Form 8-K REGIONS FINANCIAL CORP For: Jan 20
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 20, 2015
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REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE | � | 001-34034 | � | 63-0589368 |
(State or other jurisdiction of incorporation) | � | (Commission File Number) | � | (IRS Employer Identification No.) |
1900 FIFTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
(Address, including zip code, of principal executive office)
Registrants telephone number, including area code: (800)�734-4667
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
� | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
� | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
� | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
� | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item�2.02 Results of Operations and Financial Condition
Item�7.01 Regulation FD Disclosure
On January 20, 2015, Regions Financial Corporation ( Regions ) will issue a press release announcing its preliminary results of operations for the quarter and year ended December 31, 2014. A copy of the press release is attached hereto as Exhibit 99.1. Supplemental financial information for the quarter and year ended December 31, 2014 is attached as Exhibit 99.2. Executives from Regions will review the results via teleconference and live audio webcast at 11:00 a.m. Eastern time on January 20, 2015. A copy of a visual presentation that will be a part of that review is attached as Exhibit 99.3. All of the attached exhibits are incorporated herein and may also be found on Regions' website at www.regions.com, and an archived webcast of the teleconference will be available through February 20, 2015.
In accordance with general instruction B.2 of Form 8-K, this information is being furnished and shall not be deemed filed for purposes of Section�18 of the Securities Exchange Act of 1934.
Item�9.01 Financial Statements and Exhibits
(d) Exhibits
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99.1 | �� | Press Release dated January 20, 2015 | |
99.2 | �� | Supplemental Financial Information | |
99.3 | �� | Visual Presentation of January 20, 2015 | |
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 the undersigned hereunto duly authorized.
REGIONS FINANCIAL CORPORATION | |
By: | /s/ Fournier J. Gale, III |
Name: | Fournier J. Gale, III |
Title: | Senior Executive Vice President, General Counsel and Corporate Secretary |
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Date: January 20, 2015
Exhibit 99.1��
Media Contact: | �� | �� | Investor Relations Contact: | |
Evelyn Mitchell | �� | �� | List Underwood or Dana Nolan | |
(205) 264-4551 | �� | �� | (205) 581-7890 | |
Regions Financial reports full year 2014 net income available to common shareholders of $1.1 billion, driven by loan and deposit growth
Full Year 2014 Highlights:
" | Increased loan balances $3 billion or 4 percent(1)� |
" | Increased deposit balances $2 billion or 2 percent(1)� |
" | Lowered expenses over 3 percent from the previous year or 2 percent on an adjusted basis(2)� |
" | Maintained strong capital levels as the Tier 1 Common ratio(2) was 11.6 percent*, an increase of 40 basis points during the year |
" | Returned approximately $500 million of capital through share repurchases and dividend increase |
" | Improved overall asset quality as all credit metrics improved during 2014 |
Fourth Quarter 2014 Highlights:
" | Achieved loan growth of $700 million(1) as production increased 14 percent |
" | Repurchased $248 million of common stock |
" | Realized a reduction in non-performing loans, delinquencies and troubled debt restructured loans |
" | Recorded $100 million of contingent legal and regulatory accruals during the fourth quarter of 2014 related to previously disclosed matters |
BIRMINGHAM, Ala. - January 20, 2015 - Regions Financial Corporation (NYSE: RF) today announced earnings for the fourth quarter and full year ended December 31, 2014. For the fourth quarter, the company reported net income available to common shareholders of $195 million and earnings per diluted share of $0.14. For the full year 2014, Regions reported net income available to common shareholders of $1.1 billion and earnings per diluted share of $0.80, an increase of 4 percent over 2013.
Solid earnings for 2014 as loans increased 4 percent
Regions full year results reflect steady progress in growing customer relationships despite a challenging macroeconomic environment. The company continues to generate sustainable long-term growth by focusing on the fundamentals of banking, meeting customer needs through service and innovation while maintaining a prudent and disciplined risk strategy.
The fourth quarter rounded out a solid year in which we grew loans, increased deposit balances, and improved asset quality and capital ratios, said Grayson Hall, chairman, president and CEO. As we execute our strategy to deepen relationships with customers and improve efficiencies across our business, we are well-positioned for continued progress in 2015.
Total ending loan balances increased $3 billion or 4 percent for the full year. Notably, both the
business(3) and consumer lending portfolios increased. Business lending(3) increased 5 percent led by commercial and industrial loans, which grew by 11 percent. This was primarily driven by growth in specialized lending, asset based lending and geographically broad-based corporate lending. Consumer loans increased 2 percent from the previous year, led by indirect auto lending, which increased 18 percent.
Total ending deposits increased $2 billion or 2 percent during 2014, while Regions deposit costs reached historical lows at 11 basis points. Through the Regions360SM approach to relationship banking, the company experienced an increase in the number of quality households and total checking accounts during the year. Further, full year net interest income on a fully taxable equivalent basis increased 1 percent and the resulting net interest margin improved 1 basis point.
The company remained focused on achieving operational efficiencies and reduced total adjusted expenses(2) on a full year basis by 2 percent. Regions also continued to strengthen overall asset quality and reduced credit-related costs throughout the year as adjusted net charge-offs(2) decreased 46 percent and non-performing loans declined 23 percent. Moreover, the company received positive rating actions from four major credit rating agencies that cited improvement in the companys risk profile.
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During 2014, Regions returned approximately $500 million in capital as the company increased the quarterly dividend from $0.03 to $0.05 and repurchased 26 million shares of common stock amounting to $256 million. The companys liquidity position was solid as the loan to deposit ratio was 82 percent at year-end.
Fourth quarter results reflect solid loan growth
Total loan balances were $77 billion at the end of the quarter, an increase of $700 million or 1 percent from the previous quarter. Importantly, this growth was broad-based among product lines as total new and renewed production increased 14 percent from the third quarter. The business lending portfolio(3) totaled $48 billion at the end of the quarter, an increase of $524 million, or 1 percent, as production increased 18 percent. Commercial and industrial loans increased $875 million or 3 percent and investor real estate remained flat. Line utilization increased 40 basis points to 45.3 percent and commitments for new loans increased 3 percent from the previous quarter.
The consumer lending portfolio totaled $29 billion at the end of the quarter, an increase of 1 percent over the prior quarter. Indirect auto lending continued to demonstrate consistent growth as balances increased $99 million or 3 percent from the previous quarter. In addition, credit card balances increased 5 percent as spend volume and active card users increased 6 and 3 percent, respectively.
Deposit balances increased aided by checking account growth
Deposit balances increased during the quarter aided by checking account growth, which was broad-based throughout the company's markets. Total deposit ending balances were $94 billion, an increase of $70 million over the prior quarter. Regions continues to improve the mix of deposits as low-cost deposits increased $242 million in the quarter, while higher-cost certificates of deposit declined $172 million. Low-cost deposits as a percent of average deposits were 91 percent at the end of the quarter. Deposit costs remained at historical lows and were 11 basis points in the fourth quarter while total funding costs were 29 basis points.
Net interest income relatively stable despite declining interest rates
Net interest income on a fully taxable equivalent basis totaled $837 million during the fourth quarter. Despite a continuation of the low rate environment exerting pressure on asset yields, net interest income remained relatively stable due largely to a higher balance of average loans. The resulting net interest margin was 3.17 percent, a decline of 1 basis point from the previous quarter.
Non-interest income and expenses impacted by unusual items
Non-interest income totaled $448 million in the fourth quarter. Revenue was pressured, as mortgage fees declined primarily due to lower gains from loan sales and the decline in the market valuation of the mortgage servicing portfolio net of hedging activity. Service charges declined $14 million primarily driven by an $8 million reserve for customer reimbursements, as well as a $4 million reduction of fees resulting from a product discontinuation during the fourth quarter. Additionally, capital markets revenue declined $4 million, but was offset by increases in card and ATM fees and wealth management income.
Total non-interest expenses were $969 million, an increase of $143 million from the previous quarter. However, the third quarter included benefits from recovery of expenses related to unfunded commitment reserves of $24 million, which were partially offset by expenses related to Visa� of $7 million.
As previously announced, the company intends to consolidate approximately 50 offices during 2015 and incurred $10 million of related expenses during the fourth quarter of 2014. In addition, the company recorded an accrual of $100 million for contingent legal and regulatory items related to previously disclosed matters.
Maintaining solid asset quality
Regions maintained solid asset quality and risk discipline in the fourth quarter. Net charge-offs were $83 million, representing 0.42 percent of average loans. The provision for loan losses was $8 million, and the resulting allowance for loan and lease losses totaled 1.43 percent of total loans outstanding at the end of the quarter.
Non-performing loans (excluding loans held for sale) declined to $829 million, or 1 percent from the prior quarter. In addition, total delinquencies declined 11 percent, troubled debt restructured loans declined 6 percent, and both criticized and classified loans declined from the prior quarter.
Strong capital and solid liquidity
Regions capital position remains strong as the Tier 1 ratio was estimated at 12.5* percent at quarter-end. In addition, the Tier 1 Common ratio(2) was estimated at 11.6 percent* and the Common Equity Tier 1 Basel III ratio(2) was estimated at 11.1 percent*. During the fourth quarter the company
repurchased $248 million of common stock pursuant to its previously disclosed $350 million share repurchase program.
The companys liquidity position remained solid, as the loan to deposit ratio at the end of the quarter was 82 percent. The company remains well positioned as it relates to the final liquidity coverage ratio rule recently released by the joint supervisory committee and expects to be fully compliant by the January 2016 deadline.
Highlights | Quarter Ended | |||||||||||
($ in millions, except per share data) | 12/31/2014 | 9/30/2014 | 12/31/2013 | |||||||||
Net Income | ||||||||||||
Net interest income | $ | 820 | $ | 821 | $ | 832 | ||||||
Non-interest income | 448 | 478 | 526 | |||||||||
Total revenue | 1,268 | 1,299 | 1,358 | |||||||||
Provision for loan losses | 8 | 24 | 79 | |||||||||
Non-interest expense | 969 | 826 | 946 | |||||||||
Income from continuing operations before income tax | 291 | 449 | 333 | |||||||||
Income tax expense | 77 | 127 | 92 | |||||||||
Income from continuing operations (A) | 214 | 322 | 241 | |||||||||
Income (loss) from discontinued operations, net of tax | (3 | ) | 3 | (14 | ) | |||||||
Net income | 211 | 325 | 227 | |||||||||
Preferred dividends (B) | 16 | 20 | 8 | |||||||||
Net income available to common shareholders | $ | 195 | $ | 305 | $ | 219 | ||||||
Income from continuing operations available to common shareholders (A)� (B) | $ | 198 | $ | 302 | $ | 233 | ||||||
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Diluted EPS Summary(5) | ||||||||||||
Earnings per common share | $ | 0.14 | $ | 0.22 | $ | 0.16 | ||||||
Income (loss) per share from discontinued operations | (0.01 | ) | ||||||||||
Earnings per common share from continuing operations | $ | 0.14 | $ | 0.22 | $ | 0.17 | ||||||
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Key Ratios | ||||||||||||
Net interest margin (FTE) from continuing operations~ | 3.17 | % | 3.18 | % | 3.26 | % | ||||||
Tier 1 capital* | 12.5 | % | 12.7 | % | 11.7 | % | ||||||
Tier 1 common risk-based ratio (non-GAAP)*(2) | 11.6 | % | 11.8 | % | 11.2 | % | ||||||
Basel III common equity Tier 1 ratio (non-GAAP)*(2) | 11.1 | % | 11.2 | % | 10.6 | % | ||||||
Tangible common stockholders equity to tangible assets (non-GAAP)(2) | 9.75 | % | 9.92 | % | 9.24 | % | ||||||
Tangible common book value per share (non-GAAP)(2) | $ | 8.26 | $ | 8.23 | $ | 7.54 | ||||||
Allowance for loan losses as a percentage of loans, net of unearned income | 1.43 | % | 1.54 | % | 1.80 | % | ||||||
Adjusted total net charge-off percentage (non-GAAP)(2)~ | 0.42 | % | 0.39 | % | 0.67 | % | ||||||
Non-accrual loans, excluding loans held for sale, as a percentage of loans | 1.07 | % | 1.09 | % | 1.45 | % | ||||||
Non-performing assets as a percentage of loans, foreclosed properties and non-performing loans held for sale | 1.28 | % | 1.30 | % | 1.74 | % | ||||||
Non-performing assets (including 90+ past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale(4) | 1.57 | % | 1.61 | % | 2.08 | % | ||||||
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Highlights | Year Ended December 31 | ||||||||
($ in millions, except per share data) | 2014 | 2013 | |||||||
Net Income | |||||||||
Net interest income | $ | 3,279 | $ | 3,262 | |||||
Non-interest income | 1,821 | 2,019 | |||||||
Total revenue | 5,100 | 5,281 | |||||||
Provision for loan losses | 69 | 138 | |||||||
Non-interest expense | 3,432 | 3,556 | |||||||
Income from continuing operations before income tax | 1,599 | 1,587 | |||||||
Income tax expense | 457 | 452 | |||||||
Income from continuing operations (A) | 1,142 | 1,135 | |||||||
Income (loss) from discontinued operations, net of tax | 13 | (13 | ) | ||||||
Net income | 1,155 | 1,122 | |||||||
Preferred dividends (B) | 52 | 32 | |||||||
Net income available to common shareholders | $ | 1,103 | $ | 1,090 | |||||
Income from continuing operations available to common shareholders (A)� (B) | $ | 1,090 | $ | 1,103 | |||||
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Diluted EPS Summary(5) | |||||||||
Earnings per common share | $ | 0.80 | $ | 0.77 | |||||
Income (loss) per share from discontinued operations | 0.01 | (0.01 | ) | ||||||
Earnings per common share from continuing operations | $ | 0.79 | $ | 0.78 | |||||
*Tier 1 Common and Tier 1 Capital ratios for the current quarter are estimated
~Annualized
(1) On an ending basis
(2) Non-GAAP, refer to pages 14, and 18-20 of the financial supplement to this earnings release
(3) The business lending portfolio includes the commercial and investor real estate loan categories. Refer to page 8 of the financial supplement to this earnings release for amounts related to these loan categories.
(4) Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing. Refer to the footnotes on page 16 of the financial supplement to this earnings release for amounts related to these loans.
(5) Certain per share amounts may not appear to reconcile due to rounding
About Regions Financial Corporation
Regions Financial Corporation (NYSE: RF), with $120 billion in assets, is a member of the S&P 500 Index and is one of the nations largest full-service providers of consumer and commercial banking, wealth management, mortgage, and insurance products and services. Regions serves customers in 16 states across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates approximately 1,650 banking offices and 2,000 ATMs. Additional information about Regions and its full line of products and services can be found at www.regions.com.
Forward-Looking Statements
This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions current views with respect to future events and financial performance. 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 managements 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:
" | Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, unemployment rates and potential reduction of economic growth. |
" | Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations. |
" | The effects of a possible downgrade in the U.S. governments sovereign credit rating or outlook. |
" | Possible changes in market interest rates. |
" | Any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets due to adverse changes in the economic environment, declining operations of the reporting unit, or other factors. |
" | Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans. |
" | Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses. |
" | Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities. |
" | Our ability to effectively compete with other financial services companies, some of whom possess greater financial resources than we do and are subject to different regulatory standards than we are. |
" | Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments. |
" | Our ability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner. |
" | Changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies. |
" | Our ability to obtain regulatory approval (as part of the CCAR process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or redeem preferred stock or other regulatory capital instruments. |
" | Our ability to comply with applicable capital and liquidity requirements (including finalized Basel III capital standards), including our ability to generate capital internally or raise capital on favorable terms. |
" | The costs and other effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party. |
" | Any adverse change to our ability to collect interchange fees in a profitable manner, whether such change is the result of regulation, litigation, legislation, or other governmental action. |
" | Our 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 our business. |
" | Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits. |
" | Any inaccurate or incomplete information provided to us by our customers or counterparties. |
" | Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers. |
" | The inability of our internal disclosure controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts. |
" | The effects of geopolitical instability, including wars, conflicts and terrorist attacks. |
" | The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes and environmental damage. |
" | Our ability to keep pace with technological changes. |
" | Our ability to identify and address cyber-security risks such as data security breaches, denial of service attacks, hacking and identity theft. |
" | Possible downgrades in our credit ratings or outlook. |
" | The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally. |
" | The effects of the failure of any component of our business infrastructure which is provided by a third party. |
" | Our ability to receive dividends from our subsidiaries. |
" | Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. |
" | The effects of any damage to our reputation resulting from developments related to any of the items identified above. |
The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions Forward-Looking Statements and Risk Factors of Regions Annual Report on Form 10-K for the year ended December�31, 2013, as filed with the Securities and Exchange Commission.
The words anticipates, intends, plans, seeks, believes, estimates, expects, targets, projects, outlook, forecast, will, may, could, should, can, 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. We assume no obligation to update or revise any forward-looking statements that are made from time to time.
Regions Investor Relations contacts are List Underwood and Dana Nolan at (205)�581-7890; Regions Media contact is Evelyn Mitchell at (205) 264-4551.
Use of non-GAAP financial measures
Regions' management uses the adjusted efficiency ratio (non-GAAP) and the adjusted fee income ratio (non-GAAP) to monitor performance and believes these measures provide meaningful information to investors. The computation of the adjusted efficiency ratio includes certain adjustments to non-interest expense (GAAP) to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the adjusted efficiency ratio. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the adjusted fee income ratio. Net interest income on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the adjusted fee income and adjusted efficiency ratios. Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the company on the same basis as that applied by management.
Tangible common stockholders equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the company absent the effects of intangible assets and preferred stock. Traditionally, the Federal Reserve and other banking regulatory bodies have assessed a banks capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. In connection with the companys Comprehensive Capital Analysis and Review process, these regulators supplement their assessment of the capital adequacy of a bank based on a variation of Tier 1 capital, known as Tier 1 common equity. While not prescribed in amount by federal banking regulations, under Basel I, analysts and banking regulators have assessed Regions capital adequacy using the tangible common stockholders equity and/or the Tier 1 common equity measure. Because tangible common stockholders equity and Tier 1 common equity are not formally defined by GAAP or prescribed in amount by the federal banking regulations, under Basel I, these measures are currently considered to be non-GAAP financial measures and other entities may calculate them differently than Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using tangible common stockholders equity and Tier 1 common equity, management believes that it is useful to provide investors the ability to assess Regions capital adequacy on these same bases.
Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a companys balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk-weighted category. The resulting weighted values from each of the four categories are added together, and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity (non-GAAP). Tier 1 common equity (non-GAAP) is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio (non-GAAP). The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements.
In December 2010, the Basel Committee on Banking Supervision (the Basel Committee ) released its final framework for Basel III, which will strengthen international capital and liquidity regulation. In June 2012, U.S. Regulators released three separate Notices of Proposed Rulemaking covering U.S. implementation of the Basel III framework. In July 2013, U.S. Regulators released final rules covering the U.S. implementation of the Basel III framework, which will change capital requirements and place greater emphasis on common equity. For Regions, the Basel III framework will be phased in beginning in 2015 with full implementation complete beginning in 2019. The calculations provided are estimates, based on Regions current understanding of the final framework, including the companys interpretation of the requirements, and informal feedback received through
the regulatory process. Regions understanding of the framework is evolving and will likely change as analysis and discussions with regulators continue. Because the Basel III implementation regulations are not formally defined by GAAP, these measures are considered to be non-GAAP financial measures, and other entities may calculate them differently from Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using the Basel III framework, we believe that it is useful to provide investors the ability to assess Regions capital adequacy on the same basis.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to stockholders.
Management and the Board of Directors utilize non-GAAP measures as follows:
"Preparation of Regions' operating budgets
"Monthly financial performance reporting
"Monthly close-out reporting of consolidated results (management only)
"Presentation to investors of company performance
See page 14 of the supplement to this earnings release for the reconciliation of select annualized net charge-offs as a percentage of average loans ratios (GAAP) to select adjusted annualized net charge-offs as a percentage of average loans ratios (non-GAAP). See pages 18-20 of the supplement to this earnings release for 1) a reconciliation of average and ending stockholders equity (GAAP) to average and ending tangible common stockholders equity (non-GAAP), 2) computation of return on average tangible common stockholders equity (non-GAAP), 3) computation of Basel III common equity Tier1 (non-GAAP) 4) a reconciliation of total assets (GAAP) to tangible assets (non-GAAP), 5) computation of tangible common stockholders equity (non-GAAP) to tangible assets (non-GAAP) and tangible common book value per share (non-GAAP), 6) a reconciliation of stockholders equity (GAAP) to Tier 1 common equity (non-GAAP), 7) computation of Tier 1 common and Basel III common equity Tier1 risk-based ratios (non-GAAP), 8) a reconciliation of non-interest expense (GAAP) to adjusted non-interest expense (non-GAAP),9) a reconciliation of non-interest income (GAAP) to adjusted non-interest income (non-GAAP), and 10) a computation of the adjusted efficiency and fee income ratios (non-GAAP).
Exhibit 99.2
Regions Financial Corporation and Subsidiaries
Financial Supplement
Fourth Quarter 2014
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Table of Contents
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� | �� | Page |
Consolidated Balance Sheets | �� | |
Consolidated Statements of Income | �� | |
Selected Ratios and Other Information | �� | |
Consolidated Average Daily Balances and Yield / Rate Analysis from Continuing Operations | �� | |
Loans | �� | |
Deposits | �� | |
Pre-Tax Pre-Provision Income ( PPI ) and Adjusted PPI | �� | |
Non-Interest Income, Mortgage Income and Wealth Management Income | �� | |
Non-Interest Expense | �� | |
Credit Quality | �� | |
Allowance for Credit Losses, Net Charge-Offs and Related Ratios | �� | |
Non-Accrual Loans (excludes loans held for sale), Criticized and Classified Loans - Commercial and Investor Real Estate, and Home Equity Lines of Credit - Future Principal Payment Resets | �� | |
Early and Late Stage Delinquencies | �� | |
Troubled Debt Restructurings | �� | |
Reconciliation to GAAP Financial Measures | �� | |
Adjusted Efficiency Ratios, Adjusted Fee Income Ratios, and Adjusted Non-Interest Income / Expense | �� | |
Return Ratios, Tangible Common Ratios and Capital | �� | |
Statements of Discontinued Operations | �� | |
Forward-Looking Statements | �� | |
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Consolidated Balance Sheets (unaudited)
As of | |||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
Assets: | |||||||||||||||||||
Cash and due from banks | $ | 1,601 | $ | 1,770 | $ | 2,094 | $ | 2,072 | $ | 1,661 | |||||||||
Interest-bearing deposits in other banks | 2,303 | 2,993 | 2,705 | 3,114 | 3,612 | ||||||||||||||
Federal funds sold and securities purchased under agreements to resell | 100 | 20 | 20 | 10 | |||||||||||||||
Trading account securities | 106 | 103 | 100 | 117 | 111 | ||||||||||||||
Securities held to maturity | 2,175 | 2,222 | 2,275 | 2,317 | 2,353 | ||||||||||||||
Securities available for sale | 22,580 | 22,379 | 21,963 | 21,615 | 21,485 | ||||||||||||||
Loans held for sale | 541 | 504 | 514 | 395 | 1,055 | ||||||||||||||
Loans, net of unearned income | 77,307 | 76,607 | 76,513 | 75,680 | 74,609 | ||||||||||||||
Allowance for loan losses | (1,103 | ) | (1,178 | ) | (1,229 | ) | (1,261 | ) | (1,341 | ) | |||||||||
Net loans | 76,204 | 75,429 | 75,284 | 74,419 | 73,268 | ||||||||||||||
Other interest-earning assets | 67 | 91 | 65 | 86 | 86 | ||||||||||||||
Premises and equipment, net | 2,193 | 2,192 | 2,194 | 2,194 | 2,216 | ||||||||||||||
Interest receivable | 310 | 310 | 308 | 316 | 313 | ||||||||||||||
Goodwill | 4,816 | 4,816 | 4,816 | 4,816 | 4,816 | ||||||||||||||
Residential mortgage servicing rights at fair value (MSRs) | 257 | 277 | 276 | 288 | 297 | ||||||||||||||
Other identifiable intangible assets | 275 | 287 | 281 | 294 | 295 | ||||||||||||||
Other assets | 6,151 | 5,833 | 5,824 | 5,880 | 5,828 | ||||||||||||||
Total assets | $ | 119,679 | $ | 119,226 | $ | 118,719 | $ | 117,933 | $ | 117,396 | |||||||||
Liabilities and stockholders equity: | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Non-interest-bearing | $ | 31,747 | $ | 31,388 | $ | 31,277 | $ | 31,154 | $ | 30,083 | |||||||||
Interest-bearing | 62,453 | 62,742 | 62,545 | 62,239 | 62,370 | ||||||||||||||
Total deposits | 94,200 | 94,130 | 93,822 | 93,393 | 92,453 | ||||||||||||||
Borrowed funds: | |||||||||||||||||||
Short-term borrowings: | |||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,753 | 1,893 | 1,818 | 1,981 | 2,182 | ||||||||||||||
Other short-term borrowings | 500 | ||||||||||||||||||
Total short-term borrowings | 2,253 | 1,893 | 1,818 | 1,981 | 2,182 | ||||||||||||||
Long-term borrowings | 3,462 | 3,813 | 3,824 | 4,226 | 4,830 | ||||||||||||||
Total borrowed funds | 5,715 | 5,706 | 5,642 | 6,207 | 7,012 | ||||||||||||||
Other liabilities | 2,775 | 2,230 | 2,226 | 2,201 | 2,163 | ||||||||||||||
Total liabilities | 102,690 | 102,066 | 101,690 | 101,801 | 101,628 | ||||||||||||||
Stockholders equity: | |||||||||||||||||||
Preferred stock, non-cumulative perpetual | 884 | 900 | 920 | 442 | 450 | ||||||||||||||
Common stock | 14 | 14 | 14 | 14 | 14 | ||||||||||||||
Additional paid-in capital | 18,767 | 19,069 | 19,121 | 19,179 | 19,216 | ||||||||||||||
Retained earnings (deficit) | (1,061 | ) | (1,272 | ) | (1,597 | ) | (1,897 | ) | (2,216 | ) | |||||||||
Treasury stock, at cost | (1,377 | ) | (1,377 | ) | (1,377 | ) | (1,377 | ) | (1,377 | ) | |||||||||
Accumulated other comprehensive income (loss), net | (238 | ) | (174 | ) | (52 | ) | (229 | ) | (319 | ) | |||||||||
Total stockholders equity | 16,989 | 17,160 | 17,029 | 16,132 | 15,768 | ||||||||||||||
Total liabilities and stockholders equity | $ | 119,679 | $ | 119,226 | $ | 118,719 | $ | 117,933 | $ | 117,396 | |||||||||
1
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Consolidated Statements of Income (unaudited)
Quarter Ended | |||||||||||||||||||
($ amounts in millions, except per share data) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
Interest income on: | |||||||||||||||||||
Loans, including fees | $ | 736 | $ | 736 | $ | 737 | $ | 732 | $ | 758 | |||||||||
Securitiestaxable | 151 | 154 | 156 | 154 | 151 | ||||||||||||||
Loans held for sale | 5 | 5 | 4 | 8 | 6 | ||||||||||||||
Trading account securities | 1 | 2 | 1 | ||||||||||||||||
Other interest-earning assets | 1 | 2 | 2 | 2 | 1 | ||||||||||||||
Total interest income | 894 | 897 | 899 | 898 | 917 | ||||||||||||||
Interest expense on: | |||||||||||||||||||
Deposits | 27 | 26 | 25 | 27 | 29 | ||||||||||||||
Short-term borrowings | 1 | 1 | |||||||||||||||||
Long-term borrowings | 46 | 50 | 51 | 55 | 56 | ||||||||||||||
Total interest expense | 74 | 76 | 77 | 82 | 85 | ||||||||||||||
Net interest income | 820 | 821 | 822 | 816 | 832 | ||||||||||||||
Provision for loan losses | 8 | 24 | 35 | 2 | 79 | ||||||||||||||
Net interest income after provision for loan losses | 812 | 797 | 787 | 814 | 753 | ||||||||||||||
Non-interest income: | |||||||||||||||||||
Service charges on deposit accounts | 167 | 181 | 174 | 173 | 185 | ||||||||||||||
Card and ATM fees | 86 | 85 | 84 | 79 | 80 | ||||||||||||||
Mortgage income | 27 | 39 | 43 | 40 | 43 | ||||||||||||||
Securities gains, net | 12 | 7 | 6 | 2 | |||||||||||||||
Other | 156 | 166 | 150 | 144 | 218 | ||||||||||||||
Total non-interest income | 448 | 478 | 457 | 438 | 526 | ||||||||||||||
Non-interest expense: | |||||||||||||||||||
Salaries and employee benefits | 456 | 456 | 443 | 455 | 464 | ||||||||||||||
Net occupancy expense | 93 | 92 | 90 | 93 | 91 | ||||||||||||||
Furniture and equipment expense | 74 | 73 | 70 | 70 | 71 | ||||||||||||||
Other | 346 | 205 | 217 | 199 | 320 | ||||||||||||||
Total non-interest expense | 969 | 826 | 820 | 817 | 946 | ||||||||||||||
Income from continuing operations before income taxes | 291 | 449 | 424 | 435 | 333 | ||||||||||||||
Income tax expense | 77 | 127 | 125 | 128 | 92 | ||||||||||||||
Income from continuing operations | 214 | 322 | 299 | 307 | 241 | ||||||||||||||
Discontinued operations: | |||||||||||||||||||
Income (loss) from discontinued operations before income taxes | (5 | ) | 5 | 2 | 19 | (25 | ) | ||||||||||||
Income tax expense (benefit) | (2 | ) | 2 | 1 | 7 | (11 | ) | ||||||||||||
Income (loss) from discontinued operations, net of tax | (3 | ) | 3 | 1 | 12 | (14 | ) | ||||||||||||
Net income | $ | 211 | $ | 325 | $ | 300 | $ | 319 | $ | 227 | |||||||||
Net income from continuing operations available to common shareholders | $ | 198 | $ | 302 | $ | 291 | $ | 299 | $ | 233 | |||||||||
Net income available to common shareholders | $ | 195 | $ | 305 | $ | 292 | $ | 311 | $ | 219 | |||||||||
Weighted-average shares outstandingduring quarter: | |||||||||||||||||||
Basic | 1,365 | 1,378 | 1,378 | 1,378 | 1,378 | ||||||||||||||
Diluted | 1,377 | 1,389 | 1,390 | 1,390 | 1,395 | ||||||||||||||
Actual shares outstandingend of quarter | 1,354 | 1,379 | 1,378 | 1,378 | 1,378 | ||||||||||||||
Earnings per common share from continuing operations: | |||||||||||||||||||
Basic | $ | 0.14 | $ | 0.22 | $ | 0.21 | $ | 0.22 | $ | 0.17 | |||||||||
Diluted | $ | 0.14 | $ | 0.22 | $ | 0.21 | $ | 0.21 | $ | 0.17 | |||||||||
Earnings per common share: | |||||||||||||||||||
Basic | $ | 0.14 | $ | 0.22 | $ | 0.21 | $ | 0.23 | $ | 0.16 | |||||||||
Diluted | $ | 0.14 | $ | 0.22 | $ | 0.21 | $ | 0.22 | $ | 0.16 | |||||||||
Cash dividends declared per common share | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.03 | $ | 0.03 | |||||||||
Taxable-equivalent net interest income from continuing operations | $ | 837 | $ | 837 | $ | 837 | $ | 831 | $ | 846 | |||||||||
2
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Consolidated Statements of Income (Continued) (unaudited)
Year Ended December 31 | |||||||
($ amounts in millions, except per share data) | 2014 | 2013 | |||||
Interest income on: | |||||||
Loans, including fees | $ | 2,941 | $ | 3,005 | |||
Securitiestaxable | 615 | 603 | |||||
Loans held for sale | 22 | 29 | |||||
Trading account securities | 3 | 3 | |||||
Other interest-earning assets | 7 | 6 | |||||
Total interest income | 3,588 | 3,646 | |||||
Interest expense on: | |||||||
Deposits | 105 | 135 | |||||
Short-term borrowings | 2 | 2 | |||||
Long-term borrowings | 202 | 247 | |||||
Total interest expense | 309 | 384 | |||||
Net interest income | 3,279 | 3,262 | |||||
Provision for loan losses | 69 | 138 | |||||
Net interest income after provision for loan losses | 3,210 | 3,124 | |||||
Non-interest income: | |||||||
Service charges on deposit accounts | 695 | 734 | |||||
Card and ATM fees | 334 | 319 | |||||
Mortgage income | 149 | 236 | |||||
Securities gains, net | 27 | 26 | |||||
Other | 616 | 704 | |||||
Total non-interest income | 1,821 | 2,019 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 1,810 | 1,818 | |||||
Net occupancy expense | 368 | 365 | |||||
Furniture and equipment expense | 287 | 280 | |||||
Other | 967 | 1,093 | |||||
Total non-interest expense | 3,432 | 3,556 | |||||
Income from continuing operations before income taxes | 1,599 | 1,587 | |||||
