EXHIBIT 99.1
[UNION PLANTERS CORPORATION LOGO]
NEWS RELEASE
UNION PLANTERS REPORTS FIRST QUARTER NET EARNINGS
MEMPHIS, Tenn. - (April 15, 2004) Union Planters Corporation (NYSE: UPC) today
reported first quarter earnings of $73.1 million, or $.38 per diluted share.
Included in these results were previously announced charges of $3.2 million to
cover costs related to the rightsizing of the Company's mortgage and credit
operations and $25.8 million as a result of the decision to sell certain loan
portfolios. In addition, there were $4.0 million in expenses related to the
pending merger with Regions Financial Corporation. These first quarter charges,
which are consistent with our previous guidance, will create an annual benefit
of $26.0 million, 60.0 percent of which will be realized in 2004.
"We continue to deliver on our goal of significantly improving our credit
quality performance as well as restructuring our mortgage operations," said
Jackson W. Moore, Chairman, President and CEO. "Nonperforming assets declined
for the sixth straight quarter and were at the lowest level since March 2001.
Additionally, expenses outside of the merger related and loan portfolio charges
improved significantly during the quarter. While there is still room for
improvement in both our credit quality and mortgage rightsizing, I remain
tremendously proud of all the effort our associates have put forth in these
regards."
The Company experienced growth in its core mortgage loan products, which
reflects a trend reversal over the last several quarters. The adjustable-rate
mortgage product is performing very well. The Company's largest markets grew 1-4
family loans more than five percent compared to the prior quarter. "While our
mortgage business, consistent with industry trends, is still operating at lower
than anticipated production levels, we believe that our continued emphasis on an
efficient business model, ongoing efforts to streamline operations and continued
improvements in credit costs are creating a stronger, more efficient
organization that will serve us well in the coming quarters as we transition to
a new organization," Moore said.
The Company expects continued growth in certain targeted products to provide
momentum for the remainder of the year. "The tremendous success in our home
equity line of credit promotion is a testament to the strength of our sales
franchise," said Moore. "We continue to focus our sales efforts on integrating
services across business lines and working closely with retail and commercial
team members to take advantage of a diverse customer base.
"Our pending partnership with Regions Financial Corporation continues to exceed
our expectations. While the regulatory approval process continues and we prepare
for the shareholder vote, we remain absolutely confident in our ability to
successfully integrate the two
companies. Employees of both organizations are working diligently, and we
continue to be impressed with the level of cooperation and teamwork. A dedicated
team has been put in place to focus on the merger transition and integration so
that associates may remain focused on servicing customers. We are making
definite progress during this transition period. Leaders and transition team
members from both Regions and Union Planters are completely focused on doing
what it takes to create the new regional force we are committed to. We are
following a very sound discipline and applying a common sense approach.
"We have adopted the phrase 'keep going and keep growing' as we go through our
merger with Regions. We are doing this by staying focused on our most important
asset, our customers. It is our goal to be their first choice when they have a
need for financial services. Our corporate focus remains unchanged for 2004; we
continue to focus on providing shareholders with solid returns, on improving the
level of customer service and on leveraging our efficient business model by
improving organizational efficiencies. In the immediate and near term, our
operating plan, new product initiatives and a keen focus on deepening customer
relationships are all going to move forward. I have challenged our associates to
continue providing the best products and service to our customers as we chart
the course for our future with Regions - a future that we all believe to be very
bright."
BENEFITS OF THE 2004 INITIATIVES
In the Company's fourth quarter earnings message, Union Planters announced that
it would incur certain pre-tax charges. During the first quarter, these charges
were $29.0 million in aggregate and were a result of decisions to sell a
portfolio of brokered home equity and rental car fleet loans, as well as to
restructure and rightsize mortgage and credit operations. Such brokered home
equity and rental car fleet loans are now carried at the lower of cost or fair
value in accordance with the change in intent with respect to the portfolio.
These first quarter charges will create an annual benefit of $26.0 million, and
60.0 percent of this benefit will be realized in 2004. As the Company continues
to evaluate certain segments of our portfolio, management now believes the
aggregate charge will be at the low end of the range previously discussed.
NET INTEREST INCOME
Net interest income and net interest margin on a fully taxable-equivalent basis
were $270.2 million and 3.82 percent, respectively, for the first quarter of
2004, compared to $280.5 million and 3.90 percent, respectively, last quarter.
The key driver to the decline in the net interest margin from the prior quarter
was the remixing of earning assets due to a $395.7 million reduction in higher
yielding mortgage loans held for resale and an increase in investment
securities. Management does not expect the loans held for resale balance to
further decline and anticipates recent positive trends in loan growth to
continue, which should have a favorable impact on the net interest margin over
the next several quarters.
Consistent with the Company's balance sheet strategies, Union Planters continues
to devote significant marketing and sales focus on home equity line of credit
("HELOC") growth in its franchise. The Company embarked on another very
successful HELOC campaign during the
first quarter. This campaign generated 32 percent growth in average HELOC
balances since the same quarter last year, with strong average credit scores and
low loan-to-value ratios.
