EXHIBIT 99.1
July 16, 2004
REGIONS REPORTS SOLID SECOND QUARTER EARNINGS, DIVIDEND DECLARATION;
MERGER INTEGRATION PROCEEDING AS PLANNED
BIRMINGHAM, Ala., July 16, 2004 - Regions Financial Corp. (NYSE:RF) today
reported earnings highlights for the quarter ended June 30, 2004:
- Healthy quarterly earnings of $162 million, or 58 cents per diluted
share, including 2 cents in merger-related and other charges and a 1
cent reduction attributable to the adoption of a new accounting
pronouncement
- In pre-merger share count terms, earnings were 72 cents per diluted
share, including 3 cents in merger-related and other charges and a
1 cent reduction attributable to the adoption of the new accounting
pronouncement
- Core earnings at record levels, reflecting increases over first
quarter 2004 and second quarter 2003
- Steady core banking advances that benefited from 6 percent
annualized, internal loan growth and 3 percent low-cost deposit
growth, linked-quarter, annualized
- Continuing improvement in nonperforming assets - down 9 percent from
the first quarter
- Encouraging results from major non-traditional business units,
Morgan Keegan and mortgage banking
- Integration initiatives related to the Regions-Union Planters merger
proceeding on schedule - believe "new" Regions will be increasingly
well positioned for the future
- Maintaining dividend of $0.3334 per share for the third quarter as
declared by the Regions Board of Directors on July 15
"Regions made good progress in the second quarter, growing loans, improving net
interest income, maintaining solid credit quality and executing our merger
integration plan," said Regions Chairman and CEO Carl E. Jones Jr. "We are
excited about how well our two companies are coming together, and how well our
business units have performed.
"The trends are positive, and we are pleased with the outlook for the remainder
of 2004," Jones said.
Regions merged with Union Planters Corp. effective July 1, 2004. In the
transaction, Regions shareholders received 1.2346 shares for each 1 share they
previously owned, and Union Planters shareholders received 1 Regions share for
each 1 Union Planters share they previously owned. As a result, all per-share
information for prior quarters has been restated in post-merger share count
terms.
Net income totaled $162 million for the second quarter of 2004, or 58 cents per
diluted share in post-merger share count terms. This includes 2 cents in
merger-related and other charges and a 1 cent reduction related to the adoption
of a new accounting pronouncement (EITF 03-6) that impacts the accounting for
the company's accelerated share repurchase program. Using the pre-merger share
count of Regions, earnings would have been 72 cents per diluted share, including
3 cents in merger-related and other charges and 1 cent reduction related to the
adoption of the new accounting pronouncement.
Continued Next Page
July 16, 2004
Page Two
Regions' banking operations performed very well in the second quarter. Net
interest income totaled $380.9 million, compared to $379.0 million in the first
quarter. This increase was primarily attributable to growth in earning assets.
Core loans increased 6 percent annualized in the second quarter, compared to the
first quarter, and 5 percent compared to the second quarter of 2003. Regions'
Equity AssetLine product continued to drive high-quality loan growth, as did
increases in the commercial real estate portfolio. Low-cost deposits grew 3
percent on a linked-quarter, annualized basis, and 6 percent year over year as
Regions' deposit acquisition campaign continued to produce positive results.
"The fact that we were able to generate such steady growth in our banking
division in the midst of our merger and integration efforts is a testament to
the skill and dedication of our associates," said Jones. "Once again our people
have played a vital role in the success of this company.
"Though we still have much work to be done, our integration is underway and
progressing smoothly," he said. "One of the reasons for this successful
beginning is the fact that we are approaching our future as one - working
together to build a strong foundation that will ensure success for many years to
come."
The company's non-performing assets continued to improve, declining 9 percent
during the second quarter to $225.3 million, compared to $247.6 million in the
first quarter. As a percentage of total loans and other real estate,
non-performing assets were at 67 basis points in the second quarter, down from
75 basis points from the first quarter and 102 basis points during the same
period last year.
During the second quarter Morgan Keegan earned $19.4 million on total revenues
of $169.8 million. Trust revenues were up 4 percent compared to the first
quarter, and equity capital markets revenues were up 15 percent.
Additionally, Regions' mortgage business saw an increase in originations of 41
percent, linked-quarter, driven by a strong mortgage origination pipeline at the
end of the first quarter and strong growth in EquiFirst's East and West Coast
operations.
The Regions Financial Corp. Board of Directors declared a quarterly cash
dividend of 33.34 cents per share payable Aug. 16, 2004, to shareholders of
record as of Aug. 2, 2004. This is the 133rd consecutive quarter in which
Regions has paid cash dividends, going back to its formation in 1971. This
dividend declaration is a continuation of the quarterly dividend rate (in
post-merger share count terms) declared by the previous boards of directors of
both Regions and Union Planters prior to the merger of the two companies.
Regions will hold a conference call to discuss the company's performance today
at 9 a.m. central time (CT). Internet access to the call and to the supporting
materials will be available through the Investor Relations section of the
Regions Web site, www.regions.com, under the heading of Live Webcast. Telephone
access to the call may be obtained by dialing 1-800-901-5241 for U.S. callers
and 617-786-2963 for international callers with access code 29356836 by 8:50
a.m. CT.
About Regions Financial Corporation
Regions Financial Corporation (NYSE: RF), headquartered in Birmingham, Ala., is
a full-service provider of retail and commercial banking, securities brokerage,
and insurance products and services. With its merger with the former Union
Planters Corp. complete, Regions has some $80 billion in assets, making it one
of the nation's Top 15 financial services providers. Regions' banking
subsidiaries, Regions Bank and Union Planters Bank, operate some 1,400 offices
and a 1,700-ATM network across a 15-state geographic footprint in the South,
Midwest and Texas. Its investment and securities brokerage, trust and asset
management division, Morgan Keegan & Company Inc., provides services from more
than 145 offices. Additional information about Regions, which is a member of
both the Forbes and Fortune 500 and operates one of the Top 20 mortgage
companies in the United States, can be found at www.regions.com.
Continued Next Page
July 16, 2004
Page Three
FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollar amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
------------------------- -------------------------
Earnings 2004 2003 Change 2004 2003 Change
----------- ----------- ----------- -----------
Net income $ 162,024 $ 164,766 -2% $ 330,559 $ 323,366 2%
Net income available to
common shareholders $ 159,263 $ 164,766 -3% $ 325,835 $ 323,366 1%
Per share: (a) and (b)
Net income $ 0.59 $ 0.60 -2% $ 1.20 $ 1.18 2%
Net income-diluted $ 0.58 $ 0.59 -2% $ 1.18 $ 1.17 1%
Cash dividends declared $ 0.33 $ 0.24 38% $ 0.67 $ 0.49 37%
June 30
--------------------------------
Financial Condition 2004 2003 Change
-------------- --------------
Total assets $ 49,756,793 $ 49,548,331 0%
Loans, net of unearned income $ 33,636,784 $ 31,715,200 6%
Securities $ 8,749,219 $ 9,519,302 -8%
Total earning assets $ 45,767,404 $ 45,028,818 2%
Total deposits $ 34,436,961 $ 31,866,515 8%
Stockholders' equity $ 4,374,596 $ 4,370,300 0%
Stockholders' equity per share $ 16.11 $ 15.91 1%
Selected Ratios
Return on average stockholders' equity 15.04% 15.23%
Return on average total assets 1.35% 1.35%
Stockholders' equity to total assets 8.79% 8.82%
Allowance for loan losses as a percentage
of loans, net of unearned income 1.35% 1.44%
Loans, net of unearned income, to
total deposits 97.68% 99.53%
Net charge-offs to average loans 0.25% 0.27%
(a) Per share amounts for all periods presented have been restated to reflect
the exchange of Regions shares in connection with the merger with Union Planters
Corporation, which was effective July 1, 2004. Each Regions shareholder received
1.2346 shares for each 1.0 share held on July 1, 2004.
(b) Reflects impact of EITF 03-6 "Participating Securities and the Two-Class
Method under FASB Statement No. 128, Earnings per Share," which reduced earnings
per share $.01 for the three months ended June 30, 2004 and $.02 per share for
the six months ended June 30, 2004. EITF 03-6 had no impact on 2003 per share
amounts.
For additional information, including supplemental financial information, refer
to Regions' Form 8-K filed with the Securities and Exchange Commission on July
16, 2004, or visit Regions' Web site at www.regions.com. Regions' Investor
Relations contact is Jenifer Goforth at 205/244-2823; Regions' Media contact is
Kristi Lamont Ellis at 205/326-7179.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this press release regarding Regions Financial Corporation's
business that are not historical facts are "forward-looking statements" that
involve risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from those contained
in the forward-looking statements, see "Forward Looking Statements" in the
accompanying financial supplement, the company's annual report or Form 10-K for
the most recently ended fiscal year.
