REGIONS FINANCIAL CORP - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

[X]		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended March 31, 2004
		or
[ ]		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from ____________________ to ____________________

Commission File Number:	0-6159

Regions Financial Corporation

(Exact name of registrant as specified in its charter)


Delaware		63-0589368

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

417 North 20^th Street Birmingham, Alabama		35203

(Address of principal executive offices)		(Zip code)

(205) 944-1300

(Registrant's telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X]

Yes

[ ]

No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

[X]

Yes

[ ]

No

The number of shares outstanding of each of the issuer's classes of common stock was 219,483,807 shares of common stock, par value $.625, outstanding as of April 30, 2004.

	REGIONS FINANCIAL COPORATION

	INDEX

		Page Number
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Condition -
	March 31, 2004, December 31, 2003
	and March 31, 2003	4

	Consolidated Statements of Income -
	Three months ended
	March 31, 2004 and March 31, 2003	5

	Consolidated Statement of Stockholders' Equity -
	Three months ended March 31, 2004	6

	Consolidated Statements of Cash Flows -
	Three months ended March 31, 2004 and
	March 31, 2003	7

	Notes to Consolidated Financial Statements	8


Item 2.	Management's Discussion and Analysis of
	Financial Condition and Results of Operations	18

Item 3.	Qualitative and Quantitative Disclosures about
	Market Risk	43

Item 4.	Controls and Procedures	43


PART II.	OTHER INFORMATION

Item 2.	Issuer Purchase of Equity Securities	43

Item 6.	Exhibits and Reports on Form 8-K	44


SIGNATURES		45

Forward Looking Statements

This Quarterly Report on Form 10-Q, other periodic reports filed by Regions under the Securities Exchange Act of 1934, as amended, and any other written or oral statements made by or on behalf of Regions may include forward looking statements which reflect Regions' current views with respect to future events and financial performance. 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 forward-looking statements are based 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. These risks, uncertainties and other factors include, but are not limited to, those described below.

Some factors are specific to Regions, including:

The cost and other effects of material contingencies, including litigation contingencies.

Regions' ability to expand into new markets and to maintain profit margins in the face of pricing pressures.

Regions' ability to keep pace with technological changes.

Regions' 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 customers.

Regions' ability to effectively manage interest rate risk and other market risk, credit risk and operational risk.

Regions' ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support Regions' business.

Regions' ability to achieve the earnings expectations related to the businesses that were acquired or that may be acquired in the future, which in turn depends on a variety of factors, including:

Regions' ability to achieve the anticipated cost savings and revenue enhancements with respect to the acquired operations;

the assimilation of the acquired operations to Regions' corporate culture, including the ability to instill Regions' credit practices and efficient approach to the acquired operations; and

the continued growth of the markets that the acquired entities serve, consistent with recent historical experience.

Other factors which may affect Regions apply to the financial services industry more generally, including:

Further easing of restrictions on participants in the financial services industry, such as banks, securities brokers and dealers, investment companies and finance companies, may increase competitive pressures.

Possible changes in interest rates may increase funding costs and reduce earning asset yields, thus reducing margins.

Possible changes in general economic and business conditions in the United States and the South in general and in the communities Regions serves in particular may lead to a deterioration in credit quality, thereby increasing provisioning costs, or a reduced demand for credit, thereby reducing earning assets.

The threat or occurrence of war or acts of terrorism and the existence or exacerbation of general geopolitical instability and uncertainty.

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 business.

Possible changes in consumer and business spending and saving habits could affect Regions' ability to increase assets and to attract deposits.

In addition, statements made in this Quarterly Report on Form 10-Q, other periodic reports filed by Regions under the Exchange Act, and other written or oral statements made by or on behalf of Regions may include forward looking statements relating to the benefits of the proposed merger between Regions and Union Planters Corporation, including future financial and operating results, and Regions' and Union Planters' 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:

The ability to obtain regulatory approvals of the merger on the proposed terms and schedule.
The failure of Regions or Union Planters stockholders to approve the merger.
The risk that Regions and Union Planters may not have the ability to effect the merger.
The level and timeliness of realization, if any, of expected cost savings and revenue synergies from the merger.
Difficulties related to the completion of the merger and the integration of the businesses of Regions and Union Planters, including integration of information systems and retention of key personnel.
Disruption from the merger may make it more difficult to maintain relationships with clients, employees or suppliers.
A materially adverse change in the financial condition of Regions, Union Planters or the combined company.
Lower than expected revenues following the merger.
Other difficulties in effecting the proposed merger.

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.

Table of Contents

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)
	March 31,	December 31,	March 31,
ASSETS	2004	2003	2003

Cash and due from banks	$ 970,762	$ 1,255,853	$ 1,216,597
Interest-bearing deposits in other banks	102,408	96,537	185,554
Securities held to maturity	31,990	30,943	30,919
Securities available for sale	8,473,044	9,056,861	9,680,014
Trading account assets	790,864	816,074	889,628
Loans held for sale	1,436,812	1,241,852	971,312
Federal funds sold and securities
purchased under agreements to resell	594,064	577,989	371,098
Margin receivables	547,955	503,575	448,541
Loans	33,000,869	32,414,848	31,799,866
Unearned income	(231,119)	(230,525)	(238,864)

Loans, net of unearned income	32,769,750	32,184,323	31,561,002
Allowance for loan losses	(455,566)	(454,057)	(449,704)

Net loans	32,314,184	31,730,266	31,111,298
Premises and equipment	631,186	629,638	628,473
Interest receivable	182,116	194,501	224,016
Due from customers on acceptances	35,058	61,053	71,391
Excess purchase price	1,089,308	1,083,416	1,063,540
Mortgage servicing rights	113,099	126,846	110,787
Other assets	1,464,093	1,192,592	1,461,417

	$48,776,943	$48,597,996	$48,464,585



LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing	$ 5,918,325	$ 5,717,747	$ 5,287,382
Interest-bearing	25,507,248	27,014,788	27,081,993

Total deposits	31,425,573	32,732,535	32,369,375
Borrowed Funds:
Short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase	4,447,518	3,031,706	3,397,335
Commercial paper	-0-	5,500	17,250
Other short-term borrowings	1,441,916	1,389,832	1,817,000

Total short-term borrowings	5,889,434	4,427,038	5,231,585
Long-term borrowings	5,768,131	5,711,752	5,392,132

Total borrowed funds	11,657,565	10,138,790	10,623,717
Bank acceptances outstanding	35,058	61,053	71,391
Other liabilities	1,232,289	1,213,503	1,129,132

Total liabilities	44,350,485	44,145,881	44,193,615
Stockholders' Equity:
Preferred stock, par value $1.00 a share:
Authorized 5,000,000 shares	-0-	-0-	-0-
Common stock, par value $.625 a share:
Authorized 500,000,000 shares,
issued, including treasury stock,
224,282,416; 223,356,484; and
221,897,905 shares, respectively	140,177	139,598	138,686
Surplus	1,000,479	983,669	950,699
Undivided profits	3,407,590	3,329,023	3,044,708
Treasury stock, at cost 5,543,000; 1,389,000;
and -0- shares, respectively	(206,825)	(49,944)	-0-
Unearned restricted stock	(15,075)	(13,771)	(20,236)
Accumulated other comprehensive income	100,112	63,540	157,113

Total Stockholders' Equity	4,426,458	4,452,115	4,270,970

	$48,776,943	$48,597,996	$48,464,585



See notes to consolidated financial statements.

Table of Contents

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)

Three Months Ended

March 31,

2004

2003

Interest Income:

Interest and fees on loans

$ 411,012

$ 437,897

Interest on securities:

Taxable interest income

86,557

95,370

Tax-exempt interest income

5,661

6,433

Total Interest on Securities

92,218

101,803

Interest on loans held for sale

19,971

23,348

Interest on margin receivables

4,192

3,874

Income on federal funds sold and securities
purchased under agreements to resell

1,378

2,029

Interest on time deposits in other banks

22

48

Interest on trading account assets

6,889

6,987

Total Interest Income

535,682

575,986

Interest Expense:

Interest on deposits

84,054

134,847

Interest on short-term borrowings

19,651

27,633

Interest on long-term borrowings

52,980

53,603

Total Interest Expense

156,685

216,083

Net Interest Income

378,997

359,903

Provision for loan losses

15,000

31,500

Net Interest Income After Provision for Loan Losses

363,997

328,403

Non-Interest Income:

Brokerage and investment banking

138,203

125,027

Trust department income

20,691

17,106

Service charges on deposit accounts

71,868

69,725

Mortgage servicing and origination fees

23,491

28,228

Securities gains

12,803

9,898

Other

98,428

91,605

Total Non-Interest Income

365,484

341,589

Non-Interest Expense:

Salaries and employee benefits

290,923

272,619

Net occupancy expense

27,800

25,712

Furniture and equipment expense

18,130

20,312

Other

154,247

129,531

Total Non-Interest Expense

491,100

448,174

Income Before Income Taxes

238,381

221,818

Applicable income taxes

69,846

63,218

Net Income

$ 168,535

$ 158,600

Average number of shares outstanding

221,343

221,604

Average number of shares outstanding-diluted

224,590

224,059

Per share:

Net income

$0.76

$0.72

Net income-diluted

$0.75

$0.71

Cash dividends declared

$0.41

$0.30

See notes to consolidated financial statements.

Table of Contents

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS) (UNAUDITED)


	Common Stock	Surplus	Undivided Profits	Treasury Stock	Unearned Restricted Stock	Accumulated Other Comprehensive Income	Total

BALANCE AT JANUARY 1, 2004	$139,598	$ 983,669	$3,329,023	$ (49,944)	$(13,771)	$ 63,540	$4,452,115
Comprehensive Income:
Net income			168,535				168,535
Unrealized gain on available for sale securities,
net of tax and reclassification adjustment						36,414	36,414
Other comprehensive gain from derivatives, net of tax						158	158

Comprehensive income*			168,535			36,572	205,107
Cash dividends declared ($0.41 per common share)			(89,968)				(89,968)
Purchase of treasury stock				(156,881)			(156,881)
Common stock transactions:
Stock options exercised	544	14,762					15,306
Stock issued to employees under incentive plan	35	2,048			(2,154)		(71)
Amortization of unearned restricted stock					850		850

BALANCE AT MARCH 31, 2004	$140,177	$1,000,479	$3,407,590	$(206,825)	$(15,075)	$100,112	$4,426,458




Disclosure of reclassification amount:
Unrealized holding gains, net of ($26,063) in income taxes,
on available for sale securities arising during period						$ 44,736
Less: Reclassification adjustment, net of ($4,481) in income
taxes, for net gains realized in net income						8,322
Unrealized holding gain on derivatives, net of ($177) in
income taxes						319
Less: Reclassification adjustment, net of ($87) in income
taxes, for amortization of cash flow hedges						161

Comprehensive income, net of ($21,672) in income taxes						$ 36,572

*Comprehensive income for the three months ended March 31, 2003 was $151.6 million.

See notes to consolidated financial statements.