Income tax expense | 457 | 452 | |||||
Income from continuing operations | 1,142 | 1,135 | |||||
Discontinued operations: | |||||||
Income (loss) from discontinued operations before income taxes | 21 | (24 | ) | ||||
Income tax expense (benefit) | 8 | (11 | ) | ||||
Income (loss) from discontinued operations, net of tax | 13 | (13 | ) | ||||
Net income | $ | 1,155 | $ | 1,122 | |||
Net income from continuing operations available to common shareholders | $ | 1,090 | $ | 1,103 | |||
Net income available to common shareholders | $ | 1,103 | $ | 1,090 | |||
Weighted-average shares outstandingduring year: | |||||||
Basic | 1,375 | 1,395 | |||||
Diluted | 1,387 | 1,410 | |||||
Actual shares outstandingend of period | 1,354 | 1,378 | |||||
Earnings per common share from continuing operations: | |||||||
Basic | $ | 0.79 | $ | 0.79 | |||
Diluted | $ | 0.79 | $ | 0.78 | |||
Earnings per common share: | |||||||
Basic | $ | 0.80 | $ | 0.78 | |||
Diluted | $ | 0.80 | $ | 0.77 | |||
Cash dividends declared per common share | $ | 0.18 | $ | 0.10 | |||
Taxable-equivalent net interest income from continuing operations | $ | 3,342 | $ | 3,316 | |||
3
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Selected Ratios and Other Information
As of and for Quarter Ended | |||||||||||||||||||
� | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
Return on average assets from continuing operations* | 0.66 | % | 1.01 | % | 0.99 | % | 1.03 | % | 0.79 | % | |||||||||
Return on average tangible common stockholders equity (non-GAAP)* (1) | 6.78 | % | 10.78 | % | 10.68 | % | 11.84 | % | 8.58 | % | |||||||||
Adjusted efficiency ratio from continuing operations (non-GAAP) (1) | 67.5 | % | 63.6 | % | 64.2 | % | 66.9 | % | 66.3 | % | |||||||||
Common book value per share | $ | 11.89 | $ | 11.79 | $ | 11.69 | $ | 11.38 | $ | 11.12 | |||||||||
Tangible common book value per share (non-GAAP) (1) | $ | 8.26 | $ | 8.23 | $ | 8.12 | $ | 7.81 | $ | 7.54 | |||||||||
Tangible common stockholders equity to tangible assets (non-GAAP) (1) | 9.75 | % | 9.92 | % | 9.84 | % | 9.53 | % | 9.24 | % | |||||||||
Tier 1 common equity risk-based ratio (non-GAAP) (1)(2) | 11.6 | % | 11.8 | % | 11.6 | % | 11.4 | % | 11.2 | % | |||||||||
Basel III common equity Tier 1 ratio (non-GAAP) (1)(2) | 11.1 | % | 11.2 | % | 11.0 | % | 10.8 | % | 10.6 | % | |||||||||
Tier 1 capital ratio (2) | 12.5 | % | 12.7 | % | 12.5 | % | 11.8 | % | 11.7 | % | |||||||||
Total risk-based capital ratio (2) | 15.2 | % | 15.5 | % | 15.3 | % | 14.9 | % | 14.7 | % | |||||||||
Leverage ratio (2) | 10.9 | % | 11.0 | % | 10.8 | % | 10.2 | % | 10.0 | % | |||||||||
Allowance for loan losses as a percentage of loans, net of unearned income | 1.43 | % | 1.54 | % | 1.61 | % | 1.67 | % | 1.80 | % | |||||||||
Allowance for loan losses to non-performing loans, excluding loans held for sale | 1.33x | 1.41x | 1.37x | 1.18x | 1.24x | ||||||||||||||
Net interest margin (FTE) from continuing operations* | 3.17 | % | 3.18 | % | 3.24 | % | 3.26 | % | 3.26 | % | |||||||||
Loans, net of unearned income, to total deposits | 82.1 | % | 81.4 | % | 81.6 | % | 81.0 | % | 80.7 | % | |||||||||
Net charge-offs as a percentage of average loans* | 0.42 | % | 0.39 | % | 0.35 | % | 0.44 | % | 1.46 | % | |||||||||
Adjusted net charge-offs as a percentage of average loans (non-GAAP)* (1) | 0.42 | % | 0.39 | % | 0.35 | % | 0.44 | % | 0.67 | % | |||||||||
Non-accrual loans, excluding loans held for sale, as a percentage of loans | 1.07 | % | 1.09 | % | 1.17 | % | 1.41 | % | 1.45 | % | |||||||||
Non-performing assets (excluding loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale | 1.28 | % | 1.30 | % | 1.37 | % | 1.63 | % | 1.74 | % | |||||||||
Non-performing assets (including loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale (3) | 1.57 | % | 1.61 | % | 1.69 | % | 1.97 | % | 2.08 | % | |||||||||
Associate headcount (4) | 23,723 | 23,599 | 23,416 | 23,687 | 24,255 | ||||||||||||||
ATMs | 1,997 | 1,995 | 1,990 | 2,002 | 2,029 | ||||||||||||||
Branch Statistics | |||||||||||||||||||
Full service | 1,584 | 1,589 | 1,592 | 1,592 | 1,624 | ||||||||||||||
Drive-thru/transaction service only | 82 | 82 | 81 | 81 | 81 | ||||||||||||||
Total branch outlets | 1,666 | 1,671 | 1,673 | 1,673 | 1,705 | ||||||||||||||
�������������
*Annualized
(1) | See reconciliation of GAAP to non-GAAP Financial Measures on pages 14 and 18-20. |
(2) | Current quarter Tier 1 common, Basel III common equity Tier 1, Tier 1 capital, Total risk-based capital and Leverage ratios are estimated. |
(3) | Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing. Refer to the footnotes on page 16 for amounts related to these loans. |
(4) | Reflects the number of active full-time and part-time associates as of the last pay period of the month.���� |
4
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations
� | Quarter Ended | ||||||||||||||||||||
� | 12/31/2014 | 9/30/2014 | |||||||||||||||||||
($ amounts in millions; yields on taxable-equivalent basis) | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Federal funds sold and securities purchased under agreements to resell | $ | 20 | $ | 0.86 | % | $ | 4 | $ | 0.86 | % | |||||||||||
Trading account securities | 103 | 1 | 3.70 | 101 | 0.94 | ||||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | 24,590 | 151 | 2.44 | 24,264 | 154 | 2.51 | |||||||||||||||
Tax-exempt | 2 | 3 | |||||||||||||||||||
Loans held for sale | 480 | 5 | 3.74 | 512 | 5 | 3.95 | |||||||||||||||
Loans, net of unearned income: | |||||||||||||||||||||
Commercial and industrial | 32,484 | 289 | 3.54 | 31,255 | 285 | 3.61 | |||||||||||||||
Commercial real estate mortgageowner-occupied | 8,466 | 104 | 4.89 | 8,886 | 110 | 4.89 | |||||||||||||||
Commercial real estate constructionowner-occupied | 367 | 4 | 4.23 | 351 | 4 | 4.12 | |||||||||||||||
Commercial investor real estate mortgage | 4,837 | 37 | 3.05 | 5,071 | 39 | 3.08 | |||||||||||||||
Commercial investor real estate construction | 2,032 | 17 | 3.17 | 1,876 | 15 | 3.27 | |||||||||||||||
Residential first mortgage | 12,273 | 121 | 3.91 | 12,212 | 122 | 3.97 | |||||||||||||||
Home equity | 10,939 | 100 | 3.60 | 10,999 | 99 | 3.59 | |||||||||||||||
Indirect | 3,627 | 31 | 3.41 | 3,504 | 30 | 3.39 | |||||||||||||||
Consumer credit card | 975 | 28 | 11.23 | 952 | 27 | 11.33 | |||||||||||||||
Other consumer | 1,182 | 22 | 7.40 | 1,173 | 21 | 7.12 | |||||||||||||||
Total loans, net of unearned income | 77,182 | 753 | 3.87 | 76,279 | 752 | 3.91 | |||||||||||||||
Other interest-earning assets | 2,387 | 1 | 0.25 | 3,266 | 2 | 0.25 | |||||||||||||||
Total interest-earning assets | 104,764 | 911 | 3.45 | 104,429 | 913 | 3.47 | |||||||||||||||
Allowance for loan losses | (1,162 | ) | (1,214 | ) | |||||||||||||||||
Cash and due from banks | 1,805 | 1,781 | |||||||||||||||||||
Other non-earning assets | 13,835 | 13,792 | |||||||||||||||||||
$ | 119,242 | $ | 118,788 | ||||||||||||||||||
Liabilities and Stockholders Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Savings (1) | $ | 6,635 | 3 | 0.12 | $ | 6,639 | 1 | 0.12 | |||||||||||||
Interest-bearing checking | 21,003 | 5 | 0.10 | 20,944 | 5 | 0.10 | |||||||||||||||
Money market (1) | 25,752 | 7 | 0.11 | 26,348 | 7 | 0.11 | |||||||||||||||
Time deposits | 8,683 | 12 | 0.58 | 8,856 | 13 | 0.56 | |||||||||||||||
Total interest-bearing deposits (2) | 62,073 | 27 | 0.17 | 62,787 | 26 | 0.17 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,872 | 1 | 0.09 | 1,796 | 0.06 | ||||||||||||||||
Other short-term borrowings | 163 | 0.20 | |||||||||||||||||||
Long-term borrowings | 3,618 | 46 | 5.07 | 3,820 | 50 | 5.12 | |||||||||||||||
Total interest-bearing liabilities | 67,726 | 74 | 0.43 | 68,403 | 76 | 0.44 | |||||||||||||||
Non-interest-bearing deposits (2) | 31,951 | 31,184 | |||||||||||||||||||
Total funding sources | 99,677 | 74 | 0.29 | 99,587 | 76 | 0.30 | |||||||||||||||
Net interest spread | 3.02 | 3.03 | |||||||||||||||||||
Other liabilities | 2,385 | 2,168 | |||||||||||||||||||
Stockholders equity | 17,180 | 17,033 | |||||||||||||||||||
$ | 119,242 | $ | 118,788 | ||||||||||||||||||
Net interest income/margin FTE basis | $ | 837 | 3.17 | % | $ | 837 | 3.18 | % | |||||||||||||
_______
(1) | In the fourth quarter of 2014, approximately $214 million of average IRA account balances were reclassified from money market to savings. Prior period amounts have been revised to conform to the current period classification. |
(2) | Total deposit costs from continuing operations may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs from continuing operations equal 0.11% and 0.11% for the quarters ended December 31, 2014 and September 30, 2014 , respectively. |
5
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations (Continued)
� | Quarter Ended | |||||||||||||||||||||||||||||||
� | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||||||||||
($ amounts in millions; yields on taxable-equivalent basis) | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||
Federal funds sold and securities purchased under agreements to resell | $ | 16 | $ | 0.86 | % | $ | 9 | $ | 0.86 | % | $ | $ | % | |||||||||||||||||||
Trading account securities | 115 | 0.76 | 111 | 2 | 6.31 | 110 | 1 | 3.86 | ||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||
Taxable | 23,856 | 156 | 2.62 | 23,872 | 154 | 2.62 | 23,771 | 151 | 2.52 | |||||||||||||||||||||||
Tax-exempt | 3 | 4 | 5 | |||||||||||||||||||||||||||||
Loans held for sale | 413 | 4 | 3.96 | 854 | 8 | 3.89 | 625 | 6 | 3.94 | |||||||||||||||||||||||
Loans, net of unearned income: | ||||||||||||||||||||||||||||||||
Commercial and industrial | 31,058 | 284 | 3.68 | 29,993 | 278 | 3.75 | 29,950 | 287 | 3.81 | |||||||||||||||||||||||
Commercial real estate mortgageowner-occupied | 9,170 | 111 | 4.85 | 9,391 | 111 | 4.81 | 9,613 | 116 | 4.81 | |||||||||||||||||||||||
Commercial real estate constructionowner-occupied | 357 | 4 | 4.09 | 341 | 3 | 4.00 | 302 | 3 | 3.86 | |||||||||||||||||||||||
Commercial investor real estate mortgage | 5,296 | 42 | 3.20 | 5,287 | 45 | 3.42 | 5,405 | 47 | 3.46 | |||||||||||||||||||||||
Commercial investor real estate construction | 1,822 | 15 | 3.18 | 1,524 | 12 | 3.28 | 1,426 | 13 | 3.44 | |||||||||||||||||||||||
Residential first mortgage | 12,137 | 121 | 3.99 | 12,127 | 122 | 4.07 | 12,752 | 126 | 3.92 | |||||||||||||||||||||||
Home equity | 11,106 | 100 | 3.62 | 11,216 | 101 | 3.64 | 11,311 | 102 | 3.59 | |||||||||||||||||||||||
Indirect | 3,376 | 29 | 3.46 | 3,189 | 29 | 3.66 | 3,014 | 29 | 3.77 | |||||||||||||||||||||||
Consumer credit card | 926 | 25 | 11.10 | 926 | 26 | 11.23 | 910 | 28 | 11.83 | |||||||||||||||||||||||
Other consumer | 1,142 | 21 | 7.31 | 1,145 | 20 | 7.26 | 1,160 | 21 | 7.21 | |||||||||||||||||||||||
Total loans, net of unearned income | 76,390 | 752 | 3.95 | 75,139 | 747 | 4.03 | 75,843 | 772 | 4.04 | |||||||||||||||||||||||
Other interest-earning assets | 2,844 | 2 | 0.25 | 3,469 | 2 | 0.25 | 2,579 | 1 | 0.24 | |||||||||||||||||||||||
Total interest-earning assets | 103,637 | 914 | 3.54 | 103,458 | 913 | 3.58 | 102,933 | 931 | 3.59 | |||||||||||||||||||||||
Allowance for loan losses | (1,246 | ) | (1,321 | ) | (1,512 | ) | ||||||||||||||||||||||||||
Cash and due from banks | 1,767 | 1,817 | 1,807 | |||||||||||||||||||||||||||||
Other non-earning assets | 13,838 | 13,874 | 13,735 | |||||||||||||||||||||||||||||
$ | 117,996 | $ | 117,828 | $ | 116,963 | |||||||||||||||||||||||||||
Liabilities and Stockholders Equity | ||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
Savings (1) | $ | 6,673 | 2 | 0.11 | $ | 6,434 | 2 | 0.12 | $ | 6,245 | 2 | 0.10 | ||||||||||||||||||||
Interest-bearing checking | 20,476 | 4 | 0.09 | 20,791 | 5 | 0.09 | 19,815 | 4 | 0.09 | |||||||||||||||||||||||
Money market (1) | 25,907 | 7 | 0.10 | 26,013 | 8 | 0.13 | 25,885 | 8 | 0.13 | |||||||||||||||||||||||
Time deposits | 9,067 | 12 | 0.52 | 9,419 | 12 | 0.53 | 9,888 | 15 | 0.59 | |||||||||||||||||||||||
Total interest-bearing deposits (2) | 62,123 | 25 | 0.16 | 62,657 | 27 | 0.17 | 61,833 | 29 | 0.19 | |||||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 2,017 | 1 | 0.09 | 2,097 | 0.08 | 2,021 | 0.07 | |||||||||||||||||||||||||
Other short-term borrowings | 54 | 0.23 | 159 | 0.20 | ||||||||||||||||||||||||||||
Long-term borrowings | 4,161 | 51 | 4.98 | 4,643 | 55 | 4.78 | 4,840 | 56 | 4.56 | |||||||||||||||||||||||
Total interest-bearing liabilities� | 68,355 | 77 | 0.45 | 69,397 | 82 | 0.48 | 68,853 | 85 | 0.49 | |||||||||||||||||||||||
Non-interest-bearing deposits (2) | 30,866 | 30,268 | 30,218 | |||||||||||||||||||||||||||||
Total funding sources | 99,221 | 77 | 0.31 | 99,665 | 82 | 0.33 | 99,071 | 85 | 0.34 | |||||||||||||||||||||||
Net interest spread | 3.09 | 3.10 | 3.10 | |||||||||||||||||||||||||||||
Other liabilities | 2,107 | 2,162 | 2,386 | |||||||||||||||||||||||||||||
Stockholders equity | 16,668 | 16,001 | 15,506 | |||||||||||||||||||||||||||||
$ | 117,996 | $ | 117,828 | $ | 116,963 | |||||||||||||||||||||||||||
Net interest income/margin FTE basis | $ | 837 | 3.24 | % | $ | 831 | 3.26 | % | $ | 846 | 3.26 | % | ||||||||||||||||||||
(1) | In the fourth quarter of 2014, approximately $214 million of average IRA account balances were reclassified from money market to savings. Prior period amounts have been revised to conform to the current period classification. |
(2) Total deposit costs from continuing operations may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs from continuing operations equal 0.11%, 0.12%, and 0.12% for the quarters ended June 30, 2014, March 31, 2014 and December 31, 2013, respectively.
