SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MORGAN KEEGAN, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Information Concerning Participants
Morgan Keegan, Inc. (the "Company") and certain other persons named
below may be deemed to be participants in the solicitation of proxies of the
Company's shareholders to approve the proposed merger between the Company and
Regions Financial Corporation. The participants in this solicitation may be
deemed to include the directors and executive officers of the Company. As of
September 29, 2000, the directors and executive officers of the Company as a
group beneficially owned approximately 24.3% of the Company's outstanding common
stock. Additional information about the directors and executive officers of the
Company is included in the Company's proxy statement for its 2000 Annual Meeting
of Shareholders dated October 20, 2000. Information will also be included in a
proxy statement/prospectus to be filed by the Company and Regions in connection
with the proposed merger. Investors will be able to obtain these documents free
of charge at the SEC's web site (www.sec.gov) or by contacting Morgan Keegan,
Inc., 50 North Front Street, Memphis, Tennessee, 38103, Attention: Joseph C.
Weller, Secretary, telephone (901) 524-4100.
INVESTORS SHOULD READ THE JOINT PROXY STATEMENT-PROSPECTUS CAREFULLY
WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS.
The following is a press release issued by Regions Financial Corporation on
December 18, 2000:
REGIONS TO ACQUIRE MORGAN KEEGAN
BIRMINGHAM, Ala.--(BUSINESS WIRE)--Dec. 18, 2000--Regions Financial Corp.
(NASDAQ:RGBK) and Morgan Keegan, Inc. (NYSE:MOR)
o Creates leading diversified financial services company in the South
o Excellent strategic fit which accelerates Regions' wealth management
strategy
o Morgan Keegan is a premier regional broker-dealer
o Financially attractive
o Low-risk integration
Regions Financial Corp. (NASDAQ:RGBK) and Morgan Keegan, Inc. (NYSE:MOR) today
announced the signing of a definitive agreement under which Regions will acquire
the Memphis based Morgan Keegan. The acquisition will allow Regions to offer a
full range of retail and institutional brokerage and investment banking services
to its customers. Morgan Keegan will maintain its name and operate as a separate
subsidiary of Regions. Allen B. Morgan, Jr., currently Chairman and Chief
Executive Officer of Morgan Keegan, will continue in that capacity and will join
the Board of Directors of Regions.
"This transaction is about better serving our clients and accelerating our long
term earnings growth," Regions' President and Chief Executive Officer, Carl E.
Jones, Jr., explained. "The combined strengths of Regions and Morgan Keegan
coupled with a presence in the same regional markets means that we will be able
to offer our commercial, municipal, retail and private banking clients a broader
range of financial solutions and advisory services to satisfy their financial
needs. Our firms share a common commitment to providing the highest standard of
quality products and services to our regional customer base. I am excited about
the significant potential benefits from this transaction and, based on our
common operating culture and competitive strategies, I am convinced we can
realize them."
Allen Morgan said, "Regions is an ideal partner for Morgan Keegan. Together we
will create the full range financial services company our customers need and
want. Morgan Keegan significantly enhances Regions' retail and institutional
brokerage, fixed income and asset management capabilities and adds equity
capital markets, investment banking and mergers and acquisitions to Regions'
commercial and retail banking, trust, insurance and mortgage banking businesses.
Combining with Regions will provide us with a unique platform, which comes with
being part of a large financial services company. Retaining our identity as an
independent operating subsidiary will set us apart from other firms and will
allow us to maintain our entrepreneurial culture," Morgan Keegan's CEO
concluded.
Under the terms of the agreement, Regions will pay $27.00 per share for each
Morgan Keegan share in a transaction valued at $789 million. In addition,
Regions has established an employee retention pool of 5.55 million stock options
for key employees of Morgan Keegan. Morgan Keegan executive officers and
directors, owning approximately 23% of the Morgan Keegan stock, have agreed to
vote in favor of the merger. Additionally, Regions and Morgan Keegan
1
have entered into a termination fee agreement under which Regions will receive a
fee of $25 million under certain circumstances in the event the transaction is
terminated.
The merger agreement provides for a tax-free exchange of Regions common shares
for shares of Morgan Keegan. The per share exchange ratio will be based on the
daily volume weighted average trading price per Regions share over the ten
trading days ending two days prior to the closing. In lieu of Regions shares,
Morgan Keegan shareholders may elect to receive $27.00 per share in cash at
closing subject to a maximum of 30% (which may be increased at Regions'
discretion) of Morgan Keegan's shares being exchanged for cash. Based on First
Call consensus estimates, the transaction is expected to be modestly dilutive to
Regions' 2001 earnings per share and accretive thereafter. The transaction will
be immediately accretive to Regions' cash earnings per share. As a result of
this transaction, Regions' non-interest income is expected to rise from
approximately 30% to approximately 40% of total revenue.
Regions' Board of Directors has authorized the Company to repurchase up to 100%
of the shares issued in connection with this transaction. These repurchases will
be in addition to Regions' previously announced repurchase plans. In addition,
Regions may purchase shares of common stock of Morgan Keegan, as well, prior to
consummation of the acquisition.
