EXHIBIT 99.2
[REGIONS LOGO] FINANCIAL SUPPLEMENT TO FOURTH QUARTER AND YEAR END 2006
EARNINGS RELEASE
SUMMARY
QUARTERLY EARNINGS OF $0.56 PER DILUTED SHARE (GAAP), OR $0.65 PER DILUTED SHARE
EXCLUDING MERGER CHARGES (NON-GAAP - SEE PAGE 17 FOR ADDITIONAL DETAILS)
- - Primary drivers of earnings include strong net interest income, solid loan
growth, Morgan Keegan, and strong credit quality
- - Quarterly results include partial quarter impact from AmSouth merger,
which closed November 4, 2006
- - PRIOR PERIOD FINANCIAL INFORMATION REFLECTS ONLY LEGACY REGIONS' FINANCIAL
RESULTS
REGIONS/AMSOUTH MERGER ON TRACK AND MEETING OR EXCEEDING GOALS
- - Planning complete and execution underway
- - Divestiture of 52 branches expected to be completed by end of 1Q07
- - Mortgage and brokerage conversions scheduled for 1Q07
- - Expenses impacted by $87.6 million of pre-tax merger charges during the
quarter
- - Cost saves of approximately $6.6 million realized in 4Q06
- Primarily personnel-related expenses
- Regions continues to expect realization of $150 million in net
pre-tax cost saves during 2007
STRONG FOURTH QUARTER 2006 REVENUES DRIVEN BY NET INTEREST INCOME AND MORGAN
KEEGAN
- - Total FTE revenue of $1.7 billion in 4Q06
- - Quarterly net interest margin of 4.10%
BANKING FRANCHISE PERFORMS WELL DURING QUARTER
- - Loan demand and production was solid and strongest in commercial lending
- - Deposit mix shift began to stabilize and late quarter trends indicated
steady levels of deposits as well
MORGAN KEEGAN HAS RECORD YEAR OF PROFITS AND REVENUES
- - Profits increased 49% in 2006 (42% excluding the impact of the AmSouth
transaction) to $151.1 million vs. 2005 and were up 53% linked-quarter
(31% excluding the impact of AmSouth)
- - Revenues of $307.5 million in 4Q06 and $1.0 billion for the year ended
December 31, 2006, up respective 46% and 27% (31% and 23% excluding
AmSouth) annually
CHALLENGING MORTGAGE BANKING ENVIRONMENT CONTINUES
- - Total origination volume of $4.9 billion in 4Q06 (including $469 million
from AmSouth operations) compared to $4.0 billion in 3Q06
- - Recorded MSR impairment of $27.0 million ($0.03 per diluted share, after
tax) in 4Q06
CREDIT QUALITY REMAINS STRONG
- - Net charge-offs of $56.1 million, or an annualized 0.27% of average loans,
including $11.0 million related to conforming credit policies
- - Non-performing assets of $379.1 million, or 0.40% of loans and other real
estate at December 31, 2006
- - Allowance for credit losses as a percentage of loans was 1.17% at December
31, 2006
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 2
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (1)
(UNAUDITED)
($ amounts in thousands) 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
- -------------------------------------- ------------- ------------- ------------- ------------- -------------
Assets:
Cash and due from banks $ 3,550,742 $ 2,055,137 $ 2,304,934 $ 2,059,251 $ 2,414,560
Interest-bearing deposits
in other banks 270,601 38,981 31,565 37,049 92,098
Federal funds sold and securities
purchased under agreement
to resell 896,075 913,076 733,476 869,117 710,282
Trading account assets 1,442,994 1,438,427 1,056,434 1,119,854 992,082
Securities available for sale 18,514,332 12,425,555 11,758,035 11,823,198 11,947,810
Securities held to maturity 47,728 30,033 29,983 30,591 31,464
Loans held for sale 3,308,064 1,824,687 2,281,372 1,547,840 1,531,664
Loans held for sale - divestitures 1,612,237 - - - -
Margin receivables 570,063 581,558 576,616 563,202 527,317
Loans, net of unearned income 94,550,602 59,477,905 59,130,632 58,460,211 58,404,913
Allowance for loan losses (1,055,953) (778,465) (777,783) (782,368) (783,536)
------------- ------------- ------------- ------------- -------------
Net loans 93,494,649 58,699,440 58,352,849 57,677,843 57,621,377
Premises and equipment 2,398,494 1,097,616 1,109,732 1,109,587 1,122,289
Interest receivable 666,410 456,978 407,811 402,072 420,818
Excess purchase price 11,279,480 4,967,799 4,996,028 4,987,770 5,027,044
Mortgage servicing rights (MSRs) 374,871 407,740 420,322 413,672 412,008
Other identifiable intangible assets 957,834 287,437 295,588 304,008 314,368
Other assets 3,984,447 1,755,627 1,708,041 1,649,464 1,620,419
------------- ------------- ------------- ------------- -------------
Total Assets $ 143,369,021 $ 86,980,091 $ 86,062,786 $ 84,594,518 $ 84,785,600
============= ============= ============= ============= =============
Liabilities and Stockholders' Equity:
Deposits:
Non-interest-bearing $ 20,175,482 $ 12,570,051 $ 13,158,707 $ 13,328,143 $ 13,699,038
Non-interest-bearing - divestitures 533,295 - - - -
Interest-bearing 78,281,120 49,599,494 48,246,119 47,191,336 46,679,329
Interest-bearing - divestitures 2,238,072 - - - -
------------- ------------- ------------- ------------- -------------
Total deposits 101,227,969 62,169,545 61,404,826 60,519,479 60,378,367
Borrowed funds:
Short-term borrowings:
Federal funds purchased and
securities sold under agree-
ment to repurchase 7,676,254 4,943,568 4,770,538 3,900,737 3,928,185
Other short-term
borrowings 1,240,817 1,368,480 958,048 995,312 1,038,094
------------- ------------- ------------- ------------- -------------
Total short-term
borrowings 8,917,071 6,312,048 5,728,586 4,896,049 4,966,279
Long-term borrowings 9,392,649 5,490,404 6,293,372 6,621,710 6,971,680
------------- ------------- ------------- ------------- -------------
Total borrowed funds 18,309,720 11,802,452 12,021,958 11,517,759 11,937,959
Other liabilities 3,129,878 1,965,191 1,937,643 1,900,495 1,854,991
------------- ------------- ------------- ------------- -------------
Total Liabilities 122,667,567 75,937,188 75,364,427 73,937,733 74,171,317
Stockholders' equity:
Common stock 7,303 4,813 4,787 4,778 4,738
Additional paid in capital 16,339,726 7,466,180 7,393,185 7,360,704 7,248,855
Undivided profits 4,493,245 4,547,845 4,355,306 4,169,678 4,034,905
Treasury stock (7,548) (888,282) (833,633) (708,593) (581,890)
Accumulated other comprehensive
loss (131,272) (87,653) (221,286) (169,782) (92,325)
------------- ------------- ------------- ------------- -------------
Total Stockholders'
Equity 20,701,454 11,042,903 10,698,359 10,656,785 10,614,283
------------- ------------- ------------- ------------- -------------
Total Liabilities & SE $ 143,369,021 $ 86,980,091 $ 86,062,786 $ 84,594,518 $ 84,785,600
============= ============= ============= ============= =============
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 3
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (1)
(UNAUDITED)
Quarter Ended
($ amounts in thousands, except per share amounts) 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
- -------------------------------------------------- ------------- ---------- ---------- ----------- ----------
