[REGIONS FINANCIAL CORP. LOGO]
OCT. 15, 2004
REGIONS ANNOUNCES THIRD QUARTER EARNINGS,
SOLID START FOR MERGED COMPANY
BIRMINGHAM, ALA. - Regions Financial Corporation (NYSE:RF) today reported
highlights for its earnings quarter ended Sept. 30, 2004, including:
- Earned $0.55 per diluted share or $0.57 excluding $0.02 in
merger-related charges(1)
- Strong growth in loans and deposits in core banking franchise
- Increased net interest income and improved net interest
margin
- Successfully completed three major integrations: brokerage,
commercial leasing and mortgage servicing
- Realized merger-related cost savings totaling approximately
$6 million
- Net loan losses totaling 0.30% of average loans, annualized
GOOD FINANCIAL PERFORMANCE, INTEGRATION PROGRESS
"We are very encouraged by our third-quarter results, both from a financial
performance standpoint and in regard to our merger integration progress," said
Regions Chairman and CEO Carl E. Jones Jr., noting that earnings benefited from
improved credit quality and higher net interest income.
"When you look at our smooth merger conversions - mortgage servicing,
commercial leasing and brokerage - and our merger integration cost savings, it
becomes apparent that our associates' months of planning and hard work - and
their dedication to customer service - are beginning to pay off," Jones said.
"In addition, this past quarter we had to devote time, effort and resources to
coping with one of the most devastating hurricane seasons in recent history.
"Taken all together, what we accomplished during our first quarter as a
combined company gives us a great deal to be proud of, and sets the stage for a
bright future," he said.
INCREASED CORE EARNINGS
Third quarter 2004 net income totaled $256.7 million which is $0.55 per diluted
share or $0.57 per diluted share excluding $8.7 million in after-tax
merger-related charges. This year's third-quarter results reflect the effect of
the merger with Union Planters Corporation, which occurred on July 1, 2004.
Because the merger was accounted for as a purchase, prior period financial
information for Regions (net income of $164.7 million or $0.59 per diluted
share, one year ago) does not include the former Union Planters' results.
GROWTH IN BANKING FRANCHISE
Regions' banking operations achieved another quarter of steady growth. Net
interest income increased to $676 million, compared to $369 million in the
third quarter of last year. The improvement was driven by an increase in the
net interest margin to 3.71% and the effect of the merger. The merger with
Union Planters added approximately $30 billion in earning assets.
Continued Next Page
Oct. 15, 2004
Page 2
When compared to Regions and Union Planters on a pro forma combined basis in
the second quarter, average community banking loans were up 10% linked-quarter,
annualized. Home equity and commercial real estate lending drove this increase.
On the same combined basis, average community banking deposits were up 4%,
linked-quarter, annualized. "As business development campaigns gather traction
and new training programs are implemented across Regions' expanded 15-state
footprint in the South, Midwest and Texas, loan and deposit growth should
further strengthen," the chairman said.
"Keep in mind that hurricanes forced 465 of our banking offices to shut down an
average 1.5 days during the third quarter," said Jones. "I cannot say enough
about how proud we are of how our associates joined forces to quickly reopen
offices and respond to customer and community needs, while at the same time
continuing to successfully implement merger plans and do their day-to-day jobs.
"The crisis management teams from both of our legacy organizations joined
together to execute preparation and recovery plans with the speed and
continuity of a group that had been together for years and not about 60 days,"
he noted. "This says volumes about our shared culture."
IMPROVED CREDIT QUALITY
Third quarter credit quality trends were especially positive for Regions. Net
loan charge-offs were a low 0.30% of average loans, annualized, in the third
quarter of 2004. Non-performing assets totaled $462.2 million (0.81% of total
loans and other real estate).
FIRST MAJOR INTEGRATIONS COMPLETED SMOOTHLY; SIZABLE COST SAVINGS REALIZED
"Regions' merger integration plan is firmly on track and proceeding smoothly,"
Jones said. During the third quarter, Union Planters' and legacy Regions'
brokerage operations, commercial leasing businesses, and mortgage servicing
platforms were successfully integrated.
On Aug. 1, accounts held by Union Planters' former investment division were
transferred to new accounts set up at Morgan Keegan & Company Inc., Regions'
investment and securities brokerage, trust and asset management division. More
than 25,000 former Union Planters investment customers received Morgan Keegan
statements in September. In addition, Morgan Keegan opened new offices in St.
Louis, Mo.; Indianapolis, Ind.; and Miami, Fla., during the third quarter.
The mortgage integration, which took place at the end of the third quarter, was
also successful, as evidenced by the smooth transfer of customer data from
legacy Regions servicing platform to legacy Union Planters' system.
Additionally, the company sold $5 billion of primarily West coast mortgage
servicing rights, as well as 14 non-footprint retail mortgage production
offices.
"We are positioning our mortgage business for better balance between
origination and servicing, which should lead to greater earnings consistency in
the future," Jones noted.
Regions is also on target to achieve planned merger cost savings. The company
realized third quarter expense reductions approximating $6 million. The annual
run-rate of cost savings is anticipated to approximate $200 million when all
integrations have been accomplished.
"We are committed to successfully executing our merger plans and achieving our
merger objectives," Jones said. "Detailed, careful planning and a shared focus
on ensuring a seamless experience for our customers are what will help us
achieve these goals, and so far we are on the right track."
Continued Next Page
Oct. 15, 2004
Page 3
HEALTHY FEE REVENUES DESPITE CAPITAL MARKETS' AND MORTGAGE SLOWDOWN
Morgan Keegan's revenues were $177.2 million with earnings of $19.5 million. In
the third quarter, as did much of the brokerage industry, Morgan Keegan
experienced lower trading volumes and lower levels of activity in both the
private client retail arm of the business and the fixed income capital markets
arm of the business.
With the addition of Union Planters' brokerage unit, PFIC, and internal growth,
customer assets grew to $44.5 billion at September 30.
"We believe that Regions' strong component of fee-based businesses and revenues
provides diversification and serves as a good underpinning for future growth,"
Jones said. "And, given our expanded footprint and broadened customer base,
Morgan Keegan is increasingly well-positioned to benefit from any
re-strengthening in capital markets activities."
Mortgage revenues were $138 million in the third quarter. Mortgage origination
volume was down in both legacy companies as they experienced declines in
demand. Total mortgage production for the quarter was $3.8 billion.
Jones noted that while mortgage industry market forces are currently
challenging, changes under way at Regions' mortgage operations will enhance the
organization's ability to compete more efficiently and profitably, as well as
reduce earnings volatility over the long term.
(1) RECONCILIATION TO GAAP FINANCIAL MEASURES
Supplemental financial data presented below excludes certain significant items
affecting financial results. These significant items are included in financial
results presented in accordance with generally accepted accounting principles
(GAAP). We believe the exclusion of the significant items provides a meaningful
base for period-to-period comparisons. See the table below for supplemental
financial data and corresponding reconciliation to GAAP financial measures for
periods presented.
Diluted
2004 Pre-tax After-tax EPS
- ----------------------------------------- ------- --------- ------
THIRD QUARTER:
GAAP EARNINGS-COMMON SHAREHOLDERS $365.7 $ 255.5 $0.55
Significant items impact:
Merger and other charges (12.4) (8.7) (0.02)
Gain on sale of securities 49.9 35.0 0.07
Mortgage servicing rights impairment (50.0) (35.1) (0.07)
Effect of EITF 03-6 adoption -- (1.3) --
------ ------- -----
Net impact
(12.5) (10.1) (0.02)
------ ------- -----
Earnings excluding significant items $378.2 $ 265.6 $0.57
====== ======= =====
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,
mortgage, and insurance products and services. With its merger with former
Union Planters Corp. complete, Regions had assets of $84.1 billion as of Sept.