After the transaction, Morgan Keegan will become Regions' brokerage and capital
markets engine. As a result, Regions will merge its brokerage operations into
Morgan Keegan. This combination will result in a company with 54 offices
operating in 14 states with 961 Series 7 retail and institutional brokers. The
firm will maintain its headquarters in Memphis and the senior management of
Morgan Keegan will manage the combined operations of Morgan Keegan and Regions
Investment Company, Inc. "I am excited at the opportunities afforded Morgan
Keegan by the additional personnel and relationships which will come to our firm
with the merger with Regions" Allen Morgan said. "With our expanded capabilities
and access to Regions' customers, I am confident we can increase the penetration
in our commercial and retail businesses by offering a broader product array to
our joint customer bases," he concluded.
The acquisition, which will be accounted for as a purchase, is expected to close
during the first quarter of 2001, pending Morgan Keegan stockholder approval,
regulatory approval, as well as other customary conditions of closing.
Regions and Morgan Keegan will host a conference call to discuss this
transaction at 10:30 a.m. (Eastern Standard Time) on December 18, 2000.
Investors, analysts and other interested parties may dial in the conference call
at 973-628-7055. In addition, a slide presentation containing information
related to the transaction will be available on Regions' Web site at
http://www.regionsbank.com shortly before the conference call. A replay of the
conference call will be available through January 12, 2001, by dialing
402-220-2922.
Morgan Keegan & Company, Inc. is one of the South's largest investment firms.
Through their 54 offices in 13 states, Morgan Keegan serves individual investors
in the Southern United States and institutional clients throughout the United
States and abroad. With more than 2,000 employees and over $250 million in
equity capital, Morgan Keegan is an established leader in the financial services
industry in the South.
2
Regions Financial Corporation is a $43.6 billion bank holding company providing
banking services from more than 750 offices in Alabama, Arkansas, Florida,
Georgia, Louisiana, South Carolina, Tennessee and Texas. Regions also provides
banking-related services in the fields of mortgage banking, insurance,
securities brokerage and mutual funds. Regions' common stock is traded in the
Nasdaq National Market System under the symbol RGBK.
Investors and security holders are advised to read the proxy
statement/prospectus regarding the proposed transaction referenced in this press
release when it becomes available, because it will contain important
information. The proxy statement/prospectus will be filed with the Securities
and Exchange Commission by Regions and Morgan Keegan. Security holders may
receive a free copy of the proxy statement/prospectus (when available) and other
related documents filed by Regions and Morgan Keegan at the Commission's website
at http://www.sec.gov. Copies of the proxy statement/prospectus and other
related documents can also be obtained, without charge, by directing a request
to Regions Financial Corporation, 417 N. 20th Street, Birmingham, Alabama 35203,
Attention: Ronald C. Jackson (205-326-7374) or to Morgan Keegan, Inc., Fifty
North Front Street, Memphis, Tennessee 38103, Attention: Joseph C. Weller
(901-524-4100).
Morgan Keegan and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from stockholders of Morgan Keegan
with respect to the transactions contemplated by the merger agreement.
Information regarding such officers and directors is included in Morgan Keegan's
proxy statement for its 2000 annual meeting of stockholders filed with the
Commission on October 20, 2000. This document is available free of charge at the
Commission's website at http://www.sec.gov and/or from Morgan Keegan.
For additional information, visit Regions' Web site at
http://www.regionsbank.com or contact: Media: For Regions, Kathie B. Martin at
205-326-7188 Investors: For Regions, Ronald C. Jackson at 205-326-7374
Forward-Looking Statements:
The information contained in this press release may include forward-looking
statements that reflect Regions' current views with respect to future events and
financial performance. Regions' management believes that these forward-looking
statements are reasonable, however, you should not place undue reliance on these
statements as they are based only on current expectations and 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. Such forward-looking statements are
made in good faith by Regions pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995.
The words "believe", "expect", "anticipate", "project", and similar expressions
signify forward-looking statements. Readers are cautioned not to place undue
reliance on any forward-looking statements made by or on behalf of Regions. Any
such statement speaks only as of the date the statement was made. Regions
undertakes no obligation to update or revise any forward-looking statements.
Some factors which may affect the accuracy of our projections apply generally to
the financial services industry, including: (a) the easing of restrictions on
participants in the financial services
3
industry, such as banks, securities brokers and dealers, investment companies,
and finance companies, may increase our competitive pressures; (b) possible
changes in interest rates may increase our funding costs and reduce our earning
asset yields, thus reducing our margins; (c) possible changes in general
economic and business conditions in the United States and the Southeast in
general and in the communities we serve in particular may lead to a
deterioration in credit quality, thereby increasing our provisioning costs, or a
reduced demand for credit, thereby reducing our earning assets; (d) possible
changes in trade, monetary and fiscal policies, laws, and regulations, and other
activities of governments, agencies, and similar organizations, including
changes in accounting standards, may have an adverse effect on our business; and
(e) possible changes in consumer and business spending and saving habits could
have an effect on our ability to grow our assets and to attract deposits.