[REGIONS LOGO] FINANCIAL SUPPLEMENT TO SECOND QUARTER 2004 EARNINGS RELEASE
SUMMARY
Healthy quarterly earnings of $0.58 per diluted share, based on Regions'
post-merger share count basis (1.2346 for 1.0)
- - Equates to $0.61 per diluted share post-merger or $0.76 per diluted share
in pre-merger share count terms, excluding merger and other charges of
$0.03 per share and effect from adoption of EITF 03-6 of $0.01 per share
(see page 2 for additional details)
Diversification-enhanced revenue stream
- - Net interest income was up 2% linked-quarter, annualized, and up 4% over
2Q03 as the net interest margin remained relatively stable, at 3.53% in
2Q04 compared to 3.56% during 1Q04 and up from 3.47% in 2Q03. Earning
asset growth in the second quarter offset the slight decline in the
margin, which resulted primarily from maturity of fixed rate assets
- - Increase in overall mortgage revenues primarily due to increase in
origination volume and gain on sale of mortgage loans
- - Morgan Keegan's revenues were strong at $169.8 million in 2Q04 compared to
$176.5 million in 1Q04 and $188.0 million in 2Q03. Revenue comparisons are
impacted by fees from proprietary fund closings and stronger fixed income
markets in previous quarters. Earnings were relatively stable at $19.4
million compared to $20.9 million in the first quarter
Steady core banking advances in loans and deposits
- - Core loan growth of 6%, linked quarter, annualized, driven by commercial
real estate lending and home equity lines of credit
- - Low-cost deposit growth of 3%, linked quarter, annualized driven by
deposit acquisition campaign. Acquisition campaign targets eleven DDA
accounts
Credit quality improved while net charge-offs were up from their low first
quarter levels
- - Non-performing assets declined 9% to $225.3 million or 0.67% of loans and
other real estate
- - Net charge-offs of $27.9 million or 34 bps of average loans, annualized
Non-interest expenses, excluding MSR impairment(recapture) and merger-related
and other charges, decreased 10%, linked-quarter, annualized
- - Salaries and benefits expense declined $3.7 million, net of merger and
other charges, compared to 1Q04
- - Net occupancy expense was down $1.8 million, net of merger and other
charges, compared to 1Q04
Recaptured $40.0 million of mortgage servicing rights valuation allowance in
2Q04
Incurred $39.6 million in losses on the early retirement of $1.1 billion of FHLB
advances in 2Q04
Union Planters Highlights
- - Earned $11.8 million or $0.06 per diluted share including merger and other
charges of $74.4 million ($114.4 million pre-tax) or $0.39 per diluted
share
- - Significant improvement in credit quality
- - Healthy banking unit performance with home equity product balances
increasing 26% linked-quarter, annualized, 1-4 family mortgages increasing
16% linked-quarter, annualized, and average non-interest bearing deposits
increasing over 4%, linked-quarter, annualized
- - 10% linked quarter growth in financial services
- - Strong mortgage origination of $2.7 billion, an increase of 34.8% compared
to the first quarter
Merger integration process is underway and continues to follow a systematic and
disciplined course
- - Former clients of Union Planters' PFIC investment management subsidiary
will be converted to Morgan Keegan accounts by July 31
- - Regions Mortgage headquarters has been moved to Memphis and the
integration of the two mortgage companies is expected to be complete by
year-end
- - As part of initiatives to "right-size" mortgage banking, $6 billion of
West Coast mortgage servicing assets are being sold in the third quarter
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 2
SIGNIFICANT ITEMS AFFECTING EARNINGS PER SHARE
Pre-Merger Share Count Basis (1) Post-Merger Share Count Basis (1)
- -----------------------------------------------------------------------------------------------------------------------------------
YTD YTD
2Q04 1Q04 2Q03 2Q04 2Q03 2Q04 1Q04 2Q03 2Q04 2Q03
- -----------------------------------------------------------------------------------------------------------------------------------
Average number of shares
outstanding, fully diluted 222,391 224,590 225,064 223,490 224,564 274,564 277,279 277,864 275,921 277,247
(in thousands)
PER SHARE, REPORTED:
Net income-diluted $ 0.72 $ 0.74 $ 0.73 $ 1.46 $ 1.44 $ 0.58 $ 0.60 $ 0.59 $ 1.18 $ 1.17
PER SHARE, EFFECT OF: (1)
Merger and other charges (0.03) - - (0.03) - (0.02) - - (0.02) -
EITF 03-6 Adoption (0.01) (0.01) - (0.02) - (0.01) (0.01) - (0.02) -
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
$ (0.04) $ (0.01) $ - (0.05) $ - $ (0.03) $ (0.01) $ - $ (0.04) $ -
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Dividends per share $ 0.41 $ 0.41 $ 0.30 $ 0.82 $ 0.60 $ 0.33 $ 0.33 $ 0.24 $ 0.67 $ 0.49
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
(1) Positive/(negative) impact on GAAP earnings.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 3
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
($ amounts in thousands)
6/30/04 3/31/04 12/31/03 9/30/03 6/30/03
------------ ------------ ------------ ------------ ------------
Assets:
Cash and due from banks $ 1,254,432 $ 970,762 $ 1,255,853 $ 1,262,979 $ 1,235,107
Interest-bearing deposits
in other banks 35,802 102,408 96,537 194,761 154,317
Securities held to maturity 31,639 31,990 30,943 32,194 32,082
Securities available for sale 8,717,580 8,473,044 9,056,861 9,117,752 9,487,220
Trading account assets 754,213 790,864 816,074 776,332 897,732
Loans held for sale 1,231,132 1,436,812 1,241,852 1,931,014 1,487,608
Federal funds sold and securities
purchased under agreement
to resell 810,581 594,064 577,989 452,786 572,226
Margin receivables 549,673 547,955 503,575 509,573 682,433
Loans 33,863,816 33,000,869 32,414,848 31,815,772 31,945,121
Unearned income (227,032) (231,119) (230,525) (231,387) (229,921)
------------ ------------ ------------ ------------ ------------
Loans, net of unearned
income 33,636,784 32,769,750 32,184,323 31,584,385 31,715,200
Allowance for loan losses (452,677) (455,566) (454,057) (456,040) (456,672)
------------ ------------ ------------ ------------ ------------
Net Loans 33,184,107 32,314,184 31,730,266 31,128,345 31,258,528
Premises and equipment 639,822 631,186 629,638 626,188 623,050
Interest receivable 182,636 182,116 194,501 193,573 208,094
Due from customers on
acceptances 9,604 35,058 61,053 10,074 19,912
Excess purchase price 1,101,425 1,089,308 1,083,416 1,073,714 1,073,386
Mortgage servicing rights 156,774 113,099 126,846 123,902 96,333
Other assets 1,097,373 1,464,093 1,192,592 1,361,028 1,720,303
------------ ------------ ------------ ------------ ------------
$ 49,756,793 $ 48,776,943 $ 48,597,996 $ 48,794,215 $ 49,548,331
============ ============ ============ ============ ============
Liabilities and Stockholders' Equity:
Deposits
Non-interest-bearing $ 5,953,180 $ 5,918,325 $ 5,717,747 $ 5,546,705 $ 5,530,777
Interest-bearing 28,483,781 25,507,248 27,014,788 27,070,230 26,335,738
------------ ------------ ------------ ------------ ------------
Total Deposits 34,436,961 31,425,573 32,732,535 32,616,935 31,866,515
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agree-
ment to repurchase 3,702,172 4,447,518 3,031,706 3,542,312 4,076,180
Commercial paper 0 0 5,500 13,750 17,250
Other short-term
borrowings 1,110,863 1,441,916 1,389,832 1,406,372 1,999,772
------------ ------------ ------------ ------------ ------------
Total Short-term
Borrowings 4,813,035 5,889,434 4,427,038 4,962,434 6,093,202
Long-term borrowings 4,580,054 5,768,131 5,711,752 5,603,532 5,439,448
------------ ------------ ------------ ------------ ------------
Total Borrowed Funds 9,393,089 11,657,565 10,138,790 10,565,966 11,532,650
Bank acceptances
outstanding 9,604 35,058 61,053 10,074 19,912
Other liabilities 1,542,543 1,232,289 1,213,503 1,206,392 1,758,954
------------ ------------ ------------ ------------ ------------
Total Liabilities 45,382,197 44,350,485 44,145,881 44,399,367 45,178,031
Stockholders' equity:
Common stock (1) 2,716 140,177 139,598 139,397 139,100
Surplus (1) 970,024 1,000,479 983,669 975,939 965,244
Undivided profits 3,479,106 3,407,590 3,329,023 3,236,285 3,142,722
Treasury Stock 0 (206,825) (49,944) (27,497) 0
Unearned restricted stock (36,904) (15,075) (13,771) (15,693) (17,401)
Accumulated other comprehensive
income(loss) (40,346) 100,112 63,540 86,417 140,635
------------ ------------ ------------ ------------ ------------
Total Stockholders'
Equity 4,374,596 4,426,458 4,452,115 4,394,848 4,370,300
------------ ------------ ------------ ------------ ------------
$ 49,756,793 $ 48,776,943 $ 48,597,996 $ 48,794,215 $ 49,548,331
============ ============ ============ ============ ============
(1) June 30, 2004, Common Stock and Surplus has been restated to post-merger
terms, giving effect to the change in par value from $0.625 per share to
$0.01 per share and exchange of 1.2346 shares for each 1 share of old
Regions shares in connection with the July 1, 2004 merger with Union
Planters
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 4
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
($ amounts in thousands, except per share amounts)
Quarter Ended
------------------------------------------------------------
6/30/04 3/31/04 12/31/03 9/30/03 6/30/03
--------- --------- --------- --------- ---------
Interest Income:
Interest and fees on loans $ 413,613 $ 411,012 $ 412,031 $ 417,210 $ 435,161
Interest on securities:
Taxable interest income 82,123 86,557 85,460 79,326 88,609
Tax-exempt interest income 5,289 5,661 5,839 5,972 6,111
--------- --------- --------- --------- ---------
Total Interest on Securities 87,412 92,218 91,299 85,298 94,720
Interest on loans held for sale 25,044 19,971 24,722 27,780 19,830
Interest on margin receivables 4,434 4,192 4,070 4,004 3,973
Income on federal funds sold and
securities purchased under
agreement to resell 1,448 1,378 1,549 859 1,391
Interest on time deposits in
other banks 18 22 37 55 49
Interest on trading account assets 5,911 6,889 6,569 5,715 6,822
--------- --------- --------- --------- ---------
Total Interest Income 537,880 535,682 540,277 540,921 561,946
Interest Expense:
Interest on deposits 85,998 84,054 86,885 93,384 115,237
Interest on short-term borrowings 18,157 19,651 19,995 25,940 27,507
Interest on long-term borrowings 52,862 52,980 53,879 52,721 52,901
--------- --------- --------- --------- ---------
Total Interest Expense 157,017 156,685 160,759 172,045 195,645
--------- --------- --------- --------- ---------
Net Interest Income 380,863 378,997 379,518 368,876 366,301
Provision for loan losses 25,000 15,000 30,000 30,000 30,000
--------- --------- --------- --------- ---------
Net Interest Income After
Provision for Loan Losses 355,863 363,997 349,518 338,876 336,301
Non-Interest Income:
Brokerage and investment banking 128,886 138,203 135,634 140,257 151,811
Trust department income 21,668 20,691 17,797 18,168 16,850
Service charges on deposit
accounts 73,607 71,868 73,042 73,641 72,205
Mortgage servicing and origination
fees 26,246 23,491 22,514 29,074 31,757
Securities gains (losses) 149 12,803 (2) (37) 15,799
Other 96,803 98,428 82,384 86,572 89,702
--------- --------- --------- --------- ---------
Total Non-Interest Income 347,359 365,484 331,369 347,675 378,124
Non-Interest Expense:
Salaries and employee benefits 288,175 290,923 278,862 281,666 288,937
Net occupancy expense 25,985 27,800 27,748 26,869 25,518
Furniture and equipment expense 19,341 18,130 20,374 20,160 20,501
Impairment (recapture) of MSR's (39,600) 12,000 0 (20,000) 19,000
Other 180,828 142,247 124,963 147,482 130,029
--------- --------- --------- --------- ---------
Total Non-Interest Expense 474,729 491,100 451,947 456,177 483,985
--------- --------- --------- --------- ---------
Income Before Income Taxes 228,493 238,381 228,940 230,374 230,440
Applicable income taxes 66,469 69,846 65,187 65,652 65,674
--------- --------- --------- --------- ---------
Net Income $ 162,024 $ 168,535 $ 163,753 $ 164,722 $ 164,766
========= ========= ========= ========= =========
Net income available to
common shareholders $ 159,263 $ 166,572 $ 163,753 $ 164,722 $ 164,766
========= ========= ========= ========= =========
Average shares outstanding--
during quarter (1) 271,024 273,270 274,169 274,733 274,344
Average shares outstanding--during
quarter, diluted (1) 274,564 277,278 278,556 278,648 277,864
Actual shares outstanding--
end of quarter (1) 271,573 218,739 221,967 222,257 222,561
Net income per share (1) (2) $ 0.59 $ 0.61 $ 0.60 $ 0.60 $ 0.60
Net income per share, diluted (1) (2) $ 0.58 $ 0.60 $ 0.59 $ 0.59 $ 0.59
Dividends per share (1) $ 0.33 $ 0.33 $ 0.26 $ 0.26 $ 0.24
Taxable equivalent net interest income $ 397,089 $ 395,411 $ 396,831 $ 385,353 $ 382,751
(1) Share and per share amounts for all periods presented have been restated
to reflect the exchange of Regions shares in connection with the merger
with Union Planters Corporation, which was effective July 1, 2004. Each
Regions shareholder received 1.2346 shares for each 1.0 share held on July
1, 2004.
