecting strength in our middle market portfolio • Commercial & industrial line utilization rose 130 basis points to 44.4% • Investor real estate totaled $9.4 billion at quarter end and has now been reduced to 12% of total loans down from 17% one year ago • Loan yield remained flat linked quarter despite the low rate environment * Average Balances Commercial and Industrial Loan Balances* 9% increase Y-O-Y Total Loan Balances* and Loan Yields $23,506 $23,953 $24,310 $24,748 $25,650 2Q11 3Q11 4Q11 1Q12 2Q12 $81,106 $80,513 $78,702 $77,168 $76,670 4.27% 4.31% 4.35% 4.29% 4.29% 2Q11 3Q11 4Q11 1Q12 2Q12 Avg. Loan Balance Loan Yield |
![]() 5 FUNDING MIX CONTINUES TO IMPROVE AS DEPOSIT COSTS DECLINED 5 BPS • Avg. time deposits as a % of avg. deposits decreased to 18% in 2Q12 from 23% in 2Q11 • Deposit repricing opportunities remain, maturities include: • 3Q12 - $2.9B at 1.2% • 4Q12 - $3.0B at 2.1% • 1H13 - $4.6B at 1.8% • 2H13 - $1.9B at 0.8% • Deposit costs declined 5 bps linked quarter, down 21 bps year-over-year • Total funding mix improved to 60 bps, down 20 bps from one year ago * Average Balances Deposit Balances* and Deposit Costs 73,616 74,778 75,381 77,008 78,688 22,506 21,369 19,774 19,053 17,175 $96,122 $96,147 $95,155 $96,061 $95,863 53 bps 46 bps 40 bps 37 bps 32 bps 2Q11 3Q11 4Q11 1Q12 2Q12 Low Cost Deposits Time Deposits + Other Deposit Cost |
![]() 6 NET INTEREST MARGIN IMPROVES 7 BPS • Net interest margin favorably impacted by improvements in deposit costs, lower excess cash and lower non-accrual balances • Cash reserves negatively impacted net interest margin 8 bps in 2Q12 compared to 13 bps in 1Q12, an improvement of 5 bps • Non-accruals negatively impacted net interest margin 7 bps in 2Q12 compared to 10 bps in 1Q12, an improvement of 3 bps • Securities portfolio totals $27 billion as a result of cash deployment • Net interest margin expected to remain relatively stable in second half of 2012 (1) From continuing operations Net Interest Income and Net Interest Margin¹ $864 $859 $858 $839 $850 3.07% 3.04% 3.08% 3.09% 3.16% 2Q11 3Q11 4Q11 1Q12 2Q12 Net Interest Income (FTE) Net Interest Margin |
![]() 7 NON-INTEREST REVENUE DRIVEN BY 17% INCREASE IN MORTGAGE INCOME • Non-interest revenue decreased 3% linked quarter • Mortgage revenues increased 17% linked quarter and 80% over last year • HARP II expected to increase mortgage volume by $1 billion in 2012 • Service charges declined due to the establishment of a reserve for certain customer fee refunds resulting from a change in the company’s non-sufficient funds policy Fee Income by Quarter 1 (1) From continuing operations adjusted to exclude security gains and leveraged lease terminations gains–Non-GAAP, see appendix for GAAP to Non-GAAP reconciliation 308 310 263 254 233 70 44 68 77 67 50 68 57 77 90 - 15 14 15 25 27 26 28 26 66 52 60 55 57 $519 $516 $490 $505 $488 2Q11 3Q11 4Q11 1Q12 2Q12 Service charges Capital Markets, Investment Income & Trust Mortgage Income Credit Card Income Insurance Income Other 16 |
![]() 8 REDUCTION IN CREDIT COSTS DRIVE NON-INTEREST EXPENSES DOWN 8% LINKED QUARTER (1) Non-GAAP excludes 4Q11 goodwill impairment Non-Interest Expenses • Diligent and continued focus on reducing expenses through efficiencies • Non-interest expenses were 8% lower than prior quarter and down 12% year-over-year • Other real estate expenses decreased $13 million over prior quarter or 57% • Held for sale experienced net gains of $26 million related to property sales, reflecting asset value improvements • Headcount reduced by 544 positions, or 2% over the last year Other Real Estate and HFS Expenses $956 $850 $871 $913 $842 2Q11 3Q11 4Q11 1Q12 2Q12 $41 $48 $33 $15 $(16) 2Q11 3Q11 4Q11 1Q12 2Q12 1 |
![]() CONTINUED MOMENTUM IN ASSET QUALITY METRICS NPL Gross Migration NPLs and Coverage Ratio Business Services Criticized Loans Loan Loss Provision 43% Decline* 31% Decline in Total NPLs* 31% Decline* 93% Decline* *Year-over-year change **Excludes loans held for sale $2,784 $2,710 $2,372 $2,151 $1,915 112% 109% 116% 118% 120% 2Q11 3Q11 4Q11 1Q12 2Q12 NPLs** ALL / NPL** $555 $755 $561 $381 $315 2Q11 3Q11 4Q11 1Q12 2Q12 $7,899 $7,305 $6,370 $5,979 $5,436 2Q11 3Q11 4Q11 1Q12 2Q12 396 355 279 192 136 152 156 150 140 129 (150) (156) (134) (215) (239) $398 $355 $295 $117 $26 2Q11 3Q11 4Q11 1Q12 2Q12 Business Services and HFS Consumer Reserve Reduction 9 |