6
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations (Continued)
� | Year Ended December 31 | ||||||||||||||||||||
� | 2014 | 2013 | |||||||||||||||||||
($ amounts in millions; yields on taxable-equivalent basis) | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Federal funds sold and securities purchased under agreements to resell | $ | 12 | $ | 0.86 | % | $ | $ | % | |||||||||||||
Trading account securities | 107 | 3 | 2.92 | 114 | 3 | 2.24 | |||||||||||||||
Securities: | |||||||||||||||||||||
Taxable | 24,148 | 615 | 2.55 | 25,349 | 603 | 2.38 | |||||||||||||||
Tax-exempt | 3 | 6 | |||||||||||||||||||
Loans held for sale | 564 | 22 | 3.89 | 864 | 29 | 3.41 | |||||||||||||||
Loans, net of unearned income: | |||||||||||||||||||||
Commercial and industrial | 31,205 | 1,136 | 3.64 | 28,667 | 1,103 | 3.85 | |||||||||||||||
Commercial real estate mortgageowner-occupied | 8,975 | 436 | 4.86 | 9,767 | 462 | 4.73 | |||||||||||||||
Commercial real estate constructionowner-occupied | 354 | 15 | 4.11 | 328 | 15 | 4.45 | |||||||||||||||
Commercial investor real estate mortgage | 5,121 | 163 | 3.19 | 5,959 | 211 | 3.54 | |||||||||||||||
Commercial investor real estate construction | 1,815 | 59 | 3.22 | 1,180 | 42 | 3.55 | |||||||||||||||
Residential first mortgage | 12,188 | 486 | 3.99 | 12,827 | 513 | 4.00 | |||||||||||||||
Home equity | 11,064 | 400 | 3.61 | 11,450 | 413 | 3.61 | |||||||||||||||
Indirect | 3,426 | 119 | 3.47 | 2,715 | 109 | 4.00 | |||||||||||||||
Consumer credit card | 945 | 106 | 11.23 | 878 | 107 | 12.14 | |||||||||||||||
Other consumer | 1,160 | 84 | 7.27 | 1,153 | 84 | 7.31 | |||||||||||||||
Total loans, net of unearned income | 76,253 | 3,004 | 3.94 | 74,924 | 3,059 | 4.08 | |||||||||||||||
Other interest-earning assets | 2,989 | 7 | 0.25 | 2,428 | 6 | 0.25 | |||||||||||||||
Total interest-earning assets | 104,076 | 3,651 | 3.51 | 103,685 | 3,700 | 3.57 | |||||||||||||||
Allowance for loan losses | (1,235 | ) | (1,680 | ) | |||||||||||||||||
Cash and due from banks | 1,793 | 1,775 | |||||||||||||||||||
Other non-earning assets | 13,834 | 14,025 | |||||||||||||||||||
$ | 118,468 | $ | 117,805 | ||||||||||||||||||
Liabilities and Stockholders Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Savings (1) | $ | 6,596 | 8 | 0.12 | $ | 6,226 | 6 | 0.10 | |||||||||||||
Interest-bearing checking | 20,804 | 19 | 0.09 | 19,873 | 19 | 0.10 | |||||||||||||||
Money market (1) | 26,006 | 29 | 0.11 | 25,768 | 35 | 0.13 | |||||||||||||||
Time deposits | 9,003 | 49 | 0.55 | 11,148 | 75 | 0.67 | |||||||||||||||
Total interest-bearing deposits (2) | 62,409 | 105 | 0.17 | 63,015 | 135 | 0.21 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,944 | 2 | 0.08 | 2,020 | 2 | 0.08 | |||||||||||||||
Other short-term borrowings | 55 | 0.21 | 219 | 0.19 | |||||||||||||||||
Long-term borrowings | 4,057 | 202 | 4.98 | 5,206 | 247 | 4.75 | |||||||||||||||
Total interest-bearing liabilities | 68,465 | 309 | 0.45 | 70,460 | 384 | 0.54 | |||||||||||||||
Non-interest-bearing deposits (2) | 31,072 | 29,631 | |||||||||||||||||||
Total funding sources | 99,537 | 309 | 0.31 | 100,091 | 384 | 0.38 | |||||||||||||||
Net interest spread | 3.06 | 3.03 | |||||||||||||||||||
Other liabilities | 2,206 | 2,212 | |||||||||||||||||||
Stockholders equity | 16,725 | 15,502 | |||||||||||||||||||
$ | 118,468 | $ | 117,805 | ||||||||||||||||||
Net interest income/margin FTE basis | $ | 3,342 | 3.21 | % | $ | 3,316 | 3.20 | % | |||||||||||||
_______
(1) | In 2014, approximately $207 million of average IRA account balances were reclassified from money market to savings. Prior period amounts have been revised to conform to the current period classification. |
(2) | Total deposit costs from continuing operations may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs from continuing operations equal 0.11% and 0.15% for the years ended December 31, 2014 and 2013, respectively. |
7
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
�
Loans
� | As of | ||||||||||||||||||||||||||||||||
� | � | � | � | � | 12/31/2014 | 12/31/2014 | |||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | vs.�9/30/2014 | vs.�12/31/2013 | ||||||||||||||||||||||||||
Commercial and industrial | $ | 32,732 | $ | 31,857 | $ | 31,354 | $ | 30,466 | $ | 29,413 | $ | 875 | 2.7 | �% | $ | 3,319 | 11.3 | �% | |||||||||||||||
Commercial real estate mortgageowner-occupied | 8,263 | 8,666 | 9,024 | 9,257 | 9,495 | (403 | ) | (4.7 | )% | (1,232 | ) | (13.0 | )% | ||||||||||||||||||||
Commercial real estate constructionowner-occupied | 407 | 350 | 366 | 375 | 310 | 57 | 16.3 | �% | 97 | 31.3 | �% | ||||||||||||||||||||||
Total commercial | 41,402 | 40,873 | 40,744 | 40,098 | 39,218 | 529 | 1.3 | �% | 2,184 | 5.6 | �% | ||||||||||||||||||||||
Commercial investor real estate mortgage | 4,680 | 4,940 | 5,193 | 5,338 | 5,318 | (260 | ) | (5.3 | )% | (638 | ) | (12.0 | )% | ||||||||||||||||||||
Commercial investor real estate construction | 2,133 | 1,878 | 1,780 | 1,654 | 1,432 | 255 | 13.6 | �% | 701 | 49.0 | �% | ||||||||||||||||||||||
Total investor real estate | 6,813 | 6,818 | 6,973 | 6,992 | 6,750 | (5 | ) | (0.1 | )% | 63 | 0.9 | �% | |||||||||||||||||||||
Residential first mortgage | 12,315 | 12,264 | 12,187 | 12,136 | 12,163 | 51 | 0.4 | �% | 152 | 1.2 | �% | ||||||||||||||||||||||
Home equityfirst lien | 6,195 | 6,114 | 6,068 | 6,008 | 5,998 | 81 | 1.3 | �% | 197 | 3.3 | �% | ||||||||||||||||||||||
Home equitysecond lien | 4,737 | 4,854 | 4,996 | 5,140 | 5,296 | (117 | ) | (2.4 | )% | (559 | ) | (10.6 | )% | ||||||||||||||||||||
Indirect | 3,642 | 3,543 | 3,422 | 3,253 | 3,075 | 99 | 2.8 | �% | 567 | 18.4 | �% | ||||||||||||||||||||||
Consumer credit card | 1,009 | 964 | 945 | 917 | 948 | 45 | 4.7 | �% | 61 | 6.4 | �% | ||||||||||||||||||||||
Other consumer | 1,194 | 1,177 | 1,178 | 1,136 | 1,161 | 17 | 1.4 | �% | 33 | 2.8 | �% | ||||||||||||||||||||||
Total consumer | 29,092 | 28,916 | 28,796 | 28,590 | 28,641 | 176 | 0.6 | �% | 451 | 1.6 | �% | ||||||||||||||||||||||
Total Loans | $ | 77,307 | $ | 76,607 | $ | 76,513 | $ | 75,680 | $ | 74,609 | $ | 700 | 0.9 | �% | $ | 2,698 | 3.6 | �% | |||||||||||||||
� | Average Balances | ||||||||||||||||||||||||||||||||
($ amounts in millions) | 4Q14 | 3Q14 | 2Q14 | 1Q14 | 4Q13 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Commercial and industrial | $ | 32,484 | $ | 31,255 | $ | 31,058 | $ | 29,993 | $ | 29,950 | $ | 1,229 | 3.9 | �% | $ | 2,534 | 8.5 | �% | |||||||||||||||
Commercial real estate mortgageowner-occupied | 8,466 | 8,886 | 9,170 | 9,391 | 9,613 | (420 | ) | (4.7 | )% | (1,147 | ) | (11.9 | )% | ||||||||||||||||||||
Commercial real estate constructionowner-occupied | 367 | 351 | 357 | 341 | 302 | 16 | 4.6 | �% | 65 | 21.5 | �% | ||||||||||||||||||||||
Total commercial | 41,317 | 40,492 | 40,585 | 39,725 | 39,865 | 825 | 2.0 | �% | 1,452 | 3.6 | �% | ||||||||||||||||||||||
Commercial investor real estate mortgage | 4,837 | 5,071 | 5,296 | 5,287 | 5,405 | (234 | ) | (4.6 | )% | (568 | ) | (10.5 | )% | ||||||||||||||||||||
Commercial investor real estate construction | 2,032 | 1,876 | 1,822 | 1,524 | 1,426 | 156 | 8.3 | �% | 606 | 42.5 | �% | ||||||||||||||||||||||
Total investor real estate | 6,869 | 6,947 | 7,118 | 6,811 | 6,831 | (78 | ) | (1.1 | )% | 38 | 0.6 | �% | |||||||||||||||||||||
Residential first mortgage (1) | 12,273 | 12,212 | 12,137 | 12,127 | 12,752 | 61 | 0.5 | �% | (479 | ) | (3.8 | )% | |||||||||||||||||||||
Home equityfirst lien | 6,161 | 6,096 | 6,052 | 6,014 | 5,963 | 65 | 1.1 | �% | 198 | 3.3 | �% | ||||||||||||||||||||||
Home equitysecond lien | 4,778 | 4,903 | 5,054 | 5,202 | 5,348 | (125 | ) | (2.5 | )% | (570 | ) | (10.7 | )% | ||||||||||||||||||||
Indirect | 3,627 | 3,504 | 3,376 | 3,189 | 3,014 | 123 | 3.5 | �% | 613 | 20.3 | �% | ||||||||||||||||||||||
Consumer credit card | 975 | 952 | 926 | 926 | 910 | 23 | 2.4 | �% | 65 | 7.1 | �% | ||||||||||||||||||||||
Other consumer | 1,182 | 1,173 | 1,142 | 1,145 | 1,160 | 9 | 0.8 | �% | 22 | 1.9 | �% | ||||||||||||||||||||||
Total consumer | 28,996 | 28,840 | 28,687 | 28,603 | 29,147 | 156 | 0.5 | �% | (151 | ) | (0.5 | )% | |||||||||||||||||||||
Total Loans | $ | 77,182 | $ | 76,279 | $ | 76,390 | $ | 75,139 | $ | 75,843 | $ | 903 | 1.2 | �% | $ | 1,339 | 1.8 | �% | |||||||||||||||
End of Period Loan Portfolio Balances by Percentage | As of | ||||||||||||||||||||||||||||||||
12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||||||||||
Commercial and industrial | 42.4 | % | 41.6 | % | 41.0 | % | 40.3 | % | 39.4 | % | |||||||||||||||||||||||
Commercial real estate mortgageowner-occupied | 10.7 | % | 11.3 | % | 11.8 | % | 12.2 | % | 12.8 | % | |||||||||||||||||||||||
Commercial real estate constructionowner-occupied | 0.5 | % | 0.5 | % | 0.5 | % | 0.5 | % | 0.4 | % | |||||||||||||||||||||||
Total commercial | 53.6 | % | 53.4 | % | 53.3 | % | 53.0 | % | 52.6 | % | |||||||||||||||||||||||
Commercial investor real estate mortgage | 6.0 | % | 6.4 | % | 6.8 | % | 7.0 | % | 7.1 | % | |||||||||||||||||||||||
Commercial investor real estate construction | 2.8 | % | 2.5 | % | 2.3 | % | 2.2 | % | 1.9 | % | |||||||||||||||||||||||
Total investor real estate | 8.8 | % | 8.9 | % | 9.1 | % | 9.2 | % | 9.0 | % | |||||||||||||||||||||||
Residential first mortgage | 15.9 | % | 16.0 | % | 15.9 | % | 16.0 | % | 16.3 | % | |||||||||||||||||||||||
Home equityfirst lien | 8.0 | % | 8.0 | % | 7.9 | % | 8.0 | % | 8.0 | % | |||||||||||||||||||||||
Home equitysecond lien | 6.1 | % | 6.3 | % | 6.6 | % | 6.8 | % | 7.1 | % | |||||||||||||||||||||||
Indirect | 4.7 | % | 4.6 | % | 4.5 | % | 4.3 | % | 4.1 | % | |||||||||||||||||||||||
Consumer credit card | 1.3 | % | 1.3 | % | 1.2 | % | 1.2 | % | 1.3 | % | |||||||||||||||||||||||
Other consumer | 1.6 | % | 1.5 | % | 1.5 | % | 1.5 | % | 1.6 | % | |||||||||||||||||||||||
Total consumer | 37.6 | % | 37.7 | % | 37.6 | % | 37.8 | % | 38.4 | % | |||||||||||||||||||||||
Total Loans | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||
________
NM - Not Meaningful
(1) | Regions transferred approximately $686 million of primarily performing restructured residential first mortgage loans to held for sale at the end of the fourth quarter of 2013. This transaction impacts the fourth quarter 2014 to fourth quarter 2013 and first quarter 2014 to fourth quarter 2013 average balance variances. |
8
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Deposits
� | As of | ||||||||||||||||||||||||||||||||
� | � | � | � | � | 12/31/2014 | 12/31/2014 | |||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | vs. 9/30/2014 | vs. 12/31/2013 | ||||||||||||||||||||||||||
Customer Deposits | |||||||||||||||||||||||||||||||||
Interest-free deposits | $ | 31,747 | $ | 31,388 | $ | 31,277 | $ | 31,154 | $ | 30,083 | $ | 359 | 1.1 | �% | $ | 1,664 | 5.5 | �% | |||||||||||||||
Interest-bearing checking | 21,544 | 21,152 | 21,159 | 20,605 | 20,789 | 392 | 1.9 | �% | 755 | 3.6 | �% | ||||||||||||||||||||||
Savings(1) | 6,653 | 6,597 | 6,646 | 6,664 | 6,250 | 56 | 0.8 | �% | 403 | 6.4 | �% | ||||||||||||||||||||||
Money marketdomestic(1) | 25,396 | 25,983 | 25,566 | 25,529 | 25,435 | (587 | ) | (2.3 | )% | (39 | ) | (0.2 | )% | ||||||||||||||||||||
Money marketforeign | 265 | 243 | 223 | 222 | 220 | 22 | 9.1 | �% | 45 | 20.5 | �% | ||||||||||||||||||||||
Low-cost deposits | 85,605 | 85,363 | 84,871 | 84,174 | 82,777 | 242 | 0.3 | �% | 2,828 | 3.4 | �% | ||||||||||||||||||||||
Time deposits | 8,595 | 8,767 | 8,951 | 9,219 | 9,608 | (172 | ) | (2.0 | )% | (1,013 | ) | (10.5 | )% | ||||||||||||||||||||
Total customer deposits | 94,200 | 94,130 | 93,822 | 93,393 | 92,385 | 70 | 0.1 | �% | 1,815 | 2.0 | �% | ||||||||||||||||||||||
Corporate Treasury Deposits | |||||||||||||||||||||||||||||||||
Time deposits | 68 | NM | (68 | ) | (100.0 | )% | |||||||||||||||||||||||||||
Total Deposits | $ | 94,200 | $ | 94,130 | $ | 93,822 | $ | 93,393 | $ | 92,453 | $ | 70 | 0.1 | �% | $ | 1,747 | 1.9 | �% | |||||||||||||||
Average Balances | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 4Q14 | 3Q14 | 2Q14 | 1Q14 | 4Q13 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Customer Deposits | |||||||||||||||||||||||||||||||||
Interest-free deposits | $ | 31,951 | $ | 31,184 | $ | 30,866 | $ | 30,268 | $ | 30,218 | $ | 767 | 2.5 | �% | $ | 1,733 | 5.7 | �% | |||||||||||||||
Interest-bearing checking | 21,003 | 20,944 | 20,476 | 20,791 | 19,815 | 59 | 0.3 | �% | 1,188 | 6.0 | �% | ||||||||||||||||||||||
Savings(1) | 6,635 | 6,639 | 6,673 | 6,434 | 6,245 | (4 | ) | (0.1 | )% | 390 | 6.2 | �% | |||||||||||||||||||||
Money marketdomestic(1) | 25,506 | 26,095 | 25,684 | 25,788 | 25,638 | (589 | ) | (2.3 | )% | (132 | ) | (0.5 | )% | ||||||||||||||||||||
Money marketforeign | 246 | 253 | 223 | 225 | 247 | (7 | ) | (2.8 | )% | (1 | ) | (0.4 | )% | ||||||||||||||||||||
Low-cost deposits | 85,341 | 85,115 | 83,922 | 83,506 | 82,163 | 226 | 0.3 | �% | 3,178 | 3.9 | �% | ||||||||||||||||||||||
Time deposits | 8,683 | 8,856 | 9,067 | 9,417 | 9,843 | (173 | ) | (2.0 | )% | (1,160 | ) | (11.8 | )% | ||||||||||||||||||||
Total customer deposits | 94,024 | 93,971 | 92,989 | 92,923 | 92,006 | 53 | 0.1 | �% | 2,018 | 2.2 | �% | ||||||||||||||||||||||
Corporate Treasury Deposits | |||||||||||||||||||||||||||||||||
Time deposits | 2 | 45 | NM | (45 | ) | (100.0 | )% | ||||||||||||||||||||||||||
Total Deposits | $ | 94,024 | $ | 93,971 | $ | 92,989 | $ | 92,925 | $ | 92,051 | $ | 53 | 0.1 | �% | $ | 1,973 | 2.1 | �% | |||||||||||||||
As of | |||||||||||||||||||||||||||||||||
End of Period Deposits by Percentage | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||||||||||||||||
Customer Deposits | |||||||||||||||||||||||||||||||||
Interest-free deposits | 33.7 | % | 33.3 | % | 33.3 | �% | 33.4 | % | 32.5 | �% | |||||||||||||||||||||||
Interest-bearing checking | 22.9 | % | 22.5 | % | 22.6 | �% | 22.1 | % | 22.5 | �% | |||||||||||||||||||||||
Savings(1) | 7.0 | % | 7.0 | % | 7.1 | �% | 7.1 | % | 6.8 | �% | |||||||||||||||||||||||
Money marketdomestic(1) | 27.0 | % | 27.6 | % | 27.3 | �% | 27.3 | % | 27.5 | �% | |||||||||||||||||||||||
Money marketforeign | 0.3 | % | 0.3 | % | 0.2 | �% | 0.2 | % | 0.2 | �% | |||||||||||||||||||||||
Low-cost deposits | 90.9 | % | 90.7 | % | 90.5 | �% | 90.1 | % | 89.5 | �% | |||||||||||||||||||||||
Time deposits | 9.1 | % | 9.3 | % | 9.5 | �% | 9.9 | % | 10.4 | �% | |||||||||||||||||||||||
Total customer deposits | 100.0 | % | 100.0 | % | 100.0 | �% | 100.0 | % | 99.9 | �% | |||||||||||||||||||||||
Corporate Treasury Deposits | |||||||||||||||||||||||||||||||||
Time deposits | % | % | �% | % | 0.1 | �% | |||||||||||||||||||||||||||
Total Deposits | 100.0 | % | 100.0 | % | 100.0 | �% | 100.0 | % | 100.0 | �% | |||||||||||||||||||||||
________
NM - Not Meaningful
(1) | In the fourth quarter of 2014, approximately $219 million and $214 million of period end and average IRA account balances, respectively, were reclassified from money market to savings. Prior period amounts have been revised to conform to the current period classification. |
9
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Pre-Tax Pre-Provision Income ("PPI") and Adjusted PPI (non-GAAP)
The Pre-Tax Pre-Provision Income table below presents computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the presentation of PPI and the exclusion of certain items to PPI provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of income that excludes certain adjustments does not represent the amount that effectively accrues directly to stockholders.