Interest income:
Interest and fees on loans $ 1,563,558 $1,106,807 $1,047,843 $ 992,523 $ 953,903
Interest on securities:
Taxable interest income 200,917 143,118 130,979 131,651 126,070
Tax-exempt interest income 9,807 7,852 7,904 8,116 7,706
----------- ---------- ---------- ---------- ----------
Total interest on securities 210,724 150,970 138,883 139,767 133,776
Interest on loans held for sale 70,200 45,416 47,261 33,882 37,798
Interest on federal funds sold and
securities purchased under
agreement to resell 15,877 13,505 11,573 10,490 6,653
Interest on trading account assets 22,608 12,519 9,558 9,853 8,363
Interest on margin receivables 9,576 9,767 9,525 8,673 8,283
Interest on time deposits in
other banks 1,376 637 343 544 384
----------- ---------- ---------- ---------- ----------
Total interest income 1,893,919 1,339,621 1,264,986 1,195,732 1,149,160
Interest expense:
Interest on deposits 597,255 411,178 357,026 314,708 292,886
Interest on short-term borrowings 102,984 66,315 56,065 50,133 44,950
Interest on long-term borrowings 123,199 84,429 89,360 88,164 85,411
----------- ---------- ---------- ---------- ----------
Total interest expense 823,438 561,922 502,451 453,005 423,247
----------- ---------- ---------- ---------- ----------
Net interest income 1,070,481 777,699 762,535 742,727 725,913
Provision for loan losses 60,000 25,000 30,000 27,500 40,000
----------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 1,010,481 752,699 732,535 715,227 685,913
Non-interest income:
Brokerage and investment banking 207,676 144,093 158,865 166,793 140,255
Service charges on deposit
accounts 195,838 150,078 147,272 128,529 129,992
Trust department income 43,531 36,366 35,730 34,555 30,847
Mortgage servicing and origination
fees 32,907 33,296 34,270 32,698 33,651
Securities gains (losses), net (20) 8,104 28 11 (17,609)
Other 155,395 94,012 114,546 107,531 105,649
----------- ---------- ---------- ---------- ----------
Total non-interest income 635,327 465,949 490,711 470,117 422,785
Non-interest expense:
Salaries and employee benefits 620,788 413,719 441,475 447,008 436,965
Net occupancy expense 92,306 54,012 53,772 59,888 56,558
Furniture and equipment expense 60,433 33,838 33,942 34,083 34,171
(Recapture) impairment of MSR's 27,000 8,000 (10,000) (9,000) (18,000)
Other 316,304 205,024 207,324 224,115 244,342
----------- ---------- ---------- ---------- ----------
Total non-interest expense (2) 1,116,831 714,593 726,513 756,094 754,036
----------- ---------- ---------- ---------- ----------
Income before income taxes 528,977 504,055 496,733 429,250 354,662
Applicable income taxes 167,426 152,398 151,476 134,570 100,666
----------- ---------- ---------- ---------- ----------
Net income $ 361,551 $ 351,657 $ 345,257 $ 294,680 $ 253,996
=========== ========== ========== ========== ==========
Weighted-average shares outstanding--
during quarter:
Basic (3) 638,830 454,441 455,528 456,442 457,193
Diluted (3) 646,372 458,903 460,131 461,043 461,651
Actual shares outstanding--
end of quarter (3) 730,076 455,067 454,034 456,701 456,348
Per Share:
Net income - basic $ 0.57 $ 0.77 $ 0.76 $ 0.65 $ 0.56
Net income - diluted $ 0.56 $ 0.77 $ 0.75 $ 0.64 $ 0.55
Cash dividends paid (4) $ 0.35 $ 0.35 $ 0.35 $ 0.35 $ 0.34
Taxable equivalent net interest income $ 1,104,421 $ 806,260 $ 791,268 $ 766,682 $ 748,642
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
(2) Merger-related charges totaled $87.6 million in fourth quarter 2006 and
are included in non-interest expense. See pages 11 and 17 for additional
detail.
(3) On November 4, 2006, 277 million shares were issued in the AmSouth
transaction; as a result, the weighted-average shares outstanding
calculation includes approximately one month of pre-AmSouth merger
sharecount and two months of post-AmSouth merger sharecount.
(4) In 4Q06, in addition to the dividend paid, the Board of Directors declared
a $0.36 per share dividend payable January 2, 2007, representing an
acceleration of Regions' previously existing dividend schedule beginning
with the 2007 dividends paid.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 4
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (1)
(UNAUDITED)
Year Ended
December 31
------------------------------------
($ amounts in thousands, except per share amounts) 2006 2005
- --------------------------------------------------------- ----------- -----------
Interest income:
Interest and fees on loans $ 4,710,731 $ 3,546,767
Interest on securities:
Taxable interest income 606,665 498,666
Tax-exempt interest income 33,679 28,800
----------- -----------
Total interest on securities 640,344 527,466
Interest on loans held for sale 196,759 149,167
Interest on federal funds sold and securities purchased under agreement
to resell 51,445 19,301
Interest on trading account assets 54,538 36,596
Interest on margin receivables 37,541 29,173
Interest on time deposits in other banks 2,900 1,905
----------- -----------
Total interest income 5,694,258 4,310,375
Interest expense:
Interest on deposits 1,680,167 1,004,727
Interest on short-term borrowings 275,497 164,816
Interest on long-term borrowings 385,152 320,213
----------- -----------
Total interest expense 2,340,816 1,489,756
----------- -----------
Net interest income 3,353,442 2,820,619
Provision for loan losses 142,500 165,000
----------- -----------
Net interest income after provision for loan losses 3,210,942 2,655,619
Non-interest income:
Brokerage and investment banking 677,427 548,662
Service charges on deposit accounts 621,717 518,388
Trust department income 150,182 127,766
Mortgage servicing and origination fees 133,171 145,304
Securities gains (losses), net 8,123 (18,892)
Other 471,484 492,204
----------- -----------
Total non-interest income 2,062,104 1,813,432
Non-interest expense:
Salaries and employee benefits 1,922,990 1,739,017
Net occupancy expense 259,978 224,073
Furniture and equipment expense 162,296 132,776
(Recapture) impairment of MSR's 16,000 (32,000)
Other 952,767 983,090
----------- -----------
Total non-interest expense (2) 3,314,031 3,046,956
----------- -----------
Income before income taxes 1,959,015 1,422,095
Applicable income taxes 605,870 421,551
----------- -----------
Net income $ 1,353,145 $ 1,000,544
=========== ===========
Weighted-average shares outstanding-- during quarter:
Basic (3) 501,681 461,171
Diluted (3) 506,989 466,183
Actual shares outstanding--
end of year (3) 730,076 456,348
Per Share:
Net income - basic $ 2.70 $ 2.17
Net income - diluted $ 2.67 $ 2.15
Cash dividends paid (4) $ 1.40 $ 1.36
Taxable equivalent net interest income $ 3,468,633 $2,906,071
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
(2) Merger-related charges totaled $87.6 million in fourth quarter 2006 and
are included in non-interest expense. See pages 11 and 17 for additional
detail.