Average commercial real estate loan balances increased 1.9 percent from the same
quarter last year. While soft loan demand continues, some of the Company's
larger markets have begun to experience increased commercial loan activity,
particularly in Memphis and Houston, which grew commercial real estate balances
by more than 13 percent compared to the previous quarter. Average mortgage
portfolio loans secured by 1-4 family residential properties, excluding the
branch sales and mortgage loan sales, grew at a strong 8.7 percent annualized
growth rate compared to last quarter as residential mortgage loans gained
momentum, which represents a reversal of previous trends.
Average noninterest-bearing demand deposits ("DDAs") increased almost 9 percent
compared to the same period last year due to strong commercial DDA growth in
most of the Company's larger markets. The overall level of savings, money market
and time deposit balances continued to moderate in the first quarter given the
low level of interest rates. Some of our larger markets experienced solid growth
in these products, particularly the greater St. Louis area. Total average
deposits, excluding deposits in sold branches, decreased 1.5 percent from the
fourth quarter. The decline was largely driven by a reduction in highly rate
sensitive money market balances in our Miami market due to competitive pricing
pressures. To offset this decline, the Company will kick off a major deposit
campaign during the second quarter.
NONINTEREST INCOME
Noninterest income was $175.4 million for the first quarter compared to $194.6
million during the previous quarter. The decline was primarily driven by a
reduction in mortgage banking revenues as well as seasonality in service charges
on deposit accounts and lower net revenues from professional employment services
due to increased payroll taxes.
Mortgage related income for the quarter was $1.3 million compared to $42.6
million in the previous quarter. Revenue from mortgage origination activity
declined as origination volume was down to $2.0 billion compared to $2.1 billion
in the fourth quarter. Fourth quarter results included a $16.7 million gain on
the sale of $358.6 million in mortgage portfolio loans compared to a $.4 million
gain on the sale of $23.9 million in mortgage loans during the first quarter.
First quarter results were impacted by the decline in the valuation of our
mortgage servicing rights portfolio, resulting in impairment of $32.7 million,
which was offset by $31.9 million in securities gains during the quarter and a
$.8 million impact from derivative financial instruments related to mortgage
servicing rights.
Financial services income increased 10.0 percent from the same quarter last
year, driven by positive trends in all components. Trust services income was up
14.6 percent and 17.0 percent compared to last quarter and the same quarter last
year, respectively. Trust assets under management were $8.5 billion, an increase
of 18.0 percent over the prior year and 6.9 percent over the prior quarter.
Improved market conditions, a more favorable mix towards long-term assets under
management and positive overall net inflows contributed to the increase.
Additionally, the number of trust accounts increased 8.4 percent compared to the
same quarter
last year. Compared to the same quarter last year, investment and insurance
income increased almost 6 percent due to growth in brokerage commissions and
revenues from the sale of annuities.
During the first quarter, the Company closed on previously announced branch
sales in Corbin and Somerset, Kentucky, which are part of the ongoing
rationalization of our distribution network. The sales resulted in pre-tax gains
of $21.1 million and represented approximately $126.5 million and $225.2 million
in loans and deposits, respectively, as of the settlement dates.
NONINTEREST EXPENSE
Noninterest expense was $276.7 million during the first quarter compared to
$279.4 million during the prior quarter. Expenses during the first quarter were
impacted by certain pre-tax charges as well as expenses directly related to the
recently announced merger between the Company and Regions Financial Corporation.
These include merger-related expenses of $4.0 million; $3.2 million in expenses
related to the rightsizing of the Company's mortgage and credit operations; and
an $8.3 million expense associated with an investment that is designed to
produce a lower effective tax rate.
Excluding these expenses, which management believes is indicative of core
operating expenses, noninterest expenses improved by $18.2 million compared to
the previous quarter. The reduction in noninterest expenses was primarily due to
lower mortgage volumes.
CONTINUING FAVORABLE ASSET QUALITY TRENDS
As a result of management's continued commitment to improving credit quality,
nonperforming assets declined for the sixth straight quarter and represent the
lowest level since the first quarter of 2001. Nonperforming assets declined to
$252.3 million, an improvement of $60.6 million, or 19.4 percent, since the same
quarter last year and $9.5 million, or 3.6 percent, since the previous quarter.
Additionally:
- Nonperforming assets as a percentage of loans plus foreclosed
property declined to 1.12 percent, a significant improvement
from the prior year level of 1.37 percent, and compared to 1.19
percent at the end of the previous quarter.
- The allowance for loan losses as a percentage of nonperforming
loans improved to 157.9 percent, compared to 144.3 percent for
the same period in 2003 and 157.7 percent at the end of the
previous quarter.
Net charge-offs were $40.3 million, or .73 percent of average loans, this
quarter, a significant improvement compared to both last quarter and the same
quarter last year. First quarter 2003 and fourth quarter 2003 net charge-offs
were $48.6 million, or .87 percent of average loans, and $47.9 million, or .86
percent of average loans, respectively. Included in the $62.8 million in
provision for losses on loans this quarter was the $25.8 million charge incurred
as a result of the decision to sell a portfolio of brokered home equity and
rental car fleet loans. The allowance for loan losses as a percentage of total
loans declined to 1.38 percent compared to 1.50 percent at the
end of the previous quarter. The decline is primarily attributable to the
transfer of the allowance in the amount of $43.9 million related to the brokered
home equity and rental car fleet loans discussed above, which are now included
in loans held for resale.