�
� | Quarter Ended | ||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Net income from continuing operations available to common shareholders (GAAP) | $ | 198 | $ | 302 | $ | 291 | $ | 299 | $ | 233 | $ | (104 | ) | (34.4 | )% | $ | (35 | ) | (15.0 | )% | |||||||||||||
Preferred dividends (GAAP)(1) | 16 | 20 | 8 | 8 | 8 | (4 | ) | (20.0 | )% | 8 | 100.0 | �% | |||||||||||||||||||||
Income tax expense (GAAP) | 77 | 127 | 125 | 128 | 92 | (50 | ) | (39.4 | )% | (15 | ) | (16.3 | )% | ||||||||||||||||||||
Income from continuing operations before income taxes (GAAP) | 291 | 449 | 424 | 435 | 333 | (158 | ) | (35.2 | )% | (42 | ) | (12.6 | )% | ||||||||||||||||||||
Provision for loan losses (GAAP) | 8 | 24 | 35 | 2 | 79 | (16 | ) | (66.7 | )% | (71 | ) | (89.9 | )% | ||||||||||||||||||||
Pre-tax pre-provision income from continuing operations (non-GAAP) | 299 | 473 | 459 | 437 | 412 | (174 | ) | (36.8 | )% | (113 | ) | (27.4 | )% | ||||||||||||||||||||
Other adjustments: | |||||||||||||||||||||||||||||||||
Securities gains, net | (12 | ) | (7 | ) | (6 | ) | (2 | ) | (5 | ) | 71.4 | �% | (12 | ) | NM | ||||||||||||||||||
Leveraged lease termination gains, net(2) | (9 | ) | (1 | ) | (39 | ) | 9 | (100.0 | )% | 39 | (100.0 | )% | |||||||||||||||||||||
Professional, legal and regulatory expenses(3)(4) | 100 | (7 | ) | 58 | 100 | NM | 42 | 72.4 | �% | ||||||||||||||||||||||||
Branch consolidation and property and equipment charges | 10 | 6 | 5 | 10 | NM | 5 | 100.0 | �% | |||||||||||||||||||||||||
Gain on sale of TDRs held for sale, net | (35 | ) | NM | NM | |||||||||||||||||||||||||||||
Total other adjustments | 98 | (16 | ) | (13 | ) | (32 | ) | 24 | 114 | NM | 74 | 308.3 | �% | ||||||||||||||||||||
Adjusted pre-tax pre-provision income from continuing operations (non-GAAP) | $ | 397 | $ | 457 | $ | 446 | $ | 405 | $ | 436 | $ | (60 | ) | (13.1 | )% | $ | (39 | ) | (8.9 | )% | |||||||||||||
�
NM - Not Meaningful
(1) | Due to the timing of the second quarter 2014 preferred stock issuance, preferred dividends in the third quarter of 2014 reflect a longer coupon period. Total third quarter 2014 preferred dividends were approximately $4 million higher than the amount expected for future quarterly coupon periods based on the current amount of preferred stock outstanding. |
(2) | The majority of net leveraged lease termination gains reported during each period are offset by related income taxes. |
(3) | Regions recorded $100 million of contingent legal and regulatory accruals during the fourth quarter of 2014 related to previously disclosed matters. |
(4) | Regions recorded a non-tax deductible regulatory charge of $58 million during the fourth quarter of 2013 related to previously disclosed inquiries from government authorities. These matters were settled in the second quarter of 2014 for $7 million less than originally estimated. |
10
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Non-Interest Income
� | Quarter Ended | ||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Service charges on deposit accounts | $ | 167 | $ | 181 | $ | 174 | $ | 173 | $ | 185 | $ | (14 | ) | (7.7 | )% | $ | (18 | ) | (9.7 | )% | |||||||||||||
Card and ATM fees | 86 | 85 | 84 | 79 | 80 | 1 | 1.2 | �% | 6 | 7.5 | �% | ||||||||||||||||||||||
Investment management and trust fee income | 50 | 47 | 47 | 49 | 48 | 3 | 6.4 | �% | 2 | 4.2 | �% | ||||||||||||||||||||||
Insurance commissions and fees | 31 | 31 | 32 | 30 | 28 | NM | 3 | 10.7 | �% | ||||||||||||||||||||||||
Mortgage income | 27 | 39 | 43 | 40 | 43 | (12 | ) | (30.8 | )% | (16 | ) | (37.2 | )% | ||||||||||||||||||||
Bank-owned life insurance | 23 | 20 | 23 | 19 | 20 | 3 | 15.0 | �% | 3 | 15.0 | �% | ||||||||||||||||||||||
Capital markets fee income and other (1) | 20 | 24 | 16 | 13 | 29 | (4 | ) | (16.7 | )% | (9 | ) | (31.0 | )% | ||||||||||||||||||||
Commercial credit fee income | 15 | 16 | 15 | 15 | 16 | (1 | ) | (6.3 | )% | (1 | ) | (6.3 | )% | ||||||||||||||||||||
Securities gains, net | 12 | 7 | 6 | 2 | 5 | 71.4 | �% | 12 | NM | ||||||||||||||||||||||||
Investment services fee income | 10 | 12 | 11 | 10 | 8 | (2 | ) | (16.7 | )% | 2 | 25.0 | �% | |||||||||||||||||||||
Leveraged lease termination gains, net | 9 | 1 | 39 | (9 | ) | (100.0 | )% | (39 | ) | (100.0 | )% | ||||||||||||||||||||||
Net revenue (loss) from affordable housing | (12 | ) | (19 | ) | (17 | ) | (18 | ) | 1 | 7 | (36.8 | )% | (13 | ) | NM | ||||||||||||||||||
Other | 19 | 26 | 23 | 25 | 29 | (7 | ) | (26.9 | )% | (10 | ) | (34.5 | )% | ||||||||||||||||||||
Total non-interest income from continuing operations | $ | 448 | $ | 478 | $ | 457 | $ | 438 | $ | 526 | $ | (30 | ) | (6.3 | )% | $ | (78 | ) | (14.8 | )% | |||||||||||||
Mortgage Income
Quarter Ended | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Production and sales | $ | 20 | $ | 25 | $ | 26 | $ | 24 | $ | 25 | $ | (5 | ) | (20.0 | )% | $ | (5 | ) | (20.0 | )% | |||||||||||||
Loan servicing | 21 | 21 | 22 | 21 | 22 | NM | (1 | ) | (4.5 | )% | |||||||||||||||||||||||
MSR and related hedge impact: | |||||||||||||||||||||||||||||||||
MSRs fair value increase (decrease) including payment decay | (36 | ) | (8 | ) | (19 | ) | (17 | ) | 5 | (28 | ) | 350.0 | �% | (41 | ) | NM | |||||||||||||||||
MSRs hedge gain (loss) | 22 | 1 | 14 | 12 | (9 | ) | 21 | NM | 31 | (344.4 | )% | ||||||||||||||||||||||
MSR and related hedge impact | (14 | ) | (7 | ) | (5 | ) | (5 | ) | (4 | ) | (7 | ) | 100.0 | �% | (10 | ) | 250.0 | �% | |||||||||||||||
Total mortgage income | $ | 27 | $ | 39 | $ | 43 | $ | 40 | $ | 43 | $ | (12 | ) | (30.8 | )% | $ | (16 | ) | (37.2 | )% | |||||||||||||
Mortgage production - purchased | $ | 817 | $ | 961 | $ | 968 | $ | 662 | $ | 802 | $ | (144 | ) | (15.0 | )% | $ | 15 | 1.9 | �% | ||||||||||||||
Mortgage production - refinanced | 351 | 324 | 302 | 304 | 436 | 27 | 8.3 | �% | (85 | ) | (19.5 | )% | |||||||||||||||||||||
Total mortgage production(2) | $ | 1,168 | $ | 1,285 | $ | 1,270 | $ | 966 | $ | 1,238 | $ | (117 | ) | (9.1 | )% | $ | (70 | ) | (5.7 | )% | |||||||||||||
�
Wealth Management Income
Quarter Ended | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Investment management and trust fee income | $ | 50 | $ | 47 | $ | 47 | $ | 49 | $ | 48 | $ | 3 | 6.4 | �% | $ | 2 | 4.2 | % | |||||||||||||||
Insurance commissions and fees | 31 | 31 | 32 | 30 | 28 | NM | 3 | 10.7 | % | ||||||||||||||||||||||||
Investment services fee income | 10 | 12 | 11 | 10 | 8 | (2 | ) | (16.7 | )% | 2 | 25.0 | % | |||||||||||||||||||||
Total wealth management income (3) | $ | 91 | $ | 90 | $ | 90 | $ | 89 | $ | 84 | $ | 1 | 1.1 | �% | $ | 7 | 8.3 | % | |||||||||||||||
_________
NM - Not Meaningful
(1) | Capital markets fee income and other primarily relates to securities underwriting and placement, loan syndications, foreign exchange and customer derivatives. |
(2) | Represents total mortgage production during the period, including amounts sold into the secondary market as well as amounts retained in Regions' residential first mortgage loan portfolio. |
(3) | Total Wealth Management income presented above does not include the portion of service charges on deposit accounts and similar smaller dollar amounts that are also attributable to the Wealth Management segment. |
Selected Non-Interest Income Variance Analysis
" | Service charges declined $14 million dollars in the fourth quarter of 2014 primarily driven by an $8 million reserve for customer reimbursements, as well as a $4 million reduction of fees resulting from a product discontinuation during the quarter.� |
11
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
�Non-Interest Expense
Quarter Ended | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Salaries and employee benefits | $ | 456 | $ | 456 | $ | 443 | $ | 455 | $ | 464 | $ | NM | $ | (8 | ) | (1.7 | )% | ||||||||||||||||
Professional, legal and regulatory expenses(1)(2) | 134 | 36 | 30 | 35 | 104 | 98 | 272.2 | �% | 30 | 28.8 | �% | ||||||||||||||||||||||
Net occupancy expense | 93 | 92 | 90 | 93 | 91 | 1 | 1.1 | �% | 2 | 2.2 | �% | ||||||||||||||||||||||
Furniture and equipment expense | 74 | 73 | 70 | 70 | 71 | 1 | 1.4 | �% | 3 | 4.2 | �% | ||||||||||||||||||||||
Outside services | 37 | 32 | 35 | 27 | 31 | 5 | 15.6 | �% | 6 | 19.4 | �% | ||||||||||||||||||||||
Marketing | 24 | 23 | 24 | 24 | 25 | 1 | 4.3 | �% | (1 | ) | (4.0 | )% | |||||||||||||||||||||
Deposit administrative fee | 20 | 20 | 13 | 22 | 20 | NM | NM | ||||||||||||||||||||||||||
Branch consolidation and property and equipment charges | 10 | 6 | 5 | 10 | NM | 5 | 100.0 | �% | |||||||||||||||||||||||||
Provision (credit) for unfunded credit losses | (24 | ) | 11 | 4 | 24 | (100.0 | )% | (4 | ) | (100.0 | )% | ||||||||||||||||||||||
Gain on sale of TDRs held for sale, net | (35 | ) | NM | NM | |||||||||||||||||||||||||||||
Other | 121 | 118 | 104 | 120 | 131 | 3 | 2.5 | �% | (10 | ) | (7.6 | )% | |||||||||||||||||||||
Total non-interest expense from continuing operations | $ | 969 | $ | 826 | $ | 820 | $ | 817 | $ | 946 | $ | 143 | 17.3 | �% | $ | 23 | 2.4 | �% | |||||||||||||||
_________
NM - Not Meaningful
(1) | The fourth quarter of 2014 includes $100 million of accruals for contingent legal and regulatory items related to previously disclosed matters. |
(2) | The fourth quarter of 2013 includes a non-tax deductible regulatory charge of $58 million related to previously disclosed inquiries from government authorities. The matter was settled in the second quarter of 2014 for $7 million less than originally estimated. |
Selected Non-Interest Expense Variance Analysis
" | As previously announced, the Company intends to consolidate approximately 50 branches during 2015 and incurred $10 million of related expenses during the fourth quarter of 2014. |
12
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Credit Quality
As of and for Quarter Ended | |||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
Components: | |||||||||||||||||||
Allowance for loan losses (ALL) | $ | 1,103 | $ | 1,178 | $ | 1,229 | $ | 1,261 | $ | 1,341 | |||||||||
Reserve for unfunded credit commitments | 65 | 65 | 89 | 78 | 78 | ||||||||||||||
Allowance for credit losses (ACL) | $ | 1,168 | $ | 1,243 | $ | 1,318 | $ | 1,339 | $ | 1,419 | |||||||||
Provision for loan losses | $ | 8 | $ | 24 | $ | 35 | $ | 2 | $ | 79 | |||||||||
Provision (credit) for unfunded credit losses | (24 | ) | 11 | 4 | |||||||||||||||
Net loans charged-off: | |||||||||||||||||||
Commercial and industrial | 23 | 15 | 15 | 10 | 36 | ||||||||||||||
Commercial real estate mortgageowner-occupied | 11 | 12 | 11 | 13 | 27 | ||||||||||||||
Commercial real estate constructionowner-occupied | 1 | 1 | (1 | ) | |||||||||||||||
Total commercial | 34 | 28 | 26 | 24 | 62 | ||||||||||||||
Commercial investor real estate mortgage | (2 | ) | 2 | 1 | (2 | ) | |||||||||||||
Commercial investor real estate construction | (1 | ) | (1 | ) | (2 | ) | (1 | ) | |||||||||||
Total investor real estate | (3 | ) | (1 | ) | 1 | (3 | ) | ||||||||||||
Residential first mortgage (3) | 6 | 6 | 7 | 9 | 164 | ||||||||||||||
Home equityfirst lien | 5 | 4 | 3 | 7 | 8 | ||||||||||||||
Home equitysecond lien | 11 | 9 | 8 | 14 | 18 | ||||||||||||||
Indirect | 7 | 6 | 4 | 7 | 6 | ||||||||||||||
Consumer credit card | 8 | 8 | 8 | 8 | 8 | ||||||||||||||
Other consumer | 15 | 15 | 11 | 12 | 15 | ||||||||||||||
Total consumer (3) | 52 | 48 | 41 | 57 | 219 | ||||||||||||||
Total (3) | $ | 83 | $ | 75 | $ | 67 | $ | 82 | $ | 278 | |||||||||
Net loan charge-offs as a % of average loans, annualized: | |||||||||||||||||||
Commercial and industrial | 0.28 | �% | 0.19 | �% | 0.20 | �% | 0.14 | �% | 0.48 | �% | |||||||||
Commercial real estate mortgageowner-occupied | 0.54 | �% | 0.52 | �% | 0.46 | �% | 0.58 | �% | 1.13 | �% | |||||||||
Commercial real estate constructionowner-occupied | (0.02 | )% | 1.65 | �% | 0.05 | �% | 0.47 | �% | (0.10 | )% | |||||||||
Total commercial | 0.33 | �% | 0.27 | �% | 0.25 | �% | 0.25 | �% | 0.63 | �% | |||||||||
Commercial investor real estate mortgage | (0.11 | )% | (0.03 | )% | 0.12 | �% | 0.10 | �% | (0.13 | )% | |||||||||
Commercial investor real estate construction | (0.32 | )% | (0.16 | )% | (0.36 | )% | (0.13 | )% | (0.44 | )% | |||||||||
Total investor real estate | (0.17 | )% | (0.07 | )% | �% | 0.05 | �% | (0.20 | )% | ||||||||||
Residential first mortgage (3) | 0.18 | �% | 0.22 | �% | 0.20 | �% | 0.32 | �% | 5.10 | �% | |||||||||
Home equityfirst lien | 0.29 | �% | 0.25 | �% | 0.24 | �% | 0.44 | �% | 0.51 | �% | |||||||||
Home equitysecond lien | 0.93 | �% | 0.73 | �% | 0.62 | �% | 1.13 | �% | 1.35 | �% | |||||||||
Indirect | 0.77 | �% | 0.70 | �% | 0.53 | �% | 0.85 | �% | 0.78 | �% | |||||||||
Consumer credit card | 3.29 | �% | 3.30 | �% | 3.53 | �% | 3.63 | �% | 3.65 | �% | |||||||||
Other consumer | 4.90 | �% | 4.99 | �% | 3.84 | �% | 4.14 | �% | 5.04 | �% | |||||||||
Total consumer (3) | 0.70 | �% | 0.67 | �% | 0.57 | �% | 0.81 | �% | 2.98 | �% | |||||||||
Total (3) | 0.42 | �% | 0.39 | �% | 0.35 | �% | 0.44 | �% | 1.46 | �% | |||||||||
Non-accrual loans, excluding loans held for sale | $ | 829 | $ | 837 | $ | 899 | $ | 1,070 | $ | 1,082 | |||||||||
Non-performing loans held for sale | 38 | 38 | 20 | 40 | 82 | ||||||||||||||
Non-accrual loans, including loans held for sale | 867 | 875 | 919 | 1,110 | 1,164 | ||||||||||||||
Foreclosed properties | 124 | 125 | 128 | 129 | 136 | ||||||||||||||
Non-performing assets (NPAs) | $ | 991 | $ | 1,000 | $ | 1,047 | $ | 1,239 | $ | 1,300 | |||||||||
Loans past due > 90 days (1) | $ | 222 | $ | 233 | $ | 251 | $ | 257 | $ | 256 | |||||||||
Accruing restructured loans not included in categories above (2) | $ | 1,260 | $ | 1,319 | $ | 1,412 | $ | 1,578 | $ | 1,676 | |||||||||
Accruing restructured loans held for sale not included in categories above (2) | $ | 1 | $ | 1 | $ | 7 | $ | 11 | $ | 545 | |||||||||
Credit Ratios: | |||||||||||||||||||
ACL/Loans, net | 1.51 | �% | 1.62 | �% | 1.72 | �% | 1.77 | �% | 1.90 | �% | |||||||||
ALL/Loans, net | 1.43 | �% | 1.54 | �% | 1.61 | �% | 1.67 | �% | 1.80 | �% | |||||||||
Allowance for loan losses to non-performing loans, excluding loans held for sale | 1.33x | 1.41x | 1.37x | 1.18x | 1.24x | ||||||||||||||
Non-accrual loans, excluding loans held for sale/Loans, net | 1.07 | �% | 1.09 | �% | 1.17 | �% | 1.41 | �% | 1.45 | �% | |||||||||
NPAs (ex. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale | 1.28 | �% | 1.30 | �% | 1.37 | �% | 1.63 | �% | 1.74 | �% | |||||||||
NPAs (inc. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale (1) | 1.57 | �% | 1.61 | �% | 1.69 | �% | 1.97 | �% | 2.08 | �% | |||||||||
�����������
(1) | Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing. Refer to the footnotes on page 16 for amounts related to these loans. |
(2) | See page 17 for detail of restructured loans. |
(3) | Includes $151 million in residential first mortgage net charge-offs on loans transferred to loans held for sale during the fourth quarter of 2013. Excluding these net charge-offs, the adjusted net charge-off percentage for residential first mortgages for the fourth quarter of 2013 would have been 0.41% (non-GAAP). Excluding these net charge-offs, the adjusted net charge-off percentage for total consumer loans for the fourth quarter of 2013 would have been 0.93% (non-GAAP). The adjusted net charge-off percentage for all loans would have been 0.67% (non-GAAP). See page 14 for a reconciliation of these GAAP to non-GAAP net charge-off ratios. |
13
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Credit Quality (Continued)
Allowance for Credit Losses
Year Ended December 31 | |||||||
($ amounts in millions) | 2014 | 2013 | |||||
Balance at beginning of year | $ | 1,419 | $ | 2,002 | |||
Net loans charged off | (307 | ) | (716 | ) | |||
Provision for loan losses | 69 | 138 | |||||
Provision (credit) for unfunded credit losses | (13 | ) | (5 | ) | |||
Balance at end of year | $ | 1,168 | $ | 1,419 | |||
Adjusted Net Charge-Offs and Ratios (non-GAAP)
Select calculations for annualized net charge-offs as a percentage of average loans (GAAP) are presented in the table below. During the fourth quarter of 2013, Regions made the strategic decision to transfer certain primarily accruing restructured residential first mortgage loans to loans held for sale. These loans were marked down to fair value through net charge-offs upon transfer to held for sale. Management believes that excluding the incremental increase to net charge-offs from the affected net charge-off ratios to arrive at an adjusted net charge-off ratio (non-GAAP) will assist investors in analyzing the Company's credit quality performance as well as provide a better basis from which to predict future performance. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP.
