Exhibit 99.2
Regions Financial Corporation and Subsidiaries
Financial Supplement
Third Quarter 2013
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Table of Contents
Page | ||
Consolidated Balance Sheets | ||
Consolidated Statements of Income | ||
Selected Ratios and Other Information | ||
Consolidated Average Daily Balances and Yield / Rate Analysis from Continuing Operations | ||
Loans | ||
Deposits | ||
Pre-Tax Pre-Provision Income (“PPI”) and Adjusted PPI | ||
Non-Interest Income, Mortgage Income and Wealth Management Income | ||
Non-Interest Expense | ||
Credit Quality | ||
Allowance for Credit Losses, Net Charge-Offs and Related Ratios | ||
NPL, Foreclosed Property and Held for Sale Migration | ||
Non-Accrual Loans (excludes loans held for sale), Criticized and Classified Loans - Commercial and Investor Real Estate, and Residential Lending Net Charge-Off Analysis | ||
Early and Late Stage Delinquencies | ||
Troubled Debt Restructurings | ||
Reconciliation to GAAP Financial Measures | ||
Efficiency Ratios, Fee Income Ratios, and Adjusted Non-Interest Income / Expense | ||
Return Ratios, Tangible Common Ratios and Capital | ||
Statements of Discontinued Operations | ||
Forward-Looking Statements |
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Consolidated Balance Sheets (unaudited)
As of | ||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and due from banks | $ | 2,032 | $ | 2,112 | $ | 1,796 | $ | 1,979 | $ | 1,738 | ||||||||||
Interest-bearing deposits in other banks | 1,827 | 2,168 | 3,137 | 3,510 | 2,192 | |||||||||||||||
Trading account assets | 119 | 102 | 121 | 116 | 114 | |||||||||||||||
Securities held to maturity | 2,388 | 2,425 | 8 | 10 | 12 | |||||||||||||||
Securities available for sale | 21,630 | 22,001 | 27,089 | 27,244 | 27,603 | |||||||||||||||
Loans held for sale | 673 | 839 | 1,082 | 1,383 | 1,265 | |||||||||||||||
Loans, net of unearned income | 75,892 | 74,990 | 73,936 | 73,995 | 75,259 | |||||||||||||||
Allowance for loan losses | (1,540 | ) | (1,636 | ) | (1,749 | ) | (1,919 | ) | (2,062 | ) | ||||||||||
Net loans | 74,352 | 73,354 | 72,187 | 72,076 | 73,197 | |||||||||||||||
Other interest-earning assets | 105 | 135 | 102 | 900 | 881 | |||||||||||||||
Premises and equipment, net | 2,218 | 2,228 | 2,252 | 2,279 | 2,274 | |||||||||||||||
Interest receivable | 331 | 326 | 366 | 344 | 362 | |||||||||||||||
Goodwill | 4,816 | 4,816 | 4,816 | 4,816 | 4,816 | |||||||||||||||
Mortgage servicing rights at fair value (MSRs) | 281 | 276 | 236 | 191 | 176 | |||||||||||||||
Other identifiable intangible assets | 307 | 318 | 331 | 345 | 365 | |||||||||||||||
Other assets | 5,785 | 7,607 | 6,195 | 6,154 | 6,803 | |||||||||||||||
Total assets | $ | 116,864 | $ | 118,707 | $ | 119,718 | $ | 121,347 | $ | 121,798 | ||||||||||
Liabilities and stockholders’ equity: | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest-bearing | $ | 30,308 | $ | 29,464 | $ | 29,971 | $ | 29,963 | $ | 30,345 | ||||||||||
Interest-bearing | 62,013 | 62,990 | 64,162 | 65,511 | 64,536 | |||||||||||||||
Total deposits | 92,321 | 92,454 | 94,133 | 95,474 | 94,881 | |||||||||||||||
Borrowed funds: | ||||||||||||||||||||
Short-term borrowings: | ||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,773 | 2,877 | 1,829 | 1,449 | 1,866 | |||||||||||||||
Other short-term borrowings | — | 1,000 | 1 | 125 | 70 | |||||||||||||||
Total short-term borrowings | 1,773 | 3,877 | 1,830 | 1,574 | 1,936 | |||||||||||||||
Long-term borrowings | 4,838 | 4,856 | 5,847 | 5,861 | 6,224 | |||||||||||||||
Total borrowed funds | 6,611 | 8,733 | 7,677 | 7,435 | 8,160 | |||||||||||||||
Other liabilities | 2,443 | 2,191 | 2,168 | 2,939 | 3,856 | |||||||||||||||
Total liabilities | 101,375 | 103,378 | 103,978 | 105,848 | 106,897 | |||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Preferred stock, Series A non-cumulative perpetual | 458 | 466 | 474 | 482 | — | |||||||||||||||
Common stock | 14 | 14 | 15 | 15 | 15 | |||||||||||||||
Additional paid-in capital | 19,248 | 19,440 | 19,643 | 19,652 | 19,664 | |||||||||||||||
Retained earnings (deficit) | (2,443 | ) | (2,736 | ) | (3,003 | ) | (3,338 | ) | (3,603 | ) | ||||||||||
Treasury stock, at cost | (1,377 | ) | (1,377 | ) | (1,377 | ) | (1,377 | ) | (1,377 | ) | ||||||||||
Accumulated other comprehensive income (loss), net | (411 | ) | (478 | ) | (12 | ) | 65 | 202 | ||||||||||||
Total stockholders’ equity | 15,489 | 15,329 | 15,740 | 15,499 | 14,901 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 116,864 | $ | 118,707 | $ | 119,718 | $ | 121,347 | $ | 121,798 |
1
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Consolidated Statements of Income (unaudited)
Quarter Ended | ||||||||||||||||||||
($ amounts in millions, except per share data) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||
Interest income on: | ||||||||||||||||||||
Loans, including fees | $ | 758 | $ | 746 | $ | 743 | $ | 777 | $ | 783 | ||||||||||
Securities—taxable | 144 | 152 | 156 | 158 | 170 | |||||||||||||||
Loans held for sale | 6 | 8 | 9 | 10 | 9 | |||||||||||||||
Trading account assets | 1 | — | 1 | 1 | — | |||||||||||||||
Other interest-earning assets | 2 | 1 | 2 | 2 | 2 | |||||||||||||||
Total interest income | 911 | 907 | 911 | 948 | 964 | |||||||||||||||
Interest expense on: | ||||||||||||||||||||
Deposits | 31 | 33 | 42 | 53 | 67 | |||||||||||||||
Short-term borrowings | 1 | 1 | — | 1 | 1 | |||||||||||||||
Long-term borrowings | 55 | 65 | 71 | 76 | 79 | |||||||||||||||
Total interest expense | 87 | 99 | 113 | 130 | 147 | |||||||||||||||
Net interest income | 824 | 808 | 798 | 818 | 817 | |||||||||||||||
Provision for loan losses | 18 | 31 | 10 | 37 | 33 | |||||||||||||||
Net interest income after provision for loan losses | 806 | 777 | 788 | 781 | 784 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Service charges on deposit accounts | 251 | 237 | 242 | 254 | 244 | |||||||||||||||
Mortgage income | 52 | 69 | 72 | 90 | 106 | |||||||||||||||
Investment management and trust fee income | 50 | 49 | 49 | 48 | 48 | |||||||||||||||
Securities gains, net | 3 | 8 | 15 | 12 | 12 | |||||||||||||||
Other | 139 | 134 | 123 | 132 | 123 | |||||||||||||||
Total non-interest income | 495 | 497 | 501 | 536 | 533 | |||||||||||||||
Non-interest expense: | ||||||||||||||||||||
Salaries and employee benefits | 455 | 452 | 447 | 438 | 449 | |||||||||||||||
Net occupancy expense | 92 | 92 | 90 | 97 | 99 | |||||||||||||||
Furniture and equipment expense | 71 | 69 | 69 | 65 | 65 | |||||||||||||||
Other | 266 | 271 | 236 | 302 | 256 | |||||||||||||||
Total non-interest expense | 884 | 884 | 842 | 902 | 869 | |||||||||||||||
Income before income taxes from continuing operations | 417 | 390 | 447 | 415 | 448 | |||||||||||||||
Income tax expense | 124 | 122 | 114 | 138 | 136 | |||||||||||||||
Income from continuing operations | 293 | 268 | 333 | 277 | 312 | |||||||||||||||
Discontinued operations: | ||||||||||||||||||||
Income (loss) from discontinued operations before income taxes | (1 | ) | (2 | ) | 4 | (19 | ) | (19 | ) | |||||||||||
Income tax expense (benefit) | (1 | ) | (1 | ) | 2 | (7 | ) | (8 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | — | (1 | ) | 2 | (12 | ) | (11 | ) | ||||||||||||
Net income | $ | 293 | $ | 267 | $ | 335 | $ | 265 | $ | 301 | ||||||||||
Income from continuing operations available to common shareholders | $ | 285 | $ | 260 | $ | 325 | $ | 273 | $ | 312 | ||||||||||
Net income available to common shareholders | $ | 285 | $ | 259 | $ | 327 | $ | 261 | $ | 301 | ||||||||||
Weighted-average shares outstanding—during quarter: | ||||||||||||||||||||
Basic | 1,388 | 1,401 | 1,413 | 1,413 | 1,414 | |||||||||||||||
Diluted | 1,405 | 1,418 | 1,423 | 1,423 | 1,423 | |||||||||||||||
Actual shares outstanding—end of quarter | 1,378 | 1,395 | 1,413 | 1,413 | 1,413 | |||||||||||||||
Earnings per common share from continuing operations: | ||||||||||||||||||||
Basic | $ | 0.21 | $ | 0.19 | $ | 0.23 | $ | 0.19 | $ | 0.22 | ||||||||||
Diluted | $ | 0.20 | $ | 0.18 | $ | 0.23 | $ | 0.19 | $ | 0.22 | ||||||||||
Earnings per common share: | ||||||||||||||||||||
Basic | $ | 0.21 | $ | 0.18 | $ | 0.23 | $ | 0.18 | $ | 0.21 | ||||||||||
Diluted | $ | 0.20 | $ | 0.18 | $ | 0.23 | $ | 0.18 | $ | 0.21 | ||||||||||
Cash dividends declared per common share | $ | 0.03 | $ | 0.03 | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||||
Taxable-equivalent net interest income from continuing operations | $ | 838 | $ | 821 | $ | 811 | $ | 831 | $ | 830 |
2
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Selected Ratios and Other Information
As of and for Quarter Ended | ||||||||||||||||||||
9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | ||||||||||||||||
Return on average assets from continuing operations* | 0.97 | % | 0.88 | % | 1.11 | % | 0.90 | % | 1.02 | % | ||||||||||
Adjusted return on average assets from continuing operations (non-GAAP)* (1) | 0.97 | % | 0.88 | % | 1.11 | % | 1.02 | % | 1.02 | % | ||||||||||
Return on average tangible common stockholders’ equity (non-GAAP)* (1) | 11.41 | % | 10.15 | % | 13.12 | % | 10.42 | % | 12.39 | % | ||||||||||
Adjusted return on average tangible common stockholders’ equity (non-GAAP)* (1) | 11.41 | % | 10.15 | % | 13.12 | % | 11.93 | % | 12.39 | % | ||||||||||
Adjusted efficiency ratio from continuing operations (non-GAAP) (1) | 67.3 | % | 63.1 | % | 64.9 | % | 62.7 | % | 64.3 | % | ||||||||||
Common book value per share | $ | 10.90 | $ | 10.65 | $ | 10.80 | $ | 10.63 | $ | 10.55 | ||||||||||
Tangible common book value per share (non-GAAP) (1) | $ | 7.32 | $ | 7.11 | $ | 7.29 | $ | 7.11 | $ | 7.02 | ||||||||||
Tangible common stockholders’ equity to tangible assets (non-GAAP) (1) | 9.02 | % | 8.72 | % | 8.98 | % | 8.63 | % | 8.49 | % | ||||||||||
Tier 1 Common risk-based ratio (non-GAAP) (1)(2) | 11.1 | % | 11.1 | % | 11.2 | % | 10.8 | % | 10.5 | % | ||||||||||
Tier 1 Capital (2) | 11.6 | % | 11.6 | % | 12.4 | % | 12.0 | % | 11.5 | % | ||||||||||