Table of Contents

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)

	Three Months Ended
	March 31,

Operating Activities:	2004		2003

Net income	$ 168,535		$ 158,600
Adjustments to reconcile net cash provided by (used in) operating activities
Gain on securitization of auto loans	-0	-	(6,830	)
Depreciation and amortization of premises and equipment	15,753		16,941
Provision for loan losses	15,000		31,500
Net amortization of securities	8,214		5,769
Amortization of loans and other assets	22,126		19,148
Provision for impairment of mortgage servicing rights	12,000		-0	-
Amortization of deposits and borrowings	238		238
Provision for losses on other real estate	588		384
Deferred income tax expense (benefit)	40,081		(16,088	)
Loss (gain) on sale of premises and equipment	77		(85	)
Realized securities gains	(12,803	)	(9,898	)
Decrease (increase) in trading account assets	43,651		(103,636	)
Increase in loans held for sale	(194,960	)	(43,150	)
Proceeds from securitization of loans held for sale	-0	-	576,517
Increase in margin receivables	(44,380	)	(16,204	)
Decrease in interest receivable	12,532		18,072
Increase in other assets	(302,122	)	(132,071	)
Decrease in other liabilities	(51,700	)	(152,200	)
Other	780		1,383

Net Cash (Used) Provided By Operating Activities	(266,390	)	348,390

Investing Activities:
Net increase in loans	(598,878	)	(594,266	)
Proceeds from sale of securities available for sale	280,572		231,703
Proceeds from maturity of securities held to maturity	10		-0	-
Proceeds from maturity of securities available for sale	856,229		1,161,887
Purchases of securities held to maturity	(1,177	)	(251	)
Purchases of securities available for sale	(490,280	)	(2,117,432	)
Net (increase) decrease in interest-bearing deposits in other banks	(5,871	)	118,008
Proceeds from sale of premises and equipment	1,652		1,462
Purchases of premises and equipment	(19,030	)	(8,760	)
Net increase (decrease) in customers' acceptance liability	25,995		(11,071	)

Net Cash Provided (Used) By Investing Activities	49,222		(1,218,720	)

Financing Activities:
Net decrease in deposits	(1,307,200	)	(557,064	)
Net increase in short-term borrowings	1,462,396		1,146,128
Proceeds from long-term borrowings	54,987		7,939
Payments on long-term borrowings	(4,493	)	(1,916	)
Net (decrease) increase in bank acceptance liability	(25,995	)	11,071
Cash dividends	(89,968	)	(66,549	)
Purchases of treasury stock	(156,881	)	-0	-
Proceeds from exercise of stock options	15,306		6,092

Net Cash (Used) Provided By Financing Activities	(51,848	)	545,701

Decrease in Cash and Cash Equivalents	(269,016	)	(324,629	)
Cash and Cash Equivalents, Beginning of Period	1,833,842		1,912,324

Cash and Cash Equivalents, End of Period	$ 1,564,826		$ 1,587,695




See notes to consolidated financial statements.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2004

NOTE A -- Basis of Presentation

The accounting and reporting policies of Regions Financial Corporation ("Regions" or the "Company"), conform with accounting principles generally accepted in the United States and with general financial services industry practices. Regions provides a full range of banking and bank-related services to individual and corporate customers through its subsidiaries and branch offices located primarily in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas. The Company is subject to intense competition from other financial institutions and is also subject to the regulations of certain government agencies and undergoes periodic examinations by those regulatory authorities.

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions for Form 10-Q, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States. For a summary of significant accounting policies that have been consistently followed, see Note A to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K. It is management's opinion that all adjustments, consisting of only normal and recurring items necessary for a fair presentation, have been included. Please refer to "Critical Accounting Policies" included in Management's Discussion and Analysis.

Certain amounts in prior periods have been reclassified to conform to the current period presentation.

NOTE B -- Union Planters Corporation Merger Agreement

In January 2004, the Company signed a definitive merger agreement with Union Planters Corporation, headquartered in Memphis, Tennessee. Terms of the agreement include the formation of a new holding company to be named Regions Financial Corporation upon completion of the transaction. In the transaction, each share of Union Planters Corporation common stock will be converted into one share of the new company common stock and each share of Regions' common stock will be converted into 1.2346 shares of the new company common stock. The merger will be accounted for as a purchase of Union Planters for accounting and financial reporting purposes. As a result, the historical financial statements of Regions will become the historical financial statements of the combined company. The transaction is expected to close in mid 2004, subject to customary regulatory and stockholder approvals. Additional information on the proposed merger is included in Regions' Form 8-K dated as of January 22, 2004, and filed as of J anuary 26, 2004, Regions' Form 8-K dated as of January 22, 2004, and filed as of January 30, 2004, and Regions Form S-4 dated and filed effective April 29, 2004.

NOTE C -- Stock-Based Compensation

Regions has stock option plans for certain key employees that provide for the granting of options to purchase up to 5,720,000 shares of Regions' common stock (excluding options assumed in connection with acquisitions). The terms of options granted are determined by the compensation committee of the Board of Directors; however, no options may be granted after ten years from the plans' adoption, and no options may be exercised beyond ten years from the date granted. The option price per share of incentive stock options cannot be less than the fair market value of the common stock on the date of the grant; however, the option price of non-qualified options may be less than the fair market value of the common stock on the date of the grant.

Regions' long-term incentive plans provide for the granting of up to 35,000,000 shares of common stock in the form of stock options, stock appreciation rights, performance awards or restricted stock awards. The terms of stock options granted under the long-term incentive plans are generally subject to the same terms as options granted under Regions' stock option plans.

In October 1995, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123, "Accounting and Disclosure of Stock-Based Compensation" (Statement 123). Statement 123 is effective for fiscal years beginning after December 15, 1995, and allows for the option of continuing to follow Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees", and the related interpretations, or selecting the fair value method of expense recognition as described in Statement 123. The Company has elected to follow APB 25 in accounting for its employee stock options. Pro forma net income and net income per share data is presented below for the three months ended March 31, 2004 and 2003, as if the fair-value method had been applied in measuring compensation costs:

Three months ended

March 31,

March 31,

(dollar amounts in thousands)

2004

2003

Net income

$168,535

$158,600

Add: Stock-based compensation expense included

in net income, net of related tax effects

552

2,178

Less: Total stock-based compensation expense

based on fair value method for all awards, net

of related tax effects

(2,735)

(3,974)

Pro forma net income

$166,352

$156,804

Per share:

Net income

$0.76

$0.72

Net income-diluted

0.75

0.71

Pro forma net income

0.75

0.71

Pro forma net income-diluted

0.74

0.70

The weighted average fair value of options granted during the three months ended March 31, 2004 and 2003, was $4.67 and $4.52, respectively. The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in 2004: expected dividend yield of 4.50%; expected option life of 5 years; expected volatility of 22.2%; and a risk-free interest rate of 2.8%. The 2003 assumptions used in the model included: expected dividend yield of 3.70%; expected option life of 5 years; expected volatility of 21.8%; and a risk-free interest rate of 2.8%.

NOTE D -- Business Segment Information

Regions' segment information is presented based on Regions' primary segments of business. Each segment is a strategic business unit that serves specific needs of Regions' customers. The Company's primary segment is community banking. Community banking represents the Company's branch banking functions and has separate management that is responsible for the operation of that business unit. In addition, Regions has designated as distinct reportable segments the activities of its treasury, mortgage banking, investment banking/brokerage/trust, and insurance divisions. The treasury division includes the Company's bond portfolio, mortgage lending portfolio, and other wholesale activities. Mortgage banking consists of origination and servicing functions of Regions' mortgage operations. Investment banking includes trust activities and all brokerage and investment activities associated with Morgan Keegan. Insurance includes all business associated with commercial insurance, in addition to credit life products s old to consumer customers. The reportable segment designated "Other" includes activity of Regions' indirect consumer lending division and the parent company. Prior period amounts have been restated to reflect changes in methodology.

The accounting policies used by each reportable segment are the same as those discussed in Note A to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K. The following table presents financial information for each reportable segment.

Three months ended March 31, 2004

Total Banking

(in thousands)

Community
Banking

Treasury

Combined

Mortgage
Banking

Net interest income

$301,118

$ 73,368

$374,486

$ 11,712

Provision for loan losses

11,842

2,627

14,469

33

Non-interest income

81,104

12,856

93,960

78,881

Non-interest expense

213,729

9,579

223,308

80,393

Income taxes

52,961

27,757

80,718

4,188

Net income

$ 103,690

$ 46,261

$149,951

$ 5,979

Average assets

$27,009,969

$14,685,553

$41,695,522

$1,346,716

Investment Banking/
Brokerage/
Trust

Insurance

Other

Total
Company

Net interest income

$ 5,239

$ 537

$ (12,977)

$378,997

Provision for loan losses

-0-

-0-

498

15,000

Non-interest income

163,834

22,630

6,179

365,484

Non-interest expense

135,614

16,783

35,002

491,100

Income taxes

12,540

2,380

(29,980)

69,846

Net income

$ 20,919

$ 4,004

$ (12,318)

$168,535

Average assets

$2,658,892

$133,573

$2,986,023

$48,820,726

Three months ended March 31, 2003

Total Banking

(in thousands)

Community
Banking

Treasury

Combined

Mortgage Banking

Net interest income

$279,196

$ 72,723

$351,919

$ 15,798

Provision for loan losses

27,865

2,491

30,356

15

Non-interest income

81,926

9,901

91,827

79,762

Non-interest expense

217,203

8,031

225,234

53,875

Income taxes

37,281

27,038

64,319

15,948

Net income

$ 78,773

$ 45,064

$123,837

$25,722

Average assets

$26,303,212

$14,403,631

$40,706,843

$1,396,359

Investment
Banking/
Brokerage/
Trust

Insurance

Other

Total
Company

Net interest income

$ 5,408

$ 541

$(13,763)

$359,903

Provision for loan losses

-0-

-0-

1,129

31,500

Non-interest income

146,938

19,201

3,861

341,589

Non-interest expense

126,226

14,109

28,730

448,174

Income taxes

9,687

1,888

(28,624)

63,218

Net income

$ 16,433

$ 3,745

$(11,137)

$158,600

Average assets

$2,820,412

$119,129

$3,106,021

$48,148,764

NOTE E -- Commitments and Contingencies

To accommodate the financial needs of its customers, Regions makes commitments under various terms to lend funds to consumers, businesses and other entities. These commitments include (among others) revolving credit agreements, term loan commitments and short-term borrowing agreements. Many of these loan commitments have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being funded, the total commitment amounts do not necessarily represent future liquidity requirements. Standby letters of credit are also issued, which commit Regions to make payments on behalf of customers if certain specified future events occur. Historically, a large percentage of standby letters of credit also expire without being funded.

Both loan commitments and standby letters of credit have credit risk essentially the same as that involved in extending loans to customers and are subject to normal credit approval procedures and policies. Collateral is obtained based on management's assessment of the customer's credit.

Loan commitments totaled $10.2 billion at March 31, 2004, and $6.8 billion at March 31, 2003. Standby letters of credit were $1.3 billion at March 31, 2004, and $1.2 billion at March 31, 2003. Commitments under commercial letters of credit used to facilitate customers' trade transactions were $58.8 million at March 31, 2004, and $34.0 million at March 31, 2003.

The Company and its affiliates are subject to litigation and claims arising out of the normal course of business. Based on consultation with legal counsel, management is of the opinion that the outcome of pending and threatened litigation will not have a material effect on Regions' consolidated financial statements.

NOTE F -- Derivative Financial Instruments

Regions maintains positions in derivative financial instruments to manage interest rate risk, to facilitate asset/liability management strategies, and to manage other risk exposures. The most common derivative instruments are forward rate agreements, interest rate swaps, and put and call options. For those derivative contracts that qualify for special hedge accounting treatment, according to Statement of Financial Accounting Standards No. 133 (Statement 133), Regions designates the hedging instrument as either a cash flow or fair value hedge. The accounting policies associated with derivative financial instruments are discussed further in Note A to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K.

Regions utilizes certain derivative instruments to hedge the variability of interest cash flows on debt instruments. To the extent that the hedge of future cash flows is effective, changes in the fair value of the derivative are recognized as a component of other comprehensive income in stockholders' equity. At March 31, 2004, Regions reported a $3.5 million loss in other comprehensive income related to cash flow hedges. The Company will amortize this loss into earnings in conjunction with the recognition of interest payments through 2011. To the extent that the hedge of future cash flows is ineffective, changes in the fair value of the derivative are recognized in earnings as a component of other non-interest expense. For the three months ended March 31, 2004, there was no ineffectiveness recognized in other non-interest expense attributable to cash flow hedges.

Regions hedges the changes in the fair value of assets using forward contracts, which represent commitments to sell money market instruments at a future date at a specified price or yield. The contracts are utilized by the Company to hedge interest rate risk positions associated with the origination of mortgage loans held for sale. The Company is subject to the market risk associated with changes in the value of the underlying financial instrument, as well as the risk that the other party will fail to perform. For the three months ended March 31, 2004, Regions recognized a net hedging loss of $1.2 million associated with these hedging instruments.

