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| 8-K - FORM 8-K - REGIONS FINANCIAL CORP | d8k.htm |
 Barclays Capital 2010 Financial
Services Conference
May 19, 2010
Exhibit 99.1 |
 This presentation may
include forward-looking statements which reflect Regions’ current views with respect to future events and financial performance. The Private
Securities Litigation Reform Act of 1995 (“the Act”) provides a safe harbor for
forward-looking statements which are identified as such and are accompanied by the
identification of important factors that could cause actual results to differ materially from the
forward-looking statements. For these statements, we, together with our subsidiaries,
claim the protection afforded by the safe harbor in the Act. Forward-looking statements are not based on historical information, but rather are related to future
operations, strategies, financial results or other developments. Forward-looking statements
are based on management’s expectations as well as certain assumptions and estimates made
by, and information available to, management at the time the statements are made. Those statements are based on 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: ›
In 2008, the Emergency Economic Stabilization Act of 2008 became law, and in February 2009 the
American Recovery and Reinvestment Act of 2009 was signed into law. Additionally, the U.S.
Treasury and federal banking regulators are implementing a number of programs to address capital and liquidity issues in the banking
system, and there are a number of pending legislative, regulatory and tax proposals, all of which may
have significant effects on Regions and the financial services industry, the exact nature of
which cannot be determined at this time.
›
The impact of compensation and other restrictions imposed under the Troubled Asset Relief Program
(“TARP”) until Regions repays the outstanding preferred stock and warrant issued
under TARP.
›
Possible additional loan losses, impairment of goodwill and other intangibles and adjustment of
valuation allowances on deferred tax assets and the impact on earnings and
capital.
›
Possible changes in interest rates may affect funding costs and reduce earning asset yields, thus
reducing margins.
›
Possible changes in general economic and business conditions in the United States in general and in
the communities Regions serves in particular.
›
Possible changes in the creditworthiness of customers and the possible impairment of the
collectability of loans.
›
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.
›
The current stresses in the financial and real estate markets, including possible continued
deterioration in property values.
›
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 businesses that have been acquired or
that may be acquired in the future.
›
Regions' ability to expand into new markets and to maintain profit margins in the face of competitive
pressures.
›
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 keep pace with technological changes.
›
Regions' ability to effectively manage credit risk, interest rate risk, market risk,
operational risk, legal risk, liquidity risk, and regulatory and compliance risk.
›
Regions’ ability to ensure adequate capitalization is impacted by inherent uncertainties in
forecasting credit losses.
›
The cost and other effects of material contingencies, including litigation
contingencies.
›
The effects of increased competition from both banks and non-banks.
›
The effects of geopolitical instability and risks such as terrorist attacks.
›
Possible changes in consumer and business spending and saving habits could affect Regions' ability to
increase assets and to attract deposits.
›
The effects of weather and natural disasters such as droughts and hurricanes and the effects of the
Gulf of Mexico oil spill. The foregoing list of factors is not exhaustive; for discussion of these and other risks that may
cause actual results to differ from expectations, please look under the captions
“Forward-Looking Statements” and “Risk Factors” in Regions’ Annual Report
on Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarter ended
March 31, 2010, as on file with the Securities and Exchange Commission.
The words "believe," "expect," "anticipate," "project," and similar
expressions often signify forward-looking statements. You should not place undue reliance on any forward-
looking statements, which speak only as of the date made. Regions assumes no obligation to update or
revise any forward-looking statements that are made from time to time.