Total Risk-Based Capital (2) | 14.6 | % | 14.7 | % | 15.8 | % | 15.4 | % | 15.0 | % | ||||||||||
Leverage (2) | 9.9 | % | 9.7 | % | 10.1 | % | 9.6 | % | 9.1 | % | ||||||||||
Allowance for loan losses as a percentage of loans, net of unearned income | 2.03 | % | 2.18 | % | 2.37 | % | 2.59 | % | 2.74 | % | ||||||||||
Allowance for loan losses to non-performing loans, excluding loans held for sale | 1.14x | 1.09x | 1.10x | 1.14x | 1.09x | |||||||||||||||
Net interest margin (FTE) from continuing operations* | 3.24 | % | 3.16 | % | 3.13 | % | 3.10 | % | 3.08 | % | ||||||||||
Loans, net of unearned income, to total deposits | 82.2 | % | 81.1 | % | 78.5 | % | 77.5 | % | 79.3 | % | ||||||||||
Net charge-offs as a percentage of average loans* | 0.60 | % | 0.77 | % | 0.99 | % | 0.96 | % | 1.38 | % | ||||||||||
Non-accrual loans, excluding loans held for sale as a percentage of loans | 1.78 | % | 2.01 | % | 2.15 | % | 2.27 | % | 2.50 | % | ||||||||||
Non-performing assets (excluding loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale | 2.03 | % | 2.25 | % | 2.41 | % | 2.59 | % | 2.93 | % | ||||||||||
Non-performing assets (including loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale (3) | 2.38 | % | 2.68 | % | 2.88 | % | 3.07 | % | 3.37 | % | ||||||||||
Associate headcount | 24,068 | 23,692 | 23,466 | 23,427 | 23,361 | |||||||||||||||
Total branch outlets | 1,706 | 1,709 | 1,709 | 1,711 | 1,716 | |||||||||||||||
ATMs | 2,030 | 2,038 | 2,048 | 2,054 | 2,061 |
*Annualized
(1) | See reconciliation of GAAP to non-GAAP Financial Measures on pages 16-18. |
(2) | Current quarter Tier 1 Common, Tier 1, Total Risk-Based Capital and Leverage ratios are estimated. |
(3) | Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing. Refer to the footnotes on page 14 for amounts related to these loans. |
3
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations
Quarter Ended | ||||||||||||||||||||||
9/30/2013 | 6/30/2013 | |||||||||||||||||||||
($ amounts in millions; yields on taxable-equivalent basis) | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Trading account assets | $ | 107 | $ | 1 | 1.52 | % | $ | 122 | $ | — | 0.48 | % | ||||||||||
Securities: | ||||||||||||||||||||||
Taxable | 24,074 | 144 | 2.38 | 26,706 | 152 | 2.29 | ||||||||||||||||
Tax-exempt | 5 | — | — | 6 | — | — | ||||||||||||||||
Loans held for sale | 751 | 6 | 3.34 | 880 | 8 | 3.42 | ||||||||||||||||
Loans, net of unearned income: | ||||||||||||||||||||||
Commercial and industrial | 29,319 | 284 | 3.84 | 28,301 | 272 | 3.85 | ||||||||||||||||
Commercial real estate mortgage—owner-occupied | 9,678 | 116 | 4.77 | 9,808 | 114 | 4.66 | ||||||||||||||||
Commercial real estate construction—owner-occupied | 368 | 4 | 4.22 | 339 | 5 | 5.27 | ||||||||||||||||
Commercial investor real estate mortgage | 5,712 | 51 | 3.53 | 6,124 | 54 | 3.58 | ||||||||||||||||
Commercial investor real estate construction | 1,251 | 10 | 3.48 | 1,085 | 10 | 3.57 | ||||||||||||||||
Residential first mortgage | 12,835 | 128 | 3.95 | 12,823 | 128 | 4.00 | ||||||||||||||||
Home equity | 11,351 | 103 | 3.58 | 11,475 | 103 | 3.62 | ||||||||||||||||
Indirect | 2,810 | 28 | 3.88 | 2,606 | 26 | 4.08 | ||||||||||||||||
Consumer credit card | 878 | 26 | 12.16 | 851 | 27 | 12.33 | ||||||||||||||||
Other consumer | 1,157 | 22 | 7.52 | 1,137 | 20 | 7.25 | ||||||||||||||||
Total loans, net of unearned income | 75,359 | 772 | 4.07 | 74,549 | 759 | 4.09 | ||||||||||||||||
Other interest-earning assets | 2,447 | 2 | 0.25 | 1,869 | 1 | 0.24 | ||||||||||||||||
Total interest-earning assets | 102,743 | 925 | 3.57 | 104,132 | 920 | 3.55 | ||||||||||||||||
Allowance for loan losses | (1,613 | ) | (1,706 | ) | ||||||||||||||||||
Cash and due from banks | 1,781 | 1,745 | ||||||||||||||||||||
Other non-earning assets | 14,006 | 14,077 | ||||||||||||||||||||
$ | 116,917 | $ | 118,248 | |||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Savings accounts | $ | 6,076 | 1 | 0.10 | $ | 6,148 | 2 | 0.09 | ||||||||||||||
Interest-bearing transaction accounts | 19,613 | 5 | 0.09 | 19,636 | 4 | 0.10 | ||||||||||||||||
Money market accounts | 26,250 | 9 | 0.13 | 25,952 | 9 | 0.14 | ||||||||||||||||
Time deposits | 10,417 | 16 | 0.60 | 11,423 | 18 | 0.66 | ||||||||||||||||
Total interest-bearing deposits (1) | 62,356 | 31 | 0.19 | 63,159 | 33 | 0.21 | ||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,982 | — | 0.07 | 2,287 | — | 0.09 | ||||||||||||||||
Other short-term borrowings | 381 | 1 | 0.20 | 310 | 1 | 0.19 | ||||||||||||||||
Long-term borrowings | 4,845 | 55 | 4.57 | 5,298 | 65 | 4.93 | ||||||||||||||||
Total interest-bearing liabilities | 69,564 | 87 | 0.49 | 71,054 | 99 | 0.56 | ||||||||||||||||
Non-interest-bearing deposits (1) | 29,724 | — | — | 29,454 | — | — | ||||||||||||||||
Total funding sources | 99,288 | 87 | 0.35 | 100,508 | 99 | 0.40 | ||||||||||||||||
Net interest spread | 3.08 | 2.99 | ||||||||||||||||||||
Other liabilities | 2,312 | 2,097 | ||||||||||||||||||||
Stockholders’ equity | 15,317 | 15,643 | ||||||||||||||||||||
$ | 116,917 | $ | 118,248 | |||||||||||||||||||
Net interest income/margin FTE basis | $ | 838 | 3.24 | % | $ | 821 | 3.16 | % |
________
(1) | Total deposit costs from continuing operations may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs from continuing operations equal 0.13% and 0.15% for the quarters ended September 30, 2013 and June 30, 2013, respectively. |
4
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations
Quarter Ended | |||||||||||||||||||||||||||||||||
3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||||||||||||||||||
($ amounts in millions; yields on taxable-equivalent basis) | Average Balance | Income/Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||
Trading account assets | $ | 117 | $ | 1 | 3.20 | % | $ | 126 | $ | 1 | 3.16 | % | $ | 112 | $ | — | — | % | |||||||||||||||
Securities: | |||||||||||||||||||||||||||||||||
Taxable | 26,893 | 156 | 2.35 | 27,128 | 159 | 2.33 | 27,028 | 170 | 2.50 | ||||||||||||||||||||||||
Tax-exempt | 7 | — | — | 9 | — | — | 10 | — | — | ||||||||||||||||||||||||
Loans held for sale | 1,206 | 9 | 3.17 | 1,232 | 9 | 2.91 | 1,213 | 9 | 2.95 | ||||||||||||||||||||||||
Loans, net of unearned income: | |||||||||||||||||||||||||||||||||
Commercial and industrial | 27,058 | 260 | 3.90 | 26,414 | 266 | 4.01 | 26,024 | 262 | 4.01 | ||||||||||||||||||||||||
Commercial real estate mortgage—owner-occupied | 9,974 | 116 | 4.70 | 10,237 | 123 | 4.78 | 10,464 | 122 | 4.64 | ||||||||||||||||||||||||
Commercial real estate construction—owner-occupied | 303 | 3 | 4.41 | 298 | 3 | 4.00 | 274 | 3 | 4.36 | ||||||||||||||||||||||||
Commercial investor real estate mortgage | 6,613 | 59 | 3.59 | 7,404 | 66 | 3.55 | 8,374 | 74 | 3.52 | ||||||||||||||||||||||||
Commercial investor real estate construction | 951 | 9 | 3.77 | 901 | 12 | 5.30 | 851 | 8 | 3.74 | ||||||||||||||||||||||||
Residential first mortgage | 12,900 | 131 | 4.12 | 13,072 | 136 | 4.14 | 13,300 | 141 | 4.22 | ||||||||||||||||||||||||
Home equity | 11,670 | 105 | 3.64 | 11,912 | 108 | 3.61 | 12,157 | 109 | 3.57 | ||||||||||||||||||||||||
Indirect | 2,423 | 26 | 4.35 | 2,295 | 26 | 4.51 | 2,150 | 26 | 4.81 | ||||||||||||||||||||||||
Consumer credit card | 871 | 26 | 12.28 | 886 | 28 | 12.57 | 908 | 29 | 12.71 | ||||||||||||||||||||||||
Other consumer | 1,156 | 21 | 7.28 | 1,203 | 22 | 7.28 | 1,195 | 22 | 7.32 | ||||||||||||||||||||||||
Total loans, net of unearned income | 73,919 | 756 | 4.14 | 74,622 | 790 | 4.21 | 75,697 | 796 | 4.18 | ||||||||||||||||||||||||
Other interest-earning assets | 2,821 | 2 | 0.26 | 3,540 | 2 | 0.22 | 3,187 | 2 | 0.25 | ||||||||||||||||||||||||
Total interest-earning assets | 104,963 | 924 | 3.57 | 106,657 | 961 | 3.58 | 107,247 | 977 | 3.62 | ||||||||||||||||||||||||
Allowance for loan losses | (1,894 | ) | (2,027 | ) | (2,232 | ) | |||||||||||||||||||||||||||
Cash and due from banks | 1,766 | 1,812 | 1,732 | ||||||||||||||||||||||||||||||
Other non-earning assets | 14,288 | 14,594 | 14,784 | ||||||||||||||||||||||||||||||
$ | 119,123 | $ | 121,036 | $ | 121,531 | ||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||
Savings accounts | $ | 5,929 | 1 | 0.10 | $ | 5,689 | 1 | 0.07 | $ | 5,650 | 1 | 0.07 | |||||||||||||||||||||
Interest-bearing transaction accounts | 20,440 | 6 | 0.11 | 19,694 | 6 | 0.12 | 18,880 | 5 | 0.11 | ||||||||||||||||||||||||
Money market accounts | 25,477 | 9 | 0.14 | 24,912 | 9 | 0.14 | 24,891 | 11 | 0.18 | ||||||||||||||||||||||||
Time deposits | 12,904 | 26 | 0.81 | 14,220 | 37 | 1.04 | 15,536 | 50 | 1.28 | ||||||||||||||||||||||||
Total interest-bearing deposits (1) | 64,750 | 42 | 0.26 | 64,515 | 53 | 0.33 | 64,957 | 67 | 0.41 | ||||||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,786 | — | 0.10 | 1,601 | 1 | 0.25 | 2,375 | 1 | 0.17 | ||||||||||||||||||||||||
Other short-term borrowings | 25 | — | 0.01 | 109 | — | — | 363 | — | — | ||||||||||||||||||||||||
Long-term borrowings | 5,857 | 71 | 4.89 | 6,109 | 76 | 4.95 | 6,230 | 79 | 5.04 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 72,418 | 113 | 0.63 | 72,334 | 130 | 0.71 | 73,925 | 147 | 0.79 | ||||||||||||||||||||||||
Non-interest-bearing deposits (1) | 29,114 | — | — | 30,290 | — | — | 29,652 | — | — | ||||||||||||||||||||||||
Total funding sources | 101,532 | 113 | 0.45 | 102,624 | 130 | 0.50 | 103,577 | 147 | 0.56 | ||||||||||||||||||||||||
Net interest spread | 2.94 | 2.87 | 2.83 | ||||||||||||||||||||||||||||||
Other liabilities | 2,047 | 3,094 | 3,243 | ||||||||||||||||||||||||||||||
Stockholders’ equity | 15,544 | 15,318 | 14,711 | ||||||||||||||||||||||||||||||
$ | 119,123 | $ | 121,036 | $ | 121,531 | ||||||||||||||||||||||||||||
Net interest income/margin FTE basis | $ | 811 | 3.13 | % | $ | 831 | 3.10 | % | $ | 830 | 3.08 | % |
(1) Total deposit costs from continuing operations may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs from continuing operations equal 0.18%, 0.22%, and 0.28% for the quarters ended March 31, 2013, December 31, 2012, and September 30, 2012, respectively.