As of and for Quarter Ended | ||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||
Residential first mortgage net charge-offs (GAAP) | A | $ | 6 | $ | 6 | $ | 7 | $ | 9 | $ | 164 | |||||||||
Less: Net charge-offs associated with transfer to loans held for sale | 151 | |||||||||||||||||||
Adjusted residential first mortgage net charge-offs (non-GAAP) | B | $ | 6 | $ | 6 | $ | 7 | $ | 9 | $ | 13 | |||||||||
Total consumer net charge-offs (GAAP) | C | $ | 52 | $ | 48 | $ | 41 | $ | 57 | $ | 219 | |||||||||
Less: Net charge-offs associated with transfer to loans held for sale | 151 | |||||||||||||||||||
Adjusted total consumer net charge-offs (non-GAAP) | D | $ | 52 | $ | 48 | $ | 41 | $ | 57 | $ | 68 | |||||||||
Total net charge-offs (GAAP) | E | $ | 83 | $ | 75 | $ | 67 | $ | 82 | $ | 278 | |||||||||
Less: Net charge-offs associated with transfer to loans held for sale | 151 | |||||||||||||||||||
Adjusted net charge-offs (non-GAAP) | F | $ | 83 | $ | 75 | $ | 67 | $ | 82 | $ | 127 | |||||||||
Average residential first mortgage loans (GAAP) | G | $ | 12,273 | $ | 12,212 | $ | 12,137 | $ | 12,127 | $ | 12,752 | |||||||||
Add: Average balances of residential first mortgage loans transferred to loans held for sale | 74 | |||||||||||||||||||
Adjusted average residential first mortgage loans (non-GAAP) | H | $ | 12,273 | $ | 12,212 | $ | 12,137 | $ | 12,127 | $ | 12,826 | |||||||||
Average total consumer loans (GAAP) | I | $ | 28,996 | $ | 28,840 | $ | 28,687 | $ | 28,603 | $ | 29,147 | |||||||||
Add: Average balances of residential first mortgage loans transferred to loans held for sale | 74 | |||||||||||||||||||
Adjusted average total consumer loans (non-GAAP) | J | $ | 28,996 | $ | 28,840 | $ | 28,687 | $ | 28,603 | $ | 29,221 | |||||||||
Total average loans (GAAP) | K | $ | 77,182 | $ | 76,279 | $ | 76,390 | $ | 75,139 | $ | 75,843 | |||||||||
Add: Average balances of residential first mortgage loans transferred to loans held for sale | 74 | |||||||||||||||||||
Adjusted total average loans (non-GAAP) | L | $ | 77,182 | $ | 76,279 | $ | 76,390 | $ | 75,139 | $ | 75,917 | |||||||||
Residential first mortgage net charge-off percentage (GAAP)* | A/G | 0.18 | % | 0.22 | % | 0.20 | % | 0.32 | % | 5.10 | % | |||||||||
Adjusted residential first mortgage net charge-off percentage (non-GAAP)* | B/H | 0.18 | % | 0.22 | % | 0.20 | % | 0.32 | % | 0.41 | % | |||||||||
Total consumer net charge-off percentage (GAAP)* | C/I | 0.70 | % | 0.67 | % | 0.57 | % | 0.81 | % | 2.98 | % | |||||||||
Adjusted total consumer net charge-off percentage (non-GAAP)* | D/J | 0.70 | % | 0.67 | % | 0.57 | % | 0.81 | % | 0.93 | % | |||||||||
Total net charge-off percentage (GAAP)* | E/K | 0.42 | % | 0.39 | % | 0.35 | % | 0.44 | % | 1.46 | % | |||||||||
Adjusted total net charge-off percentage (non-GAAP)* | F/L | 0.42 | % | 0.39 | % | 0.35 | % | 0.44 | % | 0.67 | % | |||||||||
________
* Annualized
Year Ended December 31 | ||||||||||||||
($ amounts in millions) | 2014 | 2013 | 2014 vs 2013 | |||||||||||
Total net charge-offs (GAAP) | $ | 307 | $ | 716 | $ | (409 | ) | (57.1 | )% | |||||
Less: Net charge-offs associated with transfer to loans held for sale | 151 | (151 | ) | (100.0 | )% | |||||||||
Adjusted net charge-offs (non-GAAP) | $ | 307 | $ | 565 | $ | (258 | ) | (45.7 | )% | |||||
14
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
�Non-Accrual Loans (excludes loans held for sale)
� | As of | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||||||||||
Commercial and industrial | $ | 252 | 0.77 | % | $ | 199 | 0.62 | % | $ | 200 | 0.64 | % | $ | 280 | 0.92 | % | $ | 257 | 0.87 | % | ||||||||||||||
Commercial real estate mortgageowner-occupied | 238 | 2.88 | % | 278 | 3.20 | % | 294 | 3.25 | % | 307 | 3.31 | % | 303 | 3.19 | % | |||||||||||||||||||
Commercial real estate constructionowner-occupied | 3 | 0.64 | % | 2 | 0.56 | % | 8 | 2.32 | % | 16 | 4.31 | % | 17 | 5.33 | % | |||||||||||||||||||
Total Commercial | 493 | 1.19 | % | 479 | 1.17 | % | 502 | 1.23 | % | 603 | 1.50 | % | 577 | 1.47 | % | |||||||||||||||||||
Commercial investor real estate mortgage | 123 | 2.64 | % | 133 | 2.69 | % | 158 | 3.05 | % | 209 | 3.91 | % | 238 | 4.47 | % | |||||||||||||||||||
Commercial investor real estate construction | 2 | 0.09 | % | 2 | 0.11 | % | 9 | 0.49 | % | 8 | 0.51 | % | 10 | 0.70 | % | |||||||||||||||||||
Total Investor Real Estate | 125 | 1.84 | % | 135 | 1.98 | % | 167 | 2.39 | % | 217 | 3.11 | % | 248 | 3.67 | % | |||||||||||||||||||
Residential first mortgage | 109 | 0.88 | % | 117 | 0.96 | % | 119 | 0.98 | % | 136 | 1.12 | % | 146 | 1.21 | % | |||||||||||||||||||
Home equity | 102 | 0.94 | % | 106 | 0.97 | % | 111 | 1.00 | % | 114 | 1.02 | % | 111 | 0.98 | % | |||||||||||||||||||
Total Consumer | 211 | 0.72 | % | 223 | 0.77 | % | 230 | 0.80 | % | 250 | 0.87 | % | 257 | 0.90 | % | |||||||||||||||||||
Total Non-Accrual Loans | $ | 829 | 1.07 | % | $ | 837 | 1.09 | % | $ | 899 | 1.17 | % | $ | 1,070 | 1.41 | % | $ | 1,082 | 1.45 | % | ||||||||||||||
Criticized and Classified LoansCommercial and Investor Real Estate
� | As of | ||||||||||||||||||||||||||||||||
12/31/2014 | 12/31/2014 | ||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | vs. 9/30/2014 | vs. 12/31/2013 | ||||||||||||||||||||||||||
Special Mention | $ | 1,206 | $ | 1,297 | $ | 1,327 | $ | 1,067 | $ | 927 | $ | (91 | ) | (7.0 | )% | $ | 279 | 30.1 | �% | ||||||||||||||
Accruing Classified Loans | 875 | 1,074 | 1,055 | 1,094 | 1,263 | (199 | ) | (18.5 | )% | (388 | ) | (30.7 | )% | ||||||||||||||||||||
Non-Accruing Classified Loans | 618 | 614 | 669 | 820 | 825 | 4 | 0.7 | �% | (207 | ) | (25.1 | )% | |||||||||||||||||||||
Total | $ | 2,699 | $ | 2,985 | $ | 3,051 | $ | 2,981 | $ | 3,015 | $ | (286 | ) | (9.6 | )% | $ | (316 | ) | (10.5 | )% | |||||||||||||
Home Equity Lines of Credit - Future Principal Payment Resets(1)�
As of 12/31/2014 | |||||||||||||||||
($ amounts in millions) | First Lien | % of Total | Second Lien | % of Total | Total | ||||||||||||
2015 | $ | 26 | 0.31 | % | $ | 188 | 2.22 | % | $ | 214 | |||||||
2016 | 28 | 0.34 | % | 38 | 0.45 | % | 66 | ||||||||||
2017 | 5 | 0.06 | % | 11 | 0.13 | % | 16 | ||||||||||
2018 | 15 | 0.18 | % | 25 | 0.29 | % | 40 | ||||||||||
2019 | 116 | 1.37 | % | 105 | 1.24 | % | 221 | ||||||||||
2020-2024 | 1,475 | 17.42 | % | 1,322 | 15.62 | % | 2,797 | ||||||||||
2025-2029 | 2,418 | 28.56 | % | 2,688 | 31.75 | % | 5,106 | ||||||||||
Thereafter | 2 | 0.02 | % | 4 | 0.04 | % | 6 | ||||||||||
Total | $ | 4,085 | 48.26 | % | $ | 4,381 | 51.74 | % | $ | 8,466 | |||||||
�����������������
(1) | The balance of Regions' home equity portfolio was $10,932 million at December 31, 2014 consisting of $8,466 million of home equity lines of credit and $2,466 million of closed-end home equity loans. The home equity lines of credit presented in the table above are based on maturity date for lines with a balloon payment and draw period expiration date for lines that convert to a repayment period. The closed-end loans were primarily originated as amortizing loans, and were therefore excluded from the table above. |
15
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Early and Late Stage Delinquencies
Accruing 30-89 Days Past Due Loans | As of | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||||||||||
Commercial and industrial | $ | 23 | 0.07 | % | $ | 57 | 0.18 | % | $ | 35 | 0.11 | % | $ | 27 | 0.09 | % | $ | 43 | 0.15 | % | ||||||||||||||
Commercial real estate mortgageowner-occupied | 34 | 0.41 | % | 38 | 0.44 | % | 56 | 0.63 | % | 37 | 0.39 | % | 56 | 0.59 | % | |||||||||||||||||||
Commercial real estate constructionowner-occupied | 1 | 0.13 | % | 2 | 0.71 | % | 1 | 0.21 | % | 0.10 | % | 0.06 | % | |||||||||||||||||||||
Total Commercial | 58 | 0.14 | % | 97 | 0.24 | % | 92 | 0.23 | % | 64 | 0.16 | % | 99 | 0.25 | % | |||||||||||||||||||
Commercial investor real estate mortgage | 20 | 0.42 | % | 38 | 0.78 | % | 61 | 1.17 | % | 75 | 1.41 | % | 35 | 0.66 | % | |||||||||||||||||||
Commercial investor real estate construction | % | 12 | 0.61 | % | 0.01 | % | 2 | 0.15 | % | 5 | 0.32 | % | ||||||||||||||||||||||
Total Investor Real Estate | 20 | 0.29 | % | 50 | 0.73 | % | 61 | 0.87 | % | 77 | 1.11 | % | 40 | 0.59 | % | |||||||||||||||||||
Residential first mortgagenon-guaranteed (1) | 139 | 1.17 | % | 142 | 1.20 | % | 153 | 1.30 | % | 146 | 1.24 | % | 187 | 1.58 | % | |||||||||||||||||||
Home equity | 111 | 1.02 | % | 115 | 1.05 | % | 111 | 1.00 | % | 123 | 1.10 | % | 146 | 1.30 | % | |||||||||||||||||||
Indirect | 53 | 1.45 | % | 47 | 1.33 | % | 45 | 1.31 | % | 42 | 1.28 | % | 50 | 1.62 | % | |||||||||||||||||||
Consumer credit card | 13 | 1.32 | % | 13 | 1.29 | % | 11 | 1.13 | % | 11 | 1.26 | % | 13 | 1.38 | % | |||||||||||||||||||
Other consumer | 17 | 1.45 | % | 18 | 1.52 | % | 18 | 1.53 | % | 16 | 1.39 | % | 19 | 1.64 | % | |||||||||||||||||||
Total Consumer (1) | 333 | 1.16 | % | 335 | 1.18 | % | 338 | 1.19 | % | 338 | 1.20 | % | 415 | 1.47 | % | |||||||||||||||||||
Total Accruing 30-89 Days Past Due Loans (1) | $ | 411 | 0.53 | % | $ | 482 | 0.63 | % | $ | 491 | 0.64 | % | $ | 479 | 0.64 | % | $ | 554 | 0.75 | % | ||||||||||||||
Accruing 90+ Days Past Due Loans | As of | |||||||||||||||||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | |||||||||||||||||||||||||||||
Commercial�and industrial | $ | 7 | 0.02 | % | $ | 5 | 0.02 | % | $ | 9 | 0.03 | % | $ | 7 | 0.02 | % | $ | 6 | 0.02 | % | ||||||||||||||
Commercial real estate mortgageowner-occupied | 5 | 0.06 | % | 6 | 0.07 | % | 5 | 0.05 | % | 3 | 0.04 | % | 6 | 0.06 | % | |||||||||||||||||||
Total Commercial | 12 | 0.03 | % | 11 | 0.03 | % | 14 | 0.03 | % | 10 | 0.03 | % | 12 | 0.03 | % | |||||||||||||||||||
Commercial investor real estate mortgage | 3 | 0.06 | % | 5 | 0.10 | % | 17 | 0.32 | % | 2 | 0.04 | % | 6 | 0.10 | % | |||||||||||||||||||
Total Investor Real Estate | 3 | 0.04 | % | 5 | 0.07 | % | 17 | 0.24 | % | 2 | 0.03 | % | 6 | 0.08 | % | |||||||||||||||||||
Residential first mortgagenon-guaranteed (2) | 122 | 1.03 | % | 131 | 1.10 | % | 136 | 1.15 | % | 154 | 1.31 | % | 142 | 1.21 | % | |||||||||||||||||||
Home equity | 63 | 0.57 | % | 66 | 0.60 | % | 65 | 0.58 | % | 71 | 0.63 | % | 75 | 0.66 | % | |||||||||||||||||||
Indirect | 7 | 0.20 | % | 6 | 0.18 | % | 5 | 0.16 | % | 5 | 0.15 | % | 5 | 0.17 | % | |||||||||||||||||||
Consumer credit card | 12 | 1.21 | % | 11 | 1.15 | % | 11 | 1.19 | % | 12 | 1.30 | % | 12 | 1.28 | % | |||||||||||||||||||
Other consumer | 3 | 0.22 | % | 3 | 0.26 | % | 3 | 0.27 | % | 3 | 0.27 | % | 4 | 0.29 | % | |||||||||||||||||||
Total Consumer (2) | 207 | 0.72 | % | 217 | 0.76 | % | 220 | 0.78 | % | 245 | 0.87 | % | 238 | 0.84 | % | |||||||||||||||||||
Total Accruing 90+ Days Past Due Loans (2) | $ | 222 | 0.29 | % | $ | 233 | 0.31 | % | $ | 251 | 0.33 | % | $ | 257 | 0.34 | % | $ | 256 | 0.34 | % | ||||||||||||||
Total Delinquencies (1) (2) | $ | 633 | 0.82 | % | $ | 715 | 0.94 | % | $ | 742 | 0.97 | % | $ | 736 | 0.98 | % | $ | 810 | 1.09 | % | ||||||||||||||
�����������������
(1) | Excludes loans that are 100% guaranteed by FHA. Total 30-89 days past due guaranteed loans excluded were $24 million at 12/31/14, $21 million at 9/30/14, $19 million at 6/30/14, $16 million at 3/31/14, and $17 million at 12/31/13. |
(2) | Excludes loans that are 100% guaranteed by FHA and all guaranteed loans sold to GNMA where Regions has the right but not the obligation to repurchase. Total 90 days or more past due guaranteed loans excluded were $125 million at 12/31/14, $121 million at 9/30/14, $88 million at 6/30/14, $94 million at 3/31/14, and $106 million at 12/31/13. |
16
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Troubled Debt Restructurings
�
� | As of | ||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
Current: | |||||||||||||||||||
Commercial | $ | 244 | $ | 278 | $ | 332 | $ | 408 | $ | 441 | |||||||||
Investor real estate | 281 | 304 | 321 | 441 | 498 | ||||||||||||||
Residential first mortgage | 301 | 269 | 261 | 240 | 212 | ||||||||||||||
Home equity | 320 | 326 | 332 | 334 | 332 | ||||||||||||||
Consumer credit card | 2 | 2 | 2 | 2 | 2 | ||||||||||||||
Other consumer | 16 | 17 | 20 | 22 | 25 | ||||||||||||||
Total Current | 1,164 | 1,196 | 1,268 | 1,447 | 1,510 | ||||||||||||||
Accruing 30-89 DPD: | |||||||||||||||||||
Commercial | 7 | 11 | 23 | 18 | 27 | ||||||||||||||
Investor real estate | 9 | 24 | 34 | 18 | 13 | ||||||||||||||
Residential first mortgage | 55 | 61 | 61 | 70 | 95 | ||||||||||||||
Home equity | 23 | 25 | 24 | 23 | 29 | ||||||||||||||
Other consumer | 2 | 2 | 2 | 2 | 2 | ||||||||||||||
Total Accruing 30-89 DPD | 96 | 123 | 144 | 131 | 166 | ||||||||||||||
Total Accruing and <90 DPD | 1,260 | 1,319 | 1,412 | 1,578 | 1,676 | ||||||||||||||
Non-accrual or 90+ DPD: | |||||||||||||||||||
Commercial | 93 | 145 | 146 | 207 | 156 | ||||||||||||||
Investor real estate | 67 | 70 | 96 | 145 | 157 | ||||||||||||||
Residential first mortgage | 112 | 122 | 130 | 147 | 156 | ||||||||||||||
Home equity | 25 | 25 | 27 | 29 | 30 | ||||||||||||||
Total Non-accrual or 90+DPD | 297 | 362 | 399 | 528 | 499 | ||||||||||||||
Total TDRs - Loans | $ | 1,557 | $ | 1,681 | $ | 1,811 | $ | 2,106 | $ | 2,175 | |||||||||
TDRs - Held For Sale (1) | 29 | 13 | 16 | 38 | 579 | ||||||||||||||
Total TDRs | $ | 1,586 | $ | 1,694 | $ | 1,827 | $ | 2,144 | $ | 2,754 | |||||||||
Total TDRs - Loans by Portfolio | |||||||||||||||||||
As of | |||||||||||||||||||
($ amounts in millions) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
Total Commercial TDRs | $ | 344 | $ | 434 | $ | 501 | $ | 633 | $ | 624 | |||||||||
Total Investor Real Estate TDRs | 357 | 398 | 451 | 604 | 668 | ||||||||||||||
Total Consumer TDRs | 856 | 849 | 859 | 869 | 883 | ||||||||||||||
Total TDRs - Loans | $ | 1,557 | $ | 1,681 | $ | 1,811 | $ | 2,106 | $ | 2,175 | |||||||||
�����������
(1) | The majority of TDRs held for sale at December 31, 2013 were comprised of residential first mortgage loans transfered during the fourth quarter of 2013 and subsequently sold in the first quarter of 2014. |
17
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Reconciliation to GAAP Financial MeasuresContinuing Operations
Adjusted Efficiency Ratios, Adjusted Fee Income Ratios, and Adjusted Non-Interest Income/Expense
The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. The table also shows the fee income ratio (non-GAAP), generally calculated as non-interest income divided by total revenue. Management uses these ratios to monitor performance and believes these measures provide meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the efficiency ratio. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the fee income ratio. Net interest income on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the fee income and efficiency ratios. Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.
