EXHIBIT 99.1
[REGIONS LOGO] NEWS RELEASE
FOR IMMEDIATE RELEASE
Contacts:
MEDIA RELATIONS: INVESTOR RELATIONS
Rick Swagler, (205) 801-0105 List Underwood, (205) 801-0265
REGIONS REPORTS FOURTH QUARTER 2006 EARNINGS
BIRMINGHAM, Ala., Jan. 19, 2007 - Regions Financial Corporation (NYSE:RF) today
reported earnings for the quarter ending Dec. 31, 2006, including these
highlights:
- - Earnings of 56 cents per diluted share
- - Excluding 9 cents of merger charges, earnings per diluted share were 65
cents (see reconciliation in "Earnings Highlights" table below)
- - Merger integration progressing as planned and on schedule
- - Net interest margin of 4.10 percent in the quarter
- - Record full-year earnings of $151 million at Morgan Keegan
- - Strong credit quality
- - Good operating expense control, including $6.6 million merger-related cost
saves
Three months ended:
EARNINGS HIGHLIGHTS Dec. 31, 2006 Sept. 30, 2006 Dec. 31, 2005
(in millions except per share data) AMOUNT EPS AMOUNT EPS AMOUNT EPS
EARNINGS
Net interest income (FTE) $1,104.4 $806.3 $748.6
Non-interest income 635.3 465.9 422.8
Non-interest expenses 1,116.8 714.6 754.0
Net income (GAAP) 361.6 $0.56 351.7 $0.77 254.0 $0.55
Merger-related charges, net of tax* 59.3 0.09 - 29.4 0.06
Net income, excluding merger-related charges
(Non-GAAP)* $420.9 $0.65 $351.7 $0.77 $283.4 $0.61
KEY RATIOS
Net interest margin (FTE) 4.10% 4.21% 4.01%
Return on average assets** 1.15% 1.60% 1.18%
Return on average tangible equity** 19.59% 24.93% 19.34%
ASSET QUALITY
Reserves for credit losses as % of net loans 1.17% 1.31% 1.34%
Net charge-offs as % of average net loans** 0.27% 0.16% 0.28%
Non-performing assets as % of loans and other
real estate 0.40% 0.52% 0.70%
* See "Use of non-GAAP financial measures" at the end of this release
** Annualized
IMPORTANT NOTE: Regions' fourth quarter 2006 financial data includes three
months of operating results for legacy Regions while legacy AmSouth results are
only included since the Nov. 4, 2006 merger date. In accordance with purchase
accounting rules, prior period financial information does not include AmSouth.
REGIONS FINANCIAL CORPORATION
Post Office Box 11007
Birmingham, Alabama 35288
NEWLY MERGED COMPANY ACHIEVES TARGETED EARNINGS, MERGER GOALS
"Regions reported solid fourth quarter earnings that matched our
expectations and we're pleased with the underlying performance of our newly
combined company." said Dowd Ritter, president and chief executive officer. "And
importantly, our merger integration is on track and meeting or, in some cases,
exceeding our goals. This gives us confidence as we enter 2007 to successfully
complete the transition to a new, more efficient, and increasingly profitable
company."
Regions' integration plans are complete and will begin to be implemented
in the first quarter of 2007. At that time, the brokerage operations and
mortgage servicing platforms will be integrated. Also in the first quarter,
required branch divestitures will be completed. The first of four planned branch
conversion events is scheduled for July.
4Q AND FULL YEAR 2006 EPS RISE 7 AND 17 PERCENT VERSUS YEAR-AGO PERIODS,
RESPECTIVELY, EXCLUDING MERGER-RELATED CHARGES
Regions' fourth quarter 2006 net income was $361.6 million, or 56 cents
per diluted share, which included $59.3 million in after-tax merger-related
expenses (9 cents per diluted share). Excluding the impact of merger-related
expenses in both years, per share earnings were 65 cents, or 7 percent above
year-ago fourth quarter's 61 cents. The fourth quarter was also impacted by an
after-tax mortgage servicing rights (MSR) impairment charge of approximately
$16.8 million (3 cents per diluted share).