![]() 10 STRONG CAPITAL RATIOS Loan to Deposit Ratio Tier 1 Capital Ratio Tier 1 Common Ratio (1) Current Quarter ratios are estimated (2) Non-GAAP – See appendix for reconciliation (3) Includes Series A Preferred Stock and associated warrant (4) Based on ending balances • The impact of the warrant redemption related to the repayment of Series A preferred stock was $45 million during the second quarter • Basel III Tier 1 Common ratio estimated under the new proposed rules at 8.0% • Low loan to deposit ratio allows Regions to be ready for loan growth when the market demand increases (1) (1) (2) (3) 84% 83% 81% 79% 80% 2Q11 3Q11 4Q11 1Q12 2Q12 8.8% 9.0% 9.4% 10.5% 11.0% 3.8% 3.8% 3.9% 3.8% 12.6% 12.8% 13.3% 14.3% 11.0% 2Q11 3Q11 4Q11 1Q12 2Q12 Tier 1 Capital Excluding TARP TARP Impact 7.9% 8.2% 8.5% 9.6% 10.0% 2Q11 3Q11 4Q11 1Q12 2Q12 (2) (4) |
![]() 11 APPENDIX |
![]() 12 FORWARD-LOOKING STATEMENTS |
![]() 13 NON-GAAP RECONCILIATION: NET INCOME / (LOSS) AND EARNINGS PER SHARE (1) There are no preferred shares allocable to discontinued operations. (2) In the second quarter of 2010, Regions recorded a $200 million charge to account for a probable, reasonably estimable loss related to a pending settlement of regulatory matters. At that time, Regions assumed that the entire charge would be non-deductible for income tax purposes. $75 million of the regulatory charge relates to continuing operations. The settlement was finalized during the second quarter of 2011. At the time of settlement, Regions had better information related to tax implications. Approximately $125 million of the settlement charge will be deductible for federal income tax purposes. Accordingly, during the second quarter of 2011, Regions adjusted federal income taxes to account for the impact of the deduction. The adjustment reduced Regions' provision for income taxes by approximately $44 million for the second quarter of 2011, of which approximately $17 million relates to continuing operations. . ` (1) ($ amounts in millions, except per share data) 06/30/12 03/31/12 12/31/11 9/30/11 6/30/11 Net income (loss) available to common shareholders (GAAP) 284 $ 145 $ (602) $ 101 $ 55 $ Preferred dividends and accretion (GAAP) 71 54 54 54 54 Income (loss) from discontinued operations, net of tax (GAAP) 4 (40) (467) 14 30 Income (loss) from continuing operations (GAAP) A 351 $ 239 $ (81) $ 141 $ 79 $ B 284 $ 145 $ (602) $ 101 $ 55 $ Goodwill impairment, net of tax - - 731 - - Regulatory charge and related tax benefit - - - - (44) C 284 $ 145 $ 129 $ 101 $ 11 $ B 284 $ 145 $ (602) $ 101 $ 55 $ 4 (40) (467) 14 30 D 280 185 (135) 87 25 - - 253 - - - - - - (17) E 280 $ 185 $ 118 $ 87 $ 8 $ F 1,418 1,283 1,259 1,261 1,260 A/F 0.25 $ 0.19 $ (0.06) $ 0.11 $ 0.06 $ B/F 0.20 $ 0.11 $ (0.48) $ 0.08 $ 0.04 $ ` D/F 0.20 $ 0.14 $ (0.11) $ 0.07 $ �� 0.02 $ E/F 0.20 $ 0.14 $ 0.09 $ 0.07 $ 0.01 $ Earnings per common share from continuing operations, excluding goodwill impairment and regulatory charge and related tax benefit - diluted (non-GAAP) Income from continuing operations available to common shareholders, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP) Weighted-average diluted shares Earnings (loss) per common share -diluted (GAAP) Earnings (loss) per common share from continuing operations - diluted (GAAP) Earnings (loss) per common share from continuing operations, excluding preferred dividends and accretion -diluted (non- GAAP) Regulatory charge and related tax benefit from continuing operations (2) As of and for Quarter Ended Net income (loss) available to common shareholders (GAAP) Income available to common shareholders, excluding goodwill impairment and regulatory charge and related tax benefit (non- GAAP) Net income (loss) available to common shareholders (GAAP) Income (loss) from discontinued operations, net of tax (GAAP) Income (loss) from continuing operations