5
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Loans
Quarter Ended | ||||||||||||||||||||||||||||||||||
9/30/2013 | 9/30/2013 | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | vs. 6/30/2013 | vs. 9/30/2012 | |||||||||||||||||||||||||||
Commercial and industrial | $ | 29,863 | $ | 28,954 | $ | 27,602 | $ | 26,674 | $ | 26,375 | $ | 909 | 3.1 | % | $ | 3,488 | 13.2 | % | ||||||||||||||||
Commercial real estate mortgage—owner-occupied | 9,566 | 9,731 | 9,812 | 10,095 | 10,325 | (165 | ) | (1.7 | )% | (759 | ) | (7.4 | )% | |||||||||||||||||||||
Commercial real estate construction—owner-occupied | 377 | 345 | 325 | 302 | 292 | 32 | 9.3 | % | 85 | 29.1 | % | |||||||||||||||||||||||
Total commercial | 39,806 | 39,030 | 37,739 | 37,071 | 36,992 | 776 | 2.0 | % | 2,814 | 7.6 | % | |||||||||||||||||||||||
Commercial investor real estate mortgage | 5,613 | 5,806 | 6,338 | 6,808 | 7,866 | (193 | ) | (3.3 | )% | (2,253 | ) | (28.6 | )% | |||||||||||||||||||||
Commercial investor real estate construction | 1,317 | 1,208 | 984 | 914 | 847 | 109 | 9.0 | % | 470 | 55.5 | % | |||||||||||||||||||||||
Total investor real estate | 6,930 | 7,014 | 7,322 | 7,722 | 8,713 | (84 | ) | (1.2 | )% | (1,783 | ) | (20.5 | )% | |||||||||||||||||||||
Residential first mortgage | 12,856 | 12,839 | 12,875 | 12,963 | 13,225 | 17 | 0.1 | % | (369 | ) | (2.8 | )% | ||||||||||||||||||||||
Home equity—first lien | 5,894 | 5,726 | 5,625 | 5,622 | 5,605 | 168 | 2.9 | % | 289 | 5.2 | % | |||||||||||||||||||||||
Home equity—second lien | 5,455 | 5,684 | 5,921 | 6,178 | 6,420 | (229 | ) | (4.0 | )% | (965 | ) | (15.0 | )% | |||||||||||||||||||||
Indirect | 2,889 | 2,693 | 2,483 | 2,336 | 2,220 | 196 | 7.3 | % | 669 | 30.1 | % | |||||||||||||||||||||||
Consumer credit card | 896 | 866 | 851 | 906 | 901 | 30 | 3.5 | % | (5 | ) | (0.6 | )% | ||||||||||||||||||||||
Other consumer | 1,166 | 1,138 | 1,120 | 1,197 | 1,183 | 28 | 2.5 | % | (17 | ) | (1.4 | )% | ||||||||||||||||||||||
Total consumer | 29,156 | 28,946 | 28,875 | 29,202 | 29,554 | 210 | 0.7 | % | (398 | ) | (1.3 | )% | ||||||||||||||||||||||
Total Loans | $ | 75,892 | $ | 74,990 | $ | 73,936 | $ | 73,995 | $ | 75,259 | $ | 902 | 1.2 | % | $ | 633 | 0.8 | % | ||||||||||||||||
Average Balances | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 3Q13 | 2Q13 | 1Q13 | 4Q12 | 3Q12 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | |||||||||||||||||||||||||||
Commercial and industrial | $ | 29,319 | $ | 28,301 | $ | 27,058 | $ | 26,414 | $ | 26,024 | $ | 1,018 | 3.6 | % | $ | 3,295 | 12.7 | % | ||||||||||||||||
Commercial real estate mortgage—owner-occupied | 9,678 | 9,808 | 9,974 | 10,237 | 10,464 | (130 | ) | (1.3 | )% | (786 | ) | (7.5 | )% | |||||||||||||||||||||
Commercial real estate construction—owner-occupied | 368 | 339 | 303 | 298 | 274 | 29 | 8.6 | % | 94 | 34.3 | % | |||||||||||||||||||||||
Total commercial | 39,365 | 38,448 | 37,335 | 36,949 | 36,762 | 917 | 2.4 | % | 2,603 | 7.1 | % | |||||||||||||||||||||||
Commercial investor real estate mortgage | 5,712 | 6,124 | 6,613 | 7,404 | 8,374 | (412 | ) | (6.7 | )% | (2,662 | ) | (31.8 | )% | |||||||||||||||||||||
Commercial investor real estate construction | 1,251 | 1,085 | 951 | 901 | 851 | 166 | 15.3 | % | 400 | 47.0 | % | |||||||||||||||||||||||
Total investor real estate | 6,963 | 7,209 | 7,564 | 8,305 | 9,225 | (246 | ) | (3.4 | )% | (2,262 | ) | (24.5 | )% | |||||||||||||||||||||
Residential first mortgage | 12,835 | 12,823 | 12,900 | 13,072 | 13,300 | 12 | 0.1 | % | (465 | ) | (3.5 | )% | ||||||||||||||||||||||
Home equity—first lien | 5,825 | 5,697 | 5,642 | 5,632 | 5,636 | 128 | 2.2 | % | 189 | 3.4 | % | |||||||||||||||||||||||
Home equity—second lien | 5,526 | 5,778 | 6,028 | 6,280 | 6,521 | (252 | ) | (4.4 | )% | (995 | ) | (15.3 | )% | |||||||||||||||||||||
Indirect | 2,810 | 2,606 | 2,423 | 2,295 | 2,150 | 204 | 7.8 | % | 660 | 30.7 | % | |||||||||||||||||||||||
Consumer credit card | 878 | 851 | 871 | 886 | 908 | 27 | 3.2 | % | (30 | ) | (3.3 | )% | ||||||||||||||||||||||
Other consumer | 1,157 | 1,137 | 1,156 | 1,203 | 1,195 | 20 | 1.8 | % | (38 | ) | (3.2 | )% | ||||||||||||||||||||||
Total consumer | 29,031 | 28,892 | 29,020 | 29,368 | 29,710 | 139 | 0.5 | % | (679 | ) | (2.3 | )% | ||||||||||||||||||||||
Total Loans | $ | 75,359 | $ | 74,549 | $ | 73,919 | $ | 74,622 | $ | 75,697 | $ | 810 | 1.1 | % | $ | (338 | ) | (0.4 | )% | |||||||||||||||
End of Period Loan Portfolio Balances by Percentage | Quarter Ended | |||||||||||||||||||||||||||||||||
9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | ||||||||||||||||||||||||||||||
Commercial and industrial | 39.4 | % | 38.6 | % | 37.3 | % | 36.1 | % | 35.0 | % | ||||||||||||||||||||||||
Commercial real estate mortgage—owner-occupied | 12.6 | % | 13.0 | % | 13.3 | % | 13.6 | % | 13.7 | % | ||||||||||||||||||||||||
Commercial real estate construction—owner-occupied | 0.5 | % | 0.5 | % | 0.4 | % | 0.4 | % | 0.5 | % | ||||||||||||||||||||||||
Total commercial | 52.5 | % | 52.1 | % | 51.0 | % | 50.1 | % | 49.2 | % | ||||||||||||||||||||||||
Commercial investor real estate mortgage | 7.4 | % | 7.7 | % | 8.6 | % | 9.2 | % | 10.5 | % | ||||||||||||||||||||||||
Commercial investor real estate construction | 1.7 | % | 1.6 | % | 1.3 | % | 1.2 | % | 1.1 | % | ||||||||||||||||||||||||
Total investor real estate | 9.1 | % | 9.3 | % | 9.9 | % | 10.4 | % | 11.6 | % | ||||||||||||||||||||||||
Residential first mortgage | 16.9 | % | 17.1 | % | 17.4 | % | 17.5 | % | 17.6 | % | ||||||||||||||||||||||||
Home equity—first lien | 7.8 | % | 7.6 | % | 7.6 | % | 7.6 | % | 7.4 | % | ||||||||||||||||||||||||
Home equity—second lien | 7.2 | % | 7.6 | % | 8.0 | % | 8.4 | % | 8.5 | % | ||||||||||||||||||||||||
Indirect | 3.8 | % | 3.6 | % | 3.4 | % | 3.2 | % | 2.9 | % | ||||||||||||||||||||||||
Consumer credit card | 1.2 | % | 1.2 | % | 1.2 | % | 1.2 | % | 1.2 | % | ||||||||||||||||||||||||
Other consumer | 1.5 | % | 1.5 | % | 1.5 | % | 1.6 | % | 1.6 | % | ||||||||||||||||||||||||
Total consumer | 38.4 | % | 38.6 | % | 39.1 | % | 39.5 | % | 39.2 | % | ||||||||||||||||||||||||
Total Loans | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
________
NM - Not Meaningful
6
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Deposits
Quarter Ended | ||||||||||||||||||||||||||||||||||
9/30/2013 | 9/30/2013 | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | vs 6/30/2013 | vs. 9/30/2012 | |||||||||||||||||||||||||||
Customer Deposits | ||||||||||||||||||||||||||||||||||
Interest-free deposits | $ | 30,308 | $ | 29,464 | $ | 29,971 | $ | 29,963 | $ | 30,345 | $ | 844 | 2.9 | % | $ | (37 | ) | (0.1 | )% | |||||||||||||||
Interest-bearing checking | 19,583 | 19,937 | 20,004 | 21,096 | 19,240 | (354 | ) | (1.8 | )% | 343 | 1.8 | % | ||||||||||||||||||||||
Savings | 6,038 | 6,117 | 6,159 | 5,760 | 5,652 | (79 | ) | (1.3 | )% | 386 | 6.8 | % | ||||||||||||||||||||||
Money market—domestic | 26,085 | 25,946 | 25,411 | 24,901 | 24,404 | 139 | 0.5 | % | 1,681 | 6.9 | % | |||||||||||||||||||||||
Money market—foreign | 241 | 193 | 332 | 311 | 327 | 48 | 24.9 | % | (86 | ) | (26.3 | )% | ||||||||||||||||||||||
Low-cost deposits | 82,255 | 81,657 | 81,877 | 82,031 | 79,968 | 598 | 0.7 | % | 2,287 | 2.9 | % | |||||||||||||||||||||||
Time deposits | 10,066 | 10,797 | 12,256 | 13,443 | 14,911 | (731 | ) | (6.8 | )% | (4,845 | ) | (32.5 | )% | |||||||||||||||||||||
Total customer deposits | 92,321 | 92,454 | 94,133 | 95,474 | 94,879 | (133 | ) | (0.1 | )% | (2,558 | ) | (2.7 | )% | |||||||||||||||||||||
Corporate Treasury Deposits | ||||||||||||||||||||||||||||||||||
Time deposits | — | — | — | — | 2 | — | NM | (2 | ) | (100.0 | )% | |||||||||||||||||||||||
Total Deposits | $ | 92,321 | $ | 92,454 | $ | 94,133 | $ | 95,474 | $ | 94,881 | $ | (133 | ) | (0.1 | )% | $ | (2,560 | ) | (2.7 | )% | ||||||||||||||
Average Balances | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 3Q13 | 2Q13 | 1Q13 | 4Q12 | 3Q12 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | |||||||||||||||||||||||||||
Customer Deposits | ||||||||||||||||||||||||||||||||||
Interest-free deposits | $ | 29,724 | $ | 29,454 | $ | 29,114 | $ | 30,290 | $ | 29,652 | $ | 270 | 0.9 | % | $ | 72 | 0.2 | % | ||||||||||||||||