________
� | Quarter Ended | |||||||||||||||||||||||||||||||||
($ amounts in millions) | � | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | 4Q14 vs. 3Q14 | 4Q14 vs. 4Q13 | ||||||||||||||||||||||||||
Non-interest expense (GAAP) | $ | 969 | $ | 826 | $ | 820 | $ | 817 | $ | 946 | $ | 143 | 17.3 | �% | $ | 23 | 2.4 | �% | ||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||
Professional, legal and regulatory expenses(1)(2) | (100 | ) | 7 | (58 | ) | (100 | ) | NM | (42 | ) | 72.4 | �% | ||||||||||||||||||||||
Branch consolidation and property and equipment charges | (10 | ) | (6 | ) | (5 | ) | (10 | ) | NM | (5 | ) | 100.0 | �% | |||||||||||||||||||||
Gain on sale of TDRs held for sale, net | 35 | NM | NM | |||||||||||||||||||||||||||||||
Adjusted non-interest expense (non-GAAP) | A | $ | 859 | $ | 826 | $ | 827 | $ | 846 | $ | 883 | $ | 33 | 4.0 | �% | $ | (24 | ) | (2.7 | )% | ||||||||||||||
Net interest income (GAAP) | $ | 820 | $ | 821 | $ | 822 | $ | 816 | $ | 832 | $ | (1 | ) | (0.1 | )% | $ | (12 | ) | (1.4 | )% | ||||||||||||||
Taxable-equivalent adjustment | 17 | 16 | 15 | 15 | 14 | 1 | 6.3 | �% | 3 | 21.4 | �% | |||||||||||||||||||||||
Net interest income, taxable-equivalent basis | B | $ | 837 | $ | 837 | $ | 837 | $ | 831 | $ | 846 | $ | NM | $ | (9 | ) | (1.1 | )% | ||||||||||||||||
Non-interest income (GAAP) | C | $ | 448 | $ | 478 | $ | 457 | $ | 438 | $ | 526 | $ | (30 | ) | (6.3 | )% | $ | (78 | ) | (14.8 | )% | |||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||
Securities gains, net | (12 | ) | (7 | ) | (6 | ) | (2 | ) | (5 | ) | 71.4 | �% | (12 | ) | NM | |||||||||||||||||||
Leveraged lease termination gains, net | (9 | ) | (1 | ) | (39 | ) | 9 | (100.0 | )% | 39 | (100.0 | )% | ||||||||||||||||||||||
Adjusted non-interest income (non-GAAP) | D | $ | 436 | $ | 462 | $ | 451 | $ | 435 | $ | 487 | $ | (26 | ) | (5.6 | )% | $ | (51 | ) | (10.5 | )% | |||||||||||||
Total revenue, taxable-equivalent basis | B+C | $ | 1,285 | $ | 1,315 | $ | 1,294 | $ | 1,269 | $ | 1,372 | $ | (30 | ) | (2.3 | )% | $ | (87 | ) | (6.3 | )% | |||||||||||||
Adjusted total revenue, taxable-equivalent basis (non-GAAP) | B+D=E | $ | 1,273 | $ | 1,299 | $ | 1,288 | $ | 1,266 | $ | 1,333 | $ | (26 | ) | (2.0 | )% | $ | (60 | ) | (4.5 | )% | |||||||||||||
Adjusted efficiency ratio (non-GAAP) | A/E | 67.5 | % | 63.6 | % | 64.2 | % | 66.9 | % | 66.3 | % | |||||||||||||||||||||||
Adjusted fee income ratio (non-GAAP) | D/E | 34.3 | % | 35.6 | % | 35.0 | % | 34.4 | % | 36.5 | % | |||||||||||||||||||||||
Year Ended December 31 | |||||||||||||||
($ amounts in millions) | 2014 | 2013 | 2014 vs. 2013 | ||||||||||||
Non-interest expense (GAAP) | $ | 3,432 | $ | 3,556 | $ | (124 | ) | (3.5 | )% | ||||||
Adjustments: | |||||||||||||||
Professional, legal and regulatory expenses(1)(2) | (93 | ) | (58 | ) | (35 | ) | 60.3 | �% | |||||||
Branch consolidation and property and equipment charges | (16 | ) | (5 | ) | (11 | ) | 220.0 | �% | |||||||
Gain on sale of TDRs held for sale, net | 35 | 35 | NM | ||||||||||||
Loss on early extinguishment of debt | (61 | ) | 61 | (100.0 | )% | ||||||||||
Adjusted non-interest expense (non-GAAP) | F | $ | 3,358 | $ | 3,432 | $ | (74 | ) | (2.2 | )% | |||||
Net interest income (GAAP) | $ | 3,279 | $ | 3,262 | $ | 17 | 0.5 | �% | |||||||
Taxable-equivalent adjustment | 63 | 54 | 9 | 16.7 | �% | ||||||||||
Net interest income, taxable-equivalent basis | G | $ | 3,342 | $ | 3,316 | $ | 26 | 0.8 | �% | ||||||
Non-interest income (GAAP) | H | $ | 1,821 | $ | 2,019 | $ | (198 | ) | (9.8 | )% | |||||
Adjustments: | |||||||||||||||
Securities gains, net | (27 | ) | (26 | ) | (1 | ) | 3.8 | �% | |||||||
Leveraged lease termination gains, net | (10 | ) | (39 | ) | 29 | (74.4 | )% | ||||||||
Gain on sale of other assets�(3) | (24 | ) | 24 | (100.0 | )% | ||||||||||
Adjusted non-interest income (non-GAAP) | I | $ | 1,784 | $ | 1,930 | $ | (146 | ) | (7.6 | )% | |||||
Total revenue, taxable-equivalent basis | G+H | $ | 5,163 | $ | 5,335 | $ | (172 | ) | (3.2 | )% | |||||
Adjusted total revenue, taxable-equivalent basis (non-GAAP) | G+I=J | $ | 5,126 | $ | 5,246 | $ | (120 | ) | (2.3 | )% | |||||
Adjusted efficiency ratio (non-GAAP) | F/J | 65.5 | % | 65.4 | % | ||||||||||
Adjusted fee income ratio (non-GAAP) | I/J | 34.8 | % | 36.8 | % | ||||||||||
NM - Not Meaningful
(1) | Regions recorded $100 million of contingent legal and regulatory accruals during the fourth quarter of 2014 related to previously disclosed matters. |
(2) | Regions recorded a non-tax deductible regulatory charge of $58 million during the fourth quarter of 2013 related to previously disclosed inquiries from government authorities. These matters were settled in the second quarter of 2014 for $7 million less than originally estimated. |
(3) | Gain on sale on a non-core portion of a Wealth Management business. |
18
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Reconciliation to GAAP Financial Measures
Return Ratios, Tangible Common Ratios, Capital
The following tables provide calculations of return on average tangible common stockholders equity , end of period tangible common stockholders equity ratios and a reconciliation of stockholders equity (GAAP) to tangible common stockholders equity (non-GAAP), Tier 1 capital (regulatory) and Tier 1 common equity (non-GAAP). Tangible common stockholders equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Traditionally, the Federal Reserve and other banking regulatory bodies have assessed a banks capital adequacy based on Tier 1 capital, the calculation of which is prescribed in amount by federal banking regulations. In connection with the Companys Comprehensive Capital Analysis and Review ( CCAR ), these regulators are supplementing their assessment of the capital adequacy of a bank based on a variation of Tier 1 capital, known as Tier 1 common equity. While not prescribed in amount by federal banking regulations (under Basel I), analysts and banking regulators have assessed Regions capital adequacy using the tangible common stockholders equity and/or the Tier 1 common equity measures. Because tangible common stockholders and Tier 1 common equity are not formally defined by GAAP or prescribed in any amount by federal banking regulations (under Basel I), these measures are currently considered to be non-GAAP financial measures and other entities may calculate them differently than Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using tangible common stockholders equity and Tier 1 common equity, management believes that it is useful to provide investors the ability to assess Regions capital adequacy on these same bases.
Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a companys balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk-weighted category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity (non-GAAP). Tier 1 common equity (non-GAAP) is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio (non-GAAP). The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements.
The following tables also provide calculations of "Common equity Tier 1" (CET1), based on Regions current understanding of the Final Basel III requirements. In December 2010, the Basel Committee on Banking Supervision (the Basel Committee ) released its final framework for Basel III, which will strengthen international capital and liquidity regulation. In June 2012, U.S. Regulators released three separate Notices of Proposed Rulemaking covering U.S. implementation of the Basel III framework. In July 2013, U.S. Regulators released final rules covering the U.S. implementation of the Basel III framework, which will change capital requirements and place greater emphasis on common equity. For Regions, the Basel III framework will be phased in beginning in 2015 with full implementation complete beginning in 2019. The calculations provided below are estimates, based on Regions current understanding of the final framework, including the Companys interpretation of the requirements, and informal feedback received through the regulatory process. Regions understanding of the framework is evolving and will likely change as analysis and discussions with regulators continue. Because the Basel III implementation regulations are not formally defined by GAAP, these measures are considered to be non-GAAP financial measures, and other entities may calculate them differently from Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using the Basel III framework, we believe that it is useful to provide investors the ability to assess Regions capital adequacy on the same basis.
� | � | As of and for Quarter Ended | ||||||||||||||||||
($ amounts in millions, except per share data) | � | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS EQUITY | ||||||||||||||||||||
Net income available to common shareholders (GAAP) | A | $ | 195 | $ | 305 | $ | 292 | $ | 311 | $ | 219 | |||||||||
Average stockholders equity (GAAP) | $ | 17,194 | $ | 17,049 | $ | 16,680 | $ | 16,002 | $ | 15,504 | ||||||||||
Less: | ||||||||||||||||||||
Average intangible assets (GAAP) | 5,097 | 5,105 | 5,104 | 5,107 | 5,118 | |||||||||||||||
Average deferred tax liability related to intangibles (GAAP) | (176 | ) | (182 | ) | (184 | ) | (187 | ) | (189 | ) | ||||||||||
Average preferred stock (GAAP) | 886 | 903 | 779 | 444 | 452 | |||||||||||||||
Average tangible common stockholders equity (non-GAAP) | B | $ | 11,387 | $ | 11,223 | $ | 10,981 | $ | 10,638 | $ | 10,123 | |||||||||
Return on average tangible common stockholders equity (non-GAAP)(1) | A/B | 6.78 | % | 10.78 | % | 10.68 | % | 11.84 | % | 8.58 | % | |||||||||
TANGIBLE COMMON RATIOSCONSOLIDATED | ||||||||||||||||||||
Stockholders equity (GAAP) | $ | 16,989 | $ | 17,160 | $ | 17,029 | $ | 16,132 | $ | 15,768 | ||||||||||
Less: | ||||||||||||||||||||
Preferred stock (GAAP) | 884 | 900 | 920 | 442 | 450 | |||||||||||||||
Intangible assets (GAAP) | 5,091 | 5,103 | 5,097 | 5,110 | 5,111 | |||||||||||||||
Deferred tax liability related to intangibles (GAAP) | (172 | ) | (181 | ) | (183 | ) | (186 | ) | (188 | ) | ||||||||||
Tangible common stockholders equity (non-GAAP) | C | $ | 11,186 | $ | 11,338 | $ | 11,195 | $ | 10,766 | $ | 10,395 | |||||||||
Total assets (GAAP) | $ | 119,679 | $ | 119,226 | $ | 118,719 | $ | 117,933 | $ | 117,396 | ||||||||||
Less: | ||||||||||||||||||||
Intangible assets (GAAP) | 5,091 | 5,103 | 5,097 | 5,110 | 5,111 | |||||||||||||||
Deferred tax liability related to intangibles (GAAP) | (172 | ) | (181 | ) | (183 | ) | (186 | ) | (188 | ) | ||||||||||
Tangible assets (non-GAAP) | D | $ | 114,760 | $ | 114,304 | $ | 113,805 | $ | 113,009 | $ | 112,473 | |||||||||
Shares outstandingend of quarter | E | 1,354 | 1,379 | 1,378 | 1,378 | 1,378 | ||||||||||||||
Tangible common stockholders equity to tangible assets (non-GAAP) | C/D | 9.75 | % | 9.92 | % | 9.84 | % | 9.53 | % | 9.24 | % | |||||||||
Tangible common book value per share (non-GAAP) | C/E | $ | 8.26 | $ | 8.23 | $ | 8.12 | $ | 7.81 | $ | 7.54 | |||||||||
19
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Reconciliation to GAAP Financial Measures
Return Ratios, Tangible Common Ratios, Capital (Continued)
� | � | As of and for Quarter Ended | ||||||||||||||||||
($ amounts in millions) | � | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
TIER 1 COMMON RISK-BASED RATIO(2)�CONSOLIDATED | ||||||||||||||||||||
Stockholders equity (GAAP) | $ | 16,989 | $ | 17,160 | $ | 17,029 | $ | 16,132 | $ | 15,768 | ||||||||||
Accumulated other comprehensive (income) loss | 238 | 174 | 52 | 229 | 319 | |||||||||||||||
Non-qualifying goodwill and intangibles | (4,809 | ) | (4,808 | ) | (4,797 | ) | (4,804 | ) | (4,798 | ) | ||||||||||
Disallowed servicing assets | (27 | ) | (29 | ) | (28 | ) | (29 | ) | (31 | ) | ||||||||||
Tier 1 capital (regulatory) | $ | 12,391 | $ | 12,497 | $ | 12,256 | $ | 11,528 | $ | 11,258 | ||||||||||
Preferred stock (GAAP) | (884 | ) | (900 | ) | (920 | ) | (442 | ) | (450 | ) | ||||||||||
Tier 1 common equity (non-GAAP) | F | $ | 11,507 | $ | 11,597 | $ | 11,336 | $ | 11,086 | $ | 10,808 | |||||||||
Risk-weighted assets (regulatory) | G | $ | 98,974 | $ | 98,381 | $ | 98,098 | $ | 97,418 | $ | 96,416 | |||||||||
Tier 1 common risk-based ratio (non-GAAP) | F/G | 11.6 | % | 11.8 | % | 11.6 | % | 11.4 | % | 11.2 | % | |||||||||
BASEL III COMMON EQUITY TIER 1 RATIO (2) | ||||||||||||||||||||
Stockholder's equity (GAAP) | $ | 16,989 | $ | 17,160 | $ | 17,029 | $ | 16,132 | $ | 15,768 | ||||||||||
Non-qualifying goodwill and intangibles�(3) | (4,906 | ) | (4,918 | ) | (4,911 | ) | (4,923 | ) | (4,922 | ) | ||||||||||
Adjustments, including all components of accumulated other comprehensive income, disallowed deferred tax assets, threshold deductions and other adjustments | 116 | 36 | (100 | ) | 61 | 130 | ||||||||||||||
Preferred stock (GAAP) | (884 | ) | (900 | ) | (920 | ) | (442 | ) | (450 | ) | ||||||||||
Basel III common equity Tier 1 (non-GAAP) | H | $ | 11,315 | $ | 11,378 | $ | 11,098 | $ | 10,828 | $ | 10,526 | |||||||||
Basel III risk-weighted assets (non-GAAP)(4) | I | $ | 101,997 | $ | 101,390 | $ | 100,968 | $ | 100,566 | $ | 99,483 | |||||||||
Basel III common equity Tier 1 ratio (non-GAAP) | H/I | 11.1 | % | 11.2 | % | 11.0 | % | 10.8 | % | 10.6 | % | |||||||||
����������������
(1) | Annualized |
(2) | Current quarter amounts and the resulting ratio are estimated. |
(3) | Under Basel III, regulatory capital must be reduced by purchased credit card relationship intangible assets. These assets are partially allowed in Basel I capital. |
(4) | Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III. The amount included above is a reasonable approximation, based on our understanding of the requirements. |
20
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Statements of Discontinued Operations (unaudited)
On January�11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and Company, Inc. and related affiliates to Raymond James Financial Inc. The sale was closed on April�2, 2012. Regions Investment Management, Inc. (formerly known as Morgan Asset Management, Inc.) and Regions Trust were not included in the sale. In connection with the agreement, the results of the entities sold are reported as discontinued operations. The following table represents the unaudited condensed results of operations for discontinued operations.