available to common shareholders (GAAP) Goodwill impairment from continuing operations (non- deductible) The table below presents earnings (loss) per share from continuing operations, excluding preferred dividends and accretion (non-GAAP). The table also presents computations of earnings (loss) and certain other financial measures, excluding goodwill impairment and regulatory charge and related tax benefit (non-GAAP) all recorded in 2011. The preferred dividends and accretion, goodwill impairment charge, and the regulatory charge and related tax benefit are included in financial results presented in accordance with generally accepted accounting principles (GAAP). Regions believes that the exclusion of the preferred dividends and accretion, goodwill impairment and the regulatory charge and related tax benefit in expressing earnings (loss) and certain other financial measures, including "earnings (loss) per common share, excluding preferred dividends and accretion" and "earnings (loss) per common share, excluding goodwill impairment and regulatory charge and related tax benefit" provides a meaningful base for period- to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions' business because management does not consider the preferred dividends and accretion, goodwill impairment and regulatory charge and related tax benefit to be relevant to ongoing operating results. Management and the Board of Directors utilize these non-GAAP financial measures for the following purposes: preparation of Regions' operating budgets; monthly financial performance reporting; monthly close-out reporting of consolidated results (management only); and presentations to investors of Company performance. Regions believes that presenting these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management and the Board of Directors. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes the preferred dividends and accretion, goodwill impairment charge, and the regulatory charge and related tax benefit does not represent the amount that effectively accrues directly to stockholders (i.e. the preferred dividends and accretion, goodwill impairment charge, and the regulatory charge are reductions in earnings and stockholders' equity). |
![]() 14 NON-GAAP RECONCILIATION: PRE-TAX PRE-PROVISION INCOME The Pre-Tax Pre-Provision Income from Continuing Operations table below presents computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions' business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of income that excludes certain adjustments does not represent the amount that effectively accrues directly to stockholders. ($ amounts in millions) 6/30/12 3/31/12 12/31/11 9/30/11 6/30/11 common shareholders (GAAP) 280 $ 185 $ (135) $ 87 $ 25 $ 95 $ 51.4% 255 $ NM 71 54 54 54 54 17 31.5% 17 31.5% 126 82 18 17 (34) 44 53.7% 160 NM taxes (GAAP) 477 321 (63) 158 45 156 48.6% 432 NM 26 117 295 355 398 (91) -77.8% (372) -93.5% (non-GAAP) 503 438 232 513 443 65 14.8% 60 13.5% - - 253 - - - - - - excluding goodwill impairment (non-GAAP) 503 438 485 513 443 65 14.8% 60 13.5% Quarter Ended 2Q12 vs. 1Q12 2Q12 vs. 2Q11 Income (loss) from continuing operations available to Preferred dividends (GAAP) Income tax expense (benefit) (GAAP) Income (loss) from continuing operations before income Provision for loan losses (GAAP) Pre-tax pre-provision income from continuing operations Pre-tax pre-provision income from continuing operations, Goodwill impairment |
![]() 15 NON-GAAP RECONCILIATION: FEE INCOME RATIOS AND EFFICIENCY RATIOS ($ amounts in millions) 6/30/12 3/31/12 12/31/11 9/30/11 6/30/11 Continuing Operations Non-interest expense (GAAP) 842 $ 913 $ 1,124 $ 850 $ 956 $ Adjustments: Securities impairment, net (2) - (2) - - Branch consolidation and property and equipment charges - - 2 - (77) Goodwill impairment - - (253) - - Adjusted non-interest expense (non-GAAP) G 840 $ 913 $ 871 $ 850 $ 879 $ Net interest income, taxable-equivalent basis (GAAP) 850 $ 839 $ 858 $ 859 $ 864 $ Non-interest income (GAAP) 507 $ 524 $ 507 $ 513 $ 543 $ Adjustments: Securities (gains) losses, net (12) (12) (7) 1 (24) Leveraged