30, 2004, 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 the
new 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
Oct. 15, 2004
Page 4
FINANCIAL HIGHLIGHTS (UNAUDITED)
(Dollar amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
Earnings 2004 2003 Change 2004 2003 Change
-------- -------- ------ -------- -------- ------
Net income $256,746 $164,722 56% $587,305 $488,088 20%
Net income available to
common shareholders $255,450 $164,722 55% $581,285 $488,088 19%
Per share: (a) and (b)
Net income $ 0.55 $ 0.60 -8% $ 1.73 $ 1.78 -3%
Net income-diluted $ 0.55 $ 0.59 -7% $ 1.71 $ 1.76 -3%
Cash dividends declared $ 0.33 $ 0.26 27% $ 1.00 $ 0.75 33%
September 30
--------------------------------------
Financial Condition 2004 2003 Change
----------- ----------- ------
Total assets $84,077,043 $48,794,215 72%
Loans, net of unearned income $57,096,580 $31,584,385 81%
Securities $12,166,926 $ 9,149,946 33%
Total earning assets $73,494,889 $44,598,797 65%
Total deposits $56,589,257 $32,616,935 73%
Stockholders' equity $10,675,290 $ 4,394,848 143%
Stockholders' equity per share $ 23.02 $ 16.02 44%
Selected Ratios
Return on average stockholders' equity 12.08% 15.18%
Return on average total assets 1.28% 1.35%
Stockholders' equity to total assets 12.70% 9.01%
Allowance for loan losses as a percentage
of loans, net of unearned income 1.33% 1.44%
Loans, net of unearned income, to
total deposits 100.90% 96.83%
Net charge-offs to average loans 0.28% 0.31%
(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 less than $.01 for the three months ended September 30, 2004
and $.02 per share for the nine months ended September 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
October 15, 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 "Risk Factors" in the
company's annual report or Form 10-K for the most recently ended fiscal year.
-END-
[REGIONS FINANCIAL CORP. LOGO] FINANCIAL SUPPLEMENT TO THIRD QUARTER
2004 EARNINGS RELEASE
SUMMARY
Quarterly earnings of $0.55 per diluted share
- - Equates to $0.57 per diluted share, excluding merger charges of $0.02
per share (see page 2 for add'l details)
- - Earnings driven by increased net interest margin, good growth in loans
and deposits and improved credit quality
- - First quarter to report combined results reflecting merger with Union
Planters Corporation, consummated on July 1, 2004, and accounted for
as a purchase. PRIOR PERIOD FINANCIAL INFORMATION REFLECTS ONLY LEGACY
REGIONS' FINANCIAL RESULTS.
Positive trends in banking unit
- - Quarterly net interest income of $675.9 million; net interest margin
increased to 3.71%
- - Core community banking loan growth of 7%, linked-quarter average,
annualized, driven by commercial real estate and home equity lines of
credit
- - Core community banking deposits growth of 4%, linked-quarter average,
annualized, primarily attributable to interest free deposits, money
market deposits and CD's
Strong credit quality
- - Quarterly net charge-offs of $42.7 million or 30 bps. of average
loans, annualized
- - Non-performing assets declined 3% to $462 million or 0.81% of loans
and other real estate, compared to Regions and Union Planters combined
second quarter levels
Non-banking divisions reflect combined results
- - Morgan Keegan revenues of $177.2 million in 3Q04
- - MK customer assets of $44.5 billion and trust assets of $34.4 billion
as of September 30, 2004
- - Mortgage revenues of $138 million in 3Q04
- - Total mortgage production of $3.8 billion in 3Q04
- - Recognized $50 million in impairment on mortgage servicing rights,
offset by like amount of securities gains
- - Insurance revenues of $21.4 million for 3Q04
Cost saves of approximately $6 million realized this quarter
- - Primarily related to FTE reductions and renegotiated contracts
Merger integration underway and progressing smoothly
- - Former clients of Union Planters' PFIC investment management
subsidiary successfully converted to Morgan Keegan accounts on August
1
- - Regions Mortgage servicing, accounting and secondary marketing
conversions successfully completed at end of third quarter
- - As part of initiatives to "right-size" mortgage banking operations, $5
billion of West Coast mortgage servicing assets and 14 out of
footprint retail mortgage production offices were sold in the third
quarter
- - Integration on track and expected to be completed between 4Q05 and
first half of 2006
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 2
SIGNIFICANT ITEMS AFFECTING EARNINGS
RECONCILIATION TO GAAP FINANCIAL MEASURES
The tables below present computations of earnings excluding certain significant
items affecting financial results. These significant items are included in
financial results presented in accordance with generally accepted accounting
principles (GAAP). We believe the exclusion of the significant items in
expressing earnings provides a meaningful base for period-to-period comparisons.
See the tables below for computation of earnings excluding significant items and
corresponding reconciliation to GAAP financial measures for periods presented.
- -------------------------------------------------------------------------------
SIGNIFICANT ITEMS AFFECTING REGIONS FINANCIAL CORPORATION EARNINGS
($ in millions, except diluted per share amounts)
- -------------------------------------------------------------------------------
Diluted
2004 Pre-tax After-tax EPS
- -------------------------------------------------- ------- --------- -----
THIRD QUARTER:
GAAP EARNINGS-COMMON SHAREHOLDERS $365.7 $255.5 $0.55
Significant items impact:(1)
Merger and other charges (12.4) (8.7) (0.02)
Gain on sale of securities 49.9 35.0 0.07
Mortgage servicing rights impairment (50.0) (35.1) (0.07)
Effect of EITF 03-6 adoption (3) -- (1.3) --
------ ------ -----
Net impact (12.5) (10.1) (0.02)
------ ------ -----
Earnings excluding significant items $378.2 $265.6 $0.57
====== ====== =====
SECOND QUARTER (2)
GAAP EARNINGS-COMMON SHAREHOLDERS $228.5 $159.3 $0.58
Significant items impact:(1)
Merger and other charges (8.2) (5.8) (0.02)
Losses on early retirement of FHLB advances (39.6) (28.1) (0.10)
Mortgage servicing rights recapture 40.0 28.4 0.10
Effect of EITF 03-6 adoption (3) -- (2.7) (0.01)
------ ------ -----
Net impact (7.8) (8.2) (0.03)
------ ------ -----
Earnings excluding significant items $236.3 $167.5 $0.61
====== ====== =====
FIRST QUARTER (2)
GAAP EARNINGS-COMMON SHAREHOLDERS $238.4 $166.6 $0.60
Significant items impact:(1)
Gain on sale of securities 12.8 9.1 0.03
Mortgage servicing rights impairment (12.0) (8.5) (0.03)
Effect of EITF 03-6 adoption (3) -- (2.0) (0.01)
------ ------ -----
Net impact 0.8 (1.4) (0.01)
------ ------ -----
Earnings excluding significant items $237.6 $168.0 $0.61
====== ====== =====
(1) Positive/(negative) impact on GAAP earnings.
(2) Results prior to third quarter 2004 are for legacy Regions, as the
merger (accounted for as a purchase transaction) with Union Planters was not
effective until July 1, 2004. However, prior period per share amounts have been
restated to reflect the exchange of Regions shares in connection with the
merger. Each Regions shareholder received 1.2346 shares for each 1.0 share held
on July 1, 2004.
(3) Effective second quarter 2004 and 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 entered into March 9, 2004 which included a forward agreement,
considered a participating security. First and second quarter 2004 earnings
were reduced by $0.01 per basic and diluted share each quarter as a result of
the application of this EITF. As the position was closed out during the third
quarter, basic and diluted EPS for the third quarter were reduced by less than
$0.01 per share.