(3) On November 4, 2006, 277 million shares were issued in the AmSouth
transaction; as a result, the weighted-average shares outstanding
calculation includes approximately one month of pre-AmSouth merger share
count and two months of post-AmSouth merger share count.
(4) In 4Q06, in addition to the dividend paid, the Board of Directors declared
a $0.36 per share dividend payable January 2, 2007, representing an
acceleration of Regions' previously existing dividend schedule beginning
with the 2007 dividends paid.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 5
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE DAILY BALANCES AND YIELD/RATE ANALYSIS (1)
Quarter Ended
12/31/06 9/30/06 6/30/06
---------------------------------- -------------------------------- -----------------------------
($ amounts in thousands; yields on Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/
taxable equivalent basis) Balance Expense Rate Balance Expense Rate Balance Expense Rate
- ---------------------------------- ------------ ----------- ------- ------------ ---------- ------ ----------- ---------- ------
Assets
Earning assets:
Interest-bearing deposits
in other banks $ 125,467 $ 1,376 4.35% $ 41,821 $ 637 6.04% $ 38,825 $ 343 3.54%
Federal funds sold and
securities purchased
under agreement to
resell 1,098,535 15,878 5.73% 937,005 13,504 5.72% 871,206 11,573 5.33%
Trading account assets 1,419,868 23,168 6.47% 1,130,260 12,667 4.45% 969,137 9,583 3.97%
Securities:
Taxable 16,263,163 201,354 4.91% 11,612,748 143,483 4.90% 11,175,675 131,364 4.71%
Tax-exempt 648,747 14,540 8.89% 397,160 12,003 11.99% 406,340 12,074 11.92%
Loans held for sale 2,689,490 50,113 7.39% 2,263,608 45,416 7.96% 2,355,875 47,261 8.05%
Loans held for sale-
divestitures 1,042,964 20,087 7.64% - - - - - -
Margin receivables 540,805 9,576 7.03% 553,946 9,767 7.00% 557,148 9,525 6.86%
Loans, net of unearned
income 83,058,620 1,591,768 7.60% 59,111,355 1,130,704 7.59% 58,489,995 1,071,997 7.35%
------------ ----------- ------------ ---------- ----------- ----------
Total earning assets 106,887,659 $ 1,927,860 7.16% 76,047,903 $1,368,181 7.14% 74,864,201 $1,293,720 6.93%
Allowance for loan losses (985,310) (780,715) (781,282)
Cash and due from banks 2,605,261 1,959,441 2,016,715
Other non-earning assets 16,070,226 9,749,193 9,776,953
------------ ------------ -----------
$124,577,836 $ 86,975,822 $85,876,587
============ ============ ===========
Liabilities and Stockholders'
Equity
Interest-bearing liabilities:
Savings accounts $ 3,572,985 $ 3,097 0.34% $ 2,988,548 $ 3,053 0.41% $ 3,155,230 $ 3,357 0.43%
Interest-bearing
transaction accounts 6,157,620 36,960 2.38% 1,917,648 10,934 2.26% 2,158,034 11,491 2.14%
Money market accounts 25,878,171 185,203 2.84% 20,144,394 129,949 2.56% 19,759,267 112,716 2.29%
Certificates of deposit of
$100,000 or more 12,045,318 142,757 4.70% 8,297,133 97,633 4.67% 7,650,843 82,214 4.31%
Other interest-bearing
deposit accounts 20,610,566 217,264 4.18% 15,875,539 169,610 4.24% 15,067,677 147,248 3.92%
Interest-bearing
deposits - divestitures 1,450,645 11,974 3.27% - - - - -
------------ ----------- ------------ ---------- ----------- ----------
Total interest-bearing
deposits 69,715,305 597,255 3.40% 49,223,262 411,179 3.31% 47,791,051 357,026 3.00%
Federal funds purchased and
securities sold under
agreement to repurchase 7,333,018 87,816 4.75% 4,806,594 56,898 4.70% 4,301,848 47,213 4.40%
Other short-term borrowings 1,539,329 15,169 3.91% 927,313 9,416 4.03% 886,953 8,852 4.00%
Long-term borrowings 8,159,959 123,199 5.99% 5,810,710 84,428 5.76% 6,589,755 89,361 5.44%
------------ ----------- ------------ ---------- ----------- ----------
Total interest-bearing
liabilities 86,747,611 $ 823,439 3.77% 60,767,879 $ 561,921 3.67% 59,569,607 $ 502,452 3.38%
Non-interest-bearing deposits 17,535,467 12,482,899 12,882,910
Other liabilities 3,108,830 2,847,404 2,754,398
Stockholders' equity 17,185,928 10,877,640 10,669,672
------------ ------------ -----------
$124,577,836 $ 86,975,822 $85,876,587
============ ============ ===========
Net yield on interest earning
assets 4.10% 4.21% 4.24%
3/31/06 12/31/05
---------------------------------------- ----------------------------------------
($ amounts in thousands; yields on Average Revenue/ Yield/ Average Revenue/ Yield/
taxable equivalent basis) Balance Expense Rate Balance Expense Rate
- ----------------------------------- ----------- ---------- ------- ----------- ---------- -------
Assets
Earning assets:
Interest-bearing deposits
in other banks $ 52,400 $ 544 4.21% $ 58,311 $ 384 2.61%
Federal funds sold and
securities purchased
under agreement to
resell 936,243 10,490 4.54% 687,208 6,653 3.84%
Trading account assets 924,044 10,324 4.53% 849,974 8,748 4.08%
Securities:
Taxable 11,462,264 131,969 4.67% 11,377,852 126,525 4.41%
Tax-exempt 426,119 12,344 11.75% 464,238 11,769 10.06%
Loans held for sale 1,828,232 33,882 7.52% 2,082,891 37,798 7.20%
Loans held for sale-
divestitures - - - - - -
Margin receivables 534,978 8,673 6.57% 546,389 8,283 6.01%
Loans, net of unearned
income 58,191,512 1,011,461 7.05% 58,047,052 971,729 6.64%
----------- ---------- ----------- ----------
Total earning assets 74,355,792 $1,219,687 6.65% 74,113,915 $1,171,889 6.27%
Allowance for loan losses (785,847) (779,144)
Cash and due from banks 2,029,747 2,083,756
Other non-earning assets 9,838,032 9,725,428
----------- -----------
$85,437,724 $85,143,955
=========== ===========
Liabilities and Stockholders'
Equity
Interest-bearing liabilities:
Savings accounts $ 3,100,922 $ 2,849 0.37% $ 2,976,913 $ 2,708 0.36%
Interest-bearing
transaction accounts 2,272,440 11,062 1.97% 2,530,011 12,579 1.97%
Money market accounts 19,873,074 100,000 2.04% 19,522,227 86,574 1.76%
Certificates of deposit of
$100,000 or more 7,383,192 72,240 3.97% 7,873,050 72,501 3.65%
Other interest-bearing
deposit accounts 14,442,354 128,557 3.61% 14,081,524 118,524 3.34%
Interest-bearing
deposits - divestitures - - - -
----------- ---------- ----------- ----------
Total interest-bearing
deposits 47,071,982 314,708 2.71% 46,983,725 292,886 2.47%
Federal funds purchased and
securities sold under