Regions has also entered into interest rate swap agreements converting a portion of its fixed rate long-term debt to floating rate. The fair values of these derivative instruments are included in other assets on the statements of financial condition. For the three months ended March 31, 2004, there was no ineffectiveness recognized in other non-interest expense attributable to these fair value hedges.

During the first quarter of 2004, Regions sold Eurodollar futures contracts to hedge the fair value of a pool of highly correlated indirect auto loans. For the three months ended March 31, 2004, a $27,000 gain was recorded in earnings due to hedging ineffectiveness.

The Company also maintains a derivatives trading portfolio of interest rate swaps, option contracts and futures and forward commitments used to meet the needs of its customers. The portfolio is used to generate trading profit and help clients manage interest rate risk. The Company is subject to the risk that a counterparty will fail to perform. The fair value of the derivatives trading portfolio at March 31, 2004, was an asset of $34.5 million.

Foreign currency contracts involve the exchange of one currency for another on a specified date and at a specified rate. These contracts are executed on behalf of the Company's customers and are used to manage fluctuations in foreign exchange rates. The notional amount of forward foreign exchange contracts totaled $15 million at March 31, 2004, and $7 million at March 31, 2003. The Company is subject to the risk that a counterparty will fail to perform.

In the normal course of business, Regions' brokerage subsidiary enters into underwriting and forward and future commitments. At March 31, 2004, the contract amount of future contracts was $34 million to purchase and $285 million to sell U.S. Government and municipal securities. The brokerage subsidiary typically settles its position by entering into equal but opposite contracts and, as such, the contract amounts do not necessarily represent future cash requirements. Settlement of transactions relating to such commitments is not expected to have a material effect on the subsidiary's financial position. Transactions involving future settlement give rise to market risk, which represents the potential loss that can be caused by a change in the market value of a particular financial instrument. The exposure to market risk is determined by a number of factors, including size, composition and diversification of positions held, the absolute and relative levels of interest rates and market volatility.

Regions' derivative financial instruments are summarized as follows:

	Other Than Trading Derivatives
	As of March 31, 2004

(dollar amounts in millions)	Notional Amount	Fair Value	Receive	Pay	Average Maturity in Years

Asset hedges:
Fair value hedges:
Forward sale commitments	$ 234	$ -			0.2
Interest rate futures	5,635	-			1.4

Total asset hedges	$5,869	$ -			1.3




Liability hedges:
Fair value hedges:
Interest rate swaps	$3,438	$ 210	4.12%	1.34%	5.8
Interest rate options	250	-			1.2

Total liability hedges	$3,688	$ 210			5.5

	As of March 31, 2003

(dollar amounts in millions)	Notional Amount	Fair Value	Receive	Pay	Average Maturity in Years

Asset hedges:
Fair value hedges:
Forward sale commitments	$ 395	$ (2)			0.2

Total asset hedges	$ 395	$ (2)			0.2




Liability hedges:
Fair value hedges:
Interest rate swaps	$3,938	$238	5.11%	2.17%	6.1
Interest rate options	1,400	1			2.2

Total liability hedges	$5,338	$239			5.1

	Derivative Financial Instruments
	As of March 31,

	2004			2003

	Contract or Notional Amount			Contract or Notional Amount

	Other			Other
	Than		Credit Risk	Than		Credit Risk
	Trading	Trading	Amount*	Trading	Trading	Amount*

	(in millions)
Interest rate swaps	$3,438	$5,839	$134	$ 3,938	$3,909	$180
Interest rate options	250	839	-0-	1,400	223	-0-
Futures and forward
commitments	5,869	1,294	-0-	395	1,465	-0-
Foreign exchange
forwards	-0-	15	-0-	-0-	7	-0-

Total	$9,557	$7,987	$134	$ 5,733	$5,604	$180

The following table is a summary of Regions' derivative financial instruments as of December 31, 2003, and is presented for comparison purposes.

	Derivative Financial Instruments
	As of December 31,

	2003			2002

	Contract or Notional Amount			Contract or Notional Amount

	Other			Other
	Than		Credit Risk	Than		Credit Risk
	Trading	Trading	Amount*	Trading	Trading	Amount*

	(in millions)
Interest rate swaps	$3,438	$5,673	$191	$3,938	$3,170	$170
Interest rate options	250	911	-0-	1,400	168	-0-
Futures and forward
commitments	111	945	-0-	292	1,166	-0-
Foreign exchange
forwards	-0-	20	-0-	-0-	16	-0-

Total	$3,799	$7,549	$191	$5,630	$4,520	$170

*Credit Risk Amount is defined as all positive exposures not collateralized with cash on deposit. Any credit risk arising under option contracts is combined with swaps to reflect netting agreements.

NOTE G --Pension and Postretirement Benefits

The following table provides the net pension cost and postretirement benefit cost recognized for the three months ended March 31, 2004 and 2003:

	Pension Cost		Postretirement Benefit Cost

(in thousands)	Three Months Ended March 31,		Three Months Ended March 31,

	2004	2003	2004	2003

Service cost	$ 3,758	$ 3,287	$ 536	$ 446
Interest cost	5,666	5,319	507	346
Expected return on plan assets	(6,194)	(5,385)	(43)	-0-
Net amortization (deferral)	2,225	1,821	234	59

Net periodic pension expense	$ 5,455	$ 5,042	$ 1,234	$ 851

NOTE H -- Recent Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB 51." In December 2003, the FASB revised FIN 46 to incorporate several FASB Staff Positions and change the effective date. FIN 46 addresses consolidation by business enterprises of variable interest entities (VIE). In general, FIN 46 defines a VIE as any legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 excludes certain interests from its scope including transferors to qualifying special purpose entities subject to Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" and employee benefit plans subject to specific accounting requirements in existing FASB Statements. Effective February 1 , 2003, Regions adopted the provisions of FIN 46 for all variable interests in entities created or modified after January 31, 2003. In addition, Regions adopted FIN 46 on December 31, 2003, for entities created before February 1, 2003, that are considered to be special-purpose entities. The adoption of FIN 46 for special-purpose entities resulted in the deconsolidation of two subsidiary business trusts that have issued trust-preferred securities. Effective March 31, 2004, Regions adopted FIN 46 for entities created before February 1, 2003, that are not considered to be special-purpose entities. The adoption of FIN 46 for entities other than special-purpose entities resulted in the consolidation of one non-registered investment partnership. The consolidation of the investment partnership at March 31, 2004 resulted in increases to cash of $0.9 million, trading account assets of $18.4 million, interest receivable of $0.1 million, long-term borrowings of $5.9 million, and other liabilities $9.0 million. The cons olidation of the investment partnership at March 31, 2004 resulted in a decrease in other assets of $4.7 million. These increases and decreases to the non-cash accounts are excluded from the consolidated statement of cash flows since they represent non-cash items. A complete description of Regions' relationships with VIEs is included in Note 19 "Variable Interest Entities" of Regions' 2003 Annual Report on Form 10-K. There have been no significant changes in Regions' relationships with VIEs since December 31, 2003.

In December 2003, President Bush signed into law a bill that expands Medicare benefits, primarily adding a prescription drug benefit for Medicare-eligible retirees beginning in 2006. The law also provides a federal subsidy to companies which sponsor postretirement benefit plans that provide prescription drug coverage. FASB Staff Position 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" permits deferring the recognition of the new Medicare provisions' impact due to lack of specific authoritative guidance on accounting for the federal subsidy. The Company has elected to defer accounting for the effects of this new legislation until the specific authoritative guidance is issued. Accordingly, the postretirement benefit obligations and net periodic costs reported in the accompanying financial statements and notes do not reflect the impact of this legislation. The accounting guidance, when issued, could require changes to p reviously reported financial information. Management does not believe the adoption of this standard will have a material effect on Regions' financial position or results of operations.

On March 9, 2004, the SEC released Staff Accounting Bulletin No. 105 (SAB 105), "Application of Accounting Principles to Loan Commitments" that will require all registrants to account for mortgage loan interest rate lock commitments related to loans held for sale as written options, effective not later than for commitments entered into after March 31, 2004. The Company enters into such commitments with customers in connection with residential mortgage loan applications. SAB 105 will require the Company to recognize a liability on its balance sheet equal to the fair value of the commitment at the time the loan commitment is issued. As a result, SAB 105 will delay the recognition of any revenue related to these commitments until such time as the loan is sold, however, it will have no effect on the ultimate amount of revenue or cash flows recognized over time. The adoption of SAB 105 will not have a material effect on Regions' results of operations or financial position.

At its March 31, 2004 meeting, the FASB ratified the consensuses reached by the Emerging Issues Task Force in EITF Issue No. 03-6 (EITF 03-6), "Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share." EITF 03-6 concludes that a forward contract to issue an entity's own shares that has a provision that reduces the contract price per share when dividends are declared on the issuing entity's common stock is a participating security, and therefore, earnings per share must be calculated using the two-class method under FASB Statement No. 28. EITF 03-6 must be applied in the first reporting period beginning after March 31, 2004, by restating previously reported earnings per share to apply the two-class method to any participating securities that were outstanding for any period presented in comparative financial statements. Regions is currently assessing the impact of EITF 03-6 on its earnings per share calculation.

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

The following discussion and financial information is presented to aid in understanding Regions Financial Corporation's ("Regions" or the "Company") financial position and results of operations. The emphasis of this discussion will be on the three months ended March 31, 2004, as compared to the three months ended March 31, 2003, and the three months ended December 31, 2003.

CORPORATE PROFILE

Regions' primary business is providing traditional commercial and retail banking services to customers throughout the South. Regions' banking affiliate, Regions Bank, operates as an Alabama state-chartered bank with branch offices in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas.

In addition to providing traditional commercial and retail banking services, Regions provides other financial services in the fields of investment banking, asset management, trust, mutual funds, securities brokerage, mortgage banking, insurance, leasing, and other specialty financing. Regions has no foreign banking operations, although it maintains an international department to assist customers with their foreign transactions. Regions provides investment banking and brokerage services from 145 offices of Morgan Keegan & Company, Inc. ("Morgan Keegan"), one of the largest investment firms based in the South. Regions' mortgage banking operations, Regions Mortgage and EquiFirst Corporation ("EquiFirst"), provide residential mortgage loan origination and servicing activities for customers. Regions Mortgage services approximately $15.9 billion in mortgage loans. Regions provides full-line insurance brokerage services through Rebsamen Insurance, Inc., one of the 50 largest insurance brokers in the country . Credit life insurance services for customers are provided through other of Regions' affiliates.

Regions' profitability, like that of many other financial institutions, is dependent on its ability to generate revenue from net interest income and non-interest income sources. Net interest income is the difference between the interest income Regions receives on earning assets, such as loans and securities, and the interest expense Regions pays on interest-bearing liabilities, principally deposits and borrowings. Regions' net interest income is impacted by the size and mix of its balance sheet and the interest rate spread it earns on its assets and liabilities. Non-interest income includes fees from service charges on deposit accounts, trust and securities brokerage activities, mortgage origination and servicing, insurance and other customer services which Regions provides. Results of operations are also affected by the provision for loan losses and non-interest expenses such as salaries and employee benefits, occupancy and other operating expenses, including income taxes.

Economic conditions, competition and the monetary and fiscal policies of the Federal government in general, significantly affect financial institutions, including Regions. Lending and deposit activities and fee income generation are influenced by the level of business spending and investment, consumer income, spending and savings, capital market activities, competition among financial institutions, customer preferences, interest rate conditions and prevailing market rates on competing products in Regions' primary market areas.

Regions' business strategy has been and continues to be focused on the diversification of its revenue stream, providing a competitive mix of products and services, delivering quality customer service and maintaining a branch distribution network with offices in convenient locations. Regions believes that its recently announced merger with Union Planters Corporation will be beneficial in the future implementation of this strategy.

The Company's principal market areas are located in the states of Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas. Morgan Keegan also operates offices in Illinois, Kentucky, Massachusetts, Mississippi, New York and Virginia, as well as Toronto, Canada.

FIRST QUARTER HIGHLIGHTS

Net income for the first quarter of 2004 totaled $168.5 million or $.75 per diluted share, compared to $158.6 million or $.71 per diluted share for the first quarter of 2003 and $163.8 million or $.73 per diluted share for the fourth quarter of 2003.