COMPARISONS TO PRIOR PERIOD INFORMATION
Because the merger is accounted for as a purchase, prior period financial
information reflects only Regions' financial results, and all the tables in
this financial supplement are presented on that basis. In discussing certain
financial trends discernible in the third quarter compared to prior periods, we
compare actual third quarter results to prior period results on a combined
basis. We believe this approach is useful for understanding period-to-period
trends.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 3
- -------------------------------------------------------------------------------
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
- -------------------------------------------------------------------------------
($ amounts in thousands)
9/30/04 (2) 6/30/04 3/31/04 12/31/03 9/30/03
------------ ------------ ------------ ------------ ------------
Assets:
Cash and due from banks $ 1,720,573 $ 1,254,432 $ 970,762 $ 1,255,853 $ 1,262,979
Interest-bearing deposits
in other banks 135,291 35,802 102,408 96,537 194,761
Securities held to maturity 30,700 31,639 31,990 30,943 32,194
Securities available for sale 12,136,226 8,717,580 8,473,044 9,056,861 9,117,752
Trading account assets 1,184,308 754,213 790,864 816,074 776,332
Loans held for sale 1,823,037 1,231,132 1,436,812 1,241,852 1,931,014
Federal funds sold and securities
purchased under agreement
to resell 571,833 810,581 594,064 577,989 452,786
Margin receivables 516,914 549,673 547,955 503,575 509,573
Loans 57,317,386 33,863,816 33,000,869 32,414,848 31,815,772
Unearned income (220,806) (227,032) (231,119) (230,525) (231,387)
------------ ------------ ------------ ------------ ------------
Loans, net of unearned
income 57,096,580 33,636,784 32,769,750 32,184,323 31,584,385
Allowance for loan losses (756,750) (452,677) (455,566) (454,057) (456,040)
------------ ------------ ------------ ------------ ------------
Net Loans 56,339,830 33,184,107 32,314,184 31,730,266 31,128,345
Premises and equipment 1,096,497 639,822 631,186 629,638 626,188
Interest receivable 322,734 182,636 182,116 194,501 193,573
Due from customers on
acceptances 29,441 9,604 35,058 61,053 10,074
Excess purchase price 4,993,506 1,101,425 1,089,308 1,083,416 1,073,714
Mortgage servicing rights 400,950 156,774 113,099 126,846 123,902
Other identifiable intangible assets 369,739 4,942 5,363 4,068 4,403
Other assets 2,405,464 1,092,431 1,458,730 1,188,524 1,356,625
------------ ------------ ------------ ------------ ------------
$ 84,077,043 $ 49,756,793 $ 48,776,943 $ 48,597,996 $ 48,794,215
============ ============ ============ ============ ============
Liabilities and Stockholders' Equity:
Deposits
Non-interest-bearing $ 11,322,011 $ 5,953,180 $ 5,918,325 $ 5,717,747 $ 5,546,705
Interest-bearing 45,267,246 28,483,781 25,507,248 27,014,788 27,070,230
------------ ------------ ------------ ------------ ------------
Total Deposits 56,589,257 34,436,961 31,425,573 32,732,535 32,616,935
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agree-
ment to repurchase 4,885,534 3,702,172 4,447,518 3,031,706 3,542,312
Commercial paper 0 0 0 5,500 13,750
Other short-term
borrowings 2,006,579 1,110,863 1,441,916 1,389,832 1,406,372
------------ ------------ ------------ ------------ ------------
Total Short-term
Borrowings 6,892,113 4,813,035 5,889,434 4,427,038 4,962,434
Long-term borrowings 7,488,240 4,580,054 5,768,131 5,711,752 5,603,532
------------ ------------ ------------ ------------ ------------
Total Borrowed Funds 14,380,353 9,393,089 11,657,565 10,138,790 10,565,966
Bank acceptances
outstanding 29,441 9,604 35,058 61,053 10,074
Other liabilities 2,402,702 1,542,543 1,232,289 1,213,503 1,206,392
------------ ------------ ------------ ------------ ------------
Total Liabilities 73,401,753 45,382,197 44,350,485 44,145,881 44,399,367
Stockholders' equity:
Common stock 4,638 2,716 (1) 140,177 139,598 139,397
Surplus 7,034,904 970,024 (1) 1,000,479 983,669 975,939
Undivided profits 3,581,794 3,479,106 3,407,590 3,329,023 3,236,285
Treasury stock 0 0 (206,825) (49,944) (27,497)
Unearned restricted stock (33,559) (36,904) (15,075) (13,771) (15,693)
Accumulated other comprehensive
income (loss) 87,513 (40,346) 100,112 63,540 86,417
------------ ------------ ------------ ------------ ------------
Total Stockholders'
Equity 10,675,290 4,374,596 4,426,458 4,452,115 4,394,848
------------ ------------ ------------ ------------ ------------
$ 84,077,043 $ 49,756,793 $ 48,776,943 $ 48,597,996 $ 48,794,215
============ ============ ============ ============ ============
(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
$0.01 per share and exchange of 1.2346 shares for each 1 share of old
Regions shares in connection with the July 1, 2004 merger with Union
Planters.
(2) Regions Financial Corporation and Union Planters Corporation merged
effective July 1, 2004. The merger was accounted for as a purchase of
Union Planters by Regions. As a result, periods ending prior to July 1,
2004, reflect legacy Regions Financial data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 4
- -------------------------------------------------------------------------------
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
- -------------------------------------------------------------------------------
($ amounts in thousands, except per share amounts)
Quarter Ended
--------------------------------------------------------------------------------
9/30/04 (2) 6/30/04 3/31/04 12/31/03 9/30/03
----------- --------- --------- --------- ---------
Interest Income:
Interest and fees on loans $ 720,485 $ 413,613 $ 411,012 $ 412,031 $ 417,210
Interest on securities:
Taxable interest income 141,864 82,123 86,557 85,460 79,326
Tax-exempt interest income 7,215 5,289 5,661 5,839 5,972
--------- --------- --------- --------- ---------
Total Interest on Securities 149,079 87,412 92,218 91,299 85,298
Interest on loans held for sale 39,788 25,044 19,971 24,722 27,780
Interest on margin receivables 4,993 4,434 4,192 4,070 4,004
Income on federal funds sold and
securities purchased under
agreement to resell 2,223 1,448 1,378 1,549 859
Interest on time deposits in
other banks 315 18 22 37 55
Interest on trading account assets 8,794 5,911 6,889 6,569 5,715
--------- --------- --------- --------- ---------
Total Interest Income 925,677 537,880 535,682 540,277 540,921
Interest Expense:
Interest on deposits 152,841 85,998 84,054 86,885 93,384
Interest on short-term borrowings 33,122 18,157 19,651 19,995 25,940
Interest on long-term borrowings 63,811 52,862 52,980 53,879 52,721
--------- --------- --------- --------- ---------
Total Interest Expense 249,774 157,017 156,685 160,759 172,045
--------- --------- --------- --------- ---------
Net Interest Income 675,903 380,863 378,997 379,518 368,876
Provision for loan losses 43,500 25,000 15,000 30,000 30,000
--------- --------- --------- --------- ---------
Net Interest Income After
Provision for Loan Losses 632,403 355,863 363,997 349,518 338,876
Non-Interest Income:
Brokerage and investment banking 122,285 128,886 138,203 135,634 140,257
Trust department income 30,386 21,668 20,691 17,797 18,168
Service charges on deposit
accounts 139,286 73,607 71,868 73,042 73,641
Mortgage servicing and origination
fees 53,157 26,246 23,491 22,514 29,074
Securities gains (losses), net 49,937 149 12,803 (2) (37)
Other 143,049 96,803 98,428 82,384 86,572
--------- --------- --------- --------- ---------
Total Non-Interest Income 538,100 347,359 365,484 331,369 347,675
Non-Interest Expense:
Salaries and employee benefits 441,946 288,194 290,923 278,862 281,666
Net occupancy expense 52,481 25,985 27,800 27,748 26,869
Furniture and equipment expense 32,079 19,341 18,130 20,374 20,160
Impairment (recapture) of MSR's 50,000 (40,000) 12,000 0 (20,000)
Other 228,262 181,209 142,247 124,963 147,482
--------- --------- --------- --------- ---------
Total Non-Interest Expense 804,768 474,729 491,100 451,947 456,177
--------- --------- --------- --------- ---------
Income Before Income Taxes 365,735 228,493 238,381 228,940 230,374
Applicable income taxes 108,989 66,469 69,846 65,187 65,652
--------- --------- --------- --------- ---------
Net Income $ 256,746 $ 162,024 $ 168,535 $ 163,753 $ 164,722
========= ========= ========= ========= =========
Net income available to
common shareholders $ 255,450 $ 159,263 $ 166,572 $ 163,753 $ 164,722
========= ========= ========= ========= =========
Average shares outstanding -
during quarter (1) 462,606 271,024 273,270 274,169 274,733
Average shares outstanding - during
quarter, diluted (1) 468,125 274,564 277,278 278,556 278,649
Actual shares outstanding -
end of quarter (1) 463,766 271,573 270,055 274,040 274,398
Net income per share (1) $ 0.55 $ 0.59 $ 0.61 $ 0.60 $ 0.60
Net income per share, diluted (1) $ 0.55 $ 0.58 $ 0.60 $ 0.59 $ 0.59
Dividends per share (1) $ 0.33 $ 0.33 $ 0.33 $ 0.26 $ 0.26
Taxable equivalent net interest income $ 694,217 $ 397,089 $ 395,411 $ 396,831 $ 385,353
(1) Share and per share amounts for all periods presented prior to 9/30/04
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) Regions Financial Corporation and Union Planters Corporation merged
effective July 1, 2004. The merger was accounted for as a purchase of
Union Planters by Regions. As a result, periods ending prior to July
1, 2004, reflect legacy Regions Financial data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 5
- -------------------------------------------------------------------------------
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
- -------------------------------------------------------------------------------
($ amounts in thousands, except per share amounts)
Nine Months Ended
September 30
---------------------------------
2004 (3) 2003
---------- ----------
Interest Income:
Interest and fees on loans $1,545,110 $1,290,268
Interest on securities:
Taxable interest income 310,544 263,305
Tax-exempt interest income 18,165 18,516
---------- ----------
Total Interest on Securities 328,709 281,821
Interest on loans held for sale 84,803 70,958
Interest on margin receivables 13,619 11,851
Income on federal funds sold and
securities purchased under agreement
to resell 5,049 4,279
Interest on time deposits in other banks 355 152
Interest on trading account assets 21,594 19,524
---------- ----------
Total Interest Income 1,999,239 1,678,853
Interest Expense:
Interest on deposits 322,893 343,468
Interest on short-term borrowings 70,930 81,080
Interest on long-term borrowings 169,653 159,225
---------- ----------
Total Interest Expense 563,476 583,773
---------- ----------
Net Interest Income 1,435,763 1,095,080
Provision for loan losses 83,500 91,500
---------- ----------
Net Interest Income After Provision
for Loan Losses 1,352,263 1,003,580
Non-Interest Income:
Brokerage and investment banking 389,374 417,095
Trust department income 72,745 52,124
Service charges on deposit accounts 284,761 215,571
Mortgage servicing and origination fees 102,894 89,059
Securities gains (losses), net 62,889 25,660
Other 338,280 267,879
---------- ----------
Total Non-Interest Income 1,250,943 1,067,388
Non-Interest Expense:
Salaries and employee benefits 1,021,063 843,222
Net occupancy expense 106,266 78,099
Furniture and equipment expense 69,550 60,973
Impairment (recapture) of MSR's 22,000 (810)
Other 551,718 406,852
---------- ----------
Total Non-Interest Expense 1,770,597 1,388,336
---------- ----------
Income Before Income Taxes 832,609 682,632
Applicable income taxes 245,304 194,544
---------- ----------
Net Income $ 587,305 $ 488,088
========== ==========
Net income available to
common shareholders $ 581,285 $ 488,088
========== ==========
Average shares outstanding - year-to-date (1) 336,096 274,227
Average shares outstanding - year-to-date, diluted (1) 340,457 277,719
Actual shares outstanding - end of quarter (1) 463,766 274,398
Net income per share (1) (2) $ 1.73 $ 1.78
Net income per share, diluted (1) (2) $ 1.71 $ 1.76
Dividends per share (1) $ 1.00 $ 0.75
Taxable equivalent net interest income $1,486,719 $1,145,089
(1) Share and per share amounts for all periods presented prior to third
quarter 2004 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 $.03 per share for the nine months
ended September 30, 2004. EITF 03-6 had no impact on 2003 per share
amounts.