Interest-bearing checking | 19,613 | 19,636 | 20,440 | 19,694 | 18,880 | (23 | ) | (0.1 | )% | 733 | 3.9 | % | ||||||||||||||||||||||
Savings | 6,076 | 6,148 | 5,929 | 5,689 | 5,650 | (72 | ) | (1.2 | )% | 426 | 7.5 | % | ||||||||||||||||||||||
Money market—domestic | 26,026 | 25,722 | 25,161 | 24,577 | 24,563 | 304 | 1.2 | % | 1,463 | 6.0 | % | |||||||||||||||||||||||
Money market—foreign | 224 | 230 | 316 | 335 | 328 | (6 | ) | (2.6 | )% | (104 | ) | (31.7 | )% | |||||||||||||||||||||
Low-cost deposits | 81,663 | 81,190 | 80,960 | 80,585 | 79,073 | 473 | 0.6 | % | 2,590 | 3.3 | % | |||||||||||||||||||||||
Time deposits | 10,417 | 11,423 | 12,904 | 14,218 | 15,533 | (1,006 | ) | (8.8 | )% | (5,116 | ) | (32.9 | )% | |||||||||||||||||||||
Total customer deposits | 92,080 | 92,613 | 93,864 | 94,803 | 94,606 | (533 | ) | (0.6 | )% | (2,526 | ) | (2.7 | )% | |||||||||||||||||||||
Corporate Treasury Deposits | ||||||||||||||||||||||||||||||||||
Time deposits | — | — | — | 2 | 3 | — | NM | (3 | ) | (100.0 | )% | |||||||||||||||||||||||
Total Deposits | $ | 92,080 | $ | 92,613 | $ | 93,864 | $ | 94,805 | $ | 94,609 | $ | (533 | ) | (0.6 | )% | $ | (2,529 | ) | (2.7 | )% | ||||||||||||||
Quarter Ended | ||||||||||||||||||||||||||||||||||
End of Period Deposits by Percentage | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||||||||||||||||
Customer Deposits | ||||||||||||||||||||||||||||||||||
Interest-free deposits | 32.8 | % | 31.9 | % | 31.8 | % | 31.4 | % | 32.0 | % | ||||||||||||||||||||||||
Interest-bearing checking | 21.2 | % | 21.6 | % | 21.3 | % | 22.1 | % | 20.3 | % | ||||||||||||||||||||||||
Savings | 6.5 | % | 6.6 | % | 6.5 | % | 6.0 | % | 6.0 | % | ||||||||||||||||||||||||
Money market—domestic | 28.3 | % | 28.1 | % | 27.0 | % | 26.1 | % | 25.7 | % | ||||||||||||||||||||||||
Money market—foreign | 0.3 | % | 0.2 | % | 0.4 | % | 0.3 | % | 0.3 | % | ||||||||||||||||||||||||
Low-cost deposits | 89.1 | % | 88.4 | % | 87.0 | % | 85.9 | % | 84.3 | % | ||||||||||||||||||||||||
Time deposits | 10.9 | % | 11.6 | % | 13.0 | % | 14.1 | % | 15.7 | % | ||||||||||||||||||||||||
Total customer deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||
Corporate Treasury Deposits | ||||||||||||||||||||||||||||||||||
Time deposits | — | % | — | % | — | % | — | % | — | % | ||||||||||||||||||||||||
Total Deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
________
NM - Not Meaningful
7
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Pre-Tax Pre-Provision Income ("PPI") and Adjusted PPI (non-GAAP)
The Pre-Tax Pre-Provision Income table below presents computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the presentation of PPI and the exclusion of certain items to PPI 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.
Quarter Ended | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | ||||||||||||||||||||||||||
Income from continuing operations available to common shareholders (GAAP) | $ | 285 | $ | 260 | $ | 325 | $ | 273 | $ | 312 | $ | 25 | 9.6 | % | $ | (27 | ) | (8.7 | )% | ||||||||||||||
Preferred dividends (GAAP) | 8 | 8 | 8 | 4 | — | — | NM | (8 | ) | NM | |||||||||||||||||||||||
Income tax expense (GAAP) | 124 | 122 | 114 | 138 | 136 | 2 | 1.6 | % | (12 | ) | (8.8 | )% | |||||||||||||||||||||
Income from continuing operations before income taxes (GAAP) | 417 | 390 | 447 | 415 | 448 | 27 | 6.9 | % | (31 | ) | (6.9 | )% | |||||||||||||||||||||
Provision for loan losses (GAAP) | 18 | 31 | 10 | 37 | 33 | (13 | ) | (41.9 | )% | (15 | ) | (45.5 | )% | ||||||||||||||||||||
Pre-tax pre-provision income from continuing operations (non-GAAP) | 435 | 421 | 457 | 452 | 481 | 14 | 3.3 | % | (46 | ) | (9.6 | )% | |||||||||||||||||||||
Other adjustments: | |||||||||||||||||||||||||||||||||
Securities gains, net | (3 | ) | (8 | ) | (15 | ) | (12 | ) | (12 | ) | 5 | (62.5 | )% | 9 | (75.0 | )% | |||||||||||||||||
Gain on sale of other assets(1) | (24 | ) | — | — | — | — | (24 | ) | NM | (24 | ) | NM | |||||||||||||||||||||
Loss on early extinguishment of debt | 5 | 56 | — | 11 | — | (51 | ) | (91.1 | )% | 5 | NM | ||||||||||||||||||||||
REIT investment early termination costs | — | — | — | 42 | — | — | NM | — | NM | ||||||||||||||||||||||||
Total other adjustments | (22 | ) | 48 | (15 | ) | 41 | (12 | ) | (70 | ) | (145.8 | )% | (10 | ) | 83.3 | % | |||||||||||||||||
Adjusted pre-tax pre-provision income from continuing operations (non-GAAP) | $ | 413 | $ | 469 | $ | 442 | $ | 493 | $ | 469 | $ | (56 | ) | (11.9 | )% | $ | (56 | ) | (11.9 | )% |
NM - Not Meaningful
(1) Gain on sale of a non-core portion of a Wealth Management business.
8
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Non-Interest Income
Quarter Ended | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | |||||||||||||||||||||||||||
Service charges on deposit accounts | $ | 251 | $ | 237 | $ | 242 | $ | 254 | $ | 244 | $ | 14 | 5.9 | % | $ | 7 | 2.9 | % | ||||||||||||||||
Mortgage income | 52 | 69 | 72 | 90 | 106 | (17 | ) | (24.6 | )% | (54 | ) | (50.9 | )% | |||||||||||||||||||||
Capital markets fee income and other | 18 | 20 | 20 | 24 | 28 | (2 | ) | (10.0 | )% | (10 | ) | (35.7 | )% | |||||||||||||||||||||
Investment services fee income | 10 | 9 | 7 | 7 | 6 | 1 | 11.1 | % | 4 | 66.7 | % | |||||||||||||||||||||||
Investment management and trust fee income | 50 | 49 | 49 | 48 | 48 | 1 | 2.0 | % | 2 | 4.2 | % | |||||||||||||||||||||||
Insurance commissions and fees | 27 | 29 | 30 | 27 | 28 | (2 | ) | (6.9 | )% | (1 | ) | (3.6 | )% | |||||||||||||||||||||
Credit card/bank card income | 21 | 19 | 18 | 21 | 18 | 2 | 10.5 | % | 3 | 16.7 | % | |||||||||||||||||||||||
Commercial credit fee income | 16 | 17 | 16 | 16 | 17 | (1 | ) | (5.9 | )% | (1 | ) | (5.9 | )% | |||||||||||||||||||||
Securities gains, net | 3 | 8 | 15 | 12 | 12 | (5 | ) | (62.5 | )% | (9 | ) | (75.0 | )% | |||||||||||||||||||||
Gain on sale of other assets(1) | 24 | — | — | — | — | 24 | NM | 24 | NM | |||||||||||||||||||||||||
Bank-owned life insurance | 18 | 22 | 22 | 20 | 19 | (4 | ) | (18.2 | )% | (1 | ) | (5.3 | )% | |||||||||||||||||||||
Net revenue (loss) from affordable housing | (18 | ) | (15 | ) | (17 | ) | (5 | ) | (17 | ) | (3 | ) | 20.0 | % | (1 | ) | 5.9 | % | ||||||||||||||||
Other | 23 | 33 | 27 | 22 | 24 | (10 | ) | (30.3 | )% | (1 | ) | (4.2 | )% | |||||||||||||||||||||
Total non-interest income from continuing operations | $ | 495 | $ | 497 | $ | 501 | $ | 536 | $ | 533 | $ | (2 | ) | (0.4 | )% | $ | (38 | ) | (7.1 | )% |
Mortgage Income
Quarter Ended | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | |||||||||||||||||||||||||||
Production and sales | $ | 37 | $ | 54 | $ | 59 | $ | 72 | $ | 85 | $ | (17 | ) | (31.5 | )% | $ | (48 | ) | (56.5 | )% | ||||||||||||||
Loan servicing | 22 | 23 | 19 | 20 | 21 | (1 | ) | (4.3 | )% | 1 | 4.8 | % | ||||||||||||||||||||||
MSR hedge ineffectiveness: | ||||||||||||||||||||||||||||||||||
MSRs fair value increase (decrease) (2) | (8 | ) | 24 | 1 | (1 | ) | (19 | ) | (32 | ) | (133.3 | )% | 11 | (57.9 | )% | |||||||||||||||||||
MSRs hedge gain (loss) | 1 | (32 | ) | (7 | ) | (1 | ) | 19 | 33 | (103.1 | )% | (18 | ) | (94.7 | )% | |||||||||||||||||||
MSR hedge ineffectiveness | (7 | ) | (8 | ) | (6 | ) | (2 | ) | — | 1 | (12.5 | )% | (7 | ) | NM | |||||||||||||||||||
Total mortgage income | $ | 52 | $ | 69 | $ | 72 | $ | 90 | $ | 106 | $ | (17 | ) | (24.6 | )% | $ | (54 | ) | (50.9 | )% | ||||||||||||||
Mortgage production | $ | 1,606 | $ | 1,921 | $ | 1,819 | $ | 2,124 | $ | 2,226 | $ | (315 | ) | (16.4 | )% | $ | (620 | ) | (27.9 | )% |
Wealth Management Income
Quarter Ended | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | |||||||||||||||||||||||||||
Investment services fee income | $ | 10 | $ | 9 | $ | 7 | $ | 7 | $ | 6 | $ | 1 | 11.1 | % | $ | 4 | 66.7 | % | ||||||||||||||||
Investment management and trust fee income | 50 | 49 | 49 | 48 | 48 | 1 | 2.0 | % | 2 | 4.2 | % | |||||||||||||||||||||||
Insurance commissions and fees | 27 | 29 | 30 | 27 | 28 | (2 | ) | (6.9 | )% | (1 | ) | (3.6 | )% | |||||||||||||||||||||
Gain on sale of other assets(1) | 24 | — | — | — | — | 24 | NM | 24 | NM | |||||||||||||||||||||||||
Total wealth management income (3) | $ | 111 | $ | 87 | $ | 86 | $ | 82 | $ | 82 | $ | 24 | 27.6 | % | $ | 29 | 35.4 | % |
_________
NM - Not Meaningful
(1) | Gain on sale of a non-core portion of a Wealth Management business. |