(2) Reflects impact of EITF 03-6 "Participating Securities and the Two-Class
Method under FASB Statement No. 128, Earnings per Share," which reduced
earnings per share $.01 for the three months ended June 30, 2004 and $.02
per share for the six months ended June 30, 2004. EITF 03-6 had no impact
on 2003 per share amounts.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 5
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
($ amounts in thousands, except per share amounts)
Six Months Ended
June 30
--------------------------
2004 2003
----------- -----------
Interest Income:
Interest and fees on loans $ 824,625 $ 873,058
Interest on securities:
Taxable interest income 168,680 183,979
Tax-exempt interest income 10,950 12,544
----------- -----------
Total Interest on Securities 179,630 196,523
Interest on loans held for sale 45,015 43,178
Interest on margin receivables 8,626 7,847
Income on federal funds sold and
securities purchased under agreement
to resell 2,826 3,420
Interest on time deposits in other banks 40 97
Interest on trading account assets 12,800 13,809
----------- -----------
Total Interest Income 1,073,562 1,137,932
Interest Expense:
Interest on deposits 170,052 250,084
Interest on short-term borrowings 37,808 55,140
Interest on long-term borrowings 105,842 106,504
----------- -----------
Total Interest Expense 313,702 411,728
----------- -----------
Net Interest Income 759,860 726,204
Provision for loan losses 40,000 61,500
----------- -----------
Net Interest Income After Provision
for Loan Losses 719,860 664,704
Non-Interest Income:
Brokerage and investment banking 267,089 276,838
Trust department income 42,359 33,956
Service charges on deposit accounts 145,475 141,930
Mortgage servicing and origination fees 49,737 59,985
Securities gains (losses) 12,952 25,697
Other 195,231 181,307
----------- -----------
Total Non-Interest Income 712,843 719,713
Non-Interest Expense:
Salaries and employee benefits 579,098 561,556
Net occupancy expense 53,785 51,230
Furniture and equipment expense 37,471 40,813
Impairment (recapture) of MSR's (27,600) 19,190
Other 323,075 259,370
----------- -----------
Total Non-Interest Expense 965,829 932,159
----------- -----------
Income Before Income Taxes 466,874 452,258
Applicable income taxes 136,315 128,892
----------- -----------
Net Income $ 330,559 $ 323,366
=========== ===========
Net income available to
common shareholders $ 325,835 $ 323,366
=========== ===========
Average shares outstanding--year-to-date (1) 272,147 273,970
Average shares outstanding--year-to-date, diluted (1) 275,921 277,247
Actual shares outstanding--end of quarter (1) 271,573 274,773
Net income per share (1) (2) $ 1.20 $ 1.18
Net income per share, diluted (1) (2) $ 1.18 $ 1.17
Dividends per share (1) $ 0.67 $ 0.49
Taxable equivalent net interest income $ 792,501 $ 759,738
(1) Share and per share amounts for all periods presented have been restated
to reflect the exchange of Regions shares in connection with the merger
with Union Planters Corporation, which was effective July 1, 2004. Each
Regions shareholder received 1.2346 shares for each 1.0 share held on July
1, 2004.
(2) Reflects impact of EITF 03-6 "Participating Securities and the Two-Class
Method under FASB Statement No. 128, Earnings per Share," which reduced
earnings per share $.01 for the three months ended June 30, 2004 and $.02
per share for the six months ended June 30, 2004. EITF 03-6 had no impact
on 2003 per share amounts.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 6
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE DAILY BALANCES AND YIELD/RATE ANALYSIS
($ amounts in thousands; yields on taxable equivalent basis)
Quarter Ended
-------------------------------------------------------------------------------
6/30/04 3/31/04 12/31/03
----------------------- ----------------------- ------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate
----------- ------ ----------- ------ ----------- ------
Assets
Earning assets:
Taxable securities $ 8,349,129 3.98% $ 8,627,819 4.06% $ 8,607,323 3.99%
Non-taxable securities 424,592 7.86% 435,978 8.30% 463,019 7.81%
Federal funds sold 615,139 0.95% 614,627 0.90% 722,366 0.85%
Margin receivables 543,090 3.28% 513,922 3.28% 504,323 3.20%
Loans, net of unearned
income 32,993,733 5.19% 32,342,081 5.27% 31,746,108 5.30%
Interest-bearing deposits
in other banks 5,158 1.40% 7,568 1.17% 13,778 1.07%
Loans held for sale 1,712,772 5.88% 1,325,000 6.06% 1,616,801 6.07%
Trading account assets 634,804 3.93% 815,160 3.50% 782,120 3.81%
----------- ----------- -----------
Total earning assets 45,278,417 4.92% 44,682,155 4.97% 44,455,838 4.98%
Allowance for loan losses (457,915) (458,515) (454,035)
Cash and due from banks 992,416 945,080 958,244
Other non-earning assets 3,657,906 3,652,006 3,709,341
----------- ----------- -----------
$49,470,824 $48,820,726 $48,669,388
=========== =========== ===========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts $ 1,450,083 0.22% $ 1,426,803 0.22% $ 1,416,434 0.26%
Interest bearing transaction
accounts 2,771,453 0.87% 2,642,203 0.84% 2,481,147 0.84%
Money market accounts 10,622,534 0.63% 10,578,972 0.61% 10,630,021 0.60%
Certificates of deposit of
$100,000 or more 3,849,005 1.90% 3,544,559 1.94% 3,168,771 2.06%
Other interest-bearing
accounts 8,705,335 2.05% 8,429,297 2.13% 8,815,274 2.17%
Federal funds purchased 3,510,082 1.10% 3,546,344 0.98% 3,733,241 0.97%
Commercial paper 0 -- 1,088 3.70% 11,634 3.72%
Other short-term borrowings 1,185,923 2.90% 1,438,891 3.08% 1,417,052 3.02%
Long-term borrowings 5,719,057 3.72% 5,711,703 3.73% 5,688,221 3.76%
----------- ----------- -----------
Total interest-bearing
liabilities 37,813,472 1.67% 37,319,860 1.69% 37,361,795 1.71%
Non-interest bearing deposits 6,003,804 5,709,946 5,761,914
Other liabilities 1,291,955 1,313,753 1,131,137
Stockholders' equity 4,361,593 4,477,167 4,414,542
----------- ----------- -----------
$49,470,824 $48,820,726 $48,669,388
=========== =========== ===========
Net yield on interest earning assets 3.53% 3.56% 3.54%
Quarter Ended
-----------------------------------------------------
9/30/03 6/30/03
----------------------- -------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
----------- ------ ----------- ------
Assets
Earning assets:
Taxable securities $ 8,671,597 3.68% $ 9,019,901 3.99%
Non-taxable securities 479,484 7.73% 512,141 7.51%
Federal funds sold 605,986 0.56% 534,148 1.04%
Margin receivables 516,238 3.08% 505,989 3.15%
Loans, net of unearned
income 31,470,101 5.41% 31,481,985 5.70%
Interest-bearing deposits
in other banks 14,271 1.53% 9,225 2.13%
Loans held for sale 2,022,109 5.45% 1,386,569 5.74%
Trading account assets 702,280 3.23% 835,931 3.16%
----------- -----------
Total earning assets 44,482,066 4.97% 44,285,889 5.24%
Allowance for loan losses (459,157) (453,768)
Cash and due from banks 924,158 936,007
Other non-earning assets 3,688,043 3,676,713
----------- -----------
$48,635,110 $48,444,841
=========== ===========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts $ 1,449,886 0.22% $ 1,412,742 0.28%
Interest bearing transaction
accounts 2,377,845 0.82% 2,204,375 1.05%
Money market accounts 10,551,389 0.58% 10,616,728 0.76%
Certificates of deposit of
$100,000 or more 3,085,685 2.29% 3,274,531 2.68%
Other interest-bearing
accounts 8,979,828 2.41% 9,237,300 2.88%
Federal funds purchased 3,995,668 0.95% 3,516,034 1.10%
Commercial paper 16,054 3.73% 17,250 3.79%
Other short-term borrowings 1,676,430 3.84% 1,954,446 3.63%
Long-term borrowings 5,502,659 3.80% 5,392,564 3.93%
----------- -----------
Total interest-bearing
liabilities 37,635,444 1.81% 37,625,970 2.09%
Non-interest bearing deposits 5,450,499 5,232,916
Other liabilities 1,212,032 1,248,552
Stockholders' equity 4,337,135 4,337,403
----------- -----------
$48,635,110 $48,444,841
=========== ===========
Net yield on interest earning assets 3.44% 3.47%
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 7
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE DAILY BALANCES AND YIELD/RATE ANALYSIS
($ amounts in thousands; yields on taxable equivalent basis)
Six Months Ended
June 30
-------------------------------------------------
2004 2003
--------------------- ---------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
------- ---- ------- ----
Assets
Earning assets:
Taxable securities $ 8,488,474 4.02% $ 8,789,382 4.28%
Non-taxable securities 430,285 8.08% 519,971 7.60%
Federal funds sold 614,883 0.92% 595,048 1.16%
Margin receivables 528,506 3.28% 472,356 3.35%
Loans, net of unearned income 32,667,907 5.23% 31,299,707 5.78%
Interest-bearing deposits in
other banks 6,363 1.26% 9,022 2.17%
Loans held for sale 1,518,886 5.96% 1,459,904 5.96%
Trading account assets 724,982 3.69% 847,739 3.28%
----------- -----------
Total earning assets 44,980,286 4.95% 43,993,129 5.37%
Allowance for loan losses (458,215) (447,925)
Cash and due from banks 968,748 964,936
Other non-earning assets 3,654,956 3,787,480
----------- -----------
$49,145,775 $48,297,620
=========== ===========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts $ 1,438,443 0.22% $ 1,417,322 0.30%
Interest bearing transaction
accounts 2,706,828 0.86% 2,036,865 1.10%
Money market accounts 10,600,753 0.62% 10,692,566 0.81%
Certificates of deposit of
$100,000 or more 3,696,782 1.92% 3,338,815 2.88%
Other interest-bearing accounts 8,567,316 2.09% 9,496,294 3.11%
Federal funds purchased 3,528,213 1.04% 3,160,264 1.15%
Commercial paper 544 3.70% 17,250 3.79%
Other short-term borrowings 1,312,407 3.00% 2,028,188 3.66%
Long-term borrowings 5,715,380 3.72% 5,389,058 3.99%
----------- -----------
Total interest-bearing liabilities 37,566,666 1.68% 37,576,622 2.21%
Non-interest bearing deposits 5,856,875 5,151,095
Other liabilities 1,302,854 1,289,288
Stockholders' equity 4,419,380 4,280,615
----------- -----------
$49,145,775 $48,297,620
=========== ===========
Net yield on interest-earning
assets 3.54% 3.48%
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
($ amounts in thousands)
Six Months Ended
June 30
--------------------------------------
2004 2003
-------- --------
Balance at beginning of year $454,057 $437,164
Net loans charged off:
Commercial 29,822 28,211
Real estate 5,504 5,753
Installment 6,054 8,028
-------- --------
Total 41,380 41,992
Provision charged to expense 40,000 61,500
-------- --------
Balance at end of period $452,677 $456,672
======== ========
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 8
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED RATIOS
Quarter Ended
---------------------------------------------------------------------
6/30/04 3/31/04 12/31/03 9/30/03 6/30/03
------- ------- -------- ------- -------
Return on average assets* 1.32% 1.39% 1.34% 1.34% 1.36%
Return on tangible equity* 19.99% 19.99% 19.52% 20.02% 20.24%
Return on average equity* 14.94% 15.14% 14.72% 15.07% 15.24%
Stockholders' equity per share (1) $ 16.11 $16.39 $16.25 $16.02 $15.91
Stockholders' equity to total assets 8.79% 9.07% 9.16% 9.01% 8.82%
Allowance for loan losses as a percentage
of loans, net of unearned income 1.35% 1.39% 1.41% 1.44% 1.44%
Loans, net of unearned income,
to total deposits 97.68% 104.28% 98.33% 96.83% 99.53%
Net charge-offs as a percentage of
average loans* 0.34% 0.17% 0.40% 0.39% 0.29%
Total non-performing assets (excluding loans
90 days past due) as a percentage of
loans and other real estate 0.67% 0.75% 0.94% 1.03% 1.02%
Total non-performing assets (including loans
90 days past due) as a percentage of
loans and other real estate 0.78% 0.86% 1.05% 1.13% 1.13%
*Annualized
(1) Per share information has been restated to post-merger terms, giving
effect to the 1.2346 for 1.0 exchange ratio that was applied to Regions
shares in connection with the July 1, 2004 merger with Union Planters
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 9
LOANS
LOAN PORTFOLIO - PERIOD END DATA
- -----------------------------------------------------------------------------------------------------------------------------------
6/30/2004 6/30/2004
($ amounts in thousands) 6/30/04 3/31/04 12/31/03 9/30/03 6/30/03 vs. 3/31/04* vs. 6/30/03
- ------------------------ ----------- ----------- ----------- ----------- ----------- ------------------ -------------------
Commercial $10,034,086 $10,215,384 $10,182,176 $10,409,481 $10,988,657 $(181,298) -7.1% $ (954,571) -8.7%
Residential Mortgages 8,199,935 8,267,924 8,318,711 8,172,563 8,204,385 (67,989) -3.3% (4,450) -0.1%
Other Real Estate Loans 6,738,835 6,240,204 5,878,922 5,439,971 4,910,895 498,631 32.0% 1,827,940 37.2%
Construction 3,647,943 3,601,942 3,484,767 3,371,931 3,579,442 46,001 5.1% 68,501 1.9%
Branch Installment 1,256,961 1,293,711 1,353,707 1,414,299 1,476,601 (36,750) -11.4% (219,640) -14.9%
Indirect Installment 808,130 368,595 362,496 380,649 382,401 439,535 477.0% 425,729 111.3%
Consumer Lines of Credit 2,241,820 2,072,063 1,918,988 1,728,054 1,538,884 169,757 32.8% 702,936 45.7%
Student Loans 709,074 709,927 684,556 667,437 633,935 (853) -0.5% 75,139 11.9%
----------- ----------- ----------- ----------- ----------- --------- ------ ---------- ------
$33,636,784 $32,769,750 $32,184,323 $31,584,385 $31,715,200 $ 867,034 10.6% $1,921,584 6.1%
=========== =========== =========== =========== =========== ========= ====== ========== ======
Loans Held for Sale
(HFS):
Mortgage Loans HFS $ 1,231,132 $ 1,030,704 $ 1,021,544 $ 1,336,380 $ 1,166,875 $ 200,428 77.8% $ 64,257 5.5%
Indirect Loans HFS - 406,108 220,308 594,634 320,733 (406,108) -400.0% (320,733) -100.0%
----------- ----------- ----------- ----------- ----------- --------- ------ ---------- ------
Total Loans HFS $ 1,231,132 $ 1,436,812 $ 1,241,852 $ 1,931,014 $ 1,487,608 $(205,680) -57.3% $ (256,476) -17.2%
=========== =========== =========== =========== =========== ========= ====== ========== ======
LOAN PORTFOLIO - AVERAGE BALANCES
- -----------------------------------------------------------------------------------------------------------------------------------
2Q04 2Q04
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
- ------------------------ ----------- ----------- ------------ ----------- ----------- ----------------- ------------------
Commercial $10,169,811 $10,055,926 $10,198,310 $10,706,642 $11,004,275 $ 113,885 4.5% $ (834,464) -7.6%
Residential Mortgages 8,151,118 8,289,986 8,227,683 8,053,111 8,120,655 (138,868) -6.7% 30,463 0.4%
Other Real Estate Loans 6,406,718 6,046,504 5,624,088 5,137,428 4,769,170 360,214 23.8% 1,637,548 34.3%
Construction 3,681,832 3,563,666 3,449,078 3,475,015 3,622,848 118,166 13.3% 58,984 1.6%
Branch Installment 1,254,532 1,312,239 1,365,670 1,426,755 1,516,335 (57,707) -17.6% (261,803) -17.3%
Indirect Installment 450,481 364,603 372,293 381,910 368,989 85,878 94.2% 81,492 22.1%
Consumer Lines of Credit 2,174,258 2,001,274 1,839,613 1,643,158 1,453,531 172,984 34.6% 720,727 49.6%
Student Loans 704,983 707,883 669,373 646,082 626,182 (2,900) -1.6% 78,801 12.6%
----------- ----------- ----------- ----------- ----------- ----------------- ---------- -----
$32,993,733 $32,342,081 $31,746,108 $31,470,101 $31,481,985 $ 651,652 8.1% $1,511,748 4.8%
=========== =========== =========== =========== =========== ================= ========== =====
Loans Held for Sale
(HFS):
Mortgage Loans HFS $ 1,352,118 $ 1,010,131 $ 1,224,068 $ 1,559,879 $ 1,205,220 $ 341,987 135.4% $ 146,898 12.2%
Indirect Loans HFS 360,654 314,869 392,734 462,230 181,349 45,785 58.2% 179,305 98.9%
----------- ----------- ----------- ----------- ----------- --------- ----- ---------- -----
Total Loans HFS $ 1,712,772 $ 1,325,000 $ 1,616,802 $ 2,022,109 $ 1,386,569 $ 387,772 117.1% $ 326,203 23.5%
=========== =========== =========== =========== =========== ========= ===== ========== =====
AVERAGE COMMUNITY BANKING AND WHOLESALE LOANS
- ----------------------------------------------------------------------------------------------------------------------------------
2Q04 2Q04
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
- ------------------------ ----------- ----------- ----------- ----------- ----------- ---------------- -----------------
Community Bank Loans $26,624,586 $26,064,642 $25,586,886 $25,384,348 $25,525,634 $ 559,944 8.6% $1,098,952 4.3%
Wholesale Loans 6,369,147 6,277,439 6,159,222 6,085,753 5,956,351 91,708 5.8% 412,796 6.9%
----------- ----------- ----------- ----------- ----------- --------- --- ---------- ---
$32,993,733 $32,342,081 $31,746,108 $31,470,101 $31,481,985 $ 651,652 8.1% $1,511,748 4.8%
=========== =========== =========== =========== =========== ========= === ========== ===
*Linked quarter percentage changes are presented on an annualized basis.