Other factors which may affect the accuracy of our projections are specific to
Regions, including: (i) the cost and other effects of material contingencies,
including litigation contingencies; (ii) our ability to expand into new markets
and to maintain profit margins in the face of pricing pressures; (iii) our
ability to keep pace with technological changes; (iv) our 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 Regions
customers; (v) our ability to effectively manage interest rate risk, credit risk
and operational risk; (vi) our ability to manage fluctuations in the value of
our assets and liabilities and off-balance sheet exposures so as to maintain
sufficient capital liquidity to support our business; and (vii) our ability to
achieve the earnings expectations related to the businesses that we have
recently acquired or may acquire in the future (including the Morgan Keegan
transaction), which in turn depends on a variety of factors, including: our
ability to achieve in a timely manner anticipated cost savings and revenue
enhancements with respect to acquired operations; the assimilation of acquired
operations to the Regions corporate culture, including the ability to instill
our credit practices and efficient approach to acquired operations; our ability
to retain existing customers and employees of acquired operations; and the
continued growth of the markets that the acquired entities serve, consistent
with recent historical experience.
Regions Financial Corporation/Morgan Keegan, Inc. Affiliation Q & A
Q What is this new affiliation between Regions and Morgan Keegan?
A On December 18, Regions Financial Corporation announced the signing of
a definitive agreement under which Regions would acquire the
Memphis-based securities firm, Morgan Keegan. The acquisition, which
will be accounted for as a purchase, is expected to close during the
first quarter of 2001, pending Morgan Keegan stockholder approval,
regulatory approval, as well as other customary conditions of closing.
Q Who is Morgan Keegan, Inc?
A Morgan Keegan & Company, Inc. is one of the South's largest investment
firms. With their 54 offices in 13 states, Morgan Keegan serves
individual investors in the southern United States and institutional
clients throughout the U.S. and abroad.
4
Morgan Keegan & Company, Inc. is a subsidiary of Morgan Keegan Inc., a
financial services holding company listed on the New York Stock
Exchange as MOR.
Headquartered in Memphis, Tennessee, it operates offices in Alabama,
Arkansas, Florida, Georgia, Kentucky, Louisiana, Massachusetts,
Mississippi, New York, North Carolina, Tennessee, Texas and Virginia.
Morgan Keegan employs more than 2,000 individuals including 761
investment advisors.
Q What are the primary market sectors for Morgan Keegan?
A Morgan Keegan's primary sectors are Private Client Brokerage, Public
Finance, Agency and Corporate Fixed Income, Research, Equity Capital
Markets, Asset Management, and Corporate Finance Advisory.
Q Why is Regions acquiring an investment firm?
A Regions was already expanding the investment services it offers to its
banking customers through a project called Regions Asset Management
Strategy (RAMS). This expansion would have taken several years to
achieve the market penetration enjoyed by Morgan Keegan so the merger
fast-forwards Regions into its five-year plan. This transaction also
should enable Regions to better serve its customers and is expected to
accelerate long-term earnings growth. The combined strengths and
presence in the same regional markets will provide commercial,
municipal, retail and private banking customers of the combined firm a
broader range of financial solutions and advisory services to satisfy
their financial needs. The addition of Morgan Keegan also brings
Regions a wealth of respected investment expertise that will allow it
to better serve the growing investment needs of its customers. The
many similarities Morgan Keegan shares with Regions in the areas of
management style, corporate culture and a focus on quality make this
an excellent combination that should benefit customers and
shareholders of both organizations.
Q Will Morgan Keegan continue to operate as it has?
A Morgan Keegan will maintain its name and operate as a separate
subsidiary of Regions. Allen B. Morgan, Jr., currently Chairman and
Chief Executive Officer of Morgan Keegan, will continue in that
capacity and will also join the Regions Corporate Board of Directors.
Regions Investment Company, Inc., will become part of the Morgan
Keegan operation. The combination of the two companies will greatly
enhance opportunities for both Morgan Keegan and Regions Investment
brokers and customers by broadening the financial services offered by
both organizations.
Q How does Morgan Keegan compare in size to Regions Investment Company?
A Morgan Keegan is approximately ten times larger than Regions' existing
investment operation.
Q When is the acquisition expected to close?
5
A A first quarter 2001 closing is anticipated but this date is dependent
on regulatory timelines.
Q Will there be management changes within Morgan Keegan?
A Allen B. Morgan, Jr. and the existing Morgan Keegan management team
will continue to make all decisions relative to the management
structure within Morgan Keegan.
Q How will Regions Investment Company and Morgan Keegan customers be
affected?
A The combination of the two companies should be largely transparent to
the customers of Morgan Keegan. Once the merger is effective,
customers of Regions Investment Company will see the name of the
provider of the services they receive shift to Morgan Keegan, a
Regions company. The Morgan Keegan customers will only find a much
broader array of traditional banking services available to them.
Q Are there additional financing opportunities for the middle-market
commercial customers of Regions as a result of this merger?
A This combination will clearly enable Regions customers to have access
to capital markets that they have not heretofore been able to utilize
through Regions.
Q What happens to Morgan Keegan's branch offices?
A The offices are outstanding facilities and will remain intact to
augment the distribution channel of more than 750 Regions offices.
Morgan Keegan will explore the potential of opening new offices in
those Regions markets not having direct access to their services as
well as co-location in Regions offices as market demographics indicate
preferences and propensity to use these services.
Q Will the MOR asset management account be utilized by the Regions
branch distribution network?