agreement to repurchase 4,176,546 41,281 4.01% 4,202,647 37,963 3.58%
Other short-term borrowings 999,141 8,852 3.59% 886,991 6,987 3.13%
Long-term borrowings 6,859,167 88,164 5.21% 7,124,742 85,411 4.76%
----------- ---------- ----------- ----------
Total interest-bearing
liabilities 59,106,836 $ 453,005 3.11% 59,198,105 $ 423,247 2.84%
Non-interest-bearing deposits 12,926,748 12,871,222
Other liabilities 2,717,892 2,518,080
Stockholders' equity 10,686,248 10,556,548
----------- -----------
$85,437,724 $85,143,955
=========== ===========
Net yield on interest earning
assets 4.18% 4.01%
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth
by Regions. As a result, periods ending prior to November 4, 2006,
reflect legacy Regions data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 6
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED AVERAGE DAILY BALANCES AND YIELD/RATE ANALYSIS (1)
Year Ended December 31
2006 2005
($ amounts in thousands; yields on taxable Average Revenue/ Yield/ Average Revenue/ Yield/
equivalent basis) Balance Expense Rate Balance Expense Rate
- --------------------------------------------- ----------- --------- ------- ----------- --------- ------
Assets
Earning assets:
Interest-bearing deposits in other banks $64,766 $2,900 4.48% $81,575 $1,905 2.34%
Federal funds sold and securities
purchased under agreement to resell 961,127 51,445 5.35% 615,222 19,301 3.14%
Trading account assets 1,112,239 55,741 5.01% 829,546 38,319 4.62%
Securities:
Taxable securities 12,638,833 608,171 4.81% 11,660,508 500,666 4.29%
Tax-exempt 470,003 50,961 10.84% 499,666 43,862 8.78%
Loans held for sale 2,286,604 176,672 7.73% 2,162,767 149,167 6.90%
Loans held for sale-divestitures 262,884 20,087 7.64% - - -
Margin receivables 546,755 37,541 6.87% 533,742 29,173 5.47%
Loans, net of unearned income 64,765,653 4,805,931 7.42% 58,002,167 3,613,434 6.23%
----------- --------- ----------- ---------
Total earning assets 83,108,864 5,809,449 6.99% 74,385,193 4,395,827 5.91%
Allowance for loan losses (833,691) (765,853)
Cash and due from banks 2,153,838 1,961,894
Other non-earning assets 11,371,266 9,515,233
----------- -----------
$95,800,277 $85,096,467
=========== ===========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Savings accounts $3,205,123 $12,356 0.39% $2,926,512 $7,992 0.27%
Interest-bearing transaction accounts 3,133,768 70,447 2.25% 2,873,955 52,842 1.84%
Money market accounts 21,426,701 527,868 2.46% 19,043,326 249,589 1.31%
Certificates of deposit of
$100,000 or more 8,855,396 394,844 4.46% 8,049,384 255,787 3.18%
Other interest-bearing deposit accounts 16,514,223 662,678 4.01% 14,662,901 438,517 2.99%
Interest-bearing deposits - divestitures 365,642 11,974 3.27% - - -
----------- --------- ----------- ---------
Total interest-bearing deposits 53,500,853 1,680,167 3.14% 47,556,078 1,004,727 2.11%
Federal funds purchased and securities
sold under agreement to repurchase 5,162,196 233,208 4.52% 4,462,774 130,666 2.93%
Other short-term borrowings 1,089,223 42,289 3.88% 1,054,803 34,150 3.24%
Long-term borrowings 6,855,601 385,152 5.62% 7,175,075 320,213 4.46%
----------- --------- ----------- ---------
Total interest-bearing liabilities 66,607,873 2,340,816 3.51% 60,248,730 1,489,756 2.47%
Non-interest bearing deposits 13,965,594 12,156,817
Other liabilities 2,858,178 2,013,089
Stockholders' equity 12,368,632 10,677,831
----------- -----------
$95,800,277 $85,096,467
=========== ===========
Net yield on interest-earning assets 4.17% 3.91%
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES
Year Ended December 31
($ amounts in thousands) 2006 2005
- --------------------------- ---------- ---------
Balance at beginning of year $783,536 $754,721
Net loans charged off:
Commercial 75,646 77,223
Real Estate - Mortgage 38,879 34,436
Real Estate - Construction 233 263
Consumer 25,183 24,263
---------- --------
Total 139,941 136,185
Allowance of purchased institutions at acquisition 335,833 -
Allowance allocated to sold loans (14,140) -
Provision for loan losses charged to expense 142,500 165,000
---------- --------
Balance at end of year $1,107,788 $783,536
========== ========
Components:
Allowance for loan and lease losses $1,055,953 $783,536
Reserve for unfunded credit commitments 51,835 -
---------- --------
Allowance for credit losses $1,107,788 $783,536
========== ========
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 7
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED RATIOS (1)
As of and for Quarter Ended
12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
-------- ------- ------- ------- ---------
Return on average assets* 1.15% 1.60% 1.61% 1.40% 1.18%
Return on average assets* excluding merger-related charges (2) 1.34% 1.60% 1.61% 1.40% 1.32%
Return on average equity* 8.35% 12.83% 12.98% 11.18% 9.55%
Return on average equity excluding merger-related charges (2) 9.72% 12.83% 12.98% 11.18% 10.65%
Return on average tangible equity* 19.59% 24.93% 25.73% 22.32% 19.34%
Return on average tangible eq. excluding merger-related charges (2) 22.80% 24.93% 25.73% 22.32% 21.58%
Stockholders' equity per share $28.36 $24.27 $23.56 $23.33 $23.26
Stockholders' equity to total assets 14.44% 12.70% 12.43% 12.60% 12.52%
Tangible stockholders' equity to tangible assets 6.45% 7.08% 6.69% 6.77% 6.64%
Allowance for credit losses as a percentage of loans, net of
unearned income (3) 1.17% 1.31% 1.32% 1.34% 1.34%
Allowance for loan losses as a percentage of loans, net of
unearned income 1.12% 1.31% 1.32% 1.34% 1.34%
Net interest margin (FTE) 4.10% 4.21% 4.24% 4.18% 4.01%
Loans, net of unearned income, to total deposits 93.40% 95.67% 96.30% 96.60% 96.73%
Net charge-offs as a percentage of average loans* 0.27% 0.16% 0.21% 0.20% 0.28%
Total non-performing assets (excluding loans 90 days past due)
as a percentage of loans and other real estate 0.40% 0.52% 0.54% 0.70% 0.70%
Total non-performing assets (including loans 90 days past due)
as a percentage of loans and other real estate 0.55% 0.66% 0.67% 0.86% 0.85%
*Annualized
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
(2) Non-GAAP measurement; See page 17 for reconciliation to GAAP Financial
Measures.