Regions' well-positioned balance sheet and diversified business mix continued to produce a balanced revenue stream in the first quarter of 2004, with net interest income accounting for 52% of total revenue and non-interest income (excluding securities gains and losses) accounting for 48%. Total revenues, excluding securities gains, increased 5.8% over the first quarter of 2003 and 11.7%, annualized, compared to the fourth quarter of 2003. Net interest income increased 5% over the first quarter of 2003 and remained flat compared to the fourth quarter of 2003 as the net interest margin increased to 3.56% compared to 3.50% in the first quarter of 2003 and 3.54% in the fourth quarter of 2003. Strong private client results in the first quarter of 2004 drove Morgan Keegan's revenues up 10.4% compared to same period in 2003 and 11.0%, annualized, compared to the fourth quarter of 2003. Gains on sale of mortgage loans increased 44.8% over the first quarter of 2003 and 32.2%, annualized, compared to the fourth q uarter of 2003 primarily due to strong volume and spreads at EquiFirst. Insurance revenues increased 17.8% year over year primarily due to new accounts and strong retention of existing accounts.

Regions' core banking trends continued positive. Loan growth of 7.3%, linked quarter, annualized, was driven by commercial real estate lending and home equity lines of credit. Low-cost deposits increased 7.1%, linked quarter, annualized, due primarily to a deposit acquisition campaign.

Net charge-offs totaled $13.5 million or 0.17% of average loans, annualized, in the first quarter of 2004, compared to 0.25% for the first quarter of 2003 and 0.40% in the fourth quarter of 2003. On a linked-quarter basis, non-performing assets and loans past due 90 days decreased $57.0 million to $281.6 million at March 31, 2004. Non-accrual loans decreased $48.5 million, other real estate decreased $6.8 million, and renegotiated loans decreased $495,000 compared to fourth quarter 2003 levels. Loans past due greater than 90 days decreased $1.1 million in the first quarter of 2004, compared to the prior quarter.

As a result of the lower levels of non-performing assets and continued low levels of charge-offs, the provision for loan losses and allowance for loan losses both declined in the first quarter of 2004. The provision for loan losses totaled $15.0 million in the first quarter of 2004 compared to $31.5 million during the same period of 2003 and $30.0 million during the fourth quarter of 2003. The allowance for loan losses at March 31, 2004, was 1.39% of total loans, net of unearned income, compared to 1.42% at March 31, 2003, and 1.41% at year-end.

Non-interest income, excluding securities gains and losses, increased $21.0 million over the first quarter of 2003 and $21.3 million compared to the fourth quarter of 2003. Brokerage and investment banking revenues totaled $138.2 million in the first quarter of 2004, compared to $125.0 million in the first quarter of 2003 and $135.6 million in the fourth quarter of 2003. Trust fees totaled $20.7 million in the first quarter of 2004, compared to $17.1 million in the same period in 2003 and $17.8 million in the fourth quarter of 2003. Regions' mortgage servicing and origination fees totaled $23.5 million in the first quarter 2004 compared to $28.2 million in the first quarter of 2003 and $22.5 million in the fourth quarter of 2003.

Regions recognized $12.0 million of impairment charges on mortgage servicing rights in the first quarter of 2004, included in other non-interest expense. Total non-interest expenses, excluding the impairment charges, increased $30.9 million compared to the first quarter of 2003 and $27.2 million compared to the fourth quarter of 2003. These increases result primarily from increased employee benefits costs, expenses associated with new branch offices, and increases in other miscellaneous expenses.

Regions repurchased approximately 4.2 million shares in the first quarter of 2004, including 4.0 million shares repurchased as a result of an accelerated stock repurchase agreement. Under current board authorization, 7.0 million shares remain available for repurchase. (see "PART II, Item 2.")

Regions' quarterly dividend rate increased 28% in January 2004 producing a dividend yield of approximately 4.5% as of quarter end. In addition to the regular quarterly cash dividend of $0.33 per share declared in January, Regions declared a special dividend of $.0816 per share in connection with the proposed merger with Union Planters Corporation.

CRITICAL ACCOUNTING POLICIES

In preparing financial information, management is required to make significant estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses for the periods shown. The accounting principles followed by Regions and the methods of applying these principles conform with accounting principles generally accepted in the United States and general banking practices. Estimates and assumptions most significant to Regions are related primarily to allowance for loan losses, intangibles, income taxes, securitizations and pensions and are summarized in the following discussion and the Notes to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K.

Management's determination of the adequacy of the allowance for loan losses, which is based on the factors and risk identification procedures discussed in the following pages, requires the use of judgments and estimates that may change in the future. Changes in the factors used by management to determine the adequacy of the allowance or the availability of new information could cause the allowance for loan losses to be increased or decreased in future periods. In addition, bank regulatory agencies, as part of their examination process, may require that additions be made to the allowance for loan losses based on their judgments and estimates.

Regions' excess purchase price (the amount in excess of book value of acquired institutions) is reviewed at least annually to ensure that there have been no events or circumstances resulting in an impairment of the recorded amount of excess purchase price. Adverse changes in the economic environment, operations of acquired business units, or other factors could result in a decline in projected fair values. If the estimated fair value is less than the carrying amount, a loss would be recognized to reduce the carrying amount to implied fair value.

For purposes of evaluating mortgage servicing impairment, Regions must value its mortgage servicing rights. Mortgage servicing rights do not trade in an active market with readily observable market prices. Although sales of mortgage servicing rights do occur, the exact terms and conditions of sales may not be readily available. As a result, Regions stratifies its mortgage servicing portfolio on the basis of certain risk characteristics including loan type and contractual note rate and values its mortgage servicing rights using discounted cash flow modeling techniques which require management to make estimates regarding future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates and discount rates. Changes in interest rates, prepayment frequency or other factors could result in impairment of the servicing asset and a charge against earnings to reduce the recorded carrying amount. Based on a hypothetical sensitivity analysis, Regions estimates that a reducti on in the primary mortgage market rates of 25 basis points and 50 basis points would reduce the March 31, 2004 fair value of mortgage servicing rights by 14% and 26%, respectively. Management mitigates risk associated with declines in the estimated value of mortgage servicing rights by purchasing agency securities to create economic hedges.

Management's determination of the realization of the deferred tax asset is based upon management's judgment of various future events and uncertainties, including the timing and amount of future income earned by certain subsidiaries and the implementation of various tax plans to maximize realization of the deferred tax asset. Management believes that the subsidiaries will generate sufficient operating earnings to realize the deferred tax benefits. Regions' recent consolidated federal income tax returns are open for examination. From time to time Regions engages in business plans that may also have an effect on its tax liabilities. While Regions has obtained the opinion of advisors that the tax aspects of these plans should prevail, examination of Regions' income tax returns or changes in tax law may impact these plans and resulting provisions for income taxes. A further discussion of these plans and the benefits recognized related to these plans is included under the heading of "APPLICABLE INCOME TAXES."< /P>

Management is required to make various assumptions in valuing its pension and postretirement assets and liabilities. These assumptions include the expected rate of return on plan assets, the discount rate, and the rate of increase in future compensation levels. Changes to these assumptions could impact earnings in future periods. Regions takes into account the plan asset mix and expert opinions in determining the expected rate of return on plan assets. Regions considers the Moody's AA Corporate Bond yields and other market interest rates in setting the appropriate discount rate. In addition, Regions reviews expected inflationary and merit increases to compensation in determining the rate increase in future compensation levels. Based on a sensitivity analysis, Regions estimates that a .5% decrease in the discount rate would increase annual pension expense by $4.2 million and a 1% decrease in the expected rate of return on plan assets would increase annual pension and postretirement expense by $2.9 million. Quarterly pension and postretirement expense is disclosed in Note G to the consolidated financial statements.

During the first and fourth quarters of 2003, Regions securitized automobile loans as a source of funding. Regions accounted for these transactions as sales in accordance with the guidance of Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". When selling this category of financial assets, estimates of future cash flows are an integral part of determining the gain or loss and subsequently evaluating any impairment of any retained interest, such as a servicing asset or residual interest. The most critical assumptions in estimating cash flows and related fair value include prepayment frequency, expected credit losses, and discount rate. Management reviews these assumptions on a quarterly basis and the assumptions are adjusted if deemed appropriate. A sensitivity analysis of hypothetical changes in key assumptions on the fair value of the interest-only strips at December 31, 2003 is included in Note 6 "Asset Se curitizations" of Regions' 2003 Annual Report on Form 10-K.

TOTAL ASSETS

Regions' total assets at March 31, 2004, were $48.8 billion -- an increase of 1% compared to March 31, 2003, and relatively flat compared to December 31, 2003. This growth was primarily the result of increases in loans and loans held for sale, partially offset by a decline in the securities portfolio.

LOANS AND ALLOWANCE FOR LOAN LOSSES

LOAN PORTFOLIO

Regions' primary investment is loans. At March 31, 2004, loans represented 73% of Regions' earning assets.

The following table includes a distribution of Regions' loan portfolio.


Loan Portfolio (period end data)

(in thousands)	First Quarter 2004	Fourth Quarter 2003	First Quarter 2003

Commercial	$10,215,384	$10,182,176	$10,987,725
Residential mortgages	8,267,924	8,318,711	7,832,514
Other real estate loans	6,240,204	5,878,922	5,199,901
Construction	3,601,942	3,484,767	3,636,628
Branch installment	1,293,711	1,353,707	1,550,386
Indirect installment	368,595	362,496	393,890
Consumer lines of credit	2,072,063	1,918,988	1,330,412
Student loans	709,927	684,556	629,546

	$32,769,750	$32,184,323	$31,561,002

Total loans at March 31, 2004, increased 4% from March 31, 2003, and 2% over year-end 2003. The strongest categories of growth in the loan portfolio have been in commercial real estate and consumer lines of credit. The average yield on loans during the first quarter of 2004 was 5.27% compared to 5.86% during the first quarter of 2003, and 5.30% during the fourth quarter of 2003.

ALLOWANCE FOR LOAN LOSSES

Every loan carries some degree of credit risk. This risk is reflected in the consolidated financial statements by the allowance for loan losses, the amount of loans charged off and the provision for loan losses charged to operating expense. It is Regions' policy that when a loss is identified, it is charged against the allowance for loan losses in the current period. The policy regarding recognition of losses requires immediate recognition of a loss if significant doubt exists as to principal repayment.

Regions' provision for loan losses is a reflection of actual losses experienced during the period and management's judgment as to the adequacy of the allowance for loan losses. Some of the factors considered by management in determining the amount of the provision and resulting allowance include: (1) detailed reviews of individual loans; (2) gross and net loan charge-offs in the current period; (3) the current level of the allowance in relation to total loans and to historical loss levels; (4) past due and non-accruing loans; (5) collateral values of properties securing loans; (6) the composition of the loan portfolio (types of loans) and risk profiles; and (7) management's analysis of economic conditions and the resulting impact on Regions' loan portfolio.

A coordinated effort is undertaken to identify credit losses in the loan portfolio for management purposes and to establish the loan loss provision and resulting allowance for accounting purposes. A regular, formal and ongoing loan review is conducted to identify loans with unusual risks or possible losses. The primary responsibility for this review rests with the management of the individual banking offices. Their work is supplemented with reviews by Regions' internal audit staff and corporate loan examiners. This process provides information that helps in assessing the quality of the portfolio, assists in the prompt identification of problems and potential problems, and aids in deciding if a loan represents a probable loss that should be recognized or a risk for which an allowance should be maintained.

If, as a result of Regions' loan review and evaluation procedures, it is determined that payment of interest on a loan is questionable, it is Regions' policy to reverse interest previously accrued and uncollected on the loan against interest income. Interest on such loans is thereafter recorded on a "cash basis" and is included in earnings only when actually received in cash and when full payment of principal is no longer doubtful.

Although it is Regions' policy to immediately charge off as a loss all loan amounts judged to be uncollectible, historical experience indicates that certain losses exist in the loan portfolio that have not been specifically identified. To anticipate and provide for these unidentifiable losses, the allowance for loan losses is established by charging the provision for loan loss expense against current earnings. No portion of the resulting allowance is in any way allocated or restricted to any individual loan or group of loans. The entire allowance is available to absorb losses from any and all loans.