lease termination (gains) losses, net (7) (7) (10) 2 - Adjusted non-interest income (non-GAAP) H 488 505 490 516 519 Adjusted total revenue (non-GAAP) I 1,338 $ 1,344 $ 1,348 $ 1,375 $ 1,383 $ Fee income ratio (non-GAAP) H/I 36.5% 37.6% 36.4% 37.5% 37.5% Efficiency ratio (non-GAAP) G/I 62.8% 67.9% 64.6% 61.8% 63.6% As of and for Quarter Ended The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. The table also shows the fee ratio (non-GAAP), generally calculated as non-interest income divided by total revenue. Management uses these ratios to monitor performance and believes these measures provide meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the efficiency ratio. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the fee ratio. Net interest income on a fully taxable-equivalent basis (GAAP) and non-interest income are added together to arrive at total revenue (GAAP). Adjustments are made to arrive at adjusted total revenue (non-GAAP), which is the denominator for the fee and efficiency ratios. Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions' business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management. |
![]() 16 Stockholders' equity (GAAP) 14,455 $ 17,534 $ 16,499 $ 17,263 $ 16,888 $ Accumulated other comprehensive (income) loss (54) 60 69 (92) 177 Non-qualifying goodwill and intangibles (4,852) (4,881) (4,900) (5,649) (5,668) Disallowed deferred tax assets (336) (345) (432) (506) (498) Disallowed servicing assets (33) (36) (35) (35) (35) Qualifying non-controlling interests 92 92 92 92 92 Qualifying trust preferred securities 846 846 846 846 846 Tier 1 capital (regulatory) 10,118 $ 13,270 $ 12,139 $ 11,919 $ 11,802 $ Qualifying non-controlling interests (92) (92) (92) (92) (92) Qualifying trust preferred securities (846) (846) (846) (846) (846) Preferred stock - (3,429) (3,419) (3,409) (3,399) Tier 1 common equity (non-GAAP) O 9,180 $ 8,903 $ 7,782 $ 7,572 $ 7,465 $ Risk-weighted assets (regulatory) P 91,769 92,546 91,449 92,786 93,865 Tier 1 common risk-based ratio (non-GAAP) O/P 10.0% 9.6% 8.5% 8.2% 7.9% NON-GAAP RECONCILIATION: TIER 1 COMMON ($ amounts in millions, except per share data) 6/30/12 3/31/12 12/31/11 9/30/11 6/30/11 As of and for Quarter Ended (1) Current quarter amount and the resulting ratio is estimated The following table provides calculations of Tier 1 capital (regulatory) and "Tier 1 common equity" (non-GAAP). Traditionally, the Federal Reserve and other banking regulatory bodies have assessed a bank's capital adequacy based on Tier 1 capital, the calculation of which is not prescribed in amount by federal banking regulations. In connection with the Company's Comprehensive Capital Assessment and Review ("CCAR"), these regulators are supplementing their assessment of the capital adequacy of a bank based on a variation of Tier 1 capital, known as Tier 1 common equity. While not prescribed in amount by federal banking regulations, analysts and banking regulators have assessed Regions' capital adequacy using the Tier 1 common equity measure. Because Tier 1 common equity is not formally defined by GAAP or prescribed in any amount by federal banking regulations, this measure is considered to be a non-GAAP financial measure and other entities may calculate differently than Regions' disclosed calculations. Since analysts and banking regulators may assess Regions' capital adequacy using Tier 1 common equity, we believe that it is useful to provide investors the ability to assess Regions' capital adequacy on this same basis. Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a company's balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk-weighted category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity (non-GAAP). Tier 1 common equity (non-GAAP) is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio (non-GAAP). The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements. - CONSOLIDATED (1) TIER 1 COMMON RISK-BASED RATIO |