- - Strongest categories of growth in the loan portfolio have been in
commercial real estate related credits and consumer lines of credit.
- - Consumer lines of credit, primarily Equity AssetLines, grew 32.8%,
annualized, over 1Q04, and 45.7% over 2Q03.
- - The quality of the Equity AssetLine portfolio remains high, with an
average FICO score of 731 at June 30, 2004.
- - Regions is no longer originating and securitizing indirect auto loans. As
a result of this refocus in indirect lending, the balance of indirect
loans held for sale was moved to the portfolio of indirect installment
loans.
- - Actual loans, excluding the transfer of the indirect loans held for sale,
increased approximately 6% on an annualized, linked quarter basis and
approximately 5% year over year.
- - The transfer of indirect auto loans also affect comparisons between
quarters for wholesale loans as shown above.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 10
DEPOSITS
DEPOSIT PORTFOLIO - PERIOD END DATA
- -----------------------------------------------------------------------------------------------------------------------------------
($ amounts in 6/30/2004 6/30/2004
thousands) 6/30/04 3/31/04 12/31/03 9/30/03 6/30/03 vs. 3/31/04* vs. 6/30/03
- ---------------------- ----------- ----------- ----------- ----------- ----------- ------------------ ------------------
Interest-Free Deposits $ 5,953,180 $ 5,918,325 $ 5,717,747 $ 5,546,705 $ 5,530,777 $ 34,855 2.4% $ 422,403 7.6%
Interest-Bearing
Checking 2,844,286 2,791,766 2,647,633 2,493,209 2,424,521 52,520 7.5% 419,765 17.3%
Savings 1,442,133 1,473,000 1,420,891 1,419,015 1,411,910 (30,867) -8.4% 30,223 2.1%
Money Market 10,691,155 10,607,497 10,642,155 10,418,836 10,429,281 83,658 3.2% 261,874 2.5%
----------- ----------- ----------- ----------- ----------- ---------- ----- ---------- -----
Total Low-Cost
Deposits 20,930,754 20,790,588 20,428,426 19,877,765 19,796,489 140,166 2.7% 1,134,265 5.7%
CD's < $100K 4,743,932 4,827,603 5,056,916 5,214,403 5,675,508 (83,671) -6.9% (931,576) -16.4%
CD's > $100K 4,318,518 3,455,851 3,299,896 3,086,601 3,174,747 862,667 99.9% 1,143,771 36.0%
Other Time Deposits 4,443,757 2,351,531 3,947,297 4,438,166 3,219,771 2,092,226 355.9% 1,223,986 38.0%
----------- ----------- ----------- ----------- ----------- ---------- ----- ---------- -----
34,436,961 31,425,573 $32,732,535 $32,616,935 $31,866,515 $3,011,388 38.3% $2,570,446 8.1%
=========== =========== =========== =========== =========== ========== ===== ========== =====
AVERAGE COMMUNITY BANKING AND WHOLESALE DEPOSITS
- -------------------------------------------------------------------------------------------------------------------------------
2Q04 2Q04
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
- ------------------------ ----------- ----------- ----------- ----------- ----------- ---------------- -----------------
Community Bank Deposits $27,414,895 $27,284,201 $27,129,340 $27,180,362 $27,732,413 $ 130,694 1.9% $ (317,518) -1.1%
Wholesale Deposits 5,987,319 5,047,579 5,144,221 4,714,770 4,315,066 939,740 74.5% 1,672,253 38.8%
----------- ----------- ----------- ----------- ----------- ---------- ---- ---------- ----
$33,402,214 $32,331,780 $32,273,561 $31,895,132 $32,047,479 $1,070,434 13.2% $1,354,735 4.2%
=========== =========== =========== =========== =========== ========== ==== ========== ====
*Linked quarter percentage changes are presented on an annualized basis.
- - Low-cost deposits grew 2.7%, annualized, compared to 1Q04, and 5.7%
compared to 2Q03. Regions implemented a deposit acquisition campaign
targeting DDA accounts for 2004.
- - Approximately 113,000 accounts were opened in the first half of the year
toward a target of 250,000 new accounts in 2004 and compared to 92,000 new
accounts in the first half of 2003.
- - Wholesale deposits, primarily Euro deposits and jumbo CD's, increased as
they became a more attractive funding source in the quarter.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 11
OPERATING PERFORMANCE
REVENUE
- -------------------------------------------------------------------------------------------------------------------------------
2Q04 2Q04
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
- ------------------------ --------- --------- --------- --------- --------- --------------- ----------------
Net Interest Income $ 380,863 $ 378,997 $ 379,518 $ 368,876 $ 366,301 $ 1,866 2.0% $ 14,562 4.0%
Non-Interest Income (excl.
sec. gains/losses) 347,210 352,681 331,371 347,712 362,325 (5,471) -6.2% (15,115) -4.2%
--------- --------- --------- --------- --------- -------- ---- -------- ----
Total Revenue $ 728,073 $ 731,678 $ 710,889 $ 716,588 $ 728,626 $ (3,605) -2.0% $ (553) -0.1%
========= ========= ========= ========= ========= ======== ==== ======== ====
Fee Income as a % of Total
Revenue 47.7% 48.2% 46.6% 48.5% 49.7%
========= ========= ========= ========= =========
*Linked quarter percentage changes are presented on an annualized basis.
- - The net interest margin declined from 3.56% in 1Q04 to 3.53% in 2Q04
primarily due to maturities of fixed rate assets.
- - Net-interest income was up slightly based on strong earning asset growth
that offset contraction in the margin.
- - Regions is positioned slightly asset-sensitive at June 30, 2004.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 12
NON-INTEREST INCOME AND EXPENSE
NON-INTEREST INCOME AND EXPENSE
- ------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
-----------------------------------
2Q04 2Q04
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
- ------------------------ -------- -------- -------- -------- -------- ---------------- ----------------
Brokerage and investment banking $128,886 $138,203 $135,634 $140,257 $151,811 $ (9,317) -27.0% $(22,925) -15.1%
Trust department income 21,668 20,691 17,797 18,168 16,850 977 18.9% 4,818 28.6%
Service charges on deposit accounts 73,607 71,868 73,042 73,641 72,205 1,739 9.7% 1,402 1.9%
Mortgage servicing & origination fees 26,246 23,491 22,514 29,074 31,757 2,755 46.9% (5,511) -17.4%
Securities gains(losses) 149 12,803 (2) (37) 15,799 (12,654) N/A (15,650) -99.1%
Insurance premiums & commissions 21,645 23,155 19,614 19,048 17,654 (1,510) -26.1% 3,991 22.6%
Gain on sale of mortgage loans 46,016 41,236 38,160 35,438 37,211 4,780 46.4% 8,805 23.7%
(Loss) gain on securitization of
auto loans - - (3,575) - - - - - NA
Derivative income 1,799 964 4,170 4,208 8,016 835 346.5% (6,217) -77.6%
Other 27,343 33,073 24,015 27,878 26,821 (5,730) -69.3% 522 1.9%
-------- -------- -------- -------- -------- -------- ----- -------- -----
Total non-interest income $347,359 $365,484 $331,369 $347,675 $378,124 $(18,125) -19.8% $(30,765) -8.1%
======== ======== ======== ======== ======== ======== ===== ======== =====
NON-INTEREST EXPENSE
-----------------------------------
2Q04 2Q04
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
- ------------------------ -------- -------- -------- -------- -------- ---------------- ----------------
Salaries and employee benefits** $287,183 $290,923 $278,862 $281,666 $288,937 $ (3,740) -5.1% $ (1,754) -0.6%
Net occupancy expense** 25,985 27,800 27,748 26,869 25,518 (1,815) -26.1% 467 1.8%
Furniture and equipment expense** 19,333 18,130 20,374 20,160 20,501 1,203 26.5% (1,168) -5.7%
Amortization of core deposit intangible 421 420 334 335 334 1 1.0% 87 26.0%
Amortization of MSR's 7,664 9,257 8,686 9,196 12,705 (1,593) -68.8% (5,041) -39.7%
Impairment (recapture) of MSR's (40,000) 12,000 - (20,000) 19,000 (52,000) 100.0% (59,000) 100.0%
Loss on early extinguishment of debt 39,620 - - 20,580 - 39,620 - 39,620 NA
Merger-related and other charges 8,173 321 - - - 7,852 8,173 NA
Other** 126,350 132,249 115,943 117,371 116,990 (5,899) -17.8% 9,360 8.0%
-------- -------- -------- -------- -------- -------- ----- -------- -----
Total non-interest expense $474,729 $491,100 $451,947 $456,177 $483,985 $(16,371) -13.3% $ (9,256) -1.9%
======== ======== ======== ======== ======== ======== ===== ======== =====
*Linked quarter percentage changes are presented on an annualized basis.