(3) Regions Financial Corporation and Union Planters Corporation merged
effective July 1, 2004. The merger was accounted for as a purchase of
Union Planters by Regions. As a result, periods ending prior to July
1, 2004, reflect legacy Regions Financial data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 6
- -------------------------------------------------------------------------------
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE DAILY BALANCES AND YIELD/RATE ANALYSIS
- -------------------------------------------------------------------------------
($ amounts in thousands; yields on taxable equivalent basis)
Quarter Ended
-----------------------------------------------------------------------------------
9/30/04 (1) 6/30/04 3/31/04
----------------------- ----------------------- -----------------------
Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate
------------ ------ ------------ ------ ------------ ------
Assets
Earning assets:
Taxable securities $ 13,222,217 4.28% $ 8,349,129 3.98% $ 8,627,819 4.06%
Non-taxable securities 555,324 8.03% 424,592 7.86% 435,978 8.30%
Federal funds sold 674,308 1.31% 615,139 0.95% 614,627 0.90%
Margin receivables 526,960 3.77% 543,090 3.28% 513,922 3.28%
Loans, net of unearned
income 56,126,009 5.20% 32,993,733 5.19% 32,342,081 5.27%
Interest-bearing deposits
in other banks 84,807 1.48% 5,158 1.40% 7,568 1.17%
Loans held for sale 2,321,736 6.82% 1,712,772 5.88% 1,325,000 6.06%
Trading account assets 996,587 3.71% 634,804 3.93% 815,160 3.50%
------------ ------------ ------------
Total earning assets 74,507,948 5.04% 45,278,417 4.92% 44,682,155 4.97%
Allowance for loan losses (757,611) (457,915) (458,515)
Cash and due from banks 1,664,229 992,416 945,080
Other non-earning assets 9,233,952 3,657,906 3,652,006
------------ ------------ ------------
$ 84,648,518 $ 49,470,824 $ 48,820,726
============ ============ ============
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts $ 2,926,811 0.22% $ 1,450,083 0.22% $ 1,426,803 0.22%
Interest bearing transaction
accounts 3,151,962 1.09% 2,771,453 0.87% 2,642,203 0.84%
Money market accounts 19,507,954 0.68% 10,622,534 0.63% 10,578,972 0.61%
Certificates of deposit of
$100,000 or more 5,824,425 2.14% 3,849,005 1.90% 3,544,559 1.94%
Other interest-bearing
accounts 14,005,713 2.21% 8,705,335 2.05% 8,429,297 2.13%
Federal funds purchased 6,623,019 1.33% 3,510,082 1.10% 3,546,344 0.98%
Commercial paper 0 -- 0 -- 1,088 3.70%
Other short-term borrowings 1,601,968 2.74% 1,185,923 2.90% 1,438,891 3.08%
Long-term borrowings 7,297,349 3.48% 5,719,057 3.72% 5,711,703 3.73%
------------ ------------ ------------
Total interest-bearing
liabilities 60,939,201 1.63% 37,813,472 1.67% 37,319,860 1.69%
Non-interest bearing deposits 11,263,949 6,003,804 5,709,946
Other liabilities 1,839,944 1,291,955 1,313,753
Stockholders' equity 10,605,424 4,361,593 4,477,167
------------ ------------ ------------
$ 84,648,518 $ 49,470,824 $ 48,820,726
============ ============ ============
Net yield on interest earning assets 3.71% 3.53% 3.56%
Quarter Ended
------------------------------------------------------
12/31/03 9/30/03
------------------------ ------------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
------------ ------ ------------ ------
Assets
Earning assets:
Taxable securities $ 8,607,323 3.99% $ 8,671,597 3.68%
Non-taxable securities 463,019 7.81% 479,484 7.73%
Federal funds sold 722,366 0.85% 605,986 0.56%
Margin receivables 504,323 3.20% 516,238 3.08%
Loans, net of unearned
income 31,746,108 5.30% 31,470,101 5.41%
Interest-bearing deposits
in other banks 13,778 1.07% 14,271 1.53%
Loans held for sale 1,616,801 6.07% 2,022,109 5.45%
Trading account assets 782,120 3.81% 702,280 3.23%
------------ ------------
Total earning assets 44,455,838 4.98% 44,482,066 4.97%
Allowance for loan losses (454,035) (459,157)
Cash and due from banks 958,244 924,158
Other non-earning assets 3,709,341 3,688,043
------------ ------------
$ 48,669,388 $ 48,635,110
============ ============
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts $ 1,416,434 0.26% $ 1,449,886 0.22%
Interest bearing transaction
accounts 2,481,147 0.84% 2,377,845 0.82%
Money market accounts 10,630,021 0.60% 10,551,389 0.58%
Certificates of deposit of
$100,000 or more 3,168,771 2.06% 3,085,685 2.29%
Other interest-bearing
accounts 8,815,274 2.17% 8,979,828 2.41%
Federal funds purchased 3,733,241 0.97% 3,995,668 0.95%
Commercial paper 11,634 3.72% 16,054 3.73%
Other short-term borrowings 1,417,052 3.02% 1,676,430 3.84%
Long-term borrowings 5,688,221 3.76% 5,502,659 3.80%
------------ ------------
Total interest-bearing
liabilities 37,361,795 1.71% 37,635,444 1.81%
Non-interest bearing deposits 5,761,914 5,450,499
Other liabilities 1,131,137 1,212,032
Stockholders' equity 4,414,542 4,337,135
------------ ------------
$ 48,669,388 $ 48,635,110
============ ============
Net yield on interest earning assets 3.54% 3.44%
(1) Regions Financial Corporation and Union Planters Corporation merged
effective July 1, 2004. The merger was accounted for as a purchase of
Union Planters by Regions. As a result, periods ending prior to July
1, 2004, reflect legacy Regions Financial data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
THIRD 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)
Nine Months Ended
September 30
-----------------------------------------------------
2004 (1) 2003
------------------------ -----------------------
Average Yield/ Average Yield/
Balance Rate Balance Rate
----------- ------ ----------- ------
Assets
Earning assets:
Taxable securities $10,077,906 4.14% $ 8,749,689 4.08%
Non-taxable securities 472,269 8.06% 506,327 7.64%
Federal funds sold 634,836 1.06% 598,734 0.96%
Margin receivables 527,987 3.45% 487,144 3.25%
Loans, net of unearned income 40,544,350 5.22% 31,357,129 5.65%
Interest-bearing deposits in other banks 32,702 1.45% 10,791 1.88%
Loans held for sale 1,788,456 6.33% 1,649,365 5.75%
Trading account assets 816,178 3.70% 798,720 3.27%
----------- -----------
Total earning assets 54,894,684 4.99% 44,157,899 5.23%
Allowance for loan losses (558,742) (451,710)
Cash and due from banks 1,202,267 951,194
Other non-earning assets 5,528,195 3,753,970
----------- -----------
$61,066,404 $48,411,353
=========== ===========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts $ 1,938,187 0.22% $ 1,428,296 0.27%
Interest bearing transaction
accounts 2,856,289 0.94% 2,151,774 1.00%
Money market accounts 13,591,492 0.65% 10,644,990 0.73%
Certificates of deposit of
$100,000 or more 4,411,173 2.02% 3,253,511 2.69%
Other interest-bearing accounts 10,393,347 2.14% 9,322,247 2.88%
Federal funds purchased 4,567,345 1.18% 3,441,792 1.07%
Commercial paper 361 3.70% 16,847 3.77%
Other short-term borrowings 1,409,632 2.90% 1,909,647 3.71%
Long-term borrowings 6,246,552 3.63% 5,427,341 3.92%
----------- -----------
Total interest-bearing liabilities 45,414,378 1.66% 37,596,445 2.08%
Non-interest bearing deposits 7,672,389 5,251,993
Other liabilities 1,483,191 1,263,253
Stockholders' equity 6,496,446 4,299,662
----------- -----------
$61,066,404 $48,411,353
=========== ===========
Net yield on interest-earning assets 3.62% 3.47%
- -------------------------------------------------------------------------------
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR LOAN LOSSES
- -------------------------------------------------------------------------------
($ amounts in thousands)
Nine Months Ended
September 30
----------------------------
2004 (1) 2003
-------- --------
Balance at beginning of year $454,057 $437,164
Net loans charged off:
Commercial 49,023 51,246
Real estate 18,220 9,416
Installment 16,708 11,962
-------- --------
Total 83,951 72,624
Allowance of acquired banks 303,144 --
Provision charged to expense 83,500 91,500