Regions' determination of its allowance for loan losses is based in accordance with Statement of Financial Accounting Standards Nos. 114 and 5. In determining the amount of the allowance for loan losses, management uses information from its loan review process to stratify the loan portfolio into risk grades. The higher-risk-graded loans in the portfolio are assigned estimated amounts of loss based on several factors, including current and historical loss experience of each higher-risk category, regulatory guidelines for losses in each higher-risk category and management's judgment of economic conditions and the resulting impact on the higher-risk-graded loans. All loans deemed to be impaired, which include non-accrual loans and loans past due 90 days or more, excluding loans to individuals, are evaluated individually. The vast majority of Regions' impaired loans are dependent upon collateral for repayment. For these loans, impairment is measured by evaluating collateral value as compared to the current investment in the loan. For all other loans, Regions compares the amount of estimated discounted cash flows to the investment in the loan. In the event a particular loan's collateral value is not sufficient to support the collection of the investment in the loan, a charge is immediately taken against the allowance for loan losses. The amount of the allowance for loan losses related to the higher-risk loans (including impaired loans) was approximately 70% at March 31, 2004, compared to 69% at December 31, 2003.

In addition to establishing allowance levels for specifically identified higher-risk-graded loans, management determines allowance levels for all other loans in the portfolio for which historical experience indicates that certain losses exist. These loans are categorized by loan type and assigned estimated amounts of loss based on several factors, including current and historical loss experience of each loan type and management's judgment of economic conditions and the resulting impact on each category of loans. The amount of the allowance for loan losses related to all other loans in the portfolio for which historical experience indicates that certain losses exist was approximately 30% of Regions' allowance for loan losses at March 31, 2004, compared to 31% at December 31, 2003. The amount of the allowance related to these loans is combined with the amount of the allowance related to the higher-risk-graded loans to evaluate the overall level of the allowance for loan losses.

Management considers the current level of the allowance for loan losses adequate to absorb losses from loans in the portfolio. Management's determination of the adequacy of the allowance for loan losses, which is based on the factors and risk identification procedures previously discussed, requires the use of judgments and estimations that may change in the future. Changes in the factors used by management to determine the adequacy of the allowance or the availability of new information could cause the allowance for loan losses to be increased or decreased in future periods. In addition, bank regulatory agencies, as part of their examination process, may require that additions be made to the allowance for loan losses based on their judgments and estimates.

Activity in the allowance for loans losses is summarized as follows:

	Three Months Ended
(dollar amounts in thousands)	March 31,	March 31,
	2004	2003

Balance at beginning of period	$454,057	$437,164
Loans charged-off:
Commercial	15,412	16,555
Real estate	2,543	3,924
Installment	8,562	9,930

Total	26,517	30,409
Recoveries:
Commercial	7,062	3,994
Real estate	885	1,374
Installment	5,079	6,081

Total	13,026	11,449
Net loans charged off:
Commercial	8,350	12,561
Real estate	1,658	2,550
Installment	3,483	3,849

Total	13,491	18,960
Provision charged to expense	15,000	31,500

Balance at end of period	$455,566	$449,704




Average loans outstanding:
Commercial	$ 9,991,182	$10,844,435
Real estate	16,698,521	14,942,384
Installment	5,652,378	5,328,585

Total	$32,342,081	$31,115,404



Net charge-offs as percent of average
loans outstanding (annualized):
Commercial	.34%	.47%
Real estate	.04%	.07%
Installment	.25%	.29%

Total	.17%	.25%

Net loan losses as a percentage of average loans (annualized) were 0.17% in the first quarter of 2004 compared to 0.25% in the first quarter 2003 and 0.40% in the fourth quarter of 2003. At March 31, 2004, the allowance for loan losses was 1.39% of loans, compared to 1.42% at March 31, 2003, and 1.41% at year-end 2003. The allowance for loan losses as a percentage of non-performing loans was 193% at March 31, 2004, compared to 140% at March 31, 2003, and 159% at December 31, 2003. The allowance for loan losses as a percentage of non-performing assets was 162% at March 31, 2004, compared to 117% at March 31, 2003, and 134% at December 31, 2003.

NON-PERFORMING ASSETS

Non-performing assets are summarized as follows:

(dollar amounts in thousands)	March 31,	December 31,	March 31,
	2004	2003	2003

Non-accruing loans	$201,805	$250,344	$244,500
Loans past due 90 days or more	34,091	35,187	45,171
Renegotiated loans	391	886	31,524
Other real estate	45,356	52,195	63,585

Total	$281,643	$338,612	$384,780




Non-performing assets as a percentage
of loans and other real estate	0.86%	1.05%	1.22%

Non-accruing loans at March 31, 2004, decreased $42.7 million from March 31, 2003 levels and $48.5 million from year-end 2003 levels. These decreases are primarily related to a shared national credit of $21.9 million that was sold, resulting in a recovery of approximately $2.5 million, and an $8.5 million real estate loan that was paid off. At March 31, 2004, real estate loans comprised $87.7 million ($69.6 million in residential) of total non-accruing loans, with commercial loans accounting for $103.9 million and consumer loans accounting for $10.2 million. Loans past due 90 days or more decreased $11.1 million compared to March 31, 2003 and $1.1 million from year-end 2003 levels. Renegotiated loans decreased $31.1 million compared to March 31, 2003 and $495,000 from year-end 2003 levels. The decrease from a year ago is due primarily to the $21.9 million shared national credit discussed above, which was reclassified to non-accrual loans before being sold. Other real estate decreased $18.2 million from March 31, 2003 and $6.8 million since year-end 2003 levels.

INTEREST BEARING DEPOSITS IN OTHER BANKS

Interest-bearing deposits in other banks are used primarily as temporary investments and generally have short-term maturities. At March 31, 2004, this category of earning asset totaled $102.4 million compared to $185.6 million at March 31, 2003, and $96.5 million at December 31, 2003. The decline since a year ago reflects maturities which were not reinvested in this earning asset category.

SECURITIES

The following table shows the carrying values of securities as follows:

(in thousands)	March 31,	December 31,	March 31,
	2004	2003	2003

Securities held to maturity:
U.S. Treasury and Federal agency securities	$31,238	$30,189	$28,587
Obligations of states and political subdivisions	752	754	2,331
Other securities	-	-	1

Total	$31,990	$30,943	$30,919



Securities available for sale:
U.S. Treasury and Federal agency securities	$1,895,131	$2,568,163	$2,635,272
Obligations of states and political subdivisions	430,809	451,594	529,070
Mortgage-backed securities	5,826,168	5,703,057	6,168,399
Other securities	88,220	101,825	89,879
Equity securities	232,716	232,222	257,394

Total	$8,473,044	$9,056,861	$9,680,014

Total securities at March 31, 2004, declined 12% from March 31, 2003 and 6.4% since year-end 2003 levels. These declines are due primarily to maturities and the sale of $544 million in agency securities that served as economic hedges for the impairment of mortgage servicing rights in the first quarter of 2004.

LOANS HELD FOR SALE

Loans held for sale increased $465.5 million compared to March 31, 2003 and $195.0 million compared to year-end 2003. At March 31, 2004, there were approximately $1.0 billion in mortgage loans held for sale. Regions securitized and sold approximately $570 million during the first quarter of 2003 and $640 million during the fourth quarter of 2003 of indirect consumer auto loans classified as loans held for sale. At March 31, 2004, there were approximately $406 million in indirect consumer auto loans held for sale.

MARGIN RECEIVABLES

Margin receivables at March 31, 2004, totaled $548.0 million compared to $448.5 million at March 31, 2003, and $503.6 million at December 31, 2003. Margin receivables represent funds advanced to brokerage customers for the purchase of securities that are secured by certain marketable securities held in the customer's brokerage account. The risk of loss from these receivables is minimized by requiring that customers maintain marketable securities in the brokerage account which have a fair market value substantially in excess of the funds advanced to the customer. Fluctuations in these balances are caused by trends in general market conditions, volatility in equity retail products, and investor sentiment toward economic stability.

OTHER ASSETS

Other assets increased $2.7 million compared to March 31, 2003, and $271.5 million since year-end 2003. The increase since year-end is due primarily to receivables related to production at Morgan Keegan.

LIQUIDITY

GENERAL

Liquidity is an important factor in the financial condition of Regions and affects Regions' ability to meet the borrowing needs and deposit withdrawal requirements of its customers. Assets, consisting principally of loans and securities, are funded by customer deposits, purchased funds, borrowed funds and stockholders' equity.

The securities portfolio is one of Regions' primary sources of liquidity. Maturities of securities provide a constant flow of funds available for cash needs. Maturities in the loan portfolio also provide a steady flow of funds. Additional funds are provided from payments on consumer loans and one-to-four family residential mortgage loans. Historically, Regions' high levels of earnings have also contributed to cash flow. In addition, liquidity needs can be met by the purchase of funds in state and national money markets. Regions' liquidity also continues to be enhanced by a relatively stable deposit base.

The loan to deposit ratio at March 31, 2004, was 104.28% compared to 97.50% at March 31, 2003 and 98.33% at December 31, 2003.

Regions filed a $1.5 billion universal shelf registration statement in November 2001 and a $1.0 billion universal shelf registration statement in January 2001. Under these registration statements, Regions issued $600 million of subordinated notes in May 2002, $500 million of subordinated notes in February 2001 and $288 million of trust preferred securities in February 2001. Consequently, $1.1 billion of various debt securities could be subsequently issued, at market rates, under these registration statements.

In addition, Regions Bank has the requisite agreements in place to issue and sell up to $5 billion of its bank notes to institutional investors through placement agents. As of March 31, 2004, there were $400 million bank notes outstanding under this program.

Morgan Keegan maintains certain lines of credit with unaffiliated banks to manage liquidity in the ordinary course of business.

Regions securitized and sold approximately $570 million in the first quarter of 2003 and $640 million in the fourth quarter of 2003 of indirect consumer auto loans, utilizing an additional funding source (see "LOANS HELD FOR SALE"). Securitizations provide additional flexibility to Regions in managing liquidity.

RATINGS

The table below reflects the most recent debt ratings of Regions Financial Corporation and Regions Bank by Standard & Poor's Corporation, Moody's Investors Service and Fitch IBCA:

	S&P	Moody's	Fitch

Regions Financial Corporation:
Subordinated notes	A-	A2	A
Trust preferred securities	BBB+	A2	A
Regions Bank:
Short-term certificates of deposit	A-1	P-1	F1+
Short-term debt	A-1	P-1	F1+
Long-term certificates of deposit	A+	Aa3	AA-
Long-term debt	A+	Aa3	A+

A security rating is not a recommendation to buy, sell or hold securities, and the ratings above are subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

DEPOSITS

Regions competes with other banking and financial services companies for a share of the deposit market. Regions' ability to compete in the deposit market depends heavily on how effectively the Company meets customers' needs. Regions employs both traditional and non-traditional means to meet customers' needs and enhance competitiveness. The traditional means include providing well-designed products, providing a high level of customer service, providing attractive pricing and expanding the traditional branch network to provide convenient branch locations for customers throughout the South. Regions also employs non-traditional approaches to enhance its competitiveness. These include providing centralized, high quality telephone banking services and alternative product delivery channels like Internet banking.

Total deposits at March 31, 2004, declined 3% from March 31, 2003, and declined 4% from year-end 2003 levels. Compared to March 31, 2003, non-interest bearing deposits, interest bearing checking, money market, and savings accounts increased $1.2 billion or 6% due to a deposit acquisition campaign, but were offset by a $2.2 billion or 17% decline in retail certificates of deposit and wholesale deposits, due to management's effort to adjust the deposit mix to favor lower-cost community bank accounts. Certificates of deposit less than $100,000 comprised 15.4% of total deposits at March 31, 2004, compared to 20.0% at March 31, 2003.