(2) | Fair value adjustment includes payment decay and assumptions change impact. |
(3) | Total wealth management income presented above does not include the portion of service charges on deposit accounts and similar smaller dollar amounts that are also attributable to the Wealth Management segment. |
Selected Non-Interest Income Variance Analysis
• | Service charges on deposit accounts increased by $14 million or 6% linked quarter partially due to a second quarter $12 million increase to a reserve for customer refunds stemming from a change in the NSF policy implemented in 2012. |
9
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Non-Interest Expense
Quarter Ended | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | |||||||||||||||||||||||||||
Salaries and employee benefits | $ | 455 | $ | 452 | $ | 447 | $ | 438 | $ | 449 | $ | 3 | 0.7 | % | $ | 6 | 1.3 | % | ||||||||||||||||
Net occupancy expense | 92 | 92 | 90 | 97 | 99 | — | NM | (7 | ) | (7.1 | )% | |||||||||||||||||||||||
Furniture and equipment expense | 71 | 69 | 69 | 65 | 65 | 2 | 2.9 | % | 6 | 9.2 | % | |||||||||||||||||||||||
Professional and legal expenses | 34 | 21 | 31 | 15 | 36 | 13 | 61.9 | % | (2 | ) | (5.6 | )% | ||||||||||||||||||||||
Amortization of core deposit intangible | 7 | 7 | 7 | 20 | 20 | — | NM | (13 | ) | (65.0 | )% | |||||||||||||||||||||||
Credit/checkcard expenses | 11 | 10 | 9 | 10 | 15 | 1 | 10.0 | % | (4 | ) | (26.7 | )% | ||||||||||||||||||||||
Deposit administrative fee | 35 | 37 | 33 | 34 | 37 | (2 | ) | (5.4 | )% | (2 | ) | (5.4 | )% | |||||||||||||||||||||
Marketing | 26 | 24 | 23 | 23 | 27 | 2 | 8.3 | % | (1 | ) | (3.7 | )% | ||||||||||||||||||||||
Loss on early extinguishment of debt | 5 | 56 | — | 11 | — | (51 | ) | (91.1 | )% | 5 | NM | |||||||||||||||||||||||
REIT investment early termination costs | — | — | — | 42 | — | — | NM | — | NM | |||||||||||||||||||||||||
Gain on loans held for sale, net | (5 | ) | (11 | ) | (6 | ) | (10 | ) | (17 | ) | 6 | (54.5 | )% | 12 | (70.6 | )% | ||||||||||||||||||
Provision (credit) for unfunded credit losses | 1 | (15 | ) | 5 | 7 | (15 | ) | 16 | (106.7 | )% | 16 | (106.7 | )% | |||||||||||||||||||||
Outside services | 27 | 26 | 22 | 23 | 23 | 1 | 3.8 | % | 4 | 17.4 | % | |||||||||||||||||||||||
Other | 125 | 116 | 112 | 127 | 130 | 9 | 7.8 | % | (5 | ) | (3.8 | )% | ||||||||||||||||||||||
Total non-interest expense from continuing operations | $ | 884 | $ | 884 | $ | 842 | $ | 902 | $ | 869 | $ | — | NM | $ | 15 | 1.7 | % |
_________
NM - Not Meaningful
Selected Non-Interest Expense Variance Analysis
• | Professional and legal expenses increased by $13 million or 62% quarter over quarter driven by favorable settlements which occurred in the second quarter. |
• | Provision expense related to unfunded commitments increased by $16 million or 107% linked quarter primarily due to a large credit that funded and subsequently resolved during the second quarter. |
10
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Credit Quality
As of and for Quarter Ended | |||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | ||||||||||||||
Components: | |||||||||||||||||||
Allowance for loan losses (ALL) | $ | 1,540 | $ | 1,636 | $ | 1,749 | $ | 1,919 | $ | 2,062 | |||||||||
Reserve for unfunded credit commitments | 74 | 73 | 88 | 83 | 76 | ||||||||||||||
Allowance for credit losses (ACL) | $ | 1,614 | $ | 1,709 | $ | 1,837 | $ | 2,002 | $ | 2,138 | |||||||||
Provision for loan losses | $ | 18 | $ | 31 | $ | 10 | $ | 37 | $ | 33 | |||||||||
Provision (credit) for unfunded credit losses | 1 | (15 | ) | 5 | 7 | (15 | ) | ||||||||||||
Net loans charged-off: | |||||||||||||||||||
Commercial and industrial | $ | 17 | $ | 30 | $ | 58 | $ | 17 | $ | 31 | |||||||||
Commercial real estate mortgage—owner-occupied | 20 | 28 | 25 | 44 | 42 | ||||||||||||||
Commercial real estate construction—owner-occupied | — | — | (1 | ) | 1 | 1 | |||||||||||||
Total commercial | 37 | 58 | 82 | 62 | 74 | ||||||||||||||
Commercial investor real estate mortgage | 6 | 16 | 14 | 21 | 64 | ||||||||||||||
Commercial investor real estate construction | (1 | ) | (2 | ) | — | 1 | 6 | ||||||||||||
Total investor real estate | 5 | 14 | 14 | 22 | 70 | ||||||||||||||
Residential first mortgage | 13 | 18 | 22 | 26 | 35 | ||||||||||||||
Home equity—first lien | 10 | 7 | 10 | 12 | 14 | ||||||||||||||
Home equity—second lien | 22 | 22 | 27 | 31 | 38 | ||||||||||||||
Indirect | 5 | 4 | 6 | 5 | 4 | ||||||||||||||
Consumer credit card | 6 | 11 | 9 | 8 | 12 | ||||||||||||||
Other consumer | 16 | 10 | 10 | 14 | 15 | ||||||||||||||
Total consumer | 72 | 72 | 84 | 96 | 118 | ||||||||||||||
Total | $ | 114 | $ | 144 | $ | 180 | $ | 180 | $ | 262 | |||||||||
Net loan charge-offs as a % of average loans, annualized: | |||||||||||||||||||
Commercial and industrial | 0.22 | % | 0.43 | % | 0.87 | % | 0.27 | % | 0.47 | % | |||||||||
Commercial real estate mortgage—owner-occupied | 0.81 | % | 1.17 | % | 1.01 | % | 1.72 | % | 1.58 | % | |||||||||
Commercial real estate construction—owner-occupied | (0.03 | )% | (0.83 | )% | (1.31 | )% | 1.28 | % | 2.06 | % | |||||||||
Total commercial | 0.37 | % | 0.61 | % | 0.89 | % | 0.68 | % | 0.80 | % | |||||||||
Commercial investor real estate mortgage | 0.39 | % | 1.02 | % | 0.88 | % | 1.15 | % | 3.03 | % | |||||||||
Commercial investor real estate construction | (0.18 | )% | (0.54 | )% | 0.01 | % | 0.63 | % | 3.03 | % | |||||||||
Total investor real estate | 0.28 | % | 0.79 | % | 0.77 | % | 1.09 | % | 3.03 | % | |||||||||
Residential first mortgage | 0.41 | % | 0.56 | % | 0.68 | % | 0.76 | % | 1.06 | % | |||||||||
Home equity—first lien | 0.66 | % | 0.47 | % | 0.72 | % | 0.91 | % | 0.97 | % | |||||||||
Home equity—second lien | 1.56 | % | 1.53 | % | 1.82 | % | 1.96 | % | 2.31 | % | |||||||||
Indirect | 0.76 | % | 0.56 | % | 1.03 | % | 0.86 | % | 0.65 | % | |||||||||
Consumer credit card | 3.06 | % | 4.95 | % | 4.20 | % | 3.32 | % | 5.37 | % | |||||||||
Other consumer | 5.24 | % | 3.66 | % | 3.44 | % | 4.51 | % | 4.99 | % | |||||||||
Total consumer | 0.99 | % | 0.99 | % | 1.17 | % | 1.28 | % | 1.57 | % | |||||||||
Total | 0.60 | % | 0.77 | % | 0.99 | % | 0.96 | % | 1.38 | % | |||||||||
Non-accrual loans, excluding loans held for sale | $ | 1,354 | $ | 1,506 | $ | 1,586 | $ | 1,681 | $ | 1,884 | |||||||||
Non-performing loans held for sale | 43 | 53 | 66 | 89 | 134 | ||||||||||||||
Non-accrual loans, including loans held for sale | 1,397 | 1,559 | 1,652 | 1,770 | 2,018 | ||||||||||||||
Foreclosed properties | 147 | 136 | 136 | 149 | 197 | ||||||||||||||
Non-performing assets (NPAs) | $ | 1,544 | $ | 1,695 | $ | 1,788 | $ | 1,919 | $ | 2,215 | |||||||||
Loans past due > 90 days (1) | $ | 270 | $ | 319 | $ | 344 | $ | 363 | $ | 334 | |||||||||
Accruing restructured loans not included in categories above (2) | $ | 2,529 | $ | 2,591 | $ | 2,717 | $ | 2,789 | $ | 2,916 | |||||||||
Credit Ratios: | |||||||||||||||||||
ACL/Loans, net | 2.13 | % | 2.28 | % | 2.48 | % | 2.71 | % | 2.84 | % | |||||||||
ALL/Loans, net | 2.03 | % | 2.18 | % | 2.37 | % | 2.59 | % | 2.74 | % | |||||||||
Allowance for loan losses to non-performing loans, excluding loans held for sale | 1.14x | 1.09x | 1.10x | 1.14x | 1.09x | ||||||||||||||
Non-accrual loans, excluding loans held for sale/Loans, net | 1.78 | % | 2.01 | % | 2.15 | % | 2.27 | % | 2.50 | % | |||||||||
NPAs (ex. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale | 2.03 | % | 2.25 | % | 2.41 | % | 2.59 | % | 2.93 | % | |||||||||
NPAs (inc. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale (1) | 2.38 | % | 2.68 | % | 2.88 | % | 3.07 | % | 3.37 | % |
(1) | Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing. Refer to the footnotes on page 14 for amounts related to these loans. |
(2) | See page 15 for detail of restructured loans. |
11
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Gross and Net NPL Migration
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||
Beginning Non-Performing Loans (1) | $ | 1,506 | $ | 1,586 | $ | 1,681 | $ | 1,884 | $ | 1,915 | ||||||||||
Additions (2): | ||||||||||||||||||||
Land/Single Family/Condo Investor Real Estate | 5 | 7 | 8 | 21 | 24 | |||||||||||||||
Income Producing Investor Real Estate | 26 | 27 | 68 | 85 | 118 | |||||||||||||||