A The MOR Account is an integrated asset management program with an
array of features including a Morgan Keegan margin securities account
- or a cash account, if preferred - four money market fund options, a
checking account, debit card, Internet access and other special
features. This product is new for Regions and will be offered
initially to Regions customers directly through the Morgan Keegan
offices. Distribution through Regions offices will be considered as a
future initiative.
Q What is the overriding value or theme that best describes Morgan
Keegan?
A Morgan Keegan is in the business of creating wealth for their clients.
Q Does Regions anticipate a change in its corporate structure as a
result of this transaction?
A Regions plans to file to become a Financial Services Holding Company
as permitted under the new Financial Modernization Act. The
convergence of the financial services industry
6
has accelerated with the regulatory changes provided by this new federal
law. This new law allows more flexibility for companies, enables more open
competition for the financial services industry, and creates opportunities
for customers to obtain improved service levels and expanded product
offerings.
Q Will this merger affect the quality of service provided by either
company?
A The banking customers of Regions and Morgan Keegan clients will
experience no change really because there is no system conversion
required for either customer group. The investment customers of
Regions will be converted to the Morgan Keegan system during 2001
(planned for June time period). Morgan Keegan's system capability is
more advanced than Regions', so the customers should see improvements
in quality service as well as new product availability.
Note: A Photo is available at URL:
http://www.businesswire.com/cgi-bin/photo.cgi?pw.121800/bb6
Contact:
Regions Financial Corp.
Media:
Kathie B. Martin, 205/326-7188
or
Investors:
Ronald C. Jackson, 205/326-7374
The following is a joint presentation given by officers of the Company and
Regions Financial Corporation to analysts and investors on December 18, 2000:
[Regions Logo] [Morgan Keegan Logo]
A NATURAL COMBINATION FOR GROWTH
December 18, 2000
FORWARD-LOOKING STATEMENT
- --------------------------------------------------------------------------------
The information contained in this presentation may include forward-looking
statements that reflect Regions' current views with respect to future events and
financial performance. Regions' management believes that these forward-looking
statements are reasonable, however, you should not place undue reliance on these
statements as they are based only on current expectations and 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. Such forward-looking statements are
made in good faith by Regions pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995.
The words "believe", "expect", "anticipate", "project", and similar expressions
signify forward-looking statements. Readers are cautioned not to place undue
reliance on any forward-looking statements made by or on behalf of Regions. Any
such statement speaks only as of the date the statement was made. Regions
undertakes no obligation to update or revise any forward-looking statements.
Some factors which may affect the accuracy of our projections apply generally to
the financial services industry, including: (a) the easing of restrictions on
participants in the financial services industry, such as banks, securities
brokers and dealers, investment companies, and finance companies, may increase
our competitive pressures; (b) possible changes in interest rates may increase
our funding costs and reduce our earning asset yields, thus reducing our
margins; (c) possible changes in general economic and business conditions in the
United States and the Southeast in general and in the communities we serve in
particular may lead to a deterioration in credit quality, thereby increasing
our provisioning costs, or a reduced demand for credit, thereby reducing our
earning assets; (d) possible changes in trade, monetary and fiscal policies,
laws, and regulations, and other activities of governments, agencies, and
similar organizations, including changes in accounting standards, may have an
adverse effect on our business; and (e) possible changes in consumer and
business spending and saving habits could have an effect on our ability to grow
our assets and to attract deposits.
Other factors which may affect the accuracy of our projections are specific to
Regions, including (i) the cost and other effects of material contingencies,
including litigation contingencies; (ii) our ability to expand into new markets
and to maintain profit margins in the face of pricing pressures; (iii) our
ability to keep pace with technological changes; (iv) our 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 Regions
customers; (v) our ability to effectively manage interest rate risk, credit risk
and operational risk; (vi) our ability to manage fluctuations in the value of
our assets and liabilities and off-balance sheet exposures so as to maintain
sufficient capital liquidity to support our business; and (vii) our ability
to achieve the earnings expectations related to the businesses that we have
recently acquired or may acquire in the future (including the Morgan Keegan
transaction), which in turn depends on a variety of factors, including: our
ability to achieve in a timely manner anticipated cost savings and revenue
enhancements with respect to acquired operations; the assimilation of acquired
operations to the Regions corporate culture, including the ability to instill
our credit practices and efficient approach to acquired operations; our ability
to retain existing customers and employees of acquired operations; and the
continued growth of the markets that the acquired entities serve, consistent
with recent historical experience.
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
2
- --------------------------------------------------------------------------------
TRANSACTION OVERVIEW
- --------------------------------------------------------------------------------
CARL JONES, JR.