The following table presents the average rates paid on deposits by category for the three months ended March 31, 2004 and 2003:

	Average Rates Paid

	March 31,	March 31,
	2004	2003

Interest-bearing transaction accounts	0.84%	1.17%
Savings accounts	0.22	0.32
Money market savings accounts	0.61	0.85
Certificates of deposit of $100,000 or more	1.94	3.09
Other interest-bearing deposits	2.13	3.32
Total interest-bearing deposits	1.27%	2.01%

The following table presents the average amounts of deposits outstanding by category for the three months ended March 31, 2004 and 2003:

	Average Amounts Outstanding

	Three months ended March 31,
(in thousands)	2004	2003


Non-interest-bearing demand deposits	$ 5,709,946	$ 5,068,365

Interest-bearing transaction accounts	2,642,203	1,867,494
Savings accounts	1,426,803	1,421,953
Money market savings accounts	10,578,972	10,769,247
Certificates of deposit of $100,000 or more	3,544,559	3,403,813
Other interest-bearing deposits	8,429,297	9,758,166

Total interest-bearing deposits	26,621,834	27,220,673

Total deposits	$32,331,780	$32,289,038

BORROWINGS

Following is a summary of short-term borrowings:

(in thousands)	March 31,	December 31,	March 31,
	2004	2003	2003

Federal funds purchased	$2,524,452	$ 738,371	$1,430,601
Securities sold under
agreements to repurchase	1,923,066	2,293,335	1,966,734
Federal Home Loan Bank structured notes	350,000	350,000	850,000
Notes payable to unaffiliated banks	55,200	91,200	204,500
Commercial paper	-	5,500	17,250
Due to brokerage customers	513,874	544,832	512,797
Broker margin calls	89,803	68,332	104,539
Short sale liability	433,039	335,468	145,164


Total	$5,889,434	$4,427,038	$5,231,585

Net federal funds purchased and security repurchase agreements totaled $3.9 billion at March 31, 2004, compared to $3.0 billion at March 31, 2003, and $2.5 billion at year-end 2003. The level of federal funds and security repurchase agreements can fluctuate significantly on a day-to-day basis, depending on funding needs and which sources of funds are used to satisfy those needs. During the first quarter of 2004, net funds purchased averaged $2.9 billion compared to $2.1 billion for the same period in 2003. Other short-term borrowings and commercial paper decreased $392 million since March 31, 2003, due primarily to the extinguishment of Federal Home Loan Bank advances and a decline in notes payable, partially offset by an increase in short sale liability. Since year-end, other short-term borrowings and commercial paper have increased $46.6 million due primarily to an increase in short sale liability, which represents Regions' trading obligation to deliver certain securities at a predetermined date and pr ice.

Long-term borrowings are summarized as follows:

(in thousands)	March 31,	December 31,	March 31,
	2004	2003	2003

6 3/8% subordinated notes	$ 600,000	$ 600,000	$ 600,000
7.00% subordinated notes	500,000	500,000	500,000
7.75% subordinated notes	100,000	100,000	100,000
Senior bank notes	400,000	400,000	-0-
Federal Home Loan Bank structured notes	2,835,000	2,835,000	3,585,000
Federal Home Loan Bank advances	811,997	806,627	104,217
Trust preferred securities	-0-	-0-	291,781
8.00% junior subordinated notes	300,720	300,731	-0-
Industrial development revenue bonds	2,000	2,000	2,200
Mark-to-market on hedged long-term debt	155,245	109,845	150,924
Other long-term debt	63,169	57,549	58,010

Total	$5,768,131	$5,711,752	$5,392,132

Long-term borrowings have increased $376.0 million since March 31, 2003 and $56.4 million since year-end 2003. The increase since a year ago is due primarily to the third quarter 2003 issuance of $400 million of senior bank notes, due December 15, 2006, partially offset by the extinguishment of Federal Home Loan Bank advances.

OTHER LIABILITIES

Other liabilities increased $103.2 million compared to March 31, 2003, and $18.8 million since year-end 2003. Areas of increase since March 31, 2003, include dividends payable and accrued expenses and taxes.

STOCKHOLDERS' EQUITY

Stockholders' equity was $4.4 billion at March 31, 2004, an increase of 4% over March 31, 2003. Accumulated other comprehensive income totaled $100.1 million at March 31, 2004, compared to $157.1 million at March 31, 2003, and $63.5 million at year-end 2003. Regions' ratio of equity to total assets was 9.07% at March 31, 2004, compared to 8.81% at March 31, 2003 and 9.16% at December 31, 2003.

Regions has authorization to repurchase up to 12.6 million shares of common stock. During the first quarter of 2004, Regions repurchased approximately 4.2 million shares at a total cost of $156.9 million. Included in the shares repurchased are 4.0 million shares that were repurchased through an accelerated stock repurchase agreement entered into on March 9, 2004. At March 31, 2004, 7.0 million shares were available for repurchase under the current authorization.

Regions and its subsidiaries are required to comply with capital adequacy standards established by banking regulatory agencies. Currently, there are two basic measures of capital adequacy: a risk-based measure and a leverage measure.

The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in credit risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and interest rate risk, and to minimize disincentives for holding liquid assets. Assets and off-balance sheet items are assigned to broad risk categories, each with specified risk-weighting factors. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items. Banking organizations that are considered to have excessive interest rate risk exposure are required to maintain higher levels of capital.

The minimum standard for the ratio of total capital to risk-weighted assets is 8%. At least 50% of that capital level must consist of common equity, undivided profits and non-cumulative perpetual preferred stock, less goodwill and certain other intangibles ("Tier 1 capital"). The remainder ("Tier 2 capital") may consist of a limited amount of other preferred stock, mandatory convertible securities, subordinated debt, and a limited amount of the allowance for loan losses. The sum of Tier 1 capital and Tier 2 capital is "total risk-based capital."

The banking regulatory agencies also have adopted regulations that supplement the risk-based guidelines to include a minimum ratio of 3% of Tier 1 capital to average assets less goodwill (the "leverage ratio"). Depending upon the risk profile of the institution and other factors, the regulatory agencies may require a leverage ratio of 1% to 2% above the minimum 3% level.

The following chart summarizes the applicable bank regulatory capital requirements. Regions' capital ratios at March 31, 2004 and 2003, substantially exceeded all regulatory requirements.

		Well
	Minimum	Capitalized	Regions at	Regions at
	Regulatory	Regulatory	March 31,	March 31,
	Requirement	Requirement	2004	2003

Tier 1 capital to risk-adjusted assets	4.00%	6.00%	9.26%	9.17%
Total risk-based capital to risk-adjusted assets	8.00	10.00	13.87	14.03
Tier 1 leverage ratio	3.00	5.00	7.34	7.03

OPERATING RESULTS

Net income for the first quarter of 2004 totaled $168.5 million or $0.75 per diluted share, a 6% increase (on a per share diluted basis) over the same period in 2003. Compared to the fourth quarter of 2003, net income increased 11%, annualized (on a per share diluted basis). Annualized return on stockholders' equity for the first quarter of 2004 was 15.14% compared to 15.23% for the same period in 2003. Annualized return on assets for the first quarter of 2004 was 1.39% compared to 1.34% for the first quarter of 2003.

NET INTEREST INCOME

The following table presents a summary of net interest income for the quarters ended March 31, 2004, December 31, 2003, and March 31, 2003.

(dollar amounts in thousands)	March 31,	December 31,	March 31,
	2004	2003	2003


Interest income	$535,682	$540,277	$575,986
Interest expense	156,685	160,759	216,083

Net interest income	378,997	379,518	359,903

Tax equivalent adjustment	16,414	17,313	17,083

Net interest income (taxable equivalent)	$395,411	$396,831	$376,986





Net interest margin	3.56%	3.54%	3.50%

Net interest income (taxable equivalent basis) for the first quarter of 2004 increased $18.4 million, or 5%, compared to the same period in 2003 and remained flat compared to the fourth quarter of 2003. The increase in net interest income compared to the first quarter of 2003 is due primarily to increases in average earning assets and improved spreads on these earning assets. The net yield on interest-earning assets (taxable equivalent basis) was 3.56% in the first quarter of 2004 compared to 3.50% during the same period in 2003 and 3.54% during the fourth quarter of 2003. The yield on interest earning assets declined 53 basis points in the first quarter of 2004, while the rate on interest bearing liabilities declined 65 basis points, compared to the first quarter of 2003.

Analysis of Changes in Net Interest Income

	Three months ended March 31,

(in thousands)	2004 over 2003

	Volume	Yield/Rate	Total

Increase (decrease) in:
Interest income on:
Loans	$16,779	$(43,664)	$(26,885)
Federal funds sold	(123)	(528)	(651)
Taxable securities	791	(9,604)	(8,813)
Non-taxable securities	(1,173)	401	(772)
Other earning assets	(2,116)	(1,067)	(3,183)

Total	14,158	(54,462)	(40,304)
Interest expense on:
Savings deposits	4	(350)	(346)
Other interest-bearing deposits	(3,060)	(47,387)	(50,447)
Borrowed funds	2,997	(11,602)	(8,605)

Total	(59)	(59,339)	(59,398)

Increase (decrease) in net interest income	$14,217	$ 4,877	$ 19,094

Note: The change in interest due to both rate and volume has been allocated to change due to volume and change due to rate in proportion to the absolute dollar amounts of the change in each.

MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, commodity prices, equity prices, or the credit quality of debt securities.

The overall level of market risk taking activity within Regions has recently reached the minimum threshold level as determined by the Federal Reserve Bank which will require future compliance with the 1996 market risk amendment to the Basel Capital Accord. As a result, Regions is in process of implementing the protocols and processes necessary to meet the market risk measurement and risk management objectives of the Accord.

INTEREST RATE SENSITIVITY

Regions' primary market risk is interest rate risk, including uncertainty with respect to absolute interest rate levels as well as uncertainty with respect to relative interest rate levels which impact both the shape and the slope of the various yield curves affecting the financial products and services that the Company offers. To quantify this risk, Regions measures the change in its net interest income in various interest rate scenarios as compared to a base case scenario. Net interest income sensitivity (as measured over 12 months) is a useful short-term indicator of Regions' interest rate risk.

Sensitivity Measurement. Financial simulation models are Regions' primary tools used to measure interest rate exposure. Using a wide range of hypothetical deterministic and stochastic simulations, these tools provide management with extensive information on the potential impact to net interest income caused by changes in interest rates.

These models are structured to simulate cash flows and accrual characteristics of the many products both on and off Regions' balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve, and about the changing composition of the balance sheet that result from both strategic plans and from customer behavior. Among the assumptions are expectations of balance sheet growth and composition, the pricing and maturity characteristics of existing business and the characteristics of future business. Interest rate related risks are expressly considered, such as pricing spreads, the lag time in pricing administered rate accounts, prepayments and other option risks. Regions considers these factors, as well as the degree of certainty or uncertainty surrounding their future behavior.

Off-balance sheet items are used to mitigate the risk of changes in the values of selected assets and liabilities resulting from changes in interest rates. The effect of these economic hedges is included in the simulations of net interest income.

The primary objectives of asset/liability management at Regions are balance sheet coordination and the management of interest rate risk in achieving reasonable and stable net interest income throughout various interest rate cycles. A standard set of alternate interest rate scenarios is compared to the results of the base case scenario to determine the extent of potential fluctuations and to establish exposure limits. The standard set of interest rate scenarios includes the traditional instantaneous parallel rate shifts of plus and minus 100 and 200 basis points. In addition, Regions includes simulations of gradual interest rate movements that may more realistically mimic potential interest rate movements. Gradual scenarios could include curve steepening, flattening, and parallel movements of various magnitudes phased in over a 6-month period.

Exposure to Interest Rate Movements. Based on the foregoing discussion, management has estimated the potential effect of shifts in interest rates on net interest income. As of March 31, 2004, Regions maintains a slightly asset sensitive position to gradual rate shifts of plus or minus 100 and 200 basis points. The following table demonstrates the expected effect that a gradual (over six months beginning at March 31, 2004) parallel interest rate shift would have on Regions' annual net interest income. Results of the same analysis for the comparable period for 2003 are presented for comparison purposes.