Management continues to focus on improving the overall risk profile of the loan
portfolio and reducing credit costs. While nonperforming assets may fluctuate
from quarter to quarter, the Company expects the overall trend to continue to
decline throughout 2004, given a stable or improving economy. Including actions
taken regarding the brokered home equity and rental car fleet portfolios
previously mentioned, management continues to believe that the Company will
realize the previously established target of a 50 basis point net charge-off
ratio in the fourth quarter of 2004.
STRONG CAPITAL POSITION
Total shareholders' equity at March 31, 2004 was $3.1 billion, reflecting a
leverage ratio of 8.01 percent and an estimated Tier-1 capital to total
risk-weighted assets ratio of 9.74 percent. These ratios compare to 7.89 percent
and 9.60 percent, respectively, at December 31, 2003. The Company is authorized
to repurchase up to 24.7 million shares of its common stock under authorization
previously granted by the Board of Directors.
CONFERENCE CALL
Union Planters will host a pre-recorded conference call to discuss these first
quarter financial results at 7:30 a.m. Eastern Daylight Time (EDT) on April 15,
2004. Investors, analysts and other interested parties may dial into the
conference call toll-free at 1-800-217-1707, toll at 402-220-3902 or by visiting
our website at http://www.unionplanters.com/investor. A password is not
required. A replay of the conference call will be available until 6:00 p.m. EDT
on April 30, 2004.
ABOUT UNION PLANTERS
Union Planters Corporation announced a definitive merger agreement with
Birmingham, Alabama-based Regions Financial Corporation in January 2004. The
merger is expected to be completed in summer 2004, pending customary regulatory
and shareholder approvals. The combined company, to be called Regions Financial
Corporation, will be among the nation's 15 largest financial holding companies
with approximately $81 billion in assets.
Union Planters Corporation, Memphis, Tennessee, with total assets of $31.5
billion at March 31, 2004, is the largest bank holding company in Tennessee and
among the 30 largest bank holding companies in the United States. Union Planters
Bank, National Association, the principal banking subsidiary, was founded in
1869 and operates branches in 12 states: Alabama, Arkansas, Florida, Illinois,
Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Tennessee and Texas.
Union Planters offers a full range of commercial and consumer financial
solutions through a network of 705 banking offices, 917 ATMs and the resources
of specialized business units. Trust services include investment management,
personal trust services, employee benefit administration and proprietary mutual
funds. Investment and insurance services include
annuities, brokerage, life insurance, title insurance and debt cancellation on
consumer lending products. Union Planters Mortgage provides a full range of
mortgage products through Union Planters banking centers and a network of
mortgage production offices in 20 states. Capital Factors, Inc., based in Boca
Raton, Florida, provides receivable-based commercial financing and related
fee-based credit, collection and management information services. Capital
Factors has regional offices in Atlanta, Georgia; Charlotte, North Carolina;
Dallas, Texas; Los Angeles, California; and New York, New York. Strategic
Outsourcing, Inc., based in Charlotte, North Carolina, provides professional
employment services such as payroll administration, tax reporting, compliance,
workers' compensation, insurance and benefits management. Union Planters
Corporation's common stock is traded on the New York Stock Exchange under the
symbol UPC and is included in the Standard and Poor's 500 Index, the Standard
and Poor's 500 Regional Banks Index, the Standard and Poor's 500 Financials
Index, the NYSE Composite Index and the Russell 1000 Index.
FORWARD-LOOKING STATEMENT DISCLOSURE
This press release contains forward-looking statements relating to management's
expectations regarding: the status of the regulatory approval process and the
merger-related shareholder vote, the success of and consummation of the merger
between the Company and Regions Financial Corporation, improvement in credit
quality, revenue growth, impact of the 2004 initiatives, balance sheet growth,
the impact of any deposit promotional campaigns, the impact of a change in the
effective tax rate, the impact of loan growth in on the net interest margin, the
trend of nonperforming assets and charge-offs and the impact of changing
economic conditions. These statements are deemed to be forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are based on management's current expectations and the
current economic environment. Union Planters' actual strategies and results in
future periods may differ materially from those currently expected due to
various risks and uncertainties. A discussion of factors affecting business and
prospects is contained in Union Planters' filings with the Securities and
Exchange Commission, specifically "Risk Factors" in the 2003 Annual Report on
Form 10-K, filed on March 12, 2004. Union Planters undertakes no obligation to
update any forward-looking statements to reflect events or circumstances after
the date on which the forward-looking statement is made or to reflect the
occurrences of unanticipated events.
CONTACT FOR INVESTORS: CONTACT FOR MEDIA:
RICHARD TRIGGER VICTOR ROCHA
SENIOR VICE PRESIDENT VICE PRESIDENT
(901) 580-5974 (901) 580-5344
(5 Page Financial Attachment Follows)