Forward Looking Statements
1 |
 Agenda
›
Company Overview
›
Geographically Diversified Footprint
›
Three Major Lines of Business
›
Solid Capital
›
Economic Environment
›
Well Positioned for Return to Profitability
›
Credit Trends Improving
›
Rigorous Expense Management
›
Focused Loan and Deposit Pricing
›
Strategic Priorities
2 |
 Diversified Southeastern U.S. Franchise
›
Strategically important position across
a number of Southeastern markets
Regions
Morgan Keegan
Insurance
Offices
1,774
321
31
As of March 31, 2010
3 |
 Consumer
Services – Core Franchise is Strong
›
Every Business Day, Regions Processes:
›
650,000 Branch Transactions
›
293,000 ATM Transactions
›
2.6 Million Debit Card Transactions
›
During 2009, Regions:
›
Opened Over 1 Million New Checking Accounts
›
Grew Interest Free Deposits by Over 25%
›
Increased Online Banking Customers by 25%
›
Achieved Top 10% for Customer Loyalty
›
Top 20% for Branch Customer Service
›
Loans Outstanding = $33.9 billion
4 |
 Superior Customer Satisfaction Drives Growth
1.6%
11.4%
794,236
1,008,106
6.1%
10.4%
0.000
New Checking Sales
Attrition
Household Growth
2008
2009
›
90th percentile among competitors for customer loyalty
according to Gallup
›
Customer
retention rate at a historic high and well above
industry norm
5 |
 Strong and Improving
Market Share
Note: Based on June 30, 2009 FDIC data per SNL. Adjusted for brokered
deposits in MS and GA. 6
State
Deposits ($B)
Rank
AL
18.9
20
%
23
%
1
FL
17.4
19
4
4
TN
17.3
18
16
1
LA
7.3
8
9
3
MS
7.0
7
16
1
GA
6.4
7
4
6
AR
4.6
5
9
2
TX
3.7
4
1
16
IL
2.7
3
1
24
MO
2.5
3
2
9
IN
2.4
3
3
9
Other
3.5
4
-
-
% of Total
Mkt. Share |
 Business Services Revenue is Well-Diversified
and Positioned for Growth
Commercial
& Industrial
Commercial
Real Estate
Business
Banking
Community
Banking
Private
Banking
Specialized
Groups
›
Business Capital
(ABL)
›
Healthcare
›
Transportation
›
Public, Institutional,
Non-profit
›
Restaurant
&
Beverage
7
Loans Outstanding = $54.3 billion |
 Morgan
Keegan ›
Outstanding Diversified Franchise Operating in an
Attractive Region
›
321 Offices in 16 States
›
4,201 Associates, including 1,249 Financial Advisors
›
$149 Billion in Assets Under Management
›
During 2009, Morgan Keegan achieved:
›
Ninth Consecutive Year of Increased Operating Revenues
›
Top 10 Underwriter of Municipal Securities Nationally
›
Number 1 Ranked Focus List Performance
8 |
 7.1
11.7
RF
Tier 1
T1C
Regions’
Capital Levels Strong and Comparable to Peers
9
Peers include: BAC, BBT, CMA, FITB, KEY, MI, PNC, STI, USB, WFC; MTB
Capital ratios as of March 31, 2010
Source: SNL and Company Reports |
 Q4
2009 Risk Weighted Assets/Total Assets Holding Company
69%
71%
73%
80%
82%
84%
85%
86%
89%
92%
93%
104%
RF
Peer Median 85%
Source –
FR Y-9 –
12/31/09
Peers
include:
BAC,
BBT,
CMA,
FITB,
KEY,
MI,
PNC,
STI,
USB,
WFC;
MTB
10 |
 Improving Economic Backdrop
GDP
0.1%
2.8%
3.2%
Unemployment
9.3%
9.7%
9.1%
Home Price Index
(4.7%)
(1.3%)
0.7%
Fed Funds
0.2%
0.3%
1.1%
10yr Treasury
3.2%
4.0%
4.5%
2009
2010 (1)
2011 (1)
(1) Blue Chip forecast
11 |
 NPA
Migration Declining $0
$500
$1,000
$1,500
$2,000
1Q09
2Q09
3Q09
4Q09
1Q10
Net NPA Change
Gross NPA Additions
$ millions
Net NPA* Change down 41%
4Q09 to 1Q10
* Excludes non-performing assets held for sale
12 |
 Disposed of over $3 Billion in Problem Assets
Over Past 18 Months
$0
$300
$600
$900
$1,200
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
Sales
Transfer to HFS
$ millions
$228
$281
$554
$643
$1,039
Note:
Dispositions
include
loans
sold
or
moved
to
held
for
sale.
The
03/31/10
balance in held for sale was $256MM.