(3) The allowance for credit losses reflects the allowance related to both
loans on the balance sheet and exposure related to unfunded commitments
and standby letters of credit.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 8
LOANS (1)
LOAN PORTFOLIO - PERIOD END DATA
($ amounts in thousands) 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
- -------------------------- ------------- ------------ ------------ ------------ ------------
Commercial $ 24,145,411 $ 16,155,841 $ 15,840,510 $ 14,883,254 $ 14,728,006
Real Estate- Mortgage 38,622,197 25,972,339 26,303,946 26,926,297 27,034,924
Real Estate- Construction 14,121,030 8,730,822 8,162,479 7,700,465 7,362,219
Equity Lines of Credit 11,485,436 5,091,891 5,299,424 5,417,680 5,533,299
Indirect Lending 4,037,539 1,324,017 1,344,853 1,320,304 1,354,897
Other Consumer 2,138,989 2,202,995 2,179,420 2,212,211 2,391,568
------------- ------------ ------------ ------------ ------------
$ 94,550,602 $ 59,477,905 $ 59,130,632 $ 58,460,211 $ 58,404,913
============= ============ ============ ============ ============
LOAN PORTFOLIO - AVERAGE BALANCES
($ amounts in thousands) 4Q06 3Q06 2Q06 1Q06 4Q05
- -------------------------- ------------- ------------ ------------ ------------ ------------
Commercial $ 21,242,803 $ 15,932,108 $ 15,189,741 $ 14,758,024 $ 14,635,632
Real Estate- Mortgage 34,446,585 26,044,404 26,507,512 26,843,415 27,439,772
Real Estate- Construction 12,289,921 8,435,465 7,904,240 7,536,236 6,792,219
Equity Lines of Credit 9,310,224 5,191,498 5,378,723 5,486,959 5,063,023
Indirect Lending 3,141,590 1,336,290 1,329,697 1,334,345 1,371,162
Other Consumer 2,627,497 2,171,590 2,180,082 2,232,533 2,745,244
------------- ------------ ------------ ------------ ------------
$ 83,058,620 $ 59,111,355 $ 58,489,995 $ 58,191,512 $ 58,047,052
============= ============ ============ ============ ============
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
- - $1.6 billion of loans were reclassified to held-for-sale in 4Q06 in
anticipation of the divestiture of branches in 1Q07.
- - The AmSouth transaction added $36.5 billion of loans in 4Q06.
- - The strongest combined linked-quarter loan demand was in the mid-Atlantic,
Florida and West regions and in commercial lending.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 9
DEPOSITS (1)
DEPOSIT PORTFOLIO - PERIOD END DATA
($ amounts in thousands) 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
------------ ------------ ------------ ------------ ------------
Interest-Free Deposits $ 20,175,482 $ 12,570,051 $ 13,158,707 $ 13,328,143 $ 13,699,038
Interest-Bearing Checking 8,950,404 1,938,261 2,180,298 2,490,444 2,756,556
Savings 3,882,533 2,908,930 3,081,192 3,182,650 3,037,687
Money Market 28,470,667 20,458,363 19,788,991 19,897,135 19,856,890
Divestitures - Interest-Free 533,295 - - - -
Divestitures - Other Low-Cost 1,177,671 - - - -
------------ ------------ ------------ ------------ ------------
Total Low-Cost Deposits 63,190,052 37,875,605 38,209,188 38,898,372 39,350,171
CD's < $100K 15,104,520 11,055,918 11,063,668 10,874,303 10,201,745
CD's > $100K 12,776,086 9,124,935 7,918,736 7,480,764 7,412,359
Other Time Deposits 9,096,910 4,113,087 4,213,234 3,266,040 3,414,092
Divestitures - Time 1,060,401 - - - -
------------ ------------ ------------ ------------ ------------
$101,227,969 $ 62,169,545 $ 61,404,826 $ 60,519,479 $ 60,378,367
============ ============ ============ ============ ============
DEPOSIT PORTFOLIO - AVERAGE BALANCES
($ amounts in thousands) 4Q06 3Q06 2Q06 1Q06 4Q05
----------- ----------- ----------- ----------- -----------
Interest-Free Deposits $17,175,508 $12,482,899 $12,882,910 $12,926,748 $12,871,222
Interest-Bearing Checking 6,157,620 1,917,648 2,158,034 2,272,440 2,530,011
Savings 3,572,985 2,988,548 3,155,230 3,100,922 2,976,913
Money Market 25,878,174 20,144,394 19,759,267 19,873,074 19,522,227
Divestitures - Interest-Free 359,957 - - - -
Divestitures - Other Low-Cost 763,754 - - - -
----------- ----------- ----------- ----------- -----------
Total Low-Cost Deposits 53,907,998 37,533,489 37,955,441 38,173,184 37,900,373
CD's < $100K 13,758,120 11,068,375 11,022,675 10,714,595 10,429,499
CD's > $100K 12,045,318 8,297,133 7,650,843 7,383,192 7,873,050
Other Time Deposits 6,852,448 4,807,164 4,045,002 3,727,759 3,652,025
Divestitures - Time 686,891 - - - -
----------- ----------- ----------- ----------- -----------
$87,250,775 $61,706,161 $60,673,961 $59,998,730 $59,854,947
=========== =========== =========== =========== ===========
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The mer ger was accounted for as a purchase of AmSouth
by Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
- - $2.8 billion of deposits were reclassified to held-for-sale in 4Q06 in
anticipation of the divestiture of branches in 1Q07.
- - The AmSouth transaction added $37.6 billion of deposits in 4Q06.
- - On a combined basis, the strongest category of linked-quarter growth was
in money market accounts, followed by CD's; the deposit mix shift from
low-cost transaction accounts to higher cost CD's appear to be slowing
versus previous periods.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 10
OPERATING PERFORMANCE (1)
REVENUE
($ amounts in thousands) 4Q06 3Q06 2Q06 1Q06 4Q05
---------- ---------- ---------- ---------- ----------
Net Interest Income (TE basis) $1,104,421 $ 806,260 $ 791,268 $ 766,682 $ 748,642
Non-Interest Income (excl. sec. gains/losses) 635,347 457,845 490,683 470,106 440,394
---------- ---------- ---------- ---------- ----------
Total Revenue (TE basis) $1,739,768 $1,264,105 $1,281,951 $1,236,788 $1,189,036
========== ========== ========== ========== ==========
- ------------
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
- - Net interest margin was 4.10% in 4Q06 and was impacted by partial quarter
AmSouth results, the sale of $5 billion of securities in early November,
and purchase accounting adjustments.