CEO
REGIONS FINANCIAL
CORPORATION
3
STRATEGIC RATIONALE
- --------------------------------------------------------------------------------
A TRANSFORMING TRANSACTION FOR REGIONS
+ CREATE LEADING DIVERSIFIED FINANCIAL SERVICES COMPANY IN THE SOUTH
- Increase non-interest income to 40% of net revenues
- Significantly expand Regions' product capabilities
- Improve focus on middle market corporate and affluent retail customers
- Attractive growth dynamics of brokerage industry
- Convert to financial services holding company
+ ACQUIRE PREMIER REGIONAL BROKER-DEALER
- Diversified business mix
- Leading fixed income franchise
- Morgan Keegan poised for growth
+ EXCELLENT STRATEGIC FIT
- Similar geographic focus
- Complementary client focus
- Strong cultural fit
+ ACCELERATE REGIONS' WEALTH MANAGEMENT STRATEGY
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
4
CREATING A REGIONAL FINANCIAL POWERHOUSE
- --------------------------------------------------------------------------------
IDEALLY POSITIONED TO SERVE MIDDLE MARKET CORPORATE AND AFFLUENT RETAIL
CUSTOMERS THROUGHOUT THE SOUTH.
[Circle Graphic] More than 810 offices
in 14 states
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
+ COMMERCIAL BANKING + PRIVATE CLIENT BROKERAGE
+ RETAIL BANKING + PUBLIC FINANCE
+ TRUST AND ASSET MANAGEMENT + AGENCY AND CORPORATE FIXED
INCOME
+ MORTGAGE BANKING + EQUITY AND FIXED INCOME
RESEARCH
+ INSURANCE + EQUITY CAPITAL MARKETS
+ BROKERAGE AND PUBLIC FINANCE + ASSET AND WEALTH MANAGEMENT
+ SPECIALTY FINANCE + CORPORATE FINANCE ADVISORY
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
5
OPERATING PHILOSOPHY
- --------------------------------------------------------------------------------
MORGAN KEEGAN WILL BECOME REGIONS' BROKERAGE AND CAPITAL
MARKETS ENGINE.
+ MAINTAIN BRAND INDENTITY, MANAGEMENT AND HEADQUARTERS
+ MAINTAIN MORGAN KEEGAN ENTREPRENEURIAL FOCUS AND
OWNERSHIP CULTURE
+ INTEGRATE REGIONS INVESTMENT COMPANY (RICI) INTO MORGAN
KEEGAN
+ MORGAN KEEGAN'S MANAGEMENT RESPONSIBLE FOR EARNINGS AND
STRATEGY OF BROKER-DEALER SEGMENT
+ ALLEN MORGAN TO JOIN REGIONS BOARD
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
6
ATTRACTIVENESS OF BROKERAGE INDUSTRY
- --------------------------------------------------------------------------------
+ ATTRACTIVE RELATIVE EARNINGS GROWTH
- Long-term brokerage industry earnings growth of 12-15%, vs. 8-10% for
banks
- Higher profit margin products
- Fee vs. spread income
+ GROWING INSTITUTIONAL USAGE OF CAPITAL MARKETS
- Broader access to capital markets by middle market companies and
municipalities
- Middle-sized institutional clients under-served in consolidating industry
+ BENEFICIARY OF DEMOGRAPHIC TRENDS
- Growing population of higher-saving "baby boomers"
- Increasing market participation by retail investors
- Significant inter-generational wealth transfer
+ SIGNIFICANT GROWTH OPPORTUNITIES WITHIN REGIONS FRANCHISE
- 1.8 million households use brokerage services in branch footprint
- Of Regions 4.1 million accounts, only 107,000 are brokerage accounts
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
7
TRANSACTION AND FINANCIAL SUMMARY
- --------------------------------------------------------------------------------
+ PURCHASE PRICE
- $27 per share; $789 million in aggregate
- Retention pool of 5.55 million Regions options
+ OTHER TERMS
- Purchase accounting
- Expect to close in the first quarter of 2001
- Morgan Keegan senior management, representing 23% of shares, agreed
to approve transaction
+ FINANCIAL IMPLICATIONS
- Immediate accretion to Cash EPS
- Modestly dilutive to GAAP EPS in 2001; accretive thereafter
- Accelerates earnings growth
- Diversifies revenue streams: fee income rises to 40% of revenues
+ CREATES VALUE FOR REGIONS SHAREHOLDERS
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
8
- --------------------------------------------------------------------------------
OVERVIEW OF MORGAN KEEGAN
- --------------------------------------------------------------------------------
ALLEN MORGAN, JR.
CHAIRMAN AND CEO
MORGAN KEEGAN, INC.
9
OVERVIEW
- --------------------------------------------------------------------------------
MORGAN KEEGAN IS ONE OF THE LARGEST FULL SERVICE BROKERAGE AND
INVESTMENT BANKING FIRMS IN THE SOUTH. THE COMPANY'S CORE FOCUS IS
MIDDLE MARKET CORPORATE CLIENTS AND AFFLUENT RETAIL CUSTOMERS.