$689
13 |
 Charge-Offs Stabilized
$0
$250
$500
$750
$1,000
1Q09
2Q09
3Q09
4Q09
1Q10
Business Services
Consumer
Sales/Transfer to HFS
$ millions
$390
$491
$680
$692
$700
14 |
 Credit
Trends Stable ›
NPAs
peak by the end of 2Q10 and decline thereafter
›
Charge-offs peak by the end of 2Q10 and decline
thereafter
›
Charge-off
guidance remains unchanged: near the
midpoint range of $3.4 billion to $5.9 billion two year loss
range
›
No
reserve build expected in the second half of 2010
15 |
 Rigorous Expense Management Muted by
High Recession-Related Expenses
$996
$988
$172
$219
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
4Q09
1Q10
Other Expenses
Recession-Related Expenses**
$ in millions
$1,207
$1,168
16
**Recession-related expenses includes FDIC premiums, other real estate owned expenses, loan
related legal fees, credit support expenses, etc. |
 Strong Focus on Performance Management and
Productivity Improvements
Regions Headcount Trends
37,709
May
2006
Dec
2007
Dec
2008
Dec
2009
33,161
30,784
28,213
25% Reduction
28,509
›
Reduced Total Positions
over 25% since May 2006
›
Focused on Performance
Management/Top Grading
›
Remain focused on
Headcount Management
March
2010
17 |
 ›
Exceeding 2009 record pace
of new checking account
openings; 248,000 in 1
quarter
›
Average customer deposits
grew $1.9 billion linked
quarter; over $6.5 billion
year-over-year
›
Total deposit costs have
declined 61 basis points in
last 12 months
$80.0
$85.0
$90.0
$95.0
$100.0
1Q09
2Q09
3Q09
4Q09
1Q10
0.90%
1.00%
1.10%
1.20%
1.30%
1.40%
1.50%
1.60%
1.70%
Customer Deposits
Total Deposit Costs
7% year over year
growth in average
customer deposits
Increased Customer Deposits and Lower Cost
18
st |
 Improving Net Interest Margin; Expected to Rise
throughout 2010 and Beyond
›
Net interest margin climbed 5 bps
linked quarter; Expected to climb
to 3.00% by year-end 2010
›
Ongoing improvement in deposit
mix and cost with substantial
remaining repricing opportunity in
maturing, higher cost CDs
›
Consistent improvements in
pricing of new and renewed loans
›
Balance sheet well positioned for
eventual rising rate environment
$ in millions
19
$817
$840
$853
$857
$839
$800
$810
$820
$830
$840
$850
$860
1Q09
2Q09
3Q09
4Q09
1Q10
2.50%
2.60%
2.70%
2.80%
2.90%
3.00%
3.10%
Net Interest Income (FTE)
Net Interest Margin |
 Strategic Priorities Guiding Focus and Results
›
Keep Focused on the Customer
›
Protect our Future
›
Restore Financial Performance
›
Execute with Excellence
20 |
 |
 Appendix |
 Total
Loan Portfolio $88.2bn
Commercial
and Industrial
$21.2bn / 24%
Owner
Occupied
Real Estate
$12.6bn / 15%
1Q10 losses
1.48%
Investor
Real Estate
$20.4bn
23%
Residential
First Mortgage
$15.6bn / 18%
Indirect
$2.2bn / 2%
Direct and
Other
$1.1bn
1%
Home
Equity
$15.1bn
17%
Reduced by $5.4 billion, or 21%, since 2006
Land/Single Family/Condo down $7.3bn
Well diversified by Property Type
Our goal is to further reduce this segment to
no more than 15% of total portfolio
Land
$2.6bn / 13%
Single Family
$1.9bn / 9%
Condo -
$0.5bn / 3
Hotel -
$1.0bn / 5%
Industrial -
$1.4bn / 7%
Office
$2.9bn / 14%
Retail
$3.9bn / 19%
Multi Family
$5.0bn / 24%
Other -
$1.2bn / 6%
Investor Real Estate $20.4bn
›
›
›
› |
 Investor Real Estate Portfolio is Well Diversified
23% of Total Portfolio
Other**
$3.7bn / 18%
FL
$4.7bn / 23%
TX
$2.2bn / 11%
GA
$2.2bn / 11%
AL
$1.8bn / 9%
TN
$1.8bn / 9%
NC
$1.2bn / 6%
LA -
$0.9bn / 4%
MO -
$0.7bn / 3%
SC -
$0.7bn / 3%
AR -
$0.5bn / 3%
Loan Size
Geography
0
5,000
10,000
15,000
20,000
25,000
30,000
<$1MM
$1MM-
10MM
$10MM-
25MM
$25MM+
$802 Thousand Average Loan Balance
22,242
2,743
371
78
# of Loans |