- - Regions is positioned slightly asset-sensitive at December 31, 2006.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 11
NON-INTEREST INCOME AND EXPENSE (1)
NON-INTEREST INCOME AND EXPENSE
NON-INTEREST INCOME
($ amounts in thousands) 4Q06 3Q06 2Q06 1Q06 4Q05
- ------------------------------------------ --------- --------- --------- --------- ----------
Brokerage and investment banking $ 207,676 $ 144,093 $ 158,865 $ 166,793 $ 140,255
Service charges on deposit accounts 195,838 150,078 147,272 128,529 129,992
Trust department income 43,531 36,366 35,730 34,555 30,847
Mortgage servicing & origination fees 32,907 33,296 34,270 32,698 33,651
Securities gains (losses), net (20) 8,104 28 11 (17,609)
Insurance premiums & commissions 21,556 21,330 21,267 21,394 18,616
Gain on sale of mortgage loans 326 6,155 24,255 12,351 21,623
Derivative income 12,748 9,595 9,122 6,194 6,434
Other 120,765 56,932 59,902 67,592 58,976
--------- --------- --------- --------- ----------
Total non-interest income $ 635,327 $ 465,949 $ 490,711 $ 470,117 $ 422,785
========= ========= ========= ========= ==========
NON-INTEREST EXPENSE*
($ amounts in thousands) 4Q06 3Q06 2Q06 1Q06 4Q05
- ------------------------------------------ ---------- ---------- ---------- ---------- ----------
Salaries and employee benefits $ 555,133 $ 413,681 $ 441,475 $ 447,008 $ 409,242
Net occupancy expense 88,833 54,012 53,772 59,888 55,548
Furniture and equipment expense 60,006 33,838 33,942 34,083 34,130
Impairment (recapture) of MSR's 27,000 8,000 (10,000) (9,000) (18,000)
Amortization of core deposit intangible 32,890 10,073 10,370 10,724 11,039
Amortization of MSR's 19,406 16,592 16,263 18,303 17,890
(Gain) loss on early extinguishment of debt - (547) (1,089) 8,168 -
Other 245,925 177,923 181,780 186,920 197,244
---------- ---------- ---------- ---------- ----------
Total non-interest expense, excluding merger-related charges 1,029,193 713,572 726,513 756,094 707,093
Merger-related charges 87,638 1,021 - - 46,943
---------- ---------- ---------- ---------- ----------
Total non-interest expense $1,116,831 $ 714,593 $ 726,513 $ 756,094 $ 754,036
========== ========== ========== ========== ==========
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
* Individual expense categories are presented excluding merger-related
charges, which are presented in a separate line item in the above table.
- - Linked-quarter and year-over-year increases in the tables above are
primarily a result of the addition of approximately two months of activity
from the AmSouth franchise in the fourth quarter.
- - Gain on sale of mortgage loans declined as a result of early payment
defaults on sold loans at EquiFirst.
- - MSR impairment of $27 million was recognized as a result of declining
mortgage rates during 4Q06.
- - Cost saves of $6.6 million are reflected in 4Q06 non-interest expense.
- - The $87.6 million of "Merger-related charges" above are primarily salaries
and employee benefits ($66MM) and other non-interest expense ($18MM). See
page 3 for individual expense categories including merger-related charges.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 12
MORGAN KEEGAN (1)
MORGAN KEEGAN
- ---------------------------------------------------------------------------------------------------------------------------
Summary Income Statement
12/31/2006 12/31/2006
($ amounts in thousands) 4Q06 3Q06 2Q06 1Q06 4Q05 vs. 9/30/06* vs.12/31/2005
- -------------------------- -------- -------- -------- -------- -------- ------------------- -----------------
Revenues:
Commissions $ 72,645 $ 56,194 $ 56,960 $ 57,073 $ 51,619 $ 16,451 117.1% $ 21,026 40.7%
Principal transactions 42,691 38,381 32,996 41,951 34,752 4,310 44.9% 7,939 22.8%
Investment banking 42,441 25,767 41,623 43,027 25,894 16,674 258.8% 16,547 63.9%
Interest 40,186 36,721 32,511 30,327 24,735 3,465 37.7% 15,451 62.5%
Trust fees and services 44,189 29,966 29,014 28,046 24,680 14,223 189.9% 19,509 79.0%
Investment advisory 48,713 35,425 36,151 28,885 37,557 13,288 150.0% 11,156 29.7%
Other 16,614 8,062 9,473 22,639 11,790 8,552 424.3% 4,824 40.9%
-------- -------- -------- -------- -------- -------- ----- -------- ----
Total revenues 307,479 230,516 238,728 251,948 211,027 76,963 133.5% 96,452 45.7%
Expenses:
Interest expense 24,996 21,966 21,999 18,085 16,855 3,030 55.2% 8,141 48.3%
Non-interest expense 207,314 160,679 165,568 169,352 152,280 46,635 116.1% 55,034 36.1%
-------- -------- -------- -------- -------- -------- ----- -------- ----
Total expenses 232,310 182,645 187,567 187,437 169,135 49,665 108.8% 63,175 37.4%
-------- -------- -------- -------- -------- -------- ----- -------- ----
Income before income taxes 75,169 47,872 51,161 64,511 41,892 27,297 228.1% 33,277 79.4%
Income taxes 28,230 17,251 18,442 23,703 14,942 10,979 254.6% 13,288 88.9%
-------- -------- -------- -------- -------- -------- ----- -------- ----
Net income $ 46,939 $ 30,621 $ 32,719 $ 40,808 $ 26,950 $ 16,318 213.2% $ 19,989 74.2%
======== ======== ======== ======== ======== ======== ===== ======== ====
Breakout of Revenue by Division
Fixed-
income Equity Regions
Private Capital Capital MK Asset Interest
($ amounts in thousands) Client Markets Markets Trust Management & Other
- ------------------------ --------- -------- -------- -------- ---------- --------
THREE MONTHS ENDED
DECEMBER 31, 2006:
$ amount of revenue $ 89,769 $ 50,916 $ 32,822 $ 44,189 $ 44,131 $ 45,652
% of gross revenue 29.2% 16.6% 10.7% 14.4% 14.3% 14.8%
THREE MONTHS ENDED
SEPTEMBER 30, 2006:
$ amount of revenue $ 67,271 $ 43,292 $ 18,093 $ 29,967 $ 37,003 $ 34,890
% of gross revenue 29.2% 18.8% 7.8% 13.0% 16.1% 15.1%
YEAR ENDED
DECEMBER 31, 2006
$ amount of revenue $ 305,098 $187,425 $103,282 $131,218 $ 149,511 $152,137
% of gross revenue 29.7% 18.2% 10.0% 12.8% 14.5% 14.8%
YEAR ENDED
DECEMBER 31, 2005
$ amount of revenue $ 248,397 $160,062 $ 86,478 $103,225 $ 125,410 $ 86,681
% of gross revenue 30.7% 19.8% 10.7% 12.7% 15.5% 10.6%
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
* Linked quarter percentage changes are presented on an annualized basis and
are influenced in many cases by the AmSouth acquisition. See notes below
and on page 13 for more details.
- - Included in Morgan Keegan's 4Q06 results are approximately $30 million in
revenues and $7 million in net income related to activity in AmSouth
Investment Services (AIS) and AmSouth's trust and asset management
divisions.