-------- --------
Balance at end of period $756,750 $456,040
======== ========
(1) Regions Financial Corporation and Union Planters Corporation merged
effective July 1, 2004. The merger was accounted for as a purchase of
Union Planters by Regions. As a result, periods ending prior to July
1, 2004, reflect legacy Regions Financial data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 8
- -------------------------------------------------------------------------------
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED RATIOS
- -------------------------------------------------------------------------------
Quarter Ended
------------------------------------------------------------------------------
9/30/04 (2) 6/30/04 3/31/04 12/31/03 9/30/03
----------- ------- ------- -------- -------
Return on average assets* 1.21% 1.32% 1.39% 1.34% 1.34%
Return on tangible equity* 18.35% 19.99% 19.99% 19.52% 20.02%
Return on average equity* 9.63% 14.94% 15.14% 14.72% 15.07%
Stockholders' equity per share (1) $23.02 $16.11 $16.39 $16.25 $16.02
Stockholders' equity to total assets 12.70% 8.79% 9.07% 9.16% 9.01%
Allowance for loan losses as a percentage
of loans, net of unearned income 1.33% 1.35% 1.39% 1.41% 1.44%
Loans, net of unearned income,
to total deposits 100.90% 97.68% 104.28% 98.33% 96.83%
Net charge-offs as a percentage of
average loans* 0.30% 0.34% 0.17% 0.40% 0.39%
Total non-performing assets (excluding loans
90 days past due) as a percentage of
loans and other real estate 0.81% 0.67% 0.75% 0.94% 1.03%
Total non-performing assets (including loans
90 days past due) as a percentage of
loans and other real estate 0.91% 0.78% 0.86% 1.05% 1.13%
* Annualized
(1) Per share information has been restated to post-merger terms, giving
effect to the 1.2346 for 1.0 exchange ratio that was applied to
Regions shares in connection with the July 1, 2004 merger with Union
Planters.
(2) Regions Financial Corporation and Union Planters Corporation merged
effective July 1, 2004. The merger was accounted for as a purchase of
Union Planters by Regions. As a result, periods ending prior to July
1, 2004, reflect legacy Regions Financial data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 9
LOANS
- --------------------------------------------------------------------------------
LOAN PORTFOLIO - PERIOD END DATA
- --------------------------------------------------------------------------------
($ amounts in thousands)
9/30/04 6/30/04 3/31/04 12/31/03 9/30/03
------------ ------------ ------------ ------------ ------------
Commercial 16,136,185 $ 10,034,086 $ 10,215,384 $ 10,182,176 $ 10,409,481
Residential Mortgages 11,300,286 8,199,935 8,267,924 8,318,711 8,172,563
Other Real Estate Loans 13,930,971 6,738,835 6,240,204 5,878,922 5,439,971
Construction 6,365,291 3,647,943 3,601,942 3,484,767 3,371,931
Branch Installment 1,860,289 1,256,961 1,293,711 1,353,707 1,414,299
Indirect Installment 1,698,165 808,130 368,595 362,496 380,649
Consumer Lines of Credit 4,920,633 2,241,820 2,072,063 1,918,988 1,728,054
Student Loans 884,760 709,074 709,927 684,556 667,437
------------ ------------ ------------ ------------ ------------
$ 57,096,580 $ 33,636,784 $ 32,769,750 $ 32,184,323 $ 31,584,385
============ ============ ============ ============ ============
Loans Held for Sale (HFS):
Mortgage Loans HFS $ 1,587,075 $ 1,231,132 $ 1,030,704 $ 1,021,544 $ 1,336,380
Other Loans HFS 235,962 -- 406,108 220,308 594,634
------------ ------------ ------------ ------------ ------------
Total Loans HFS $ 1,823,037 $ 1,231,132 $ 1,436,812 $ 1,241,852 $ 1,931,014
============ ============ ============ ============ ============
($ amounts in thousands) 9/30/2004 9/30/2004
vs. 6/30/04* vs. 9/30/03
--------------------- ----------------------
Commercial $ 6,102,099 243.3% $ 5,726,704 55.0%
Residential Mortgages 3,100,351 151.2% 3,127,723 38.3%
Other Real Estate Loans 7,192,136 426.9% 8,491,000 156.1%
Construction 2,717,348 298.0% 2,993,360 88.8%
Branch Installment 603,328 192.0% 445,990 31.5%
Indirect Installment 890,035 440.5% 1,317,516 346.1%
Consumer Lines of Credit 2,678,813 478.0% 3,192,579 184.7%
Student Loans 175,686 99.1% 217,323 32.6%
------------ ----- ------------ -----
$ 23,459,796 279.0% $ 25,512,195 80.8%
============ ===== ============ =====
Loans Held for Sale (HFS):
Mortgage Loans HFS $ 355,943 115.6% $ 250,695 18.8%
Other Loans HFS 235,962 N/A (358,672) -60.3%
------------ ----- ------------ -----
Total Loans HFS $ 591,905 192.3% $ (107,977) -5.6%
============ ===== ============ =====
- --------------------------------------------------------------------------------
LOAN PORTFOLIO - AVERAGE BALANCES
- --------------------------------------------------------------------------------
($ amounts in thousands)
3Q04 2Q04 1Q04 4Q03 3Q03
------------ ------------ ------------ ------------ ------------
Commercial 15,927,841 $ 10,169,811 $ 10,055,926 $ 10,198,310 $ 10,706,642
Residential Mortgages 11,120,060 8,151,118 8,289,986 8,227,683 8,053,111
Other Real Estate Loans 13,740,593 6,406,718 6,046,504 5,624,088 5,137,428
Construction 6,148,828 3,681,832 3,563,666 3,449,078 3,475,015
Branch Installment 1,867,362 1,254,532 1,312,239 1,365,670 1,426,755
Indirect Installment 1,691,378 450,481 364,603 372,293 381,910
Consumer Lines of Credit 4,763,459 2,174,258 2,001,274 1,839,613 1,643,158
Student Loans 866,488 704,983 707,883 669,373 646,082
------------ ------------ ------------ ------------ ------------
$ 56,126,009 $ 32,993,733 $ 32,342,081 $ 31,746,108 $ 31,470,101
============ ============ ============ ============ ============
Loans Held for Sale (HFS):
Mortgage Loans HFS $ 2,026,447 $ 1,352,118 $ 1,010,131 $ 1,224,068 $ 1,559,879
Other Loans HFS 295,289 360,654 314,869 392,734 462,230
------------ ------------ ------------ ------------ ------------
Total Loans HFS $ 2,321,736 $ 1,712,772 $ 1,325,000 $ 1,616,802 $ 2,022,109
============ ============ ============ ============ ============
($ amounts in thousands) 3Q04 3Q04
vs. 2Q04* vs. 3Q03
----------------------- -----------------------
Commercial $ 5,758,030 226.5% $ 5,221,199 48.8%
Residential Mortgages 2,968,942 145.7% 3,066,949 38.1%
Other Real Estate Loans 7,333,875 457.9% 8,603,165 167.5%
Construction 2,466,996 268.0% 2,673,813 76.9%
Branch Installment 612,830 195.4% 440,607 30.9%
Indirect Installment 1,240,897 1101.8% 1,309,468 342.9%
Consumer Lines of Credit 2,589,201 476.3% 3,120,301 189.9%
Student Loans 161,505 91.6% 220,406 34.1%
------------ ------ ------------ ------
$ 23,132,276 280.4% $ 24,655,908 78.3%
============ ====== ============ ======
Loans Held for Sale (HFS):
Mortgage Loans HFS $ 674,329 199.5% $ 466,568 29.9%
Other Loans HFS (65,365) -72.5% (166,941) -36.1%
------------ ------ ------------ ------
Total Loans HFS $ 608,964 142.2% $ 299,627 14.8%
============ ====== ============ ======
- --------------------------------------------------------------------------------
AVERAGE COMMUNITY BANKING AND WHOLESALE LOANS
- --------------------------------------------------------------------------------
($ amounts in thousands) 3Q04 3Q04
3Q04 2Q04 1Q04 4Q03 3Q03 vs. 2Q04* vs. 3Q03
----------- ----------- ----------- ----------- ----------- ------------------ ------------------
Community Bank Loans $47,401,193 $26,624,586 $26,064,642 $25,586,886 $25,384,348 $20,776,607 312.1% $22,016,845 86.7%
Wholesale Loans 8,724,816 6,369,147 6,277,439 6,159,222 6,085,753 2,355,669 147.9% 2,639,063 43.4%
----------- ----------- ----------- ----------- ----------- ----------- ----- ----------- -----
$56,126,009 $32,993,733 $32,342,081 $31,746,108 $31,470,101 $23,132,276 280.4% $24,655,908 78.3%
=========== =========== =========== =========== =========== =========== ===== =========== =====
* Linked quarter percentage changes are presented on an annualized basis.