For the full year 2006, Regions earned a record $1.4 billion, or $2.67 per
diluted share, including $60.3 million of after-tax merger-related charges (12
cents per diluted share). In 2005, Regions reported net income totaling $1.0
billion, or $2.15 per diluted share, including $110 million (24 cents per
diluted share) in after-tax merger-related charges. Excluding merger-related
charges, annual per share earnings increased 17 percent to $2.79 from $2.38.
BANKING FRANCHISE CONTINUES STRONG PERFORMANCE
Regions' banking franchise continued its strong performance during the
quarter. Taxable equivalent net interest income was $1.1 billion. The net
interest margin remained strong at 4.10 percent, compared with 4.21 percent in
the third quarter of 2006 and reflects the addition of AmSouth's balance sheet
to Regions' since the Nov. 4 merger date.
As planned, $5 billion of securities that had been in the AmSouth
portfolio were sold around the time of the deal closing. While this sale did not
significantly affect fourth quarter results, it did serve to further improve the
company's interest rate sensitivity positioning.
Loan portfolio growth was solid during the quarter, led by commercial
lending. Core deposits were relatively flat third-to-fourth quarter, but notably
the shift from transaction accounts to higher-priced time deposits has slowed.
FEE-BASED REVENUES REMAIN SOLID
Deposit service charges remained strong and were a key driver of
non-interest revenue, as were trust and brokerage fees.
Morgan Keegan delivered another record year with full-year 2006 profits of
$151.1 million on revenues of $1.0 billion. Fourth quarter revenues and earnings
rose to $307.5 million and $46.9 million, respectively. Included in these
results were approximately $30 million in revenues and $7 million in net income
resulting from the addition of AmSouth's brokerage, trust and asset management
units. In the seasonally strong fourth quarter, both fixed income and equity
capital markets activity, particularly in investment banking, were very strong
as was the retail brokerage business.
Partially offsetting these increases, the mortgage business continues to
experience a challenging environment. Mortgage originations increased to $4.9
billion in the fourth quarter, helped by the addition of AmSouth's mortgage
business. However, lower levels of loan sales and early payment default losses
negatively impacted gain on sale fees and profitability at our non-conforming
mortgage company, EquiFirst.
Today, January 19, 2007, Regions announced the signing of a definitive
agreement to sell EquiFirst Corporation to Barclays Bank PLC. The transaction
is expected to close in the first half of 2007.
UNDERLYING EXPENSES WELL-CONTROLLED
Regions' fourth quarter non-interest expenses at $1.1 billion matched
company expectations and included the previously mentioned merger-related
expenses ($87.6 million pre-tax) and MSR impairment ($27.0 million pre-tax).
Also meeting expectations, $6.6 million in pre-tax merger-related cost
savings were realized in the fourth quarter. Regions remains on track to achieve
an estimated $150 million pre-tax net cost saves for full-year 2007. Given the
timing of planned conversions (particularly bank branch systems), the bulk of
the savings will not occur until the latter part of the year.
CREDIT QUALITY REMAINS STRONG
Credit quality trends remain positive with net loan charge-offs of $56.1
million, or an annualized 0.27 percent of average net loans in the quarter. Net
loan charge-offs in the quarter include $11.0 million related to conforming
certain credit policies.
Fourth quarter's provision for loan losses totaled $60.0 million. The
total reserve for credit losses was 1.17 percent of net loans at Dec. 31, 2006.
Total non-performing assets at Dec. 31, 2006, were $379.1 million, or 0.40
percent of loans and other real estate, compared to a $312.0 million, or 0.52
percent at Sept. 30; the dollar increase was driven largely by assets acquired
in the AmSouth merger.