** Net of merger and other charges in 2Q04
- - Trust department income increased 29% compared to 2Q03 primarily as a
result of the addition of RMK Timberland revenues, increases in fee
levels, and higher asset values, on which fees are based.
- - For the six months ended June 30, 2004, approximately 61% of Rebsamen's
insurance revenues are related to the commercial property and casualty
business. Approximately 29% of revenues are from the life and group life
businesses.
- - Insurance premiums and commissions increased over 2Q03 levels primarily as
a result of new business and strong retention levels of existing clients.
- - Regions derivative income is primarily connected to the conversion of
fixed rate loan products into variable rate loan products. As a result,
this income fluctuates based on the interest rate environment and
resulting demand from customers.
- - The loss on early extinguishment of debt recognized in 2Q04 is related to
early retirement of $1.1 billion of FHLB advances. The benefit of this
prepayment is expected to be reinvested in fixed-rate funding and
investment in customer relationships through greater flexibility in
deposit pricing during the transition process.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 13
MORGAN KEEGAN
MORGAN KEEGAN
Summary Income Statement
2Q04 2Q04
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
- ------------------------ ---- ---- ---- ---- ---- ------------------ ------------------
Revenues:
Commissions $ 38,751 $ 43,965 $ 41,503 $ 43,782 $ 40,022 $ (5,214) -47.4% $ (1,271) -3.2%
Principal transactions 48,583 53,838 51,010 60,669 72,208 (5,255) -39.0% (23,625) -32.7%
Investment banking 24,944 24,545 28,064 23,378 28,933 399 6.5% (3,989) -13.8%
Interest 11,470 12,636 12,434 10,799 12,385 (1,166) -36.9% (915) -7.4%
Trust fees and services 18,245 17,591 14,873 15,541 14,707 654 14.9% 3,538 24.1%
Investment advisory 20,530 18,683 19,210 17,405 14,778 1,847 39.5% 5,752 38.9%
Other 7,291 5,212 4,663 3,285 4,927 2,079 159.6% 2,364 48.0%
-------- -------- -------- -------- -------- -------- ------ -------- -----
Total revenues 169,814 176,470 171,757 174,859 187,960 (6,656) -15.1% (18,146) -9.7%
Expenses:
Interest expense 5,303 7,397 6,761 5,622 6,344 (2,094) -113.2% (1,041) -16.4%
Non-interest expense 133,502 135,614 133,110 134,507 142,924 (2,112) -6.2% (9,422) -6.6%
-------- -------- -------- -------- -------- -------- ------ -------- -----
Total expenses 138,805 143,011 139,871 140,129 149,268 (4,206) -11.8% (10,463) -7.0%
-------- -------- -------- -------- -------- -------- ------ -------- -----
Income before income taxes 31,009 33,459 31,886 34,730 38,692 (2,450) -29.3% (7,683) -19.9%
Income taxes 11,580 12,540 11,988 13,045 14,652 (960) -30.6% (3,072) -21.0%
-------- -------- -------- -------- -------- -------- ------ -------- -----
Net income $ 19,429 $ 20,919 $ 19,898 $ 21,685 $ 24,040 $ (1,490) -28.5% $ (4,611) -19.2%
======== ======== ======== ======== ======== ======== ====== ======== =====
Breakout of Revenue by Division
Fixed-
income Equity Regions
Private Capital Capital MK Investment Interest
($ amounts in thousands) Client Markets Markets Trust Advisory & Other
- ------------------------ ------ ------- ------- ----- -------- -------
THREE MONTHS ENDED
JUNE 30, 2004:
$ amount of revenue $ 48,696 $ 50,821 $ 17,879 $ 18,246 $ 21,633 $ 12,539
% of gross revenue 28.7% 29.9% 10.5% 10.7% 12.7% 7.4%
THREE MONTHS ENDED
MARCH 31, 2004:
$ amount of revenue $ 60,064 $ 50,464 $ 15,520 $ 17,590 $ 19,792 $ 13,040
% of gross revenue 34.0% 28.6% 8.8% 10.0% 11.2% 7.4%
SIX MONTHS ENDED
JUNE 30, 2004:
$ amount of revenue $ 108,760 $ 101,285 $ 33,399 $ 35,836 $ 41,425 $ 25,579
% of gross revenue 31.4% 29.2% 9.6% 10.3% 12.0% 7.5%
SIX MONTHS ENDED
JUNE 30, 2003:
$ amount of revenue $ 92,089 $ 142,894 $ 24,471 $ 29,865 $ 30,536 $ 27,968
% of gross revenue 26.5% 41.1% 7.0% 8.6% 8.8% 8.0%
*Linked quarter percentage changes are presented on an annualized basis.
- - During the first quarter, Morgan Keegan executed a successful IPO of the
RMK Strategic Income Fund. Fee and commission revenue from this offering
contributed approximately $5 million each to both private client and
equity capital markets revenues for a total of $10 million.
- - Commissions income declined $5.2 million compared to 1Q04 primarily as a
result of lower levels of retail market activity in the middle to late
part of the quarter as well as 1Q04 commissions related to the IPO of the
RMK Strategic Income Fund.
- - Principal transactions income declined $5.3 million from 1Q04 as a result
of lower levels of retail activity in the middle to late part of the
quarter. Principal transactions income declined 33% compared to 2Q03,
which represented a historical high for Morgan Keegan's fixed income
business.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 14
MORGAN KEEGAN (CONTINUED)
- - Investment banking revenues in 2Q03 and 1Q04 were affected by the IPOs of
the RMK High Income Fund and the RMK Strategic Income Fund in each
respective quarter.
- - Trust income increased 15%, linked-quarter, annualized over 1Q04 as a
result of an increase in corporate trust revenues and higher recent asset
values on which fees are based.
- - Expenses were down 12% linked quarter, annualized and 7% year over year
primarily as a result of lower commissions expense.
- - The decline in private client revenues compared to 1Q04 is related to the
IPO of the RMK Strategic Income Fund in the first quarter as well as the
previously mentioned decline in market activity in the second quarter.
- - Equity capital markets revenues increased significantly in the first half
of 2004, reflecting marked improvement over slower activity levels in
2003.
- - Average assets per financial advisor were $59.2 million at June 30, 2004
compared to $59.4 million at March 31, 2004.
- - Total customer assets were $41.5 billion at June 30, 2004, compared to
$40.5 billion at March 31, 2004.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 15
MORTGAGE OPERATIONS
MORTGAGE OPERATIONS
2Q04 2Q04
2Q04 1Q04 4Q03 3Q03 2Q03 vs. 1Q04* vs. 2Q03
---- ---- ---- ---- ---- --------- --------
Single family mortgage
production (millions):
Regions Mortgage $ 952 $ 731 $ 801 $ 1,697 $ 1,631 $ 221 120.9% $ (679) -41.6%
EquiFirst 1,476 985 1,081 1,150 831 491 199.4% 645 77.6%
------- ------- ------- ------- -------- ------- ----- -------- -----
Total $ 2,428 $ 1,716 $ 1,882 $ 2,847 $ 2,462 $ 712 166.0% (34) -1.4%
======= ======= ======= ======= ======== ======= ===== ======== =====
Gain(loss) on sale of
mortgage loans:
Regions Mortgage $ (946) $ 330 $ 348 $ 3,799 $ 9,115 $(1,276) -1546.7% $(10,061) -110.4%
EquiFirst 46,962 40,906 37,812 31,639 28,096 6,056 59.2% 18,866 67.1%
------- ------- ------- ------- -------- ------- ----- -------- -----
Total $46,016 $41,236 $38,160 $35,438 $ 37,211 $ 4,780 46.4% $ 8,805 23.7%
======= ======= ======= ======= ======== ======= ===== ======== =====
Servicing portfolio $ 15.8 billion $ 15.9 billion $16.1 billion $16.0 billion $16.6 billion
Capitalized mortgage
servicing rights (net) $156.8 MM $113.1 MM $126.8 MM $123.9 MM $96.3 MM
MSR valuation allowance $ 11.5 MM $ 51.5 MM $ 39.5 MM $ 39.5 MM $59.5 MM
MSR capitalization rate 99 bps. 71 bps. 79 bps. 77 bps. 58 bps.
*Linked quarter percentage changes are presented on an annualized basis.
- - Approximately 39% of single-family mortgage production was originated by
Regions Mortgage and approximately 61% was originated by EquiFirst in
2Q04.
- - Mortgage production increased 41% from 1Q04 to 2Q04 as a result of lower
interest rates at the beginning of the quarter and increased production
from EquiFirst.
- - The $4.8 million increase in gain on sale of mortgage loans quarter to
quarter is primarily a result of higher origination volume at EquiFirst,
offset by some premium contraction.
- - Regions Mortgage originates conforming mortgage loans and services loans
originated in-house and by others.