Total Investor Real Estate | 31 | 34 | 76 | 106 | 142 | |||||||||||||||
Commercial | 99 | 182 | 62 | 104 | 120 | |||||||||||||||
Business and Community | 98 | 129 | 144 | 158 | 190 | |||||||||||||||
Consumer | (29 | ) | (17 | ) | (5 | ) | (18 | ) | 11 | |||||||||||
Total Gross NPL Additions | 199 | 328 | 277 | 350 | 463 | |||||||||||||||
Resolutions (3) | (243 | ) | (255 | ) | (203 | ) | (340 | ) | (217 | ) | ||||||||||
Charge-Offs (4) | (65 | ) | (95 | ) | (120 | ) | (122 | ) | (159 | ) | ||||||||||
Net Additions (Reductions) | (109 | ) | (22 | ) | (46 | ) | (112 | ) | 87 | |||||||||||
Non-Accrual Loan Sales | (5 | ) | (7 | ) | (5 | ) | (20 | ) | (8 | ) | ||||||||||
Transfers to HFS | (27 | ) | (38 | ) | (31 | ) | (51 | ) | (81 | ) | ||||||||||
Transfers to OREO | (11 | ) | (13 | ) | (13 | ) | (20 | ) | (29 | ) | ||||||||||
Ending Non-Performing Loans (1) | $ | 1,354 | $ | 1,506 | $ | 1,586 | $ | 1,681 | $ | 1,884 |
(1) | Does not include Loans Held for Sale. |
(2) | All net activity within the consumer portfolio other than sales and transfers to held for sale is included as a single net number within the additions line, due to the relative immateriality of consumer non-accrual loans. |
(3) | Includes payments and returned to accruals. |
(4) | Includes charge-offs on loans on non-accrual status and charge-offs taken upon sale and transfer of non-accrual loans to held for sale. |
Foreclosed Properties
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||
Beginning Foreclosed Properties | $ | 136 | $ | 136 | $ | 149 | $ | 197 | $ | 214 | ||||||||||
Transfers in | 64 | 65 | 60 | 50 | 70 | |||||||||||||||
Sales | (43 | ) | (55 | ) | (59 | ) | (86 | ) | (68 | ) | ||||||||||
Writedowns / Other Activity | (10 | ) | (10 | ) | (14 | ) | (12 | ) | (19 | ) | ||||||||||
Ending Foreclosed Properties | $ | 147 | $ | 136 | $ | 136 | $ | 149 | $ | 197 |
Non-Performing Loans Held for Sale
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||
Beginning Non-Performing Loans Held for Sale | $ | 53 | $ | 66 | $ | 89 | $ | 134 | $ | 202 | ||||||||||
Transfers in | 27 | 38 | 31 | 51 | 81 | |||||||||||||||
Sales | (26 | ) | (34 | ) | (36 | ) | (84 | ) | (138 | ) | ||||||||||
Writedowns | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Loan moved from HFS / Other Activity | (8 | ) | (14 | ) | (11 | ) | (10 | ) | (7 | ) | ||||||||||
Transfers to OREO | (3 | ) | (3 | ) | (6 | ) | (2 | ) | (3 | ) | ||||||||||
Ending Non-Performing Loans Held for Sale | $ | 43 | $ | 53 | $ | 66 | $ | 89 | $ | 134 |
Composition of Non-Performing Loans Held for Sale
Timing of Transfer to HFS | Percent | |
3Q13 | 62.2 | % |
2Q13 | 22.9 | % |
1Q13 | 0.5 | % |
2012 | 12.6 | % |
2011 | 1.8 | % |
Total | 100.0 | % |
12
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Non-Accrual Loans (excludes loans held for sale)
Quarter Ended | |||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | ||||||||||||||||||||||||||||||
Commercial and Industrial | $ | 383 | 1.28 | % | $ | 408 | 1.41 | % | $ | 355 | 1.29 | % | $ | 409 | 1.53 | % | $ | 393 | 1.49 | % | |||||||||||||||
Commercial Real Estate Mortgage—OO | 364 | 3.81 | % | 398 | 4.08 | % | 420 | 4.28 | % | 439 | 4.35 | % | 504 | 4.88 | % | ||||||||||||||||||||
Commercial Real Estate Construction—OO | 12 | 3.25 | % | 15 | 4.38 | % | 12 | 3.70 | % | 14 | 4.57 | % | 15 | 5.30 | % | ||||||||||||||||||||
Total Commercial | 759 | 1.91 | % | 821 | 2.10 | % | 787 | 2.08 | % | 862 | 2.33 | % | 912 | 2.47 | % | ||||||||||||||||||||
Commercial Investor Real Estate Mortgage | 276 | 4.92 | % | 352 | 6.07 | % | 451 | 7.12 | % | 457 | 6.74 | % | 560 | 7.12 | % | ||||||||||||||||||||
Commercial Investor Real Estate Construction | 31 | 2.34 | % | 16 | 1.30 | % | 13 | 1.32 | % | 20 | 2.21 | % | 52 | 6.15 | % | ||||||||||||||||||||
Total Investor Real Estate | 307 | 4.43 | % | 368 | 5.25 | % | 464 | 6.34 | % | 477 | 6.17 | % | 612 | 7.03 | % | ||||||||||||||||||||
Residential First Mortgage | 167 | 1.30 | % | 186 | 1.44 | % | 201 | 1.56 | % | 214 | 1.65 | % | 224 | 1.69 | % | ||||||||||||||||||||
Home Equity | 121 | 1.06 | % | 130 | 1.14 | % | 133 | 1.15 | % | 128 | 1.08 | % | 136 | 1.12 | % | ||||||||||||||||||||
Direct | — | 0.00 | % | — | 0.06 | % | — | 0.06 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||||||||
Indirect | — | 0.00 | % | 1 | 0.03 | % | 1 | 0.03 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||||||||
Consumer Credit Card | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||||||||
Other Consumer | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||||||||
Total Consumer | 288 | 0.99 | % | 317 | 1.09 | % | 335 | 1.16 | % | 342 | 1.17 | % | 360 | 1.22 | % | ||||||||||||||||||||
Total Non-Accrual Loans | $ | 1,354 | 1.78 | % | $ | 1,506 | 2.01 | % | $ | 1,586 | 2.15 | % | $ | 1,681 | 2.27 | % | $ | 1,884 | 2.50 | % |
________
OO = Owner Occupied
Criticized and Classified Loans—Commercial and Investor Real Estate
Quarter Ended | ||||||||||||||||||||||||||||||||||
9/30/2013 | 9/30/2013 | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | vs. 6/30/2013 | vs. 9/30/12 | |||||||||||||||||||||||||||
Special Mention | $ | 1,035 | $ | 1,142 | $ | 1,136 | $ | 1,336 | $ | 1,707 | $ | (107 | ) | (9.4 | )% | $ | (672 | ) | (39.4 | )% | ||||||||||||||
Accruing Classified Loans | 1,411 | 1,587 | 1,713 | 1,817 | 1,900 | (176 | ) | (11.1 | )% | (489 | ) | (25.7 | )% | |||||||||||||||||||||
Non-Accruing Classified Loans | 1,066 | 1,189 | 1,251 | 1,339 | 1,524 | (123 | ) | (10.3 | )% | (458 | ) | (30.1 | )% | |||||||||||||||||||||
Total | $ | 3,512 | $ | 3,918 | $ | 4,100 | $ | 4,492 | $ | 5,131 | $ | (406 | ) | (10.4 | )% | $ | (1,619 | ) | (31.6 | )% |
Residential Lending Net Charge-off Analysis
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||
9/30/2013 | 6/30/2013 | |||||||||||||||||||||||||||||||||||||||
First Liens | Junior Liens | Total(1) | First Liens | Junior Liens | Total(1) | |||||||||||||||||||||||||||||||||||
Residential | Home | Home | Residential | Home | Home | |||||||||||||||||||||||||||||||||||
($ amounts in millions) | Mortgage | Equity | Total | Equity | Mortgage | Equity | Total | Equity | ||||||||||||||||||||||||||||||||
Florida | ||||||||||||||||||||||||||||||||||||||||
Net Charge-off %* | 0.67 | % | 1.15 | % | 0.80 | % | 2.56 | % | 1.25 | % | 0.88 | % | 0.83 | % | 0.86 | % | 2.52 | % | 1.29 | % | ||||||||||||||||||||
$ Losses | $ | 7.9 | $ | 5.3 | $ | 13.2 | $ | 14.3 | $ | 27.5 | $ | 10.4 | $ | 3.8 | $ | 14.2 | $ | 14.5 | $ | 28.7 | ||||||||||||||||||||
Balance | $ | 4,707.9 | $ | 1,841.8 | $ | 6,549.7 | $ | 2,193.8 | $ | 8,743.5 | $ | 4,737.6 | $ | 1,833.0 | $ | 6,570.5 | $ | 2,276.7 | $ | 8,847.2 | ||||||||||||||||||||
Original LTV | 73.0 | % | 64.7 | % | 75.5 | % | 72.9 | % | 65.1 | % | 75.6 | % | ||||||||||||||||||||||||||||
All Other States | ||||||||||||||||||||||||||||||||||||||||
Net Charge-off %* | 0.26 | % | 0.44 | % | 0.32 | % | 0.89 | % | 0.44 | % | 0.38 | % | 0.30 | % | 0.35 | % | 0.87 | % | 0.47 | % | ||||||||||||||||||||
$ Losses | $ | 5.3 | $ | 4.4 | $ | 9.7 | $ | 7.4 | $ | 17.1 | $ | 7.6 | $ | 2.9 | $ | 10.5 | $ | 7.5 | $ | 18.1 | ||||||||||||||||||||
Balance | $ | 8,148.2 | $ | 4,052.3 | $ | 12,200.5 | $ | 3,261.3 | $ | 15,461.8 | $ | 8,101.4 | $ | 3,892.4 | $ | 11,993.8 | $ | 3,407.8 | $ | 15,401.5 | ||||||||||||||||||||
Original LTV | 74.6 | % | 64.5 | % | 79.0 | % | 74.5 | % | 65.0 | % | 79.1 | % | ||||||||||||||||||||||||||||
Totals | ||||||||||||||||||||||||||||||||||||||||
Net Charge-off %* | 0.41 | % | 0.66 | % | 0.49 | % | 1.56 | % | 0.73 | % | 0.56 | % | 0.47 | % | 0.54 | % | 1.53 | % | 0.77 | % | ||||||||||||||||||||
$ Losses | $ | 13.2 | $ | 9.7 | $ | 22.9 | $ | 21.7 | $ | 44.6 | $ | 18.0 | $ | 6.7 | $ | 24.8 | $ | 22.0 | $ | 46.8 | ||||||||||||||||||||
Balance | $ | 12,856.1 | $ | 5,894.1 | $ | 18,750.2 | $ | 5,455.1 | $ | 24,205.3 | $ | 12,838.9 | $ | 5,725.4 | $ | 18,564.3 | $ | 5,684.4 | $ | 24,248.8 | ||||||||||||||||||||
Original LTV | 74.0 | % | 64.5 | % | 77.6 | % | 73.9 | % | 65.0 | % | 77.6 | % |
(1) Total line item includes first liens on residential first mortgage and home equity, as well as junior liens on home equity.
* Annualized
Note: Home Equity origination quality continues to be solid with an average FICO of 776 and an average LTV of 59%. Property value declines continue to drive losses.