[MORGAN KEEGAN LOGO]
---------------- ----------- ----------- --------------
|PRIVATE CLIENT| | FIXED | | EQUITY | | INVESTMENT |
| | | INCOME | | CAPITAL | | ADVISORY |
| | | CAPITAL | | MARKETS | | |
| | | MARKETS | | | | |
---------------- ----------- ----------- --------------
- --------------------------------------------------------------------------------
FY 2000 REVENUES
$242.2 $143.7 $61.0 $38.5
% OF TOTAL 49.0% 29.1% 12.3% 7.8%
- --------------------------------------------------------------------------------
FY 2000 PRE-TAX EARNINGS
$37.0 $19.0 $14.7 $0.9
% OF TOTAL 51.5% 26.5% 20.4% 1.3%
- --------------------------------------------------------------------------------
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
10
OFFICE NETWORK
- --------------------------------------------------------------------------------
- 54 Locations
- 761 Financial Advisors
- Over 2,000 Employees
[Map of Boston, New York, and the Southeastern United States
denoting locations of Morgan Keegan offices and areas where
Regions operates]
[REGIONS LOGO] [MORGAN KEEGAN LOGO]
11
PRIVATE CLIENT GROUP
- --------------------------------------------------------------------------------
MORGAN KEEGAN IS GROWING THE ABSOLUTE NUMBER OF
FINANCIAL ADVISORS AND THEIR AVERAGE PRODUCTION.
[LINE GRAPHS TRANSPOSED OVER BAR GRAPH DEPICTING THE FOLLOWING INFORMATION:
NUMBER OF ADVISORS
FINANCIAL ADVISORS FINANCIAL ADVISORS WITH MORE
THAN ONE YEAR EXPERIENCE
1996 596 487
1997 623 566
1998 662 609
1999 686 624
2000 761 655
AVERAGE PRODUCTION ($000)
AVERAGE PRODUCTION (FINANCIAL ADVISORS WITH MORE THAN ONE YEAR EXPERIENCE)
1996 $346
1997 $363
1998 $437
1999 $447
2000 $469]
[REGIONS] [MORGAN KEEGAN LOGO]
12
FIXED INCOME CAPITAL MARKETS
- --------------------------------------------------------------------------------
MORGAN KEEGAN HAS A STRONG POSITION AS MANAGER FOR MIDDLE
MARKET CORPORATE AND MUNICIPAL BOND ISSUES IN THE SOUTH.
+ MUNICIPAL BOND UNDERWRITING
- Raised $8.9 billion in 409 deals in 2000
- Rank #1 in core region *(a) with 28.1% market share
- Rank #4 in extended region *(b) with 15.4% market share
+ AGENCY BOND UNDERWRITING
- Raised $8.2 billion in 302 deals in 2000
- Rank #12 nationally with 5.6% market share; #1 in number of
transactions
+ CORPORATE BOND UNDERWRITING
- Raised $2.8 billion in 60 deals in 2000
+ OTHER
- Dedicated Fixed Income Research
- Sales and Trading
*(a) Defined as AL, AR, KY, LA, MS and TN
*(b) Defined as core regions plus FL, GA, NC and TX
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EQUITY CAPITAL MARKETS & INVESTMENT ADVISORY
- --------------------------------------------------------------------------------
MORGAN KEEGAN DIFFERENTIATES ITS APPROACH BY FOCUSING ON AREAS OF
STRENGTH AND BOTTOM LINE PERFORMANCE FOR ITS CUSTOMERS.
+ CORPORATE FINANCE AND ADVISORY
- Raised $4.6 billion in 35 transactions as lead or co-lead managers
since 1/1/99
- Advised on 10 M&A transactions since 1/1/99 with $711 million
aggregate value
+ FOCUSED EQUITY RESEARCH
- 12 knowledge corridors
- 23 senior analysts, including 6 ranked by WSJ
+ BOTTOM-LINE PERFORMANCE
- #1-ranked focus list for one and five year periods *(a)
+ ASSET AND WEALTH MANAGEMENT
- $1.9 billion in AUM including proprietary mutual funds
- Recently created WealthTrust strategy
*(a) Source: Zacks, for the periods ended March 31, 2000.
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FINANCIAL SUMMARY
- --------------------------------------------------------------------------------
YEAR ENDED JULY 31, QUARTER ENDED OCTOBER 31, CAGR
---------------------- --------------------------- ------------------------
1999 2000 1999 2000*(a) FY99-FY00 1Q00-1Q01
--------- ----------- ------------ ------------- --------- -----------
Private Client Group $ 188 $ 242 $ 47 $ 59 29 % 26 %
Fixed Income 169 144 34 42 (15) 24
Equity Capital Markets 48 61 13 17 27 31
Other 34 47 9 14 38 56
--------- ------------ ------------ ------------
Gross Revenues $ 439 $ 494 $ 103 $ 132 13 % 28 %
Interest Expense 53 72 15 22 36 47
--------- ------------ ------------ ------------
Net Revenues $ 386 $ 422 $ 88 $ 110 9 % 25 %
Pre-tax Income 74 72 12 18 (3) 50
Net Income $ 46 $ 45 $ 7 $ 11 (2) % 57 %
-------- ------------ ------------ ------------
EPS $ 1.41 $1.53 $ 0.24 $ 0.39 9 % 63 %
Assets $ 1,598 $ 1,732 $ 1,600 $ 2,058 8 % 29 %
Equity 279 259 243 267 (7) 10
*(a) Excludes approximately $2.2 million of non-recurring expenses relating to litigation settlement.
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PROFITABILITY
- --------------------------------------------------------------------------------
[BAR GRAPHS DEPICTING THE FOLLOWING INFORMATION:
PRE-TAX PROFIT MARGINS BASED ON PRE-TAX RETURN ON EQUITY
GROSS REVENUES
1996 17% 1996 29%
1997 18% 1997 36%
1998 17% 1998 30%
1999 19% 1999 33%
2000 17% 2000 27%]
*Figures for fiscal years ending July 31.