Gradual	March 31, 2004		March 31, 2003

	$ Change in	% Change in	$ Change in	% Change in
Change in	Net Interest	Net Interest	Net Interest	Net Interest
Interest Rates	Income	Income	Income	Income

(in basis points)	(dollar amounts in thousands)
+200	$ 36,000	2.4%	$15,000	1.0%
+100	16,000	1.1	9,000	0.6
-100	(10,000)	(0.7)	(15,000)	(1.1)
-200	(25,000)	(1.6)	(54,000)	(3.7)

As of March 31, 2004, Regions maintains a slightly asset sensitive position to instantaneous rate shifts of plus or minus 100 and 200 basis points. The following table demonstrates the expected effect that an instantaneous parallel rate shift would have on Regions' annual net interest income. Results of the same analysis for the comparable period of 2003 are presented for comparison purposes.

Instantaneous	March 31, 2004		March 31, 2003

	$ Change in	% Change in	$ Change in	% Change in
Change in	Net Interest	Net Interest	Net Interest	Net Interest
Interest Rates	Income	Income	Income	Income

(in basis points)	(dollar amounts in thousands)
+200	$ 53,000	3.5%	$ 39,000	2.7%
+100	26,000	1.7	25,000	1.7
-100	(12,000)	(0.8)	(33,000)	(2.2)
-200	(40,000)	(2.6)	(100,000)	(6.8)

DERIVATIVES

Regions uses financial derivative instruments for management of interest rate sensitivity. The Asset and Liability Committee in its oversight role for the management of interest rate sensitivity approves the use of derivatives in balance sheet hedging strategies. The most common derivatives the Company employs are interest rate swaps, interest rate options, forward sale commitments, and interest rate and foreign exchange forward contracts.

Interest rate swaps are contractual agreements typically entered into to exchange fixed for variable streams of interest payments. The notional principal is not exchanged but is used as a reference for the size of the interest payments. Interest rate options are contracts that allow the buyer to purchase or sell a financial instrument at a pre-determined price and time. Forward sale commitments are contractual obligations to sell money market instruments at a future date for an already agreed upon price. Foreign exchange forwards are contractual agreements to receive or deliver a foreign currency at an agreed upon future date and price.

Regions has made use of interest rate swaps and interest rate options to convert a portion of its fixed-rate funding position to a variable rate. Regions also uses derivatives to manage interest rate and pricing risk associated with its mortgage origination business. Futures contracts and forward sales commitments are used to protect the value of the loan pipeline from changes in interest rates. In the period of time that elapses between the origination and sale of mortgage loans, changes in interest rates have the potential to cause a decline in the value of the loans in this held for sale portfolio. Futures and forward sale commitment positions are used to protect the Company from the risk of such adverse changes. The change in value of the contracts used to mitigate interest rate risk is expected to be highly effective in offsetting the change in value of specific assets and liabilities over the life of the relationship.

Regions also uses derivatives to meet the needs of its customers. Interest rate swaps, interest rate options, futures and forward commitments and foreign exchange forwards are the most common derivatives sold to customers. Positions with similar characteristics are used to offset the market risk and minimize income statement volatility associated with this portfolio. Those instruments, which are used to service customers, are entered into the trading account, with changes in value recorded in the income statement.

BROKERAGE AND MARKET MAKING ACTIVITY

Morgan Keegan's business activities expose it to market risk, including its securities inventory positions and securities held for investment.

Morgan Keegan trades for its own account in corporate and tax-exempt securities and U.S. government, agency and guaranteed securities. Most of these transactions are entered into to facilitate the execution of customers' orders to buy or sell these securities. In addition, it trades certain equity securities in order to "make a market" in these securities. Morgan Keegan's trading activities require the commitment of capital. All principal transactions place the subsidiary's capital at risk. Profits and losses are dependent upon the skills of employees and market fluctuations. In some cases, in order to mitigate the risks of carrying inventory, Morgan Keegan enters into a low level of activity involving U.S. Treasury note futures.

Morgan Keegan, as part of its normal brokerage activities, assumes short positions on securities. The establishment of short positions exposes Morgan Keegan to off-balance sheet risk in the event that prices increase, as it may be obligated to cover such positions at a loss. Morgan Keegan manages its exposure to these instruments by entering into offsetting or other positions in a variety of financial instruments.

Morgan Keegan will occasionally economically hedge a portion of its long proprietary inventory position through the use of short positions in financial future contracts, which are included in securities sold, not yet purchased at market value. At March 31, 2004, Morgan Keegan had no outstanding futures contracts. The contract amounts do not necessarily represent future cash requirements.

In the normal course of business, Morgan Keegan enters into underwriting and forward and future commitments. At March 31, 2004, the contract amounts of futures contracts were $34 million to purchase and $285 million to sell U.S. Government and municipal securities. Morgan Keegan typically settles its position by entering into equal but opposite contracts and, as such, the contract amounts do not necessarily represent future cash requirements. Settlement of the transactions relating to such commitments is not expected to have a material effect on Regions' consolidated financial position. Transactions involving future settlement give rise to market risk, which represents the potential loss that can be caused by a change in the market value of a particular financial instrument. Regions' exposure to market risk is determined by a number of factors, including the size, composition and diversification of positions held, the absolute and relative levels of interest rates, and market volatility.

Interest rate risk at Morgan Keegan arises from the exposure of holding interest-sensitive financial instruments such as government, corporate and municipal bonds and certain preferred equities. Morgan Keegan manages its exposure to interest rate risk by setting and monitoring limits and, where feasible, hedging with offsetting positions in securities with similar interest rate risk characteristics. Securities inventories are marked to market, and accordingly there are no unrecorded gains or losses in value. While a significant portion of the securities inventories have contractual maturities in excess of five years, these inventories, on average, turn over in excess of twelve times per year. Accordingly, the exposure to interest rate risk inherent in Morgan Keegan's securities inventories is less than that of similar financial instruments held by firms in other industries. Morgan Keegan's equity securities inventories are exposed to risk of loss in the event of unfavorable price movements. The equity s ecurities inventories are marked to market and there are no unrecorded gains or losses.

Morgan Keegan is also subject to credit risk arising from non-performance by trading counterparties, customers, and issuers of debt securities owned. This risk is managed by imposing and monitoring position limits, monitoring trading counterparties, reviewing security concentrations, holding and marking to market collateral and conducting business through clearing organizations that guarantee performance. Morgan Keegan regularly participates as an agent in the trading of some derivative securities for its customers; however, this activity does not involve Morgan Keegan acquiring a position or commitment in these products and this trading is not a significant portion of Morgan Keegan's business. Morgan Keegan does not participate in the trading of derivative securities that have off-balance sheet risk.

PROVISION FOR LOAN LOSSES

The provision for loan losses was $15.0 million or .19% (annualized) of average loans in the first quarter of 2004 compared to $31.5 million or .41% (annualized) of average loans in the first quarter of 2003 and $30.0 million or .37% (annualized) of average loans in the fourth quarter of 2003. The provision for loan losses recorded in the first quarter of 2004 was based on management's assessment of inherent losses associated with the loan portfolio and management's evaluation of current and future economic conditions (see "ALLOWANCE FOR LOAN LOSSES").

NON-INTEREST INCOME

The following table presents a summary of non-interest income for the quarters ended March 31, 2004, December 31, 2003, and March 31, 2003.

	March 31,	December 31,	March 31,
(in thousands)	2004	2003	2003


Brokerage and investment banking	$138,203	$135,634	$125,027
Trust department income	20,691	17,797	17,106
Service charges on deposit accounts	71,868	73,042	69,725
Mortgage servicing and origination fees	23,491	22,514	28,228
Securities gains (losses)	12,803	(2)	9,898
Insurance premiums and commissions	23,155	19,614	19,661
Gain on sale of mortgage loans	41,236	38,160	28,475
Derivative income	964	4,170	5,483
Other	33,073	20,440	37,986


Total non-interest income	$365,484	$331,369	$341,589

Total non-interest income (excluding securities transactions) increased $21.0 million or 6% in the first quarter of 2004 compared to the first quarter of 2003 due primarily to increases in brokerage and investment banking income, trust fees and gains on sale of mortgage loans. Compared to the fourth quarter of 2003, total non-interest income (excluding securities transactions) increased $21.3 million or 6% due to increases in substantially all categories of non-interest income.

BROKERAGE AND INVESTMENT BANKING

Brokerage and investment banking income reflected an increase of $13.2 million in the first quarter of 2004 compared to the same period in 2003 due primarily to growth in the private client business and equity capital markets, partially offset by a decline in the fixed-income markets. Compared to the fourth quarter of 2003, brokerage and investment banking income increased $2.6 million as revenues from the private client business continued to increase, partially offset by the continued slowing of the fixed-income markets.

The following table shows the breakout of revenue by division contributed by Morgan Keegan for the three months ended March 31, 2004, December 31, 2003, and March 31, 2003.


Morgan Keegan
Breakout of Revenue by Division

(dollar amounts in thousands)	Private Client	Fixed-income Capital Markets	Equity Capital Markets	Regions MK Trust	Investment Advisory	Interest & Other

Three months ended March 31, 2004:
$ amount of revenue	$60,064	$50,464	$15,520	$17,590	$19,792	$13,040
% of gross revenue	34.0%	28.6%	8.8%	10.0%	11.2%	7.4%

Three months ended December 31, 2003:
$ amount of revenue	$49,386	$52,659	$20,935	$14,873	$20,318	$13,586
% of gross revenue	28.8%	30.7%	12.2%	8.7%	11.8%	7.9%

Three months ended March 31, 2003:
$ amount of revenue	$40,720	$65,546	$ 9,673	$15,158	$14,803	$13,963
% of gross revenue	25.5%	41.0%	6.1%	9.5%	9.3%	8.7%

The following table shows the components of revenue contributed by Morgan Keegan for the three months ended March 31, 2004, December 31, 2003, and March 31, 2003.


Morgan Keegan Summary Income Statement

(dollar amounts in thousands)	Three months ended Mar. 31, 2004	Three months ended Dec. 31, 2003	Three months ended Mar. 31, 2003	% Change from Dec. 31, 2003	% Change from Mar. 31, 2003

Revenues:
Commissions	$43,965	$41,503	$34,175	5.9%	28.6%
Principal transaction	53,838	51,010	68,015	5.5	(20.8)
Investment banking	24,545	28,064	12,184	(12.5)	101.5
Interest	12,636	12,434	12,925	1.6	(2.2)
Trust fees and services	17,591	14,873	15,158	18.3	16.1
Investment advisory	18,683	19,210	13,616	(2.7)	37.2
Other	5,212	4,663	3,790	11.8	37.5

Total revenues	176,470	171,757	159,863	2.7	10.4

Expenses:
Interest expense	7,397	6,761	7,517	9.4	(1.6)
Non-interest expense	135,614	133,110	126,226	1.9	7.4

Total expenses	143,011	139,871	133,743	2.2	6.9


Income before income taxes	33,459	31,886	26,120	4.9	28.1

Income taxes	12,540	11,988	9,687	4.6	29.5


Net income	$20,919	$19,898	$16,433	5.1%	27.3%

TRUST INCOME

Trust department income for the first quarter of 2004 increased $3.6 million or 21% compared to the first quarter of 2003 and $2.9 million or 16% compared to the fourth quarter of 2003 due primarily to better performance in the financial markets and increases in trust assets.

SERVICE CHARGES ON DEPOSIT ACCOUNTS

Service charges on deposit accounts increased $2.1 million or 3% in the first quarter of 2004 over the same period in 2003 due to management's continued focus on fee collection efforts. Compared to the fourth quarter of 2003, service charges on deposit accounts decreased $1.2 million or 2%.

MORTGAGE SERVICING AND ORIGINATION FEES

The primary source of this category of income is Regions' mortgage banking affiliates, Regions Mortgage and EquiFirst. Regions Mortgage's primary business and source of income is the origination and servicing of conforming mortgage loans for long-term investors. EquiFirst typically originates non-conforming mortgage loans which are sold to third-party investors with servicing released. Net gains and losses related to the sale of mortgage loans are included in other non-interest income.