- - EquiFirst originates non-conforming mortgage loans primarily through a
broker network and sells them servicing-released, on a whole loan basis,
at a premium.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 16
CREDIT QUALITY
CREDIT QUALITY
YTD YTD
($ amounts in thousands) 2Q04 1Q04 4Q03 3Q03 2Q03 6/30/04 6/30/03
- ------------------------ ---- ---- ---- ---- ---- ------- -------
Allowance for loan losses $ 452,677 $ 455,566 $ 454,057 $ 456,040 $ 456,672
Provision for loan losses $ 25,000 $ 15,000 $ 30,000 $ 30,000 $ 30,000 $ 40,000 $ 61,500
Net loans charged off:
Commercial $ 21,472 $ 8,350 $ 24,503 $ 23,035 $ 15,650 $ 29,822 $ 28,211
Real estate 3,846 1,658 3,739 3,663 3,203 5,504 5,753
Installment 2,571 3,483 3,741 3,934 4,179 6,054 8,028
--------- --------- --------- --------- --------- --------- --------
Total $ 27,889 $ 13,491 $ 31,983 $ 30,632 $ 23,032 $ 41,380 41,992
========= ========= ========= ========= ========= ========= ========
Net loan charge-offs as a % of
average loans, annualized
Commercial 0.83% 0.33% 0.94% 0.81% 0.57% 0.58% 0.52%
Real estate 0.09% 0.04% 0.09% 0.10% 0.08% 0.07% 0.08%
Installment 0.18% 0.25% 0.27% 0.29% 0.31% 0.21% 0.30%
--------- --------- --------- --------- --------- --------- --------
Total 0.34% 0.17% 0.40% 0.39% 0.29% 0.25% 0.27%
========= ========= ========= ========= ========= ========= ========
Non-performing assets:
Non-accrual loans $ 187,685 $ 201,805 $ 250,344 $ 268,764 $ 241,789
Renegotiated loans - 391 886 931 29,803
Other real estate 37,652 45,356 52,195 56,887 52,358
--------- --------- --------- --------- ---------
Total $ 225,337 $ 247,552 $ 303,425 $ 326,582 $ 323,950
========= ========= ========= ========= =========
Loans past due > 90 days $ 37,147 $ 34,091 $ 35,187 $ 31,075 $ 35,894
- - Annualized charge-offs were 0.34% of average loans in 2Q04 as compared to
0.17% in 1Q04 and 0.29% in 2Q03. The linked-quarter increase is related
primarily to a low level of first quarter 2004 net charge-offs.
- - 2Q04 commercial loan net charge-offs reflect a decline in recoveries from
1Q04 as well as a larger commercial lease that was charged off in the
second quarter.
- - Non-performing assets decreased $22 million or 9% linked quarter.
- - Non-accrual loans were down $14.1 million compared to 1Q04 levels due to
reduced inflows of loans into non-accrual status.
- - At June 30, 2004, non-performing assets totaled 0.67% of loans and other
real estate compared to 0.75% at March 31, 2004 and 1.02% at June 30,
2003.
- - Regions non-performing loan portfolio is composed primarily of small to
medium-sized loans that are diversified geographically throughout its
franchise.
- - Of the total $188 million in non-accrual loans at June 30, 2004,
approximately $66 million (35%) are secured by single-family residences,
which historically have had very low levels of loss.
- - The largest non-performing loan has an outstanding balance of
approximately $6.5 million.
- - Of the 25 largest ORE properties, the largest has a book value of $2.4
million and the smallest has a book value of $318 thousand.
- - Management considers the current level of the allowance for loan losses
adequate to absorb probable losses from loans in the portfolio.
Management's determination of the adequacy of the allowance for loan
losses requires the use of judgments and estimates that may change in the
future. Unfavorable changes in the factors used by management to determine
the adequacy of the reserve, or the availability of new information, could
cause the allowance for loan losses to be increased or decreased in future
periods.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 17
ADDITIONAL FINANCIAL AND OPERATIONAL DATA
- - Regions has authorization to repurchase up to 20 million shares of common
stock.
- - Excess purchase price was $1.1 billion at June 30, 2004, March 31, 2004,
and June 30, 2003.
SIGNIFICANT ITEMS AFFECTING EARNINGS
SECOND QUARTER 2004
($ amounts in millions, except fully diluted per share)
Pre-Merger Share Basis Post-Merger Share Basis (1)
---------------------- ---------------------------
EPS, EPS,
Pre-tax After-tax fully diluted Pre-tax After-tax fully diluted
------- --------- ------------- ------- --------- -------------
GAAP EARNINGS AVAILABLE TO
COMMON SHAREHOLDERS $ 228.5 $ 159.3 $ 0.72 $ 228.5 $ 159.3 $ 0.58
SIGNIFICANT ITEMS: (2)
Merger & Other Expenses $ (8.2) $ (5.8) $ (0.03) $ (8.2) $ (5.8) $ (0.02)
Losses on Early Retirement of FHLB Advances (39.6) (28.1) (0.13) (39.6) (28.1) (0.10)
Mortgage Servicing Rights Recapture 40.0 28.4 0.13 40.0 28.4 0.10
Effect of EITF 03-6 Adoption - (2.7) (0.01) - (2.7) (0.01)
-------- -------- ------- ------- -------- --------
Net Earnings Impact $ (7.8) $ (8.2) $ (0.04) $ (7.8) $ (8.4) $ (0.03)
======== ======== ======= ======= ======== ========
(1) Adjusted for July 1, 2004 merger share exchange ratio (1.2346 for 1.0),
i.e., EPS calculation based on 274.564 million average diluted shares
outstanding compared to pre-merger average count of 222.391 million.
(2) Positive/(negative) impact on GAAP earnings.
(3) Effective second quarter 2004 and to be retroactively applied, EITF 03-6,
"Participating Securities and the Two-Class Method under FASB Statement
No. 128, Earnings per Share," requires a portion of earnings to be
allocated to participating securities using the two-class method described
in FAS 128. Regions repurchased 4.0 million shares through an accelerated
stock repurchase agreement which included a forward agreement, considered
a participating security, entered into March 9, 2004. As the position is
closed out by the counterparties, the impact will be reduced. First and
second quarter 2004 earnings were reduced by $0.01 per basic and diluted
share each quarter as a result of this EITF.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 18
UNION PLANTERS SECOND QUARTER EARNINGS SUMMARY
Earnings in line with expectations
- - Quarterly earnings of $11.8 million, or $0.06 per diluted share, were
reduced by merger and other pre-tax charges of $114.4 million, or $0.39 per
diluted share after tax
Favorable revenue trends
- - Net interest income of $265 million was reduced by $3 million related to
the impact of a change in the non-accrual policy. Net interest income grew
2% linked quarter annualized excluding the impact of this charge
- - Mortgage origination activity increased by 35% compared to the first
quarter
- - Revenue from Strategic Outsourcing, Inc. and Capital Factors subsidiaries
increased $2.9 million, or 50.6%, and $0.9 million, or 9.6%, respectively,
compared to the prior quarter
- - Fees from financial services up 10% linked quarter driven by double-digit
growth in insurance, brokerage and annuity products
Positive loan and deposit trends
- - Core loan growth of 6.8% linked quarter annualized excluding loans
transferred to held for sale
- - Continued strong growth in home equity loans and consumer mortgages
- - Targeted product promotions increased account acquisition rate on deposit
products and contributed to growth in average noninterest-bearing demand
deposits of 4.6% compared to the previous quarter
Continuing favorable asset quality trends
- - Nonperforming assets declined for seventh straight quarter and were at the
lowest level since March of 2001
- - Nonperforming loans plus 90 days past due and still accruing were down
from the prior quarter by $151 million, or 34%
Noninterest expenses were up 1.3% compared to last quarter and included $7.2
million and $15.0 million in the first and second quarters in merger related
and other charges, respectively. Excluding these charges, noninterest expense
decreased 1.6%
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 19
UNION PLANTERS CORPORATION FINANCIAL HIGHLIGHTS
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
($ amounts in thousands) 6/30/04 3/31/04 6/30/03
- --------------------------------------------------- ------------- ------------- -------------
Cash and due from banks $ 805,252 $ 741,678 $ 925,500
Interest-bearing deposits at financial institutions 130,326 72,309 145,910
Federal funds sold and securities purchased
under resell agreement 162,238 10,567 74,598
Trading account assets 346,933 297,734 291,728
Loans held for resale 1,267,634 1,141,788 2,647,721
Available for sale securities 5,386,696 5,211,084 6,596,273
Loans
Commercial, financial and agricultural 4,757,381 4,904,737 5,244,088
Foreign 331,254 284,223 255,392
Accounts receivable - factoring 560,370 641,566 633,367
Real estate - construction 2,406,350 2,343,970 2,408,361
Real estate - mortgage
Secured by 1-4 family residential 3,616,832 3,476,528 3,691,072
Non-farm, nonresidential properties 5,083,757 5,164,793 5,112,378
Multifamily (5 or more) residential 868,737 868,239 796,127
Secured by farmland 485,478 467,805 489,412
Home equity 2,315,557 2,174,520 1,811,300
Consumer 1,704,590 1,719,029 1,847,013
Direct lease financing 41,220 44,417 60,661
------------- ------------- -------------
Total loans 22,171,526 22,089,827 22,349,171
Less: Unearned income (25,564) (24,539) (23,589)
Allowance for losses on loans (303,144) (308,763) (344,756)
------------- ------------- -------------
Net loans 21,842,818 21,756,525 21,980,826
Premises and equipment, net 482,332 494,897 521,219
Accrued interest receivable 155,126 158,467 204,991
Mortgage servicing rights, net 359,258 324,966 226,354
Goodwill, net 743,185 743,185 743,185
Other intangibles, net 152,954 157,955 178,251
Other assets 379,440 386,809 450,665
------------- ------------- -------------
TOTAL ASSETS $ 32,214,192 31,497,964 $ 34,987,221
============= ========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 5,373,199 5,498,829 $ 5,691,928
Time deposits of $100,000 and over 1,573,251 1,494,822 1,582,463
Other interest-bearing 15,929,478 15,751,107 17,724,131
------------- ------------- -------------
Total deposits 22,875,928 22,744,758 24,998,522
Short-term borrowings 3,207,156 2,013,696 3,029,537
Short- and medium-term senior notes 589,602 608,176 613,091
Federal Home Loan Bank long-term advances 328,286 428,598 459,345
Other long-term debt 1,567,999 1,631,270 1,204,813
Accrued interest, expenses and taxes 128,928 205,475 206,736
Other liabilities 578,358 759,567 1,192,975