![]() NON-GAAP RECONCILIATION: TIER 1 CAPITAL (1) Current quarter amounts and the resulting ratios are estimated Regions' Series A preferred stock was repurchased on April 4, 2012 and the warrant to purchase 48.3 million shares of Regions common stock was retired on May 2, 2012. The following table presents the calculations of Tier 1 capital and the Tier 1 capital ratio, adjusted as if the repurchase of the shares and the retirement of the warrant occurred on the last day of the quarter for each prior period presented. The amount retired includes the Series A preferred stock plus the remaining balance of the related discount. ($ amounts in millions) 6/30/12 3/31/12 12/31/11 9/30/11 6/30/11 TIER 1 RISK-BASED RATIO Stockholders' equity 14,455 $ 17,534 $ 16,499 $ 17,263 $ 16,888 $ Accumulated other comprehensive (income) loss (54) 60 69 (92) 177 Non-qualifying goodwill and intangibles (4,852) (4,881) (4,900) (5,649) (5,668) Disallowed deferred tax assets (336) (345) (432) (506) (498) Disallowed servicing assets (33) (36) (35) (35) (35) Qualifying non-controlling interests 92 92 92 92 92 Qualifying trust preferred securities 846 846 846 846 846 Tier 1 capital as reported 10,118 $ 13,270 $ 12,139 $ 11,919 $ 11,802 $ Series A Preferred Stock Retirement (Reduction to Stockholders' equity) - $ (3,500) $ (3,500) $ (3,500) $ (3,500) $ - (45) (45) (45) (45) Tier 1 capital as adjusted to exclude Series A Preferred Stock 10,118 $ 9,725 $ 8,594 $ 8,374 $ 8,257 $ �� Risk-weighted assets 1 91,769 92,546 91,449 92,786 93,865 Tier 1 capital ratio 1 11.0% 14.3% 13.3% 12.8% 12.6% 11.0% 10.5% 9.4% 9.0% 8.8% Quarter Ended 17 Tier 1 capital ratio excluding Series A Preferred Stock and associated warrant 1 Retirement of warrant to purchase 48.3 million shares of common stock |
![]() NON-GAAP RECONCILIATION: BASEL III (1) Under Basel III, regulatory capital must be reduced by purchased credit card relationship intangible assets. The majority of these assets are allowed in Basel I capital. (2) Regions continues to develop systems and internal controls to calculate risk-weighted assets as required by Basel III. The amount included above is a reasonable approximation based on our understanding of the requirements, as outlined in the June 2012 Notices of Proposed Rulemakings. 18 The following table provides calculations of Tier 1 common equity (non-GAAP), based on Regions’ current understanding of Basel III requirements, as proposed by the U.S. Notices of Proposed Rulemaking released in June 2012. Regions currently calculates its risk-based capital ratios under guidelines adopted by the Federal Reserve based on the 1988 Capital Accord (“Basel I”) of the Basel Committee on Banking Supervision (the “Basel Committee”). The calculations provided below are estimates, based on Regions’ current understanding of the framework, including the Company’s reading of the requirements, and informal feedback received through the regulatory process. Regions’ understanding of the framework is evolving and will likely change as the regulations are finalized. The NPR comment period ends in early September and changes could result. Such changes could result in materially different capital ratios from what we have estimated. Because the Basel III implementation regulations are not formally defined by GAAP and have not yet been finalized and codified, these measures are considered to be non-GAAP financial measures, and other entities may calculate them differently from Regions’ disclosed calculations. Since analysts and banking regulators may assess Regions’ capital adequacy using the Basel III framework, the Company believes that it is useful to provide investors the ability to assess Regions’ capital adequacy on the same basis. Estimate based on June 2012 U.S. Notices of Proposed Rulemaking ($ amounts in millions) 6/30/2012 Stockholders' equity (GAAP) 14,455 $ Non-qualifying goodwill and intangibles (1) (5,005) Adjustments, including other comprehensive income related to cash flow hedges, disallowed deferred tax assets, threshold deductions and other adjustments (548) Basel III Tier 1 Common Equity (non-GAAP) 8,902 $ Basel I risk-weighted assets (regulatory) 91,769 $ Basel III risk-weighted assets (non-GAAP) (2) 111,782 $ Basel III Tier 1 Common Ratio (non-GAAP) 8.0% |
![]() |