- - End of period loans increased $1.2 billion or 8.5%, linked-quarter,
annualized, when comparing to Regions and Union Planters on a combined
basis in the second quarter.
- - Strongest categories of growth in the loan portfolio continue to be
commercial real estate related credits and consumer lines of credit.
- - Average community banking loans increased 7%, linked-quarter, annualized,
when comparing to Regions and Union Planters on a combined basis in the
second quarter.
- - The quality of the loans originated in the Equity AssetLine campaign
remains high, with an average FICO score of 729 at September 30, 2004.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 10
DEPOSITS
- --------------------------------------------------------------------------------
DEPOSIT PORTFOLIO - PERIOD END DATA
- --------------------------------------------------------------------------------
($ amounts in thousands) 9/30/2004 9/30/2004
9/30/04 6/30/04 3/31/04 12/31/03 9/30/03 vs. 6/30/04* vs. 9/30/03
----------- ----------- ----------- ----------- ----------- ------------------ ------------------
Interest-Free Deposits $11,322,011 $ 5,953,180 $ 5,918,325 $ 5,717,747 $ 5,546,705 $ 5,368,831 360.7% $ 5,775,306 104.1%
Interest-Bearing Checking 3,219,056 2,844,286 2,791,766 2,647,633 2,493,209 374,770 52.7% 725,847 29.1%
Savings 2,873,369 1,442,133 1,473,000 1,420,891 1,419,015 1,431,236 397.0% 1,454,354 102.5%
Money Market 19,211,554 10,691,155 10,607,497 10,642,155 10,418,836 8,520,399 318.8% 8,792,718 84.4%
----------- ----------- ----------- ----------- ----------- ----------- ----- ----------- -----
Total Low-Cost Deposits 36,625,990 20,930,754 20,790,588 20,428,426 19,877,765 15,695,236 299.9% 16,748,225 84.3%
CD's < $100K 9,135,136 4,743,932 4,827,603 5,056,916 5,214,403 4,391,204 370.3% 3,920,733 75.2%
CD's > $100K 6,012,449 4,318,518 3,455,851 3,299,896 3,086,601 1,693,931 156.9% 2,925,848 94.8%
Other Time Deposits 4,815,682 4,443,757 2,351,531 3,947,297 4,438,166 371,925 33.5% 377,516 8.5%
----------- ----------- ----------- ----------- ----------- ----------- ----- ----------- -----
$56,589,257 $34,436,961 $31,425,573 $32,732,535 $32,616,935 $22,152,296 257.3% $23,972,322 73.5%
=========== =========== =========== =========== =========== =========== ===== =========== =====
- --------------------------------------------------------------------------------
AVERAGE COMMUNITY BANKING AND WHOLESALE DEPOSITS
- --------------------------------------------------------------------------------
($ amounts in thousands) 3Q04 3Q04
3Q04 2Q04 1Q04 4Q03 3Q03 vs. 2Q04* vs. 3Q03
----------- ----------- ----------- ----------- ----------- ------------------ ------------------
Community Bank Deposits $49,279,855 $27,414,895 $27,284,201 $27,129,340 $27,180,362 $21,864,960 319.0% $22,099,493 81.3%
Wholesale Deposits 7,400,959 5,987,319 5,047,579 5,144,221 4,714,770 1,413,640 94.4% 2,686,189 57.0%
----------- ----------- ----------- ----------- ----------- ----------- ----- ----------- -----
$56,680,814 $33,402,214 $32,331,780 $32,273,561 $31,895,132 $23,278,600 278.8% $24,785,682 77.7%
=========== =========== =========== =========== =========== =========== ===== =========== =====
* Linked quarter percentage changes are presented on an annualized basis.
- - End of period deposits declined $751 million or 5%, linked-quarter,
annualized, when comparing to Regions and Union Planters on a combined
basis in the second quarter primarily as a result of a decline in
wholesale Euro deposits.
- - Average community banking deposits increased 4%, linked-quarter,
annualized, when comparing to Regions and Union Planters on a combined
basis in the second quarter.
- - Primary drivers of growth were interest-free deposits, money market
deposits and CD's.
- - In the legacy Regions deposit acquisition campaign, approximately 173,000
accounts were opened in the first nine months of the year toward a target
of 250,000 new accounts in 2004 and compared to 140,000 new accounts in the
first nine months of 2003.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 11
OPERATING PERFORMANCE
- --------------------------------------------------------------------------------
REVENUE
- --------------------------------------------------------------------------------
3Q04 3Q04
($ amounts in thousands) 3Q04 2Q04 1Q04 4Q03 3Q03 vs. 2Q04* vs. 3Q03
---------- ---------- ---------- ---------- ---------- ------------------ -----------------
Net Interest Income $ 675,903 $ 380,863 $ 378,997 $ 379,518 $ 368,876 $ 295,040 309.9% $ 307,027 83.2%
Non-Interest Income
(excl. sec. gains/losses) 488,163 347,210 352,681 331,371 347,712 140,953 162.4% 140,451 40.4%
---------- ---------- ---------- ---------- ---------- ---------- ----- ---------- -----
Total Revenue $1,164,066 $ 728,073 $ 731,678 $ 710,889 $ 716,588 $ 435,993 239.5% $ 447,478 62.4%
========== ========== ========== ========== ========== ========== ===== ========== =====
Fee Income as a % of
Total Revenue 41.9% 47.7% 48.2% 46.6% 48.5%
========== ========== ========== ========== ==========
* Linked quarter percentage changes are presented on an annualized basis.
- - The net interest margin increased from 3.53% in 2Q04 to 3.71% in 3Q04
primarily due to the combination of Regions and Union Planters balance
sheets at July 1, 2004, along with benefits arising from the early
retirement of FHLB advances in the second quarter and the effect of
purchase accounting on Union Planters' interest-earning assets and
interest-bearing liabilities
- - Net-interest income increased approximately $24.7 million or 3.8% when
comparing to Regions and Union Planters on a combined basis in the second
quarter. Purchase accounting adjustment accounted for $8.8 million of the
increase. The remainder is attributable to loan growth and the higher
yields on the securities portfolio, offset somewhat by an increase in the
cost of deposits.