- - Commissions revenue increased 29% linked-quarter, primarily as a result of
$10 million in AmSouth-related revenues as well as increased levels of
retail customer confidence resulting in more equity and fixed income
trading activity during the quarter.
- - Principal transactions revenue increased 11% linked-quarter, primarily as
a result of higher levels of fixed income sales and trading activity,
particularly with respect to the deals managed by Morgan Keegan.
- - Investment banking and the Fixed Income Capital Markets and Equity Capital
Markets lines of business all experienced significant linked-quarter
increases in revenues as a result of seasonally higher levels of deal
activity in the fourth quarter.
- - Interest revenues increased $3.5 million linked quarter due to a larger
inventory position during the majority of the quarter.
- - Trust revenues increased 47% linked-quarter due to the addition of
AmSouth's trust business, which contributed approximately $15.6 million in
revenue.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 13
MORGAN KEEGAN (CONT.)
- - Investment advisory and asset management revenues were positively impacted
during 4Q06 by the addition of AmSouth's asset management business which
contributed approximately $2 million in revenues, but increased primarily
as a result of a 10% increase in the market value of assets under
management and new asset growth.
- - Other revenues include $2.6 million of revenue from AIS in 4Q06. The
remainder of the linked quarter increase is primarily a result of billings
on certain accounts such as IRAs that are collected in the fourth quarter
of each year.
- - 1Q06 other revenues includes a $13.1 million pre-tax gain related to the
swap of NYSE seats in exchange for stock.
- - Non-interest expense increased $46.6 million linked-quarter as a result of
the addition of approximately $19 million in AmSouth-related expenses and
due to increases in salaries and commissions expense in direct correlation
with increased revenues.
- - Private client revenues increased $22.5 million linked-quarter due
primarily to the addition of AIS and increased levels of equity and fixed
income trading activity in association with retail customer confidence
during the quarter.
- - 17,300 new accounts were opened in 4Q06 compared to 20,000 in 3Q06 and
19,000 in 4Q05.
- - Total customer assets were $76.2 billion at December 31, 2006, including
approximately $7 billion added in connection to the AmSouth merger,
compared to $65.9 billion at September 30, 2006 and $56.3 billion at
December 31, 2005.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 14
MORTGAGE OPERATIONS (1)
MORTGAGE OPERATIONS
----------------------------------------------------------------------------------------------------------
As of and for Quarter Ended 12/31/2006 12/31/2006
12/31/06 9/30/06 6/30/06 3/31/06 12/31/05 vs. 9/30/06* vs.12/31/2005
------------- ------------- ------------- ------------- ------------- ------- ------- --------- -------
Single family mortgage
production (millions):
Regions Mortgage $ 1,596 $ 1,253 $ 1,440 $ 1,345 $ 1,459 $ 343 109.5% $ 137 9.4%
EquiFirst 3,276 2,754 2,966 1,749 2,203 522 75.8% 1,073 48.7%
------------- ------------- ------------- ------------- ------------- ------- ------- --------- -------
Total $ 4,872 $ 4,007 $ 4,406 $ 3,094 $ 3,662 $ 865 86.3% $ 1,210 33.0%
============= ============= ============= ============= ============= ======= ======= ========= =======
Gain(loss) on sale of
mortgage loans (thous.):
Regions Mortgage $ 1,310 $ 2,956 $ 3,824 $ 2,732 $ 4,653 $(1,646) -222.7% $ (3,343) -71.8%
EquiFirst (984) 3,199 20,431 9,619 16,970 (4,183) -523.0% (17,954) -105.8%
------------- ------------- ------------- ------------- ------------- ------- ------- --------- -------
Total $ 326 $ 6,155 $ 24,255 $ 12,351 $ 21,623 $(5,829) -378.8% $(21,297) -98.5%
============= ============= ============= ============= ============= ======= ======= ========= =======
Servicing portfolio $43.0 Billion $36.0 Billion $36.4 Billion $36.7 Billion $37.2 Billion
Capitalized mortgage
servicing rights (net) $ 374.9 MM $ 407.7 MM $ 420.3 MM $ 413.7 MM $ 412 MM
MSR valuation allowance $ 41.4 MM $ 14.4 MM $ 6.4 MM $ 20.5 MM $ 29.5 MM
MSR capitalization rate
- - total portfolio 87 bps. 113 bps. 115 bps. 113 bps. 111 bps.
MSR capitalization rate
- - 3rd party servicing 134 bps. 145 bps. 148 bps. 144 bps. 142 bps.
New servicing
capitalization rate 124 bps. 125 bps. 117 bps. 104 bps. 116 bps.
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
* Linked quarter percentage changes are presented on an annualized basis.
- - 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.
- - Included in 4Q06 Regions Mortgage origination volume is $469 million
related to AmSouth Mortgage.
- - Regions Mortgage recorded $27 million (equates to $0.03 per diluted share
after-tax) of MSR impairment in 4Q06 as a result of declining mortgage
rates during the quarter.
- - EquiFirst experienced record production volume in 4Q06.
- - EquiFirst's gross gain on sale premiums approximated 2.1% in 4Q06,
compared to 2.0% in 3Q06.
- - EquiFirst's gain on sale of mortgage loans declined linked quarter
primarily due to early payment defaults and lower sales volume in 4Q06
compared to 3Q06.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 15
CREDIT QUALITY (1)
CREDIT QUALITY
As of and for Quarter Ended YTD YTD
($ in thousands) 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05 12/31/06 12/31/05
- ------------------------------ ----------- ---------- ----------- ----------- ----------- ----------- ----------
Allowance for credit losses $1,107,788 $ 778,465 $ 777,783 $ 782,368 $ 783,536
Provision for credit losses $ 60,000 $ 25,000 $ 30,000 $ 27,500 $ 40,000 $ 142,500 $ 165,000
Net loans charged off:
Commercial $ 24,648 $ 16,723 $ 21,989 $ 12,286 $ 25,129 $ $ 75,646 $ 77,223
Real Estate - Mortgage 15,890 6,575 6,165 10,249 6,755 38,879 34,436
Real Estate - Construction (223) 381 115 (40) 264 233 263
Consumer 15,834 639 2,537 6,173 8,259 25,183 24,263
---------- --------- ---------- ---------- ---------- ---------- ---------
Total $ 56,149 $ 24,318 $ 30,806 $ 28,668 $ 40,407 $ 139,941 $ 136,185
========== ========= ========== ========== ========== ========== =========
Net loan charge-offs as a % of
average loans, annualized
Commercial 0.46% 0.42% 0.58% 0.34% 0.68% 0.45% 0.52%
Real Estate - Mortgage 0.18% 0.10% 0.09% 0.15% 0.10% 0.14% 0.12%
Real Estate - Construction -0.01% 0.02% 0.01% 0.00% 0.02% 0.00% 0.00%
Consumer 0.42% 0.03% 0.11% 0.28% 0.36% 0.24% 0.27%
---------- --------- ---------- ---------- ---------- ---------- ---------
Total 0.27% 0.16% 0.21% 0.20% 0.28% 0.22% 0.23%
========== ========= ========== ========== ========== ========== =========
Non-performing assets (NPAs):
Non-accrual loans $ 306,471 $ 246,728 $ 264,284 $ 343,880 $ 341,177
Renegotiated loans - 103 107 190 241
Foreclosed properties 72,663 65,190 55,495 64,999 65,459
---------- --------- ---------- ---------- ----------
Total $ 379,134 $ 312,021 $ 319,886 $ 409,069 $ 406,877
========== ========= ========== ========== ==========
Loans past due > 90 days $ 143,868 $ 78,785 $ 78,096 $ 92,766 $ 87,523
Allowance for credit losses as
percentage of loans, net of
unearned income 1.17% NA NA NA NA
Allowance for loan losses as
a percentage of loans, net of
unearned income 1.12% 1.31% 1.32% 1.34% 1.34%
Total NPAs (excluding loans 90
days past due) as a percentage
of loans and other real estate 0.40% 0.52% 0.54% 0.70% 0.70%
Total NPAs (including loans 90
days past due) as a percentage
of loans and other real estate 0.55% 0.66% 0.67% 0.86% 0.85%
Katrina update as of December 31, 2006:
Loan exposure 1,008,263
Loans on non-accrual 9,695
Past due loans > 90 days 1,191
Net loans charged-off in 4Q 1,592
Remaining Katrina-specific allowance 60,470
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
- - Net charge-offs totaled $56 million, or an annualized 0.27 percent of
average loans, and included approximately $1.6 million of net charge-offs
from the Katrina-related portfolio.