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Quarter Ended | |||||||||||||||||||
($ amounts in millions, except per share data) | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | 12/31/2013 | ||||||||||||||
Non-interest income: | |||||||||||||||||||
Insurance proceeds | $ | $ | 19 | $ | $ | $ | |||||||||||||
Total non-interest income | 19 | ||||||||||||||||||
Non-interest expense: | |||||||||||||||||||
Professional and legal expenses | 5 | 14 | (3 | ) | (19 | ) | 24 | ||||||||||||
Other | 1 | 1 | |||||||||||||||||
Total non-interest expense | 5 | 14 | (2 | ) | (19 | ) | 25 | ||||||||||||
Income (loss) from discontinued operations before income tax | (5 | ) | 5 | 2 | 19 | (25 | ) | ||||||||||||
Income tax expense (benefit) | (2 | ) | 2 | 1 | 7 | (11 | ) | ||||||||||||
Income (loss) from discontinued operations, net of tax | $ | (3 | ) | $ | 3 | $ | 1 | $ | 12 | $ | (14 | ) | |||||||
Weighted-average shares outstandingduring quarter (1): | |||||||||||||||||||
Basic | 1,365 | 1,378 | 1,378 | 1,378 | 1,378 | ||||||||||||||
Diluted | 1,365 | 1,389 | 1,390 | 1,390 | 1,378 | ||||||||||||||
Earnings (loss) per common share from discontinued operations: | |||||||||||||||||||
Basic | $ | (0.00 | ) | $ | 0.00 | $ | 0.00 | $ | 0.01 | $ | (0.01 | ) | |||||||
Diluted | $ | (0.00 | ) | $ | 0.00 | $ | 0.00 | $ | 0.01 | $ | (0.01 | ) | |||||||
_________
(1) | In a quarter where there is a loss from discontinued operations, basic and diluted weighted-average common shares outstanding are the same. |
21
Regions Financial Corporation and Subsidiaries��������������������������������
Financial Supplement to Fourth Quarter 2014 Earnings Release
Forward-Looking Statements
This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions current views with respect to future events and financial performance. 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 managements 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:
" | Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, unemployment rates and potential reduction of economic growth. |
" | Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations. |
" | The effects of a possible downgrade in the U.S. governments sovereign credit rating or outlook. |
" | Possible changes in market interest rates. |
" | Any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets due to adverse changes in the economic environment, declining operations of the reporting unit, or other factors. |
" | Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans. |
" | Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses. |
" | Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities. |
" | Our ability to effectively compete with other financial services companies, some of whom possess greater financial resources than we do and are subject to different regulatory standards than we are. |
" | Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments. |
" | Our ability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner. |
" | Changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies. |
" | Our ability to obtain regulatory approval (as part of the CCAR process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or redeem preferred stock or other regulatory capital instruments. |
" | Our ability to comply with applicable capital and liquidity requirements (including finalized Basel III capital standards), including our ability to generate capital internally or raise capital on favorable terms. |
" | The costs and other effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party. |
" | Any adverse change to our ability to collect interchange fees in a profitable manner, whether such change is the result of regulation, litigation, legislation, or other governmental action. |
" | Our 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 our business. |
" | Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits. |
" | Any inaccurate or incomplete information provided to us by our customers or counterparties. |
" | Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers. |
" | The inability of our internal disclosure controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts. |
" | The effects of geopolitical instability, including wars, conflicts and terrorist attacks. |
" | The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes and environmental damage. |
" | Our ability to keep pace with technological changes. |
" | Our ability to identify and address cyber-security risks such as data security breaches, denial of service attacks, hacking and identity theft. |
" | Possible downgrades in our credit ratings or outlook. |
" | The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally. |
" | The effects of the failure of any component of our business infrastructure which is provided by a third party. |
" | Our ability to receive dividends from our subsidiaries. |
" | Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. |
" | The effects of any damage to our reputation resulting from developments related to any of the items identified above. |
The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions Forward-Looking Statements and Risk Factors of Regions Annual Report on Form 10-K for the year ended December�31, 2013, as filed with the Securities and Exchange Commission.
The words anticipates, intends, plans, seeks, believes, estimates, expects, targets, projects, outlook, forecast, will, may, could, should, can, 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. We assume no obligation to update or revise any forward-looking statements that are made from time to time.
Regions Investor Relations contacts are List Underwood and Dana Nolan at (205)�581-7890; Regions Media contact is Evelyn Mitchell at (205) 264-4551.
22
4th Quarter 2014 Earnings o Conference Call January 20, 2015 Exhibit 99.3
�
2014 Overview 2 Continued risk discipline Emphasis on diversifying and growing revenue Focused on banking fundamentals " Loans increased $3 billion or 4% " Deposits increased $2 billion or 2%, while deposit costs reached historic lows " Increased number of quality households and grew number of checking, savings, credit card and wealth management accounts " Reduced full year adjusted expenses(2) 2% " All credit metrics experienced improvement " Maintained strong capital levels Focus areas for 2015: " Effectively deploy capital " Generate positive operating leverage " Revenue diversification ($ in millions, except per share data) 2014 2013 Change Net Income(1) $1,103 $1,090 1% Diluted EPS $0.80 $0.77 4% Ending Loans $77,307 $74,609 4% Ending Deposits $94,200 $92,453 2% Tier 1 Common ratio(2) 11.6% 11.2% 40 bps Non-accrual loans as % of loans(3) 1.07% 1.45% 38 bps (1) Available to common shareholders (2) Non-GAAP; see appendix for reconciliation (3) Excluding loans held for sale Financial Highlights
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Loans For the quarter: " Ending loan balances up $700MM or 1% " Business loans(1)(2) increased 1% as production increased 18% " Commercial and industrial grew 3% " Line utilization increased 40 basis points and commitments increased 3% " Investor real estate relatively steady " Consumer loans increased 1% " Indirect auto loans up 3% " Credit card balances increased 5% " Mortgage balances up modestly " Home equity down slightly " Other consumer loans up just over 1% as a result of the introduction of several new products and improved customer delivery $74.6 $75.7 $76.5 $76.6 $77.3 4Q13 1Q14 2Q14 3Q14 4Q14 3 ($ in billions) ($ in billions) Loan Balances(1) by portfolio Loan Balances(1) $46.0 $47.1 $47.7 $47.7 $48.2 $28.6 $28.6 $28.8 $28.9 $29.1 4Q13 1Q14 2Q14 3Q14 4Q14 Business Lending Consumer Lending Note: All percentage growth is for ending loans on a linked quarter basis (1) On an ending basis (2) The business lending portfolio includes the commercial and investor real estate loan categories (2)
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4 Deposits and funding costs Deposit Balances(1) ($ in billions) 34 bps 33 bps 31 bps 30 bps 29 bps 4Q13 1Q14 2Q14 3Q14 4Q14 Funding costs $82.8 $84.2 $84.9 $85.4 $85.6 $9.7 $9.2 $9.0 $8.8 $8.6 4Q13 1Q14 2Q14 3Q14 4Q14 Low-Cost Deposits Time Deposits + Other Deposit Balances(1) by type ($ in billions) Deposit costs 12 bps 12 bps 11 bps 11 bps 11 bps 4Q13 1Q14 2Q14 3Q14 4Q14 $92.5 $93.4 $93.8 $94.1 $94.2 4Q13 1Q14 2Q14 3Q14 4Q14 (1) On an ending basis
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Net interest income and net interest margin " Despite continuation of the low rate environment, which exerted pressure on asset yields, both net interest income and net interest margin remained relatively stable with the third quarter " Stability in both measures was largely attributable to higher average loan balances and lower cash balances Net interest income and net interest margin ($ in millions) $846 $831 $837 $837 $837 3.26% 3.26% 3.24% 3.18% 3.17% 4Q13 1Q14 2Q14 3Q14 4Q14 Net Interest Income (FTE) Net Interest Margin 5
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Non-interest income " Non-interest income down 6% " Service charges declined $14MM " $4MM decline in fees resulting from product discontinuation " Customer reimbursements of $8MM " Mortgage income impacted by lower gains from loan sales and decline in market valuation of mortgage servicing portfolio net of hedging " Capital markets income decreased $4MM, driven primarily by credit valuation adjustments on swaps " Card and ATM fees increased as a result of higher spending and transaction volumes " Wealth management income increased as the company continues to expand and deepen relationships with new and existing customers Non-interest income ($ in millions) 185 173 174 181 167 80 79 84 85 86 43 40 43 39 27 84 89 90 90 91 134 57 66 83 77 $526 $438 $457 $478 $448 4Q13 1Q14 2Q14 3Q14 4Q14 Service charges on deposit accounts Card and ATM fees Mortgage Income Wealth Management Income Other (1) Total Wealth Management income presented above does not include the portion of service charges on deposit accounts and similar smaller dollar amounts that are also attributable to the Wealth Management segment. (1) 6
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Expenses " Reported expenses included some unusual items " Previous quarter included $24MM benefit from unfunded commitments; partially offset by $7MM Visa� expense(3) " Intend to consolidate 50 branches in 2015 and incurred related expense of $10MM in fourth quarter(4) " Contingent legal and regulatory accrual of $100MM in fourth quarter(4) " Salaries and benefits flat from previous quarter, although headcount increased 124 positions " Outside services increased due to third party engagements to support risk management functions " Remain diligent with respect to expense control, but will opportunistically invest in talent and technology to further accelerate momentum (1) Non-GAAP; see appendix for reconciliation (2) Year-over-year change for the most recent quarter (3) Included in adjusted non-interest expenses (4) Not included in adjusted non-interest expenses Adjusted non-interest expenses(1) ($ in millions) $883 $846 $827 $826 $859 4Q13 1Q14 2Q14 3Q14 4Q14 7 3% Decrease(2)
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463 457 452 452 468 1,321 1,301 992 866 750 391 386 383 376 368 579 $2,754 $2,144 $1,827 $1,694 $1,586 4Q13 1Q14 2Q14 3Q14 4Q14 Residential First Mortgage All Other Home Equity TDRs Held-For-Sale 2,088 1,914 1,724 1,688 1,493 927 1,067 1,327 1,297 1,206 $3,015 $2,981 $3,051 $2,985 $2,699 4Q13 1Q14 2Q14 3Q14 4Q14 Classified Loans Special Mention Solid asset quality Net charge-offs and ratio ($ in millions) NPLs and coverage ratio(3) ($ in millions) Criticized and classified loans(4) ($ in millions) Troubled debt restructurings ($ in millions) 35% Decline(1)(2) 23% Decline in Total NPLs(1) 10% Decline(1) 42% Decline(1) 8 $1,082 $1,070 $899 $837 $829 124% 118% [VALUE] [VALUE] 133% 4Q13 1Q14 2Q14 3Q14 4Q14 NPLs Coverage Ratio (1) Year-over-year change for the most recent quarter (2) Non-GAAP; see appendix for reconciliation (3) Excludes loans held for sale (4) Includes commercial and investor real estate loans only (5) The All Other category includes TDRs classified as Held-For-Sale for the following periods : $38M in 1Q14, $16M in 2Q14, $13M in 3Q14 and $29M in 4Q14. (5)
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Strong capital and solid liquidity Tier 1 capital ratio(1) Loan to deposit ratio(3) Tier 1 common ratio(1)(2) (1) Current quarter ratios are estimated (2) Non-GAAP; see appendix for reconciliation (3) Based on ending balances 11.7% 11.8% 12.5% 12.7% 12.5% 4Q13 1Q14 2Q14 3Q14 4Q14 11.2% 11.4% 11.6% 11.8% 11.6% 4Q13 1Q14 2Q14 3Q14 4Q14 81% 81% 82% 81% 82% 4Q13 1Q14 2Q14 3Q14 4Q14 " Repurchased 25 million shares of common stock amounting to $248 million " Basel III Common Equity Tier 1 ratio(1)(2) estimated to be approximately 11.1%, which is well above minimum threshold " Regions remains well-positioned to be fully compliant with the Liquidity Coverage Ratio 9
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Expectations for 2015 10 Deposit growth of 1% to 2% Loans " Expect total loan growth in the 4% to 6% range " Commercial and industrial loans expected to drive growth within business lending portfolio " Expect growth in investor real estate to be limited as we remain committed to risk tolerance levels " Continued indirect auto lending growth is expected " Expect pace of growth in other consumer category to accelerate " Credit card growth to continue in near term " Expect mortgage balances to increase incrementally Deposits " Deposit balances should grow at similar rate as 2014 NIM / Operating Leverage " If current market conditions prevail, the net interest margin is expected to remain relatively stable next quarter " If the 10-year Treasury yield were to remain in the 1.75% to 2% range, we would expect 10 to 12 basis points of margin pressure throughout 2015 " Net interest margin is expected to remain stable to trending higher in a moderately rising rate environment in 2015 " Expect to generate positive operating leverage Economy " Expect solid GDP growth in U.S. economy in 2015 " Low energy prices should provide tailwind to consumer spending and manufacturing sector " Uncertain global growth environment poses some risks " Do not expect an increase in short-term rates until latter part of 2015
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Appendix 11
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Energy and oil exposure 12 Exposure E&P Risk Management " Energy related loans represented 4.3% of total loans outstanding as of 12/31/14 " ~70% of E&P loans in Texas, 20% in South Louisiana and remaining 10% disbursed geographically " In E&P portfolio ~76% tied to oil and 24% to natural gas " Oilfield services portfolio is concentrated in a relatively small number of names " Securities portfolio contains ~$289MM of high quality, investment grade corporate bonds that are energy related " Experienced team of bankers and petroleum engineers on staff " Majority of exposure is in Shared National Credits " Reserve calculations based on a conservative advance rate " Borrowing base redeterminations occur in the spring and fall every year " Continue to place high degree of surveillance on geographic markets that may experience economic correlation to falling commodity prices Energy Loan Portfolio Outstandings ($ in millions) As of 12/31/14 Oilfield Services $1,394 Exploration and production (Upstream) $1,144 Midstream $367 Downstream $282 Coal $139 Energy Investment Funds $30 Total $3,356
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Non-GAAP reconciliation: Non-interest expense The table below presents non-interest expense (GAAP) excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP). Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. This non-GAAP financial measure is also used by management to assess the performance of Regions business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of this non-GAAP financial measure will permit investors to assess the performance of the Company on the same basis as that applied by management. 13 Quarter Ended ($ amounts in millions) 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013 4Q14 vs. 3Q14 4Q14 vs. 4Q13 Non-interest expense (GAAP) $ 969 $ 826 $ 820 $ 817 $ 946 $ 143 17.3 % $ 23 2.4 % Adjustments: Professional, legal and regulatory expenses(1)(2) (100 ) 7 (58 ) (100 ) NM (42 ) 72.4 % Branch consolidation and property and equipment charges (10 ) (6 ) (5 ) (10 ) NM (5 ) 100.0 % Gain on sale of TDRs held for sale, net 35 NM NM Adjusted non-interest expense (non-GAAP) $ 859 $ 826 $ 827 $ 846 $ 883 $ 33 4.0 % $ (24 ) (2.7 )% NM Not Meaningful (1) Regions recorded $100 million of contingent legal and regulatory accruals during the fourth quarter of 2014 related to previously disclosed matters. (2) Regions recorded a non-tax deductible regulatory charge of $58 million during the fourth quarter of 2013 related to previously disclosed inquiries from government authorities. These matters were settled in the second quarter of 2014 for $7 million less than originally estimated. Year Ended December 31 ($ amounts in millions) 2014 2013 2014 vs. 2013 Non-interest expense (GAAP) $ 3,432 $ 3,556 $ (124 ) (3.5 )% Adjustments: Professional, legal and regulatory expenses(1)(2) (93 ) (58 ) (35 ) 60.3 % Branch consolidation and property and equipment charges (16 ) (5 ) (11 ) 220.0 % Gain on sale of TDRs held for sale, net 35 35 NM Loss on early extinguishment of debt (61 ) 61 (100.0 )% Adjusted non-interest expense (non-GAAP) $ 3,358 $ 3,432 $ (74 ) (2.2 )%
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Non-GAAP reconciliation: Net charge-off ratio Select calculations for annualized net charge-offs as a percentage of average loans (GAAP) are presented in the table below. During the fourth quarter of 2013, Regions made the strategic decision to transfer certain primarily accruing restructured residential first mortgage loans to loans held for sale. These loans were marked down to fair value through net charge-offs upon transfer to held for sale. Management believes that excluding the incremental increase to net charge-offs from the affected net charge-off ratios to arrive at an adjusted net charge-off ratio (non-GAAP) will assist investors in analyzing the Company's credit quality performance as well as provide a better basis from which to predict future performance. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. *Annualized 14 As of and for Quarter Ended ($ amounts in millions) 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013 Residential first mortgage net charge-offs (GAAP) A $ 6 $ 6 $ 7 $ 9 $ 164 Less: Net charge-offs associated with transfer to loans held for sale 151 Adjusted residential first mortgage net charge-offs (non-GAAP) B $ 6 $ 6 $ 7 $ 9 $ 13 Total consumer net charge-offs (GAAP) C $ 52 $ 48 $ 41 $ 57 $ 219 Less: Net charge-offs associated with transfer to loans held for sale 151 Adjusted total consumer net charge-offs