- - Regions is positioned slightly asset-sensitive at September 30, 2004, and
expects to remain slightly asset sensitive for the remainder of the year
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 12
NON-INTEREST INCOME AND EXPENSE
- --------------------------------------------------------------------------------
NON-INTEREST INCOME AND EXPENSE
- --------------------------------------------------------------------------------
NON-INTEREST INCOME
3Q04 3Q04
($ amounts in thousands) 3Q04 2Q04 1Q04 4Q03 3Q03 vs. 2Q04* vs. 3Q03
--------- --------- --------- --------- --------- ------------------ ------------------
Brokerage and
investment banking $ 122,285 $ 128,886 $ 138,203 $ 135,634 $ 140,257 $ (6,601) -20.5% $ (17,972) -12.8%
Trust department income 30,386 21,668 20,691 17,797 18,168 8,718 160.9% 12,218 67.3%
Service charges
on deposit accounts 139,286 73,607 71,868 73,042 73,641 65,679 356.9% 65,645 89.1%
Mortgage servicing
& origination fees 53,157 26,246 23,491 22,514 29,074 26,911 410.1% 24,083 82.8%
Securities gains (losses) 49,937 149 12,803 (2) (37) 49,788 N/A 49,974 N/A
Insurance premiums
& commissions 21,393 21,645 23,155 19,614 19,048 (252) -4.7% 2,345 12.3%
Gain on sale of mortgage
loans 57,178 46,016 41,236 38,160 35,438 11,162 97.0% 21,740 61.3%
(Loss) on securitization
of auto loans -- -- -- (3,575) -- -- -- -- --
Derivative income 2,464 1,799 964 4,170 4,208 665 147.9% (1,744) -41.4%
SOI and Capital Factors 21,908 -- -- -- -- n/a n/a n/a n/a
Other 40,106 27,343 33,073 24,015 27,878 12,763 186.7% 12,228 43.9%
--------- --------- --------- --------- --------- --------- ----- --------- -----
Total non-interest
income $ 538,100 $ 347,359 $ 365,484 $ 331,369 $ 347,675 $ 190,741 219.6% $ 190,425 54.8%
========= ========= ========= ========= ========= ========= ===== ========= =====
NON-INTEREST EXPENSE
3Q04 3Q04
($ amounts in thousands) 3Q04 2Q04 1Q04 4Q03 3Q03 vs. 2Q04* vs. 3Q03
--------- --------- --------- --------- --------- ------------------- ------------------
Salaries and employee
benefits** $ 437,346 $ 287,202 $ 290,923 $ 278,862 $ 281,666 $ 150,144 209.1% $ 155,680 55.3%
Net occupancy expense** 52,281 25,985 27,800 27,748 26,869 26,296 404.8% 25,412 94.6%
Furniture and equipment
expense** 32,079 19,333 18,130 20,374 20,160 12,746 263.7% 11,919 59.1%
Amortization of core
deposit intangible 12,974 421 420 334 335 12,553 NM 12,639 NM
Amortization of MSR's 21,239 7,664 9,257 8,686 9,196 13,575 708.5% 12,043 131.0%
Impairment (recapture) of MSR's 50,000 (40,000) 12,000 -- (20,000) 90,000 -900.0% 70,000 -350.0%
Loss on early extinguishment
of debt -- 39,620 -- -- 20,580 (39,620) -400.0% (20,580) -100.0%
Merger-related and
other charges 12,369 8,173 321 -- -- 4,196 205.4% 12,369 100.0%
Other** 186,480 126,331 132,249 115,943 117,371 60,149 190.4% 69,109 58.9%
--------- --------- --------- --------- --------- --------- ------- --------- -------
Total non-interest expense $ 804,768 $ 474,729 $ 491,100 $ 451,947 $ 456,177 $ 330,039 278.1% $ 348,591 76.4%
========= ========= ========= ========= ========= ========= ======= ========= =======
* Linked quarter percentage changes are presented on an annualized basis.
** Net of merger and other charges in 2Q04 and 3Q04.
- - Non-interest income declined $40.3 million or 7.6%, linked-quarter, when
comparing to Regions and Union Planters on a combined basis in the second
quarter. Primary drivers of the decline were mortgage and brokerage
revenues.
- - Non-interest expense declined $14.3 million or 1.9%, linked-quarter, when
comparing to Regions and Union Planters on a combined basis in the second
quarter. Primary drivers include cost saves of approximately $6 million,
$4 million in expenses related to mortgage production offices sold in the
third quarter and $11 million in swaption expense savings, offset by a
$12.5 million increase in EquiFirst's salaries and employee benefits
expense related to increased volume of loan sales in the quarter. The
effect of purchase accounting entries for amortization of intangibles
($12.6 million) and a reduction in fixed asset depreciation ($7.3 million)
increased non-interest expense by $5.3 million, net.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 13
MORGAN KEEGAN
- --------------------------------------------------------------------------------
MORGAN KEEGAN
- --------------------------------------------------------------------------------
Summary Income Statement
3Q04 3Q04
($ amounts in thousands) 3Q04 2Q04 1Q04 4Q03 3Q03 vs. 2Q04* vs. 3Q03
-------- -------- -------- -------- -------- ----------------- -----------------
Revenues:
Commissions $ 47,079 $ 38,751 $ 43,965 $ 41,503 $ 43,782 $ 8,328 86.0% $ 3,297 7.5%
Principal transactions 40,169 48,583 53,838 51,010 60,669 (8,414) -69.3% (20,500) -33.8%
Investment banking 19,529 24,944 24,545 28,064 23,378 (5,415) -86.8% (3,849) -16.5%
Interest 14,334 11,470 12,636 12,434 10,799 2,864 99.9% 3,535 32.7%
Trust fees and services 26,402 18,245 17,591 14,873 15,541 8,157 178.8% 10,861 69.9%
Investment advisory 22,832 20,530 18,683 19,210 17,405 2,302 44.9% 5,427 31.2%
Other 6,855 7,291 5,212 4,663 3,285 (436) -23.9% 3,570 108.7%
-------- -------- -------- -------- -------- -------- ----- -------- -----
Total revenues 177,200 169,814 176,470 171,757 174,859 7,386 17.4% 2,341 1.3%
Expenses:
Interest expense 6,954 5,303 7,397 6,761 5,622 1,651 124.5% 1,332 23.7%
Non-interest expense 139,274 133,502 135,614 133,110 134,507 5,772 17.3% 4,767 3.5%
-------- -------- -------- -------- -------- -------- ----- -------- -----
Total expenses 146,228 138,805 143,011 139,871 140,129 7,423 21.4% 6,099 4.4%
-------- -------- -------- -------- -------- -------- ----- -------- -----
Income before income taxes 30,972 31,009 33,459 31,886 34,730 (37) -0.5% (3,758) -10.8%
Income taxes 11,499 11,580 12,540 11,988 13,045 (81) -2.8% (1,546) -11.9%
-------- -------- -------- -------- -------- -------- ----- -------- -----
Net income $ 19,473 $ 19,429 $ 20,919 $ 19,898 $ 21,685 $ 44 0.9% $ (2,212) -10.2%
======== ======== ======== ======== ======== ======== ===== ======== =====
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
SEPTEMBER 30, 2004:
$ amount of revenue $ 54,111 $ 41,524 $ 15,845 $ 26,402 $ 23,952 $ 15,366
% of gross revenue 30.5% 23.4% 9.0% 14.9% 13.5% 8.7%
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%
NINE MONTHS ENDED
SEPTEMBER 30, 2004:
$ amount of revenue $ 162,871 $ 142,809 $ 49,244 $ 62,238 $ 65,377 $ 40,946
% of gross revenue 31.1% 27.3% 9.4% 11.9% 12.5% 7.8%
NINE MONTHS ENDED
SEPTEMBER 30, 2003:
$ amount of revenue $ 195,445 $ 180,909 $ 47,780 $ 45,406 $ 8,319 $ 44,823
% of gross revenue 37.4% 34.6% 9.1% 8.7% 1.6% 8.6%
* Linked quarter percentage changes are presented on an annualized basis.
- - Included in Morgan Keegan's third quarter 2004 results are $11.4 million
in revenues and approximately $1.5 million in net income related to UP's
brokerage unit, PFIC, as well as $8.1 million in revenues and
approximately $1 million in net income related to UP Investment Advisors
and UPTrust.
- - The effect of adding PFIC primarily affects commissions and the private
client results.
- - The effect of adding UPIA and UPTrust primarily affects the trust and
investment advisory areas.
- - Private client was down approximately $6 million quarter over quarter on a
pro forma combined basis as trading volumes remained at depressed levels.
- - Fixed income and principal transactions were both down significantly
quarter over quarter as fixed income market activity was at a low level
throughout the third quarter. (cont. on next page)
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 14
MORGAN KEEGAN (CONTINUED)
- - Investment banking revenues are largely unaffected by PFIC. They declined
$5.4 million primarily as a result of fewer transactions in both the
equity and debt markets.
- - Equity capital markets revenues are down $2 million or 11% as a result of
record low transaction volume in the national equity markets.
- - RMK Trust revenues were relatively flat quarter over quarter, after
adjusting for the UPTrust revenues.
- - Investment advisory revenues have increased approximately $1 million when
adjusting for the effect of UPIA revenues. Morgan Keegan continues to
benefit from the sale of a proprietary closed end fund in the first quarter
as well as its increase in wrap accounts.