------------- ------------- -------------
TOTAL LIABILITIES 29,276,257 28,391,540 31,705,019
------------- ------------- -------------
Commitments and contingent liabilities - - -
Shareholders' equity
Convertible preferred stock - - 9,946
Common stock, $5 par value; 300,000,000
shares authorized; 951,345 950,098 981,577
Additional paid-in capital 574,030 568,889 543,862
Retained earnings 1,548,015 1,599,551 1,709,998
Unearned compensation (41,111) (41,039) (23,751)
Accumulated other comprehensive income (94,344) 28,925 60,570
------------- ------------- -------------
TOTAL SHAREHOLDERS' EQUITY 2,937,935 3,106,424 3,282,202
------------- ------------- -------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 32,214,192 $ 31,497,964 $ 34,987,221
============= ============= =============
Actual shares outstanding - end of quarter 190,268,933 188,918,687 196,315,446
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 20
UNION PLANTERS CORPORATION FINANCIAL HIGHLIGHTS
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended Three Months Ended
June 30 June 30
------------------------ ------------------------
($ amounts in thousands, except per share amounts) 2004 2003 2004 2003
-------------------------------------------------- ---------- ---------- ---------- ----------
INTEREST INCOME
Interest and fees on loans $ 577,825 $ 676,540 $ 284,229 $ 334,214
Interest on investment securities
Taxable 90,447 104,993 45,588 53,236
Tax-exempt 6,416 16,972 2,214 8,339
Interest on deposits at financial institutions 539 934 265 482
Interest on federal funds sold and securities purchased
under agreements to resell 414 390 103 235
Interest on trading account assets 3,021 4,758 1,257 2,470
Interest on loans held for resale 28,715 58,131 18,788 30,122
---------- ---------- ---------- ----------
Total interest income 707,377 862,718 352,444 429,098
---------- ---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits 109,552 164,484 53,537 84,072
Interest on short-term borrowings 11,157 17,538 6,502 8,592
Interest on long-term debt 54,435 61,245 27,259 28,306
---------- ---------- ---------- ----------
Total interest expense 175,144 243,267 87,298 120,970
---------- ---------- ---------- ----------
NET INTEREST INCOME 532,233 619,451 265,146 308,128
PROVISION FOR LOSSES ON LOANS 180,747 94,649 117,925 46,000
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS 351,486 524,802 147,221 262,128
---------- ---------- ---------- ----------
NONINTEREST INCOME
Service charges on deposit accounts 110,870 115,127 55,245 57,405
Mortgage banking revenue, net 18,573 47,238 17,250 42,564
Factoring commissions and fees 20,515 20,089 10,727 10,189
Professional employment organization, net revenues 14,564 13,922 8,753 7,531
Bankcard transaction fees 19,904 20,304 10,327 10,620
Available for sale securities gains, net 32,817 65,311 956 46,354
Financial services revenues 40,971 37,702 21,456 19,968
Other income 58,925 43,408 17,015 18,945
---------- ---------- ---------- ----------
Total noninterest income 317,139 363,101 141,729 213,576
---------- ---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 278,947 274,245 141,573 137,327
Net occupancy expense 50,844 51,134 25,214 25,390
Equipment expense 40,774 41,131 20,343 20,937
Other intangibles amortization 10,043 10,480 5,001 5,189
Other expense 176,405 174,884 88,176 93,372
---------- ---------- ---------- ----------
Total noninterest expense 557,013 551,874 280,307 282,215
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 111,612 336,029 8,643 193,489
Income taxes 26,687 68,810 (3,174) 59,982
---------- ---------- ---------- ----------
NET EARNINGS $ 84,925 $ 267,219 $ 11,817 $ 133,507
========== ========== ========== ==========
NET EARNINGS APPLICABLE TO COMMON SHARES $ 84,850 $ 266,818 $ 11,817 $ 133,307
========== ========== ========== ==========
EARNINGS PER COMMON SHARE
Basic $ .45 $ 1.35 $ .06 $ .70
Diluted .44 1.34 .06 .69
AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
Basic 189,671 197,938 190,048 189,653
Diluted 191,011 199,950 190,928 192,310
ACTUAL SHARES OUTSTANDING (IN THOUSANDS) 190,269 196,315 190,269 196,315
Dividends per share $ 0.67 $ 0.67 $ 0.33 $ 0.33
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 21
UNION PLANTERS FINANCIAL HIGHLIGHTS
ASSET QUALITY
As of and for the
three months ended
($ in thousands) 6/30/2004 3/31/2004 6/30/2003
---------------- --------- --------- ---------
Allowance for loan losses $303,144 $308,763 $344,756
Provision for loan losses $117,925 $ 62,823 $ 46,000
Net loan charge-offs $ 71,522 $ 40,256 $ 52,206
Non-performing assets(1) $251,146 $252,283 $306,456
Loans 90 days past due $ 36,920 $186,658 $265,606
Net charge-offs as a percentage of
average loans 1.28% 0.73% 0.92%
Allowance for loan losses as a percentage
of loans, net of unearned income 1.34% 1.40% 1.54%
Total non-performing assets (excluding
loans 90 days past due) as a percentage
of loans and other real estate 1.11% 1.14% 1.37%
Total non-performing assets (including
loans 90 days past due) as a percentage
of loans and other real estate 1.28% 1.98% 2.55%
(1) Includes non-accrual loans, renegotiated loans and other real estate
SELECTED RATIOS
As of and for the
three months ended
6/30/2004 3/31/2004 6/30/2003
--------- --------- ---------
Return on average assets* 0.15% 0.94% 1.56%
Return on tangible equity* 2.24% 13.60% 23.03%
Return on average equity* 1.57% 9.58% 16.47%
Stockholders' equity per share $15.44 $16.35 $16.67
Net interest margin 3.65% 3.82% 4.01%
*Annualized
ADDITIONAL FINANCIAL AND OPERATIONAL INFORMATION
AS OF AND FOR PERIOD ENDED
($ in thousands) 6/30/2004 3/31/2004 6/30/2003
---------------- --------- --------- ---------
Capitalized mortgage servicing rights (net) $ 359,258 $ 324,966 $ 226,354
MSR valuation allowance $ 18,238 $ 38,907 $ 132,546
MSR capitalization rate 1.48bps. 1.34bps. 1.04bps.
Single family mortgage production $2,683,074 $1,990,300 $4,962,098
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 22
SIGNIFICANT ITEMS AFFECTING UNION PLANTERS' EARNINGS
SIGNIFICANT ITEMS AFFECTING UNION PLANTERS' EARNINGS
2004
-----------------------------------------------------------------------------
First Quarter Second Quarter
($ in millions, except fully diluted per share) Pre-tax After-tax Diluted EPS Pre-tax After-tax Diluted EPS
---------- ---------- ----------- ---------- ---------- -----------
GAAP EARNINGS: $ 103.0 $ 73.1 $ 0.38 $ 8.6 $ 11.8 $ 0.06
SIGNIFICANT ITEMS:*
Mortgage/Credit Operations $ (3.2) $ (2.1) (0.01) $ - $ - -
rightsizing costs
Mark to market charge to reclassify (25.8) (16.8) (0.09) (39.9) (26.0) (0.14)
certain loan portfolios as loans
held for sale for change in intent
with respect to the portfolios(1)
Charges incurred to conform credit - - - (39.0) (25.3) (0.13)
policies and procedures
Charges to reposition and conform policies - - - (19.2) (12.4) (0.07)
in mortgage-banking area
Merger expenses(2) (4.0) (4.0) (0.02) (15.7) (10.2) (0.05)
Branch sale gains / (loss) 21.1 13.7 0.07 (0.7) (0.4) (0.00)
---------- ---------- ----------- ---------- ---------- -----------
Net Earnings Impact $ (11.9) $ (9.2) $ (0.05) $ (114.4) $ (74.4) $ (0.39)
========== ========== =========== ========== ========== ===========
*Positive/(negative) impact on GAAP earnings.
(1) Change in intent to hold certain non-strategic loan portfolios in the
Capital Factors subsidiary.
(2) Merger-related expenses include certain legal, consulting, accounting,
regulatory and other expenses associated with the merger between Union
Planters Corporation and Regions Financial Corp. consummated on July 1,
2004.
FINANCIAL SUPPLEMENT TO
SECOND QUARTER 2004 EARNINGS RELEASE
PAGE 23
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. The forward-looking statements 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 that 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 South, 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) the existence or exacerbation of general geopolitical
instability and uncertainty, including the threat or occurrence of acts of
terror or the occurrence or escalation of hostilities; (e) 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 (f)
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 that 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 and other
market 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 and 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,
which in turn depends on a variety of factors, including: our ability to achieve
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; and the continued growth of the markets that
the acquired entities serve, consistent with recent historical experience.
In addition, statements made in this financial supplement and the accompanying
press release, other periodic reports filed by Regions with the Securities and
Exchange Commission, and other written or oral statements made by or on behalf
of Regions may include forward looking statements relating to the benefits of
the merger between Regions and Union Planters Corporation, including future
financial and operating results, and Regions' plans, objectives, expectations
and intentions. Such statements involve risks and uncertainties that may cause
results to differ materially from those set forth in these statements.
The following factors, among those addressed above and others, could cause
actual results to differ materially from those set forth in such forward-looking
statements: (1) the level and timeliness of realization, if any, of expected
cost savings and revenue synergies from the merger; (2) difficulties related to
the completion of the merger and the integration of the businesses of Regions
and Union Planters, including integration of information systems and retention
of key personnel; (3) disruption from the merger may make it more difficult to
maintain relationships with clients, employees or suppliers; (4) a materially
adverse change in the financial condition of Regions, Union Planters or the
combined company; (5) lower than expected revenues following the merger (6)
other difficulties in effecting the proposed merger.
Regions' Investor Relations contact is Jenifer M. Goforth at (205) 244-2823;
Regions' Media contact is Kristi Lamont Ellis at (205) 326-7179.