SHARE BUYBACKS CONTINUE, BOARD INCREASES DIVIDEND FOR 36TH CONSECUTIVE YEAR
During the fourth quarter, Regions repurchased 5.0 million common shares
at an average cost of $37.00 per share, bringing full-year 2006 repurchases to
13.7 million shares. A new 50 million share repurchase authorization was
approved by Regions' Board of Directors on January 18, 2007. In addition, there
remain 13.9 million shares available for repurchase under the company's prior
authorization.
Further demonstrating Regions' commitment to returning excess capital to
shareholders, on Dec. 11, 2006, the Board of Directors approved a one cent
increase in the quarterly common dividend to $0.36 per share, which was paid to
shareholders on Jan. 2, 2007. This marks Regions' 36th consecutive year of
dividend increases, going back to the company's 1971 formation.
At Dec. 31, 2006, Regions' capital position, or tangible shareholders'
equity-to-tangible assets ratio, was 6.45 percent. This compared to 7.08 percent
at Sept. 30, 2006.
For supplemental financial information about the fourth quarter results,
please refer to the Form 8-K filed by Regions with the Securities and Exchange
Commission on Jan. 19, 2007, or visit the Investor Relations page at
www.regions.com.
ABOUT REGIONS
Regions Financial Corporation is a member of the S&P 100 Index and Forbes
Magazine's "Platinum 400" list of America's best big companies. With more than
$140 billion in assets, Regions is one of the nation's largest full-service
providers of consumer and commercial banking, trust, securities brokerage,
mortgage and insurance products and services. Regions serves customers in 16
states across the South, Midwest and Texas, and through its subsidiary, Regions
Bank, operates some 2,000 AmSouth and Regions banking offices and over 2,600
ATM's. Its investment and securities brokerage, trust and asset management
division, Morgan Keegan & Company Inc., provides services from over 300 offices.
Additional information about Regions and its full line of products and services
can be found at www.regions.com.
FORWARD LOOKING STATEMENTS
This press release includes forward-looking statements about Regions
Financial Corporation within the meaning of the Private Securities Litigation
Reform Act of 1995. Statements that are not historical or current facts,
including statements about beliefs and expectations, are forward-looking
statements. The words "believe," "expect," "anticipate," "project," and
similar expressions often signify forward-looking statements. Such statements
involve inherent risks and uncertainties. Regions cautions that actual results
and events could differ materially from expectations expressed in
forward-looking statements as a result of factors such as possible changes in
economic and business conditions and interest rates; Regions' ability to
integrate the recent combination with AmSouth Bancorporation and to retain and
attract customers; the effects of geopolitical instability and risks such as
terrorist attacks; possible changes in laws and regulations and governmental
monetary and fiscal policies; the cost and other effects of legal and
administrative cases and similar contingencies; possible changes in the credit
worthiness of customers and the possible impairment of collectibility of loans,
increased competition from both banks and non-banks, and effects of critical
accounting policies and judgments. For discussion of these and other risks that
may cause actual results to differ from expectations, please look under the
caption "Forward Looking Statements" in Regions' Annual Report on Form 10-K for
the year ended December 31, 2005, and subsequent quarterly reports on
Form 10-Q, all as on file with the Securities and Exchange Commission. You
should not place undue reliance on any forward-looking statements, which speak
only as of the date made. Regions assumes no obligation to update or revise any
forward-looking statements that are made from time to time.
USE OF NON-GAAP FINANCIAL MEASURES
Page one of this earnings release presents a computation of earnings and
earnings per diluted share excluding merger charges (non-GAAP). Non-GAAP
financial measures have inherent limitations, are not required to be uniformly
applied, and are not audited. Merger charges are included in financial results
presented in accordance with generally accepted accounting principles (GAAP).
Regions believes the exclusion of merger charges in expressing earnings and
certain other financial measures provides a meaningful basis for
period-to-period comparisons. See page 17 of the supplement to this earnings
release for additional computations of earnings and certain other financial
measures excluding merger charges and corresponding reconciliation to GAAP
financial measures for the periods presented.