- - Expenses declined approximately $5.5 million when adjusting for the effect
of the Union Planters-related expenses. The reduction is primarily a
result of lower commissions expense.
- - Average assets per financial advisor were $57.2 million at September 30,
2004 compared to $59.2 million at June 30, 2004. The decline is
attributable primarily to the integration of former PFIC advisors into
Morgan Keegan.
- - Total customer assets were $44.5 billion at September 30, 2004, compared
to $41.5 billion at June 30, 2004. Approximately $2 billion of this
increase is attributable to the addition of PFIC in the quarter.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 15
MORTGAGE OPERATIONS
- --------------------------------------------------------------------------------
MORTGAGE OPERATIONS
- --------------------------------------------------------------------------------
3Q04 2Q04 1Q04 4Q03 3Q03
-------------- -------------- -------------- -------------- --------------
Single family mortgage
production (millions):
Regions Mortgage $ 2,456 $ 952 $ 731 $ 801 $ 1,697
EquiFirst 1,344 1,476 985 1,081 1,150
-------------- -------------- -------------- -------------- --------------
Total $ 3,800 $ 2,428 $ 1,716 $ 1,882 $ 2,847
============== ============== ============== ============== ==============
Gain(loss) on sale of
mortgage loans (thous.):
Regions Mortgage $ 4,125 $ (946) $ 330 $ 348 $ 3,799
EquiFirst 53,053 46,962 40,906 37,812 31,639
-------------- -------------- -------------- -------------- --------------
Total $ 57,178 $ 46,016 $ 41,236 $ 38,160 $ 35,438
============== ============== ============== ============== ==============
Servicing portfolio $39.3 BILLION $15.8 Billion $15.9 Billion $16.1 Billion $16.0 Billion
Capitalized mortgage
servicing rights (net) $401.0 MM $156.8 MM $113.1 MM $126.8 MM $123.9 MM
MSR valuation allowance $61.5 MM $11.5 MM $51.5 MM $39.5 MM $39.5 MM
MSR capitalization rate 102 BPS. 99 bps. 71 bps. 79 bps. 77 bps.
3Q04 3Q04
vs. 2Q04* vs. 3Q03
-------------------- -------------------
Single family mortgage
production (millions):
Regions Mortgage $ 1,504 631.9% $ 759 44.7%
EquiFirst (132) -35.8% 194 16.9%
-------- -------- -------- --------
Total $ 1,372 226.0% $ 953 33.5%
======== ======== ======== ========
Gain(loss) on sale of
mortgage loans (thous.):
Regions Mortgage $ 5,071 N/A $ 326 8.6%
EquiFirst 6,091 51.9% 21,414 67.7%
-------- -------- -------- --------
Total $ 11,162 97.0% $ 21,740 61.3%
======== ======== ======== ========
* Linked quarter percentage changes are presented on an annualized basis.
- - Mortgage production declined 32%, linked-quarter, when comparing to
Regions and Union Planters on a combined basis in the second quarter,
primarily as a result of industry trends and the sale of 14 out of
footprint retail mortgage production offices.
- - The $11.2 million increase in gain on sale of mortgage loans quarter to
quarter is primarily a result of increased volume of loan sales at
EquiFirst offset by premium compression and the merger.
- - Regions Mortgage originates conforming mortgage loans and services loans
originated in-house and by others.
- - EquiFirst originates non-conforming mortgage loans primarily through a
broker network and sells them servicing-released, on a whole loan basis, at
a premium.
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 16
CREDIT QUALITY
- --------------------------------------------------------------------------------
CREDIT QUALITY
- --------------------------------------------------------------------------------
YTD YTD
($ in thousands) 3Q04 2Q04 1Q04 4Q03 3Q03 9/30/04 9/30/03
-------- -------- -------- -------- -------- -------- --------
Allowance for loan losses $756,750 $452,677 $455,566 $454,057 $456,040
Provision for loan losses $ 43,500 $ 25,000 $ 15,000 $ 30,000 $ 30,000 $ 83,500 $ 91,500
Net loans charged off:
Commercial $ 19,201 $ 21,472 $ 8,350 $ 24,503 $ 23,035 $ 49,023 $ 51,246
Real estate 12,716 3,846 1,658 3,739 3,663 18,220 9,416
Installment 10,654 2,571 3,483 3,741 3,934 16,708 11,962
-------- -------- -------- -------- -------- -------- --------
Total $ 42,571 $ 27,889 $ 13,491 $ 31,983 $ 30,632 $ 83,951 $ 72,624
======== ======== ======== ======== ======== ======== ========
Net loan charge-offs as a % of
average loans, annualized
Commercial 0.50% 0.83% 0.33% 0.94% 0.81% 0.55% 0.62%
Real estate 0.17% 0.09% 0.04% 0.09% 0.10% 0.11% 0.08%
Installment 0.41% 0.18% 0.25% 0.27% 0.29% 0.31% 0.30%
-------- -------- -------- -------- -------- -------- --------
Total 0.30% 0.34% 0.17% 0.40% 0.39% 0.28% 0.31%
======== ======== ======== ======== ======== ======== ========
Non-performing assets:
Non-accrual loans $389,491 $187,685 $201,805 $250,344 $268,764
Renegotiated loans 284 -- 391 886 931
Other real estate 72,424 37,652 45,356 52,195 56,887
-------- -------- -------- -------- --------
Total $462,199 $225,337 $247,552 $303,425 $326,582
======== ======== ======== ======== ========
Loans past due > 90 days $ 61,545 $ 37,147 $ 34,091 $ 35,187 $ 31,075
- - Annualized charge-offs were a low 0.30% of average loans in 3Q04.
- - Non-performing assets declined 3%, linked-quarter, when comparing to
Regions and Union Planters on a combined basis in the second quarter,
primarily in the non-accrual loans category.
- - Loans past due greater than 90 days declined $13 million or 17%,
linked-quarter, when comparing to Regions and Union Planters on a combined
basis in the second quarter.
- - At September 30, 2004, non-performing assets totaled 0.81% of loans and
other real estate compared to 0.85% at June 30, 2004, when comparing to
Regions and Union Planters on a combined basis in the second quarter.
- - Regions non-performing loan portfolio is composed primarily of small to
medium-sized loans that are diversified geographically throughout its
franchise.
- - The largest non-performing loan has an outstanding balance of approximately
$9 million.
- - Of the 25 largest ORE properties, the largest has a book value of $3.8
million and the smallest has a book value of $366,000.
- - 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
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 17
ADDITIONAL FINANCIAL AND OPERATIONAL DATA
- - Regions has authorization to repurchase up to 20 million shares of common
stock.
- - No repurchases were made in the third quarter of 2004.
MERGER-RELATED AND OTHER CHARGES
(Pre-tax dollars in millions)
REGIONS
INCOME STATEMENT EXCESS PURCHASE
2004 TOTAL UNION PLANTERS EFFECT PRICE
- ---------------------------- --------------- --------------- ---------------- ---------------
First Quarter $ 12.2 $ 11.9 $ 0.3 $ --
Second Quarter 128.2 114.5 8.2 5.5
Third Quarter 92.0 n/a 12.4 79.6
--------------- --------------- --------------- ---------------
Cumulative to date 232.4 126.4 20.9 85.1
--------------- --------------- --------------- ---------------
Originally projected merger-
related expenses(1) 300.0
Union Planters restructuring
charges(2) 60.0
---------------
Total merger-related
restructuring charges $ 360.0
---------------
Estimated remaining charges
to be incurred $ 127.6
===============
Cumulative to date vs
total projected 64.6%
===============
(1) Projections provided by management at time of merger announcement, January
23, 2004
(2) Projections provided by Union Planters management in 4Q03 press release
FINANCIAL SUPPLEMENT TO
THIRD QUARTER 2004 EARNINGS RELEASE
PAGE 18
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: (1) 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; (2) possible changes in interest rates may increase
our funding costs and reduce our earning asset yields, thus reducing our
margins; (3) 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; (4) 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; (5) 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 (6)
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: (1) the cost and other effects of material contingencies,
including litigation contingencies; (2) our ability to expand into new markets
and to maintain profit margins in the face of pricing pressures; (3) our ability
to keep pace with technological changes; (4) 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; (5) our
ability to effectively manage interest rate risk and other market risk, credit
risk and operational risk; (6) 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 (7) our ability to
achieve the earnings expectations related to the businesses that we have
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
operational effects 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 resulting from the merger.
Regions' Investor Relations contact is Jenifer M. Goforth at (205) 244-2823;
Regions' Media contact is Kristi Lamont Ellis at (205) 326-7179.