13
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Early and Late Stage Delinquencies
Accruing 30-89 Days Past Due Loans | Quarter Ended | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | ||||||||||||||||||||||||||||||
Commercial and Industrial | $ | 31 | 0.10 | % | $ | 36 | 0.12 | % | $ | 54 | 0.20 | % | $ | 50 | 0.19 | % | $ | 88 | 0.33 | % | |||||||||||||||
Commercial Real Estate Mortgage—OO | 56 | 0.59 | % | 52 | 0.54 | % | 49 | 0.50 | % | 77 | 0.76 | % | 69 | 0.67 | % | ||||||||||||||||||||
Commercial Real Estate Construction—OO | 1 | 0.21 | % | 1 | 0.25 | % | 2 | 0.62 | % | — | 0.10 | % | 2 | 0.82 | % | ||||||||||||||||||||
Total Commercial | 88 | 0.22 | % | 89 | 0.23 | % | 105 | 0.28 | % | 127 | 0.34 | % | 159 | 0.43 | % | ||||||||||||||||||||
Commercial Investor Real Estate Mortgage | 118 | 2.11 | % | 60 | 1.04 | % | 72 | 1.13 | % | 80 | 1.18 | % | 80 | 1.01 | % | ||||||||||||||||||||
Commercial Investor Real Estate Construction | 4 | 0.27 | % | 3 | 0.21 | % | 7 | 0.73 | % | 2 | 0.17 | % | 40 | 4.73 | % | ||||||||||||||||||||
Total Investor Real Estate | 122 | 1.76 | % | 63 | 0.90 | % | 79 | 1.08 | % | 82 | 1.06 | % | 120 | 1.37 | % | ||||||||||||||||||||
Residential First Mortgage—Non-Guaranteed (1) | 176 | 1.41 | % | 183 | 1.47 | % | 207 | 1.65 | % | 219 | 1.73 | % | 236 | 1.83 | % | ||||||||||||||||||||
Home Equity | 131 | 1.15 | % | 133 | 1.16 | % | 127 | 1.10 | % | 153 | 1.30 | % | 155 | 1.30 | % | ||||||||||||||||||||
Direct | 8 | 1.03 | % | 9 | 1.16 | % | 9 | 1.12 | % | 13 | 1.52 | % | 13 | 1.48 | % | ||||||||||||||||||||
Indirect | 39 | 1.35 | % | 38 | 1.39 | % | 31 | 1.26 | % | 40 | 1.74 | % | 36 | 1.61 | % | ||||||||||||||||||||
Consumer Credit Card | 12 | 1.37 | % | 10 | 1.18 | % | 9 | 1.11 | % | 14 | 1.56 | % | 14 | 1.64 | % | ||||||||||||||||||||
Other Consumer | 12 | 3.38 | % | 12 | 3.53 | % | 9 | 2.59 | % | 11 | 2.95 | % | 12 | 3.48 | % | ||||||||||||||||||||
Total Consumer (1) | 378 | 1.31 | % | 385 | 1.35 | % | 392 | 1.37 | % | 450 | 1.56 | % | 466 | 1.60 | % | ||||||||||||||||||||
Total Accruing 30-89 Days Past Due Loans (1) | $ | 588 | 0.78 | % | $ | 537 | 0.72 | % | $ | 576 | 0.78 | % | $ | 659 | 0.89 | % | $ | 745 | 0.99 | % | |||||||||||||||
Accruing 90+ Days Past Due Loans | Quarter Ended | ||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | ||||||||||||||||||||||||||||||
Commercial & Industrial | $ | 6 | 0.02 | % | $ | 8 | 0.03 | % | $ | 8 | 0.03 | % | $ | 19 | 0.07 | % | $ | 6 | 0.02 | % | |||||||||||||||
Commercial Real Estate Mortgage—OO | 7 | 0.07 | % | 16 | 0.16 | % | 9 | 0.09 | % | 6 | 0.06 | % | 8 | 0.07 | % | ||||||||||||||||||||
Commercial Real Estate Construction—OO | — | 0.12 | % | — | — | % | — | 0.02 | % | — | 0.03 | % | — | 0.14 | % | ||||||||||||||||||||
Total Commercial | 13 | 0.03 | % | 24 | 0.06 | % | 17 | 0.05 | % | 25 | 0.07 | % | 14 | 0.04 | % | ||||||||||||||||||||
Commercial Investor Real Estate Mortgage | 15 | 0.27 | % | 24 | 0.41 | % | 25 | 0.39 | % | 11 | 0.16 | % | 7 | 0.10 | % | ||||||||||||||||||||
Commercial Investor Real Estate Construction | 1 | 0.07 | % | — | 0.03 | % | — | 0.02 | % | — | 0.05 | % | 1 | 0.08 | % | ||||||||||||||||||||
Total Investor Real Estate | 16 | 0.23 | % | 24 | 0.34 | % | 25 | 0.34 | % | 11 | 0.15 | % | 8 | 0.09 | % | ||||||||||||||||||||
Residential First Mortgage—Non-Guaranteed (2) | 149 | 1.19 | % | 178 | 1.42 | % | 203 | 1.62 | % | 220 | 1.73 | % | 226 | 1.73 | % | ||||||||||||||||||||
Home Equity | 72 | 0.64 | % | 75 | 0.66 | % | 79 | 0.68 | % | 87 | 0.74 | % | 69 | 0.57 | % | ||||||||||||||||||||
Direct | 2 | 0.16 | % | 1 | 0.15 | % | 1 | 0.15 | % | 1 | 0.16 | % | 1 | 0.16 | % | ||||||||||||||||||||
Indirect | 4 | 0.15 | % | 3 | 0.13 | % | 3 | 0.13 | % | 3 | 0.12 | % | 2 | 0.10 | % | ||||||||||||||||||||
Consumer Credit Card | 12 | 1.27 | % | 11 | 1.27 | % | 14 | 1.60 | % | 14 | 1.56 | % | 12 | 1.26 | % | ||||||||||||||||||||
Other Consumer | 2 | 0.47 | % | 3 | 0.63 | % | 2 | 0.73 | % | 2 | 0.51 | % | 2 | 0.54 | % | ||||||||||||||||||||
Total Consumer (2) | 241 | 0.83 | % | 271 | 0.95 | % | 302 | 1.06 | % | 327 | 1.13 | % | 312 | 1.07 | % | ||||||||||||||||||||
Total Accruing 90+ Days Past Due Loans (2) | $ | 270 | 0.36 | % | $ | 319 | 0.43 | % | $ | 344 | 0.47 | % | $ | 363 | 0.49 | % | $ | 334 | 0.45 | % |
OO = Owner Occupied
(1) | Excludes loans that are 100% guaranteed by FHA and also those 100% guaranteed by GNMA where Regions has the right but not the obligation to repurchase. Total 30-89 days past due guaranteed loans excluded were $18 million at 9/30/13, $20 million at 6/30/13, $17 million at 3/31/13, $16 million at 12/31/12, and $18 million at 9/30/12. |
(2) | Excludes loans that are 100% guaranteed by FHA and also those 100% guaranteed by GNMA where Regions has the right but not the obligation to repurchase. Total 90 days or more past due guaranteed loans excluded were $97 million at 9/30/13, $96 million at 6/30/13, $98 million at 3/31/13, $87 million at 12/31/12, and $71 million at 9/30/12. |
14
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Troubled Debt Restructurings
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||
Current: | ||||||||||||||||||||
Commercial | $ | 428 | $ | 426 | $ | 486 | $ | 462 | $ | 495 | ||||||||||
Investor Real Estate | 599 | 721 | 763 | 844 | 911 | |||||||||||||||
Residential First Mortgage | 894 | 898 | 891 | 867 | 847 | |||||||||||||||
Home Equity | 337 | 343 | 354 | 356 | 372 | |||||||||||||||
Consumer Credit Card | 2 | 1 | 1 | — | — | |||||||||||||||
Other Consumer | 28 | 31 | 34 | 37 | 41 | |||||||||||||||
Total Current | 2,288 | 2,420 | 2,529 | 2,566 | 2,666 | |||||||||||||||
Accruing 30-89 DPD: | ||||||||||||||||||||
Commercial | 17 | 18 | 25 | 38 | 51 | |||||||||||||||
Investor Real Estate | 88 | 26 | 27 | 29 | 44 | |||||||||||||||
Residential First Mortgage | 104 | 91 | 105 | 117 | 118 | |||||||||||||||
Home Equity | 29 | 33 | 28 | 35 | 33 | |||||||||||||||
Other Consumer | 3 | 3 | 3 | 4 | 4 | |||||||||||||||
Total Accruing 30-89 DPD | 241 | 171 | 188 | 223 | 250 | |||||||||||||||
Total Accruing and <90 DPD | 2,529 | 2,591 | 2,717 | 2,789 | 2,916 | |||||||||||||||
Non-accrual or 90+ DPD: | ||||||||||||||||||||
Commercial | 283 | 302 | 289 | 291 | 308 | |||||||||||||||
Investor Real Estate | 174 | 208 | 278 | 251 | 368 | |||||||||||||||
Residential First Mortgage | 161 | 177 | 191 | 201 | 209 | |||||||||||||||
Home Equity | 31 | 31 | 34 | 37 | 33 | |||||||||||||||
Total Non-accrual or 90+DPD | 649 | 718 | 792 | 780 | 918 | |||||||||||||||
Total TDRs | $ | 3,178 | $ | 3,309 | $ | 3,509 | $ | 3,569 | $ | 3,834 |
15
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Reconciliation to GAAP Financial Measures—Continuing Operations
Efficiency Ratios and Fee Income Ratios
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 income 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 income ratio. Net interest income on a taxable-equivalent basis 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 income 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.
Quarter Ended | ||||||||||||||||||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 3Q13 vs. 2Q13 | 3Q13 vs. 3Q12 | |||||||||||||||||||||||||||||
Continuing Operations | ||||||||||||||||||||||||||||||||||||
Non-interest expense (GAAP) | $ | 884 | $ | 884 | $ | 842 | $ | 902 | $ | 869 | $ | — | NM | $ | 15 | 1.7 | % | |||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
REIT investment early termination costs | — | — | — | (42 | ) | — | — | NM | — | NM | ||||||||||||||||||||||||||
Loss on early extinguishment of debt | (5 | ) | (56 | ) | — | (11 | ) | — | 51 | (91.1 | )% | (5 | ) | NM | ||||||||||||||||||||||
Adjusted non-interest expense (non-GAAP) | A | $ | 879 | $ | 828 | $ | 842 | $ | 849 | $ | 869 | $ | 51 | 6.2 | % | $ | 10 | 1.2 | % | |||||||||||||||||
Net interest income (GAAP) | $ | 824 | $ | 808 | $ | 798 | $ | 818 | $ | 817 | $ | 16 | 2.0 | % | $ | 7 | 0.9 | % | ||||||||||||||||||
Taxable-equivalent adjustment | 14 | 13 | 13 | 13 | 13 | 1 | 7.7 | % | 1 | 7.7 | % | |||||||||||||||||||||||||
Net interest income, taxable-equivalent basis | 838 | 821 | 811 | 831 | 830 | 17 | 2.1 | % | 8 | 1.0 | % | |||||||||||||||||||||||||
Non-interest income (GAAP) | 495 | 497 | 501 | 536 | 533 | (2 | ) | (0.4 | )% | (38 | ) | (7.1 | )% | |||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||
Securities gains, net | (3 | ) | (8 | ) | (15 | ) | (12 | ) | (12 | ) | 5 | (62.5 | )% | 9 | (75.0 | )% | ||||||||||||||||||||
Gain on sale of other assets(1) | (24 | ) | — | — | — | — | (24 | ) | NM | (24 | ) | NM | ||||||||||||||||||||||||
Adjusted non-interest income (non-GAAP) | B | 468 | 489 | 486 | 524 | 521 | (21 | ) | (4.3 | )% | (53 | ) | (10.2 | )% | ||||||||||||||||||||||
Adjusted total revenue (non-GAAP) | C | $ | 1,306 | $ | 1,310 | $ | 1,297 | $ | 1,355 | $ | 1,351 | $ | (4 | ) | (0.3 | )% | $ | (45 | ) | (3.3 | )% | |||||||||||||||
Adjusted efficiency ratio (non-GAAP) | A/C | 67.3 | % | 63.1 | % | 64.9 | % | 62.7 | % | 64.3 | % | |||||||||||||||||||||||||
Adjusted fee income ratio (non-GAAP) | B/C | 35.9 | % | 37.3 | % | 37.5 | % | 38.7 | % | 38.6 | % |
_________
NM - Not Meaningful
(1) Gain on sale of a non-core portion of a Wealth Management business.
16
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Reconciliation to GAAP Financial Measures
Return Ratios, Tangible Common Ratios, Capital
The following tables provide calculations of “return on average assets from continuing operations”, “return on average tangible common stockholders’ equity”, end of period “tangible common stockholders’ equity” ratios and a reconciliation of stockholders’ equity (GAAP) to tangible common stockholders’ equity (non-GAAP), Tier 1 capital (regulatory) and “Tier 1 common equity” (non-GAAP). Tangible common stockholders’ equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. 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 prescribed in amount by federal banking regulations. In connection with the Company’s Comprehensive Capital Analysis 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 (under Basel I), analysts and banking regulators have assessed Regions’ capital adequacy using the tangible common stockholders’ equity and/or the Tier 1 common equity measures. Because tangible common stockholders’ and Tier 1 common equity are not formally defined by GAAP or prescribed in any amount by federal banking regulations (under Basel I), these measures are currently considered to be non-GAAP financial measures and other entities may calculate them differently than Regions’ disclosed calculations. Since analysts and banking regulators may assess Regions’ capital adequacy using tangible common stockholders’ equity and Tier 1 common equity, management believes that it is useful to provide investors the ability to assess Regions’ capital adequacy on these same bases.
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.