For the first quarter of 2004, mortgage servicing and origination fees decreased $4.7 million or 17% compared to the same period of 2003 due to a decrease in production levels and fewer loans serviced. Compared to the fourth of 2003, mortgage servicing and origination fees increased $977,000 or 4%. Single-family mortgage production was $1.7 billion in the first quarter of 2004, compared to $2.2 billion in the first quarter of 2003 and $1.9 billion in the fourth quarter of 2003. The mortgage company's servicing portfolio totaled $15.9 billion at March 31, 2004, compared to $17.1 billion at March 31, 2003, and $16.1 billion at December 31, 2003.

A summary of mortgage servicing rights, which are included in other assets in the consolidated statements of condition, is presented as follows. The balances shown represent the original amounts capitalized, less accumulated amortization and valuation adjustments, for the right to service mortgage loans that are owned by other investors. The carrying values of mortgage servicing rights are affected by various factors, including prepayments of the underlying mortgages. A significant change in prepayments of mortgages in the servicing portfolio could result in significant changes in the valuation adjustments.

	Three Months Ended
(dollar amounts in thousands)	March 31,	March 31,
	2004	2003

Balance at beginning of year	$166,346	$147,487
Additions	7,510	15,272
Amortization	(9,257)	(11,472)

	164,599	151,287
Valuation adjustment	(51,500)	(40,500)

Balance at end of period	$113,099	$110,787




Mortgage servicing asset as a percent of servicing portfolio	0.71%	0.65%

The changes in the valuation allowance for servicing assets for the three months ended March 31, 2004 and 2003 were as follows:

	Three Months Ended
(in thousands)	March 31,	March 31,
	2004	2003

Balance at beginning of the year	$39,500	$40,500
Provisions for impairment valuation	12,000	-0-

Balance at end of the period	$51,500	$40,500

SECURITIES GAINS

Securities gains for the first quarter of 2004 totaled $12.8 million compared to $9.9 million for the same period of 2003. Securities gains in the first quarter of 2004 are related to the sale of agency securities that served as economic hedges for the impairment of mortgage servicing rights.

OTHER INCOME

The components of other income consist mainly of fees and commissions, insurance premiums, customer derivative fees and gains related to the sale of mortgage loans. Other non-interest income for the first quarter of 2004 increased $6.8 million over the first quarter of 2003 and $16.0 million over the fourth quarter of 2003 due primarily to strong performance by Regions' insurance operations and higher gains resulting from mortgage banking activities. Also affecting these increases were net gains of $3.3 million recorded in other non-interest income in the first and fourth quarter of 2003 from the securitization and sale of indirect auto consumer loans.

NON-INTEREST EXPENSE

The following table presents a summary of non-interest expense for the quarters ended March 31, 2004, December 31, 2003, and March 31, 2003.

(in thousands)	March 31,	December 31,	March 31,
	2004	2003	2003


Salaries and employee benefits	$290,923	$278,862	$272,619
Net occupancy expense	27,800	27,748	25,712
Furniture and equipment expense	18,130	20,374	20,312
Impairment of MSRs	12,000	-0-	-0-
Other	142,247	124,963	129,531


Total non-interest expense	$491,100	$451,947	$448,174

Total non-interest expense increased $42.9 million or 10% in the first quarter of 2004 compared to the first quarter of 2003 and $39.2 million or 9% compared to the fourth quarter of 2003 due primarily to increased salaries and employee benefits, expenses associated with new branch offices, and increases in other miscellaneous expenses. Also contributing to these increases was an impairment charge on mortgage servicing rights of $12.0 million recorded in the first quarter of 2004.

SALARIES AND EMPLOYEE BENEFITS

Salaries and employee benefits were up $18.3 million or 7% in the first quarter of 2004 compared to the same period in 2003, due to increased benefit plan costs, incentives, and normal merit increases. Compared to the fourth quarter of 2003, salaries and employee benefits increased $12.1 million or 4% due primarily to payroll taxes incurred in the first quarter of each year and normal first quarter compensation increases. As of March 31, 2004, Regions had 16,259 full-time equivalent employees.

NET OCCUPANCY EXPENSE

Net occupancy expense includes rents, depreciation and amortization, utilities, maintenance, insurance, taxes and other expenses of premises occupied by Regions and its affiliates. Regions' affiliates operate banking offices in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, and Texas.

Net occupancy expense increased $2.1 million or 8% in the first quarter of 2004 over the first quarter of 2003 due to expenses related to new and acquired branch offices. Net occupancy expense increased slightly compared to fourth quarter of 2003.

FURNITURE AND EQUIPMENT EXPENSE

Furniture and equipment expense during the first quarter of 2004 decreased $2.2 million compared to the same period in 2003 and compared to year-end 2003 due primarily to lower expenses related to computer equipment.

OTHER EXPENSES

The significant components of other expense include other non-credit losses, amortization and impairment of mortgage servicing rights and computer and other outside services. Other non-interest expense increased $24.7 million or 19% in the first quarter of 2004 compared to the same period in 2003 due primarily to a $12.0 million impairment charge on mortgage servicing rights recorded in the first quarter of 2004. Other increases included legal and professional fees and origination costs associated with mortgage subsidiaries. Compared to the fourth quarter of 2003, other non-interest expense increased $29.3 million or 23% due primarily to the first quarter impairment charge and minority interest expense of approximately $12 million recorded annually in the first quarter.

APPLICABLE INCOME TAXES

Income tax expense for the first quarter of 2004 increased $6.6 million compared to the first quarter of 2003 and $4.7 million compared to the fourth quarter of 2003 due to higher levels of income before taxes and a higher effective tax rate. Regions effective tax rate for the first quarter of 2004 was 29.3% compared to 28.5% in the first quarter and fourth quarter of 2003.

From time to time Regions engages in business plans that may also have an effect on its tax liabilities. While Regions has obtained the opinion of advisors that the tax aspects of these strategies should prevail, examination of Regions' income tax returns or changes in tax law may impact the tax benefits of these plans.

Periodically, Regions invests in pass-through investment vehicles that generate tax credits, principally low-income housing credits, which directly reduce Regions' federal income tax liability. Congress has legislated these tax credit programs to encourage capital inflows to these investment vehicles. The amount of tax benefit recognized to these tax credits was $6.0 million and $6.2 million for the three months ended March 31, 2004 and 2003, respectively.

During the fourth quarter of 2000, Regions recapitalized a mortgage-related subsidiary by raising Tier 2 capital, which resulted in a reduction in taxable income of that subsidiary attributable to Regions. The reduction in the taxable income of this subsidiary attributable to Regions is expected to result in a lower effective tax rate applicable to the consolidated taxable income before taxes of Regions for future periods. The impact on Regions' effective tax rate applicable to consolidated income before taxes of the reduction in the subsidiary's taxable income attributable to Regions will, however, depend on a number of factors, including, but not limited to, the amount of assets in the subsidiary, the yield of the assets in the subsidiary, the cost of funding the subsidiary, possible loan losses in the subsidiary, the level of expenses of the subsidiary, the level of income attributable to obligations of states and political subdivisions, and various other factors. The amount of federal and state tax benefits recognized related to the recapitalized subsidiary was $11.2 million and $10.5 million for the three months ended March 31, 2004 and 2003, respectively.

Regions has segregated a portion of its investment securities and intellectual property into separate legal entities organized in Delaware in order to, among other business purposes, protect such intangible assets from inappropriate claims of Regions' creditors, and to maximize the return on such assets by the professional and focused management thereof. Regions has recognized state tax benefits related to these legal entities of $3.1 million and $3.4 million for the three months ended March 31, 2004 and 2003, respectively.

Regions' federal and state income tax returns for the years 1998 through 2002 are open for review and examination by governmental authorities. In the normal course of these examinations, Regions is subject to challenges from governmental authorities regarding amounts of taxes due. Regions has received notices of proposed adjustments relating to taxes due for the years 1999 through 2001, which includes proposed adjustments relating to an increase in taxable income of the mortgage-related subsidiary discussed above. Regions believes adequate provision for income taxes have been recorded for all years open for review and intends to vigorously contest the proposed adjustments. To the extent that final resolution of the proposed adjustments results in significantly different conclusions from Regions' current assessment of the proposed adjustments, Regions' effective tax rate in any given financial reporting period may be materially different from its current effective tax rate.

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Item 3. Qualitative and Quantitative Disclosures about Market Risk

Reference is made to pages 33 through 36 'Market Risk' included in Management's Discussion and Analysis.

Item 4. Controls and Procedures

Based on an evaluation, as of the end of the period covered by this Form 10-Q, under the supervision and with the participation of Regions' management, including its Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer have concluded that Regions' disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective. As of the end of the period covered by this report, there have been no significant changes in Regions' internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Regions' internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Issuer Purchase of Equity Securities

			Total Number of	Maximum Number
			Shares Purchased	of Shares that May
			As Part of Publicly	Yet Be Purchased
	Total Number of	Average Price Paid	Announced Plans	Under the Plans
Period	Shares Purchased	Per Share	or Programs	or Programs⁽¹⁾


January 1, 2004 -
January 31, 2004				11,211,000

February 1, 2004 -
February 29, 2004	119,000	$36.82	119,000	11,092,000

March 1, 2004 -
March 31, 2004	4,035,000	$37.79	4,035,000	7,057,000


Total	4,154,000	$37.77	4,154,000

⁽¹⁾ On July 17, 2003, Regions announced that its Board of Directors had authorized the repurchase of up to 12.6 million shares of Regions' common stock through open market transactions.

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Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

Exhibit No.	Description

3.1	Bylaws as last amended on January 22, 2004.

31.1	Certification of chief executive officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

31.2	Certification of chief financial officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

A report on Form 8-K, dated January 16, 2004, was furnished under items 9 and 12 in connection with the Registrant's results of operations for the quarter and year ended December 31, 2003.

A report on Form 8-K, dated January 22, 2004, was filed on January 26, 2004, under item 5 concerning the Registrant's proposed merger with Union Planters Corporation.

A report on Form 8-K, dated January 22, 2004, was filed on January 30, 2004, under item 5 concerning the Registrant's proposed merger with Union Planters Corporation.

A report on Form 8-K, dated February 11, 2004, was furnished under item 9 in connection with the Registrant's presentation to institutional investors in scheduled meetings during the month of February 2004.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by undersigned thereunto duly authorized.

Regions Financial Corporation

DATE: May 7, 2004

/s/ Ronald C. Jackson
Ronald C. Jackson
Senior Vice President and Comptroller
(Chief Accounting Officer and
Duly Authorized Officer)

	Total Banking

(in thousands)	Community Banking	Treasury	Combined	Mortgage Banking

Net interest income	$301,118	$ 73,368	$374,486	$ 11,712
Provision for loan losses	11,842	2,627	14,469	33
Non-interest income	81,104	12,856	93,960	78,881
Non-interest expense	213,729	9,579	223,308	80,393
Income taxes	52,961	27,757	80,718	4,188


Net income	$ 103,690	$ 46,261	$149,951	$ 5,979




Average assets	$27,009,969	$14,685,553	$41,695,522	$1,346,716

	Investment Banking/ Brokerage/ Trust	Insurance	Other	Total Company

Net interest income	$ 5,239	$ 537	$ (12,977)	$378,997
Provision for loan losses	-0-	-0-	498	15,000
Non-interest income	163,834	22,630	6,179	365,484
Non-interest expense	135,614	16,783	35,002	491,100
Income taxes	12,540	2,380	(29,980)	69,846


Net income	$ 20,919	$ 4,004	$ (12,318)	$168,535




Average assets	$2,658,892	$133,573	$2,986,023	$48,820,726

	Investment Banking/ Brokerage/ Trust	Insurance	Other	Total Company

Net interest income	$ 5,408	$ 541	$(13,763)	$359,903
Provision for loan losses	-0-	-0-	1,129	31,500
Non-interest income	146,938	19,201	3,861	341,589
Non-interest expense	126,226	14,109	28,730	448,174
Income taxes	9,687	1,888	(28,624)	63,218


Net income	$ 16,433	$ 3,745	$(11,137)	$158,600




Average assets	$2,820,412	$119,129	$3,106,021	$48,148,764