- - Also included in net charge-offs is approximately $11 million of
charge-offs resulting from conforming Regions' and AmSouth's credit
policies.
- - Regions' December 31, 2006, allowance for credit losses includes
approximately $60 million of reserves identified for the Katrina portfolio
(representing combined Regions and AmSouth reserves).
- - Regions' December 31, 2006 allowance for credit losses includes
approximately $52 million of reserves related to unfunded commitments and
standby letters of credit.
- - Regions sold approximately $28.5 million of non-performing loans during
4Q06.
- - Regions' non-performing loan portfolio is composed primarily of small to
medium-sized loans that are diversified geographically throughout its
franchise.
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 16
ADDITIONAL FINANCIAL AND OPERATIONAL DATA (1)
12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
-------- ------- ------- ------- --------
FTE employees 35,904 24,277 24,457 24,928 25,326
Authorized shares remaining under
buyback program (see note below) 13.9 MM 18.9 MM 20.3 MM 23.9 MM 27.6 MM
Full service offices 1,956 1,299 1,304 1,312 1,311
ATM's 2,664 1,549 1,564 1,586 1,585
Morgan Keegan offices 319 328 321 301 281
- ---------
(1) Regions Financial Corporation and AmSouth Bancorporation merged effective
November 4, 2006. The merger was accounted for as a purchase of AmSouth by
Regions. As a result, periods ending prior to November 4, 2006, reflect
legacy Regions data on a stand-alone basis.
- - During the fourth quarter, 5.0 million shares were repurchased at an
average cost of $37.00 per share.
- - On January 18, 2007, the Regions Board of Directors approved a new 50
million share repurchase authorization.
MERGER-RELATED ITEMS
(Pre-tax dollars in thousands)
INCOME STATEMENT EXCESS
TOTAL EFFECT PURCHASE PRICE
--------- ---------------- --------------
Year to date 2006 $ 274,036 $ 88,658 $ 185,378
========= ========= =========
FINANCIAL SUPPLEMENT TO
FOURTH QUARTER AND YEAR END 2006 EARNINGS RELEASE
PAGE 17
RECONCILIATION TO GAAP FINANCIAL MEASURES
The table below presents computations of earnings and certain other financial
measures excluding merger charges (non-GAAP). Merger charges are included in
financial results presented in accordance with generally accepted accounting
principles (GAAP). Non-GAAP financial measures have inherent limitations, are
not required to be uniformly applied, and are not audited. Regions believes the
exclusion of merger charges in expressing earnings and certain other financial
measures provides a meaningful base for period-to-period comparisons. See table
below for computations of earnings and certain other financial measures
excluding merger charges and corresponding reconciliation to GAAP financial
measures for the periods presented.
As of and for Quarter Ended Fiscal Year Ended
--------------------------- -------------------------
12/31/06 12/31/05 12/31/06 12/31/05
------------- ----------- ----------- -----------
INCOME
Pre-tax income (GAAP) $ 528,977 $ 354,662 $ 1,959,015 $ 1,422,095
Merger-related charges, pre-tax**
Salaries and employee benefits 65,655 27,723 65,693 73,556
Net occupancy expense 3,473 1,010 3,473 5,053
Furniture and equipment expense 427 41 427 536
Other 18,083 18,169 19,066 89,636
------------ ----------- ----------- -----------
Total merger-related charges, pre-tax 87,638 46,943 88,659 168,781
------------ ----------- ----------- -----------
Pre-tax income excluding merger charges (non-GAAP) $ 616,615 $ 401,605 $ 2,047,674 $ 1,590,876
============ =========== =========== ===========
Net income (GAAP) A $ 361,551 $ 253,996 $ 1,353,145 $ 1,000,544
Merger-related charges, net of tax** 59,299 29,391 60,320 109,688
------------ ----------- ----------- -----------
Net income excluding merger charges (non-GAAP) B $ 420,850 $ 283,387 $ 1,413,465 $ 1,110,232
============ =========== =========== ===========
Weighted average diluted shares C 646,372 461,651 506,989 466,183
Earnings per share, excluding merger charges - diluted B/C $ 0.65 $ 0.61 $ 2.79 $ 2.38
============ =========== =========== ===========
RETURN ON AVERAGE ASSETS
Average assets (GAAP) D $124,577,836 $85,143,955 $95,800,277 $85,096,467
Return on average assets (GAAP)* A/D 1.15% 1.18% 1.41% 1.18%
============ =========== =========== ===========
Return on average assets, ex. merger charges* (non-GAAP) B/D 1.34% 1.32% 1.48% 1.30%
============ =========== =========== ===========
RETURN ON AVERAGE EQUITY
Average equity (GAAP) E $ 17,185,928 $10,556,548 $12,368,632 $10,677,831
Average intangible assets (GAAP) 9,862,619 5,346,617 6,449,657 5,356,932
------------ ----------- ----------- -----------
Average tangible equity F $ 7,323,309 $ 5,209,931 $ 5,918,975 $ 5,320,899
Return on average equity (GAAP)* A/E 8.35% 9.55% 10.94% 9.37%
Return on average tangible equity* A/F 19.59% 19.34% 22.86% 18.80%
============ =========== =========== ===========
Return on average equity, ex. merger charges* (non-GAAP) B/E 9.72% 10.65% 11.43% 10.40%
============ =========== =========== ===========
Return on average tangible equity, ex. merger charges* (non-GAAP) B/F 22.80% 21.58% 23.88% 20.87%
============ =========== =========== ===========
* Income statement amounts have been annualized in calculation
** 2005 merger charges relate to the Union Planters acquisition
This financial supplement to Regions' 4th quarter and year end 2006 earnings
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.