As of and for Quarter Ended | ||||||||||||||||||||||
($ amounts in millions, except per share data) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||||
Net income available to common shareholders (GAAP) | D | $ | 285 | $ | 259 | $ | 327 | $ | 261 | $ | 301 | |||||||||||
REIT investment early termination costs, net of tax(1) | — | — | — | 38 | — | |||||||||||||||||
Adjusted income available to common shareholders (non-GAAP) | E | $ | 285 | $ | 259 | $ | 327 | $ | 299 | $ | 301 | |||||||||||
Net income available to common shareholders (GAAP) | D | $ | 285 | $ | 259 | $ | 327 | $ | 261 | $ | 301 | |||||||||||
Income (loss) from discontinued operations, net of tax (GAAP) | — | (1 | ) | 2 | (12 | ) | (11 | ) | ||||||||||||||
Income from continuing operations available to common shareholders (GAAP) | F | 285 | 260 | 325 | 273 | 312 | ||||||||||||||||
REIT investment early termination costs, net of tax from continuing operations (1) | — | — | — | 38 | — | |||||||||||||||||
Adjusted income from continuing operations available to common shareholders (non-GAAP) | G | $ | 285 | $ | 260 | $ | 325 | $ | 311 | $ | 312 | |||||||||||
RETURN ON AVERAGE ASSETS FROM CONTINUING OPERATIONS | ||||||||||||||||||||||
Average assets (GAAP)—continuing operations | H | $ | 116,917 | $ | 118,248 | $ | 119,123 | $ | 121,036 | $ | 121,531 | |||||||||||
Return on average assets from continuing operations (GAAP)(2) | F/H | 0.97 | % | 0.88 | % | 1.11 | % | 0.90 | % | 1.02 | % | |||||||||||
Adjusted return on average assets from continuing operations (non-GAAP)(2) | G/H | 0.97 | % | 0.88 | % | 1.11 | % | 1.02 | % | 1.02 | % | |||||||||||
RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
Average stockholders’ equity (GAAP) | $ | 15,317 | $ | 15,644 | $ | 15,552 | $ | 15,265 | $ | 14,663 | ||||||||||||
Less: | ||||||||||||||||||||||
Average intangible assets (GAAP) | 5,129 | 5,141 | 5,154 | 5,170 | 5,195 | |||||||||||||||||
Average deferred tax liability related to intangibles (GAAP) | (188 | ) | (188 | ) | (190 | ) | (193 | ) | (198 | ) | ||||||||||||
Average preferred equity (GAAP) | 460 | 468 | 476 | 321 | — | |||||||||||||||||
Average tangible common stockholders’ equity (non-GAAP) | I | $ | 9,916 | $ | 10,223 | $ | 10,112 | $ | 9,967 | $ | 9,666 | |||||||||||
Return on average tangible common stockholders’ equity (non-GAAP)(2) | D/I | 11.41 | % | 10.15 | % | 13.12 | % | 10.42 | % | 12.39 | % | |||||||||||
Adjusted return on average tangible common stockholders’ equity (non-GAAP)(2) | E/I | 11.41 | % | 10.15 | % | 13.12 | % | 11.93 | % | 12.39 | % |
17
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Return Ratios, Tangible Common Ratios, Capital (Continued)
As of and for Quarter Ended | ||||||||||||||||||||||
($ amounts in millions, except per share data) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||||
TANGIBLE COMMON RATIOS—CONSOLIDATED | ||||||||||||||||||||||
Stockholders’ equity (GAAP) | $ | 15,489 | $ | 15,329 | $ | 15,740 | $ | 15,499 | $ | 14,901 | ||||||||||||
Less: | ||||||||||||||||||||||
Preferred equity (GAAP) | 458 | 466 | 474 | 482 | — | |||||||||||||||||
Intangible assets (GAAP) | 5,123 | 5,134 | 5,147 | 5,161 | 5,181 | |||||||||||||||||
Deferred tax liability related to intangibles (GAAP) | (189 | ) | (187 | ) | (189 | ) | (191 | ) | (195 | ) | ||||||||||||
Tangible common stockholders’ equity (non-GAAP) | J | $ | 10,097 | $ | 9,916 | $ | 10,308 | $ | 10,047 | $ | 9,915 | |||||||||||
Total assets (GAAP) | $ | 116,864 | $ | 118,707 | $ | 119,718 | $ | 121,347 | $ | 121,798 | ||||||||||||
Less: | ||||||||||||||||||||||
Intangible assets (GAAP) | 5,123 | 5,134 | 5,147 | 5,161 | 5,181 | |||||||||||||||||
Deferred tax liability related to intangibles (GAAP) | (189 | ) | (187 | ) | (189 | ) | (191 | ) | (195 | ) | ||||||||||||
Tangible assets (non-GAAP) | K | $ | 111,930 | $ | 113,760 | $ | 114,760 | $ | 116,377 | $ | 116,812 | |||||||||||
Shares outstanding—end of quarter | L | 1,378 | 1,395 | 1,413 | 1,413 | 1,413 | ||||||||||||||||
Tangible common stockholders’ equity to tangible assets (non-GAAP) | J/K | 9.02 | % | 8.72 | % | 8.98 | % | 8.63 | % | 8.49 | % | |||||||||||
Tangible common book value per share (non-GAAP) | J/L | $ | 7.32 | $ | 7.11 | $ | 7.29 | $ | 7.11 | $ | 7.02 | |||||||||||
TIER 1 COMMON RISK-BASED RATIO(3) —CONSOLIDATED | ||||||||||||||||||||||
Stockholders’ equity (GAAP) | $ | 15,489 | $ | 15,329 | $ | 15,740 | $ | 15,499 | $ | 14,901 | ||||||||||||
Accumulated other comprehensive (income) loss | 411 | 478 | 12 | (65 | ) | (202 | ) | |||||||||||||||
Non-qualifying goodwill and intangibles | (4,804 | ) | (4,812 | ) | (4,819 | ) | (4,826 | ) | (4,836 | ) | ||||||||||||
Disallowed deferred tax assets | — | — | — | (35 | ) | (238 | ) | |||||||||||||||
Disallowed servicing assets | (30 | ) | (30 | ) | (37 | ) | (33 | ) | (33 | ) | ||||||||||||
Qualifying non-controlling interests | — | — | 93 | 93 | 93 | |||||||||||||||||
Qualifying trust preferred securities | — | 3 | 501 | 501 | 846 | |||||||||||||||||
Tier 1 capital (regulatory) | $ | 11,066 | $ | 10,968 | $ | 11,490 | $ | 11,134 | $ | 10,531 | ||||||||||||
Qualifying non-controlling interests | — | — | (93 | ) | (93 | ) | (93 | ) | ||||||||||||||
Qualifying trust preferred securities | — | (3 | ) | (501 | ) | (501 | ) | (846 | ) | |||||||||||||
Preferred stock | (458 | ) | (466 | ) | (474 | ) | (482 | ) | — | |||||||||||||
Tier 1 common equity (non-GAAP) | M | $ | 10,608 | $ | 10,499 | $ | 10,422 | $ | 10,058 | $ | 9,592 | |||||||||||
Risk-weighted assets (regulatory) | N | 95,415 | 94,640 | 92,787 | 92,811 | 91,723 | ||||||||||||||||
Tier 1 common risk-based ratio (non-GAAP) | M/N | 11.1 | % | 11.1 | % | 11.2 | % | 10.8 | % | 10.5 | % |
(1) | In the fourth quarter of 2012, Regions entered into an agreement with a third party investor in Regions Asset Management Company, Inc., pursuant to which the investment was fully redeemed. This resulted in extinguishing a $203 million liability, including accrued, unpaid interest, as well as incurring early termination costs of approximately $42 million on a pre-tax basis ($38 million after tax). |
(2) | Annualized |
(3) | Current quarter amounts and the resulting ratio are estimated. |
18
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Statements of Discontinued Operations (unaudited)
On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and Company, Inc. and related affiliates to Raymond James Financial Inc. The sale was closed on April 2, 2012. Regions Investment Management, Inc. (formerly known as Morgan Asset Management, Inc.) and Regions Trust were not included in the sale. In connection with the agreement, the results of the entities sold are reported as discontinued operations. The following table represents the unaudited condensed results of operations for discontinued operations.
Quarter Ended | ||||||||||||||||||||
($ amounts in millions) | 9/30/2013 | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Gain on sale | $ | — | $ | — | $ | — | $ | 3 | $ | 1 | ||||||||||
Other | — | — | — | 5 | — | |||||||||||||||
Total non-interest income | — | — | — | 8 | 1 | |||||||||||||||
Non-interest expense: | ||||||||||||||||||||
Professional and legal fees | 3 | 1 | (5 | ) | 27 | 19 | ||||||||||||||
Other | (2 | ) | 1 | 1 | — | 1 | ||||||||||||||
Total non-interest expense | 1 | 2 | (4 | ) | 27 | 20 | ||||||||||||||
Income (loss) from discontinued operations before income tax | (1 | ) | (2 | ) | 4 | (19 | ) | (19 | ) | |||||||||||
Income tax expense (benefit) | (1 | ) | (1 | ) | 2 | (7 | ) | (8 | ) | |||||||||||
Income (loss) from discontinued operations, net of tax | $ | — | $ | (1 | ) | $ | 2 | $ | (12 | ) | $ | (11 | ) | |||||||
Weighted-average shares outstanding—during quarter (1): | ||||||||||||||||||||
Basic | 1,388 | 1,401 | 1,413 | 1,413 | 1,414 | |||||||||||||||
Diluted | 1,388 | 1,401 | 1,423 | 1,413 | 1,414 | |||||||||||||||
Earnings (loss) per common share from discontinued operations: | ||||||||||||||||||||
Basic | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) | ||||||
Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.00 | $ | (0.01 | ) | $ | (0.01 | ) |
(1) | In a quarter where there is a loss from discontinued operations, basic and diluted weighted-average common shares outstanding are the same. |
19
Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
Forward-Looking Statements
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:
• | The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) became law in July 2010, and a number of legislative, regulatory and tax proposals remain pending. All of the foregoing may have significant effects on Regions and the financial services industry, the exact nature and extent of which cannot be determined at this time. |
• | Current developments in recent litigation against the Board of Governors of the Federal Reserve System could result in possible reductions in the maximum permissible interchange fee that an issuer may receive for electronic debit transactions and/or the possible expansion of providing merchants with the choice of multiple unaffiliated payment networks for each transaction, each of which could negatively impact the income Regions currently receives with respect to those transactions. |
• | Possible additional loan losses, impairment of goodwill and other intangibles, and adjustment of valuation allowances on deferred tax assets and the impact on earnings and capital. |
• | Possible changes in interest rates may increase funding costs and reduce earning asset yields, thus reducing margins. Increases in benchmark interest rates could also increase debt service requirements for customers whose terms include a variable interest rate, which may negatively impact the ability of borrowers to pay as contractually obligated. |
• | Possible adverse 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 the collectability of loans. |
• | Possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations, may have an adverse effect on business. |
• | Possible regulations issued by the Consumer Financial Protection Bureau or other regulators which might adversely impact Regions’ business model or products and services. |
• | Regions’ ability to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or issue or redeem preferred stock or other regulatory capital instruments, is subject to the review of such proposed actions by the Federal Reserve as part of Regions’ comprehensive capital plan for the applicable period in connection with the regulators’ Comprehensive Capital Analysis and Review (CCAR) process and to the acceptance of such capital plan and non-objection to such capital actions by the Federal Reserve. |
• | Possible stresses in the financial and real estate markets, including possible deterioration in property values. |
• | 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 expand into new markets and to maintain profit margins in the face of competitive pressures. |
• | 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. |
• | Cyber-security risks, including “denial of service,” “hacking” and “identity theft,” that could adversely affect our business and financial performance, or our reputation. |
• | Regions’ ability to keep pace with technological changes. |
• | Regions’ ability to effectively identify and manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk, reputational risk, counterparty risk, international risk, regulatory risk, and compliance risk. |
• | Regions’ ability to ensure adequate capitalization which is impacted by inherent uncertainties in forecasting credit losses. |
• | The reputational damage, cost and other effects of material contingencies, including litigation contingencies, and negative publicity, fines, penalties, and other negative consequences from any adverse judicial, administrative or arbitral rulings or proceedings, regulatory violations and legal actions. |
• | The effects of increased competition from both banks and non-banks. |
• | The effects of geopolitical instability and risks such as terrorist attacks. |
• | Regions’ ability to identify and address data security breaches. |
• | 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 floods, droughts, wind, tornadoes and hurricanes, and the effects of man-made disasters. |
• | Possible downgrades in ratings issued by rating agencies. |
• | Possible changes in the speed of loan prepayments by Regions’ customers and loan origination or sales volumes. |
• | Possible acceleration of prepayments on mortgage-backed securities due to low interest rates and the related acceleration of premium amortization on those securities. |
• | The effects of problems encountered by larger or similar financial institutions that adversely affect Regions or the banking industry generally. |
• | Regions’ ability to receive dividends from its subsidiaries. |
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Regions Financial Corporation and Subsidiaries
Financial Supplement to Third Quarter 2013 Earnings Release
• | The effects of the failure of any component of Regions’ business infrastructure which is provided by a third party. |
• | Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. |
• | The effects of any damage to Regions’ reputation resulting from developments related to any of the items identified above. |
The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions “Forward-Looking Statements” and “Risk Factors” of Regions’ Annual Report on Form 10-K for the year ended December 31, 2012 and the “Forward-Looking Statements” section of Regions’ Quarterly Report on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, as filed 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. We assume no obligation to update or revise any forward-looking statements that are made from time to time.
Regions’ Investor Relations contact is List Underwood at (205) 801-0265; Regions’ Media contact is Evelyn Mitchell at (205) 264-4551.
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