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- --------------------------------------------------------------------------------
FINANCIAL IMPACT
- --------------------------------------------------------------------------------
RICK HORSLEY
VICE CHAIRMAN &
EXECUTIVE FINANCIAL OFFICER
REGIONS FINANCIAL
CORPORATION
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KEY TRANSACTION TERMS
- --------------------------------------------------------------------------------
PURCHASE PRICE - $27 per share
- $789 million in aggregate
STRUCTURE - Choice between cash and Regions shares
- Fixed price structure
- Stock consideration to be tax-free
- Regions to finance approximately 75% through
cash election and/or stock repurchase
RETENTION POOL - 5.55 million Regions options
- Tiered 3-year vesting
OTHER - Purchase accounting
- Expected to close in the first quarter of 2001
- Morgan Keegan management representing 23% of shares
agreed to approve the deal
APPROVALS REQUIRED - Customary regulatory and Morgan Keegan shareholder
approvals
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ANALYSIS OF VALUATION
- --------------------------------------------------------------------------------
Aggregate Consideration $ 789
After-tax NPV of Retention $ 23
-----
$ 812
STATISTIC
------------------------------------------
MEDIAN FOR
AGGREGATE REGIONS/ COMPARABLE
DATA MORGAN KEEGAN TRANSACTIONS*(a)
-------- ------------- ----------------
LTM Net Income (10/31/00) $ 49 *(b) 16.7 x 17.4 x
FY01 Net Income (7/31/01) 51 *(b)*(c) 15.8 16.1
Book Value (10/31/00) 267 3.04 3.35
Internal Rate of Return 16 - 17.5 %
-----------
-----------
*(a) Includes eight deals involving regional broker-dealers since 1997.
*(b) Excludes non-recurring expenses.
*(c) Source: Sidoti and Company dated September 8, 2000.
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SYNERGIES
- -------------------------------------------------------------------------------
CONSERVATIVE ASSUMPTIONS: SIGNIFICANT LONG-TERM UPSIDE
+ EXPENSE SAVINGS: $14 MM PRE-TAX IN 2002
- 2.9% of Morgan Keegan and RICI LTM operating expense
- Combine back office
- Leverage Regions infrastructure
+ REVENUE ENHANCEMENTS: $10 MM PRE-TAX IN 2002
- 2.4% of Morgan Keegan and RICI LTM net revenues
- Enhance opportunities for Regions brokers
- Improve share of municipal underwritings
- Introduce corporate finance products to Regions middle
market customers
- Access to Regions high net worth customers
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EARNINGS IMPACT
- --------------------------------------------------------------------------------
2001(a) 2002
--------- ---------
Regions IBES EPS*(b) $ 2.40 $ 2.60
Regions Net Income*(b) $ 531 $ 576
Morgan Keegan Net Income*(c) 41 59
After-Tax Synergies 3 15
Transaction Adjustments:
Financing*(d) (20) (26)
Goodwill (19) (25)
--------- ---------
$ 536 $ 599
--------- ---------
--------- ---------
Pro Forma EPS:
GAAP $ 2.36 $ 2.61
Cash 2.58 2.86
% Change in:
GAAP EPS (1.8)% 0.2 %
Cash EPS 1.4 4.0
*(a) Assume Morgan Keegan closes in first quarter of 2001.
*(b) Based on median IBES 2001 estimates, grown at median IBES long-term growth
rate.
*(c) Based on Sidoti and Company 2001 estimates grown at 10%.
*(d) Assumes net issuance of 7.9 million shares (repurchase of 75% of shares
issued in transaction).
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CAPITAL STRUCTURE IMPACT
- --------------------------------------------------------------------------------
+ PROPOSED FINANCING STRUCTURE:
Cash/Senior Debt $ 483 61.2 %
Tier II Capital 109 13.8
Common Stock 197 25.0
---------- ----------
$ 789 100.0 %
+ PRO FORMA CAPITAL RATIOS:
REGIONS PRO FORMA
9/30/00 3/31/01
---------- -----------
Tangible Common Ratio 6.67 % 6.02 %
Leverage Ratio 6.95 6.52
Tier I Capital Ratio 9.94 8.88
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- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
CARL JONES, JR.
CEO
REGIONS FINANCIAL
CORPORATION
23
SUMMARY
- --------------------------------------------------------------------------------
+ CREATES LEADING DIVERSIFIED FINANCIAL SERVICES COMPANY IN THE SOUTH
+ ACCELERATES REGIONS' EARNINGS GROWTH
+ BROADENS REGIONS' PRODUCT MIX
+ EXCELLENT STRATEGIC AND CULTURAL FIT
+ FAIRLY VALUED TRANSACTION
+ LOW RISK INTEGRATION
+ ACCRETIVE TO 2002 EPS
+ ATTRACTIVE IRR
... A NATURAL COMBINATION FOR GROWTH
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- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
- --------------------------------------------------------------------------------
25
FIXED INCOME
- --------------------------------------------------------------------------------
MORGAN KEEGAN HAS A STRONG POSITION AS MANAGER FOR MIDDLE MARKET
CORPORATE AND MUNICIPAL BOND ISSUES IN THE SOUTH.
[BAR GRAPHS DEPICTING THE FOLLOWING INFORMATION:
MUNICIPALS
PROJECT SPECIFIC GENERAL PURPOSE PROCEEDS
1996 306 64 $6,855
1997 359 73 $7,902
1998 470 101 $13,840
1999 378 102 $11,742
2000YTD 336 73 $8,918
CORPORATES & AGENCIES
AGENCY OTHER PROCEEDS
1996 75 17 $3,385
1997 209 26 $9,864
1998 231 53 $10,855
1999 434 82 $20,024
2000 YTD 302 60 $10,968]
MORGAN KEEGAN RANK AND MARKET SHARE
1996 1997 1998 1999 2000
----------------------------------------------
CORE REGION (A)
Rank 1 1 1 1 1 MORGAN KEEGAN RANK AND MARKET SHARE IN AGENCIES
Market Share 31.6 % 26.7 % 31.2 % 24.9 % 28.1 % 1996 1997 1998 1999 2000
EXTENDED REGION (B) -------------------------------------------
Rank 8 10 6 4 4 Rank 19 10 18 13 12
Market Share 14.5 % 11.7% 14.9% 15.6 % 15.4 % Market Share 3.6 % 6.4 % 4.6 % 7.0 % 5.6 %
(a) Core Region defined as AL, AR, KY, LA, MS and TN.
(b) Extended Region defined as Core Region plus GA, FL, NC and TX. *Full credit to each
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SUMMARY CORPORATE FINANCE ACTIVITY
- --------------------------------------------------------------------------------
EQUITY TRANSACTIONS
1999 - 2000 YTD UNDERWRITING ROLE AVG. GROSS
---------------------- --------------------- AVG. DEAL FEE SPREAD/
INDUSTRY DEAL VALUE % LEAD CO-LEAD SIZE REVENUE PRICE
- ---------------- ------------ ------- ------- ----------- --------- ------- ----------
Consumer/Retail $ 379.7 8.2 % --- 5 $ 75.9 $ 1.2 5.5 %
Energy 317.9 6.9 1 5 53.0 0.6 4.6
Financial Services 1,107.6 24.0 --- 4 276.9 1.0 4.6
Healthcare 274.5 5.9 --- 1 274.5 0.5 3.7
Manufacturing 349.5 7.6 --- 3 116.5 1.1 5.6
Technology 1,982.6 42.9 --- 13 152.5 5.4 5.9
Transportation 101.1 2.2 --- 2 50.6 0.4 5.7
Other 106.0 2.3 --- 1 106.0 0.4 4.9
------------ -------- ------- ----------- -------
$ 4,618.9 100.0 % 1 34 $ 132.0 $ 10.5 5.3 %
------------ -------- ------- ----------- --------- ------- -----------
------------ -------- ------- ----------- --------- ------- -----------
M & A
1999 - 2000 YTD
-------------------------- # OF
INDUSTRY DEAL VALUE % TRANSACTIONS
--------------- ------------- ---------- --------------
Financial Services $ 276.0 38.8 % 3
Technology 352.5 49.6 5
Transportation 82.2 11.6 2
------------- ---------- --------------
$ 710.8 100.0 % 10
------------- ---------- --------------
------------- ---------- --------------
N.B. All announced deals excluding deals withdrawn and deals without
deal value disclosure.
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RESEARCH
- --------------------------------------------------------------------------------
+ DEDICATED FIXED INCOME AND EQUITIES TEAMS
+ EQUITIES
- 12 industry sectors covered by 23 senior analysts
Biometrics & Natural Interface Tech. Financial Services
Consumer Services Technology
Digital Media and Entertainment Healthcare
E-Learning Real Estate
Transportation Energy
Technology Distribution Special Situations
- 6 analysts ranked by Wall Street Journal
+ MORGAN KEEGAN'S FOCUS LIST OF STOCK RECOMMENDATIONS
RANKED #1 PERFORMER DURING THE ONE-YEAR AND FIVE-YEAR
PERIODS *(a)
*(a) Period ending March 31, 2000.
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Investors and security holders are advised to read the proxy statement/
prospectus regarding the proposed transaction referenced in this press
release when it becomes available, because it will contain important
information. The proxy statment/prospectus will be filed with the
Securities and Exchange Comission by Regions and Morgan Keegan. Security
holders may receive a free copy from Regions and Morgan Keegan or at the
Commission's website at http://www.sec.gov. Copies of the proxy
statement/prospectus and other related documents can also be obtained,
without charge, by directing a request to Regions Financial Corporation,
417 N. 20th Street, Birmingham, Alabama 35203, Attention: Ronald C.
Jackson (205-326-7374) or to Morgan Keegan, Inc., Fifty North Front
Street, Memphis, Tennessee 38103, Attention: Joseph C. Weller
(901-524-4100).
Morgan Keegan and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from stockholders of Morgan
Keegan with respect to the transactions contemplated by the merger
agreement. Information regarding such officers and directors is included
in Morgan Keegan's proxy statement for its 2000 annual meeting of
stockholders filed with the Commission's website at http://www.sec.gov
and/or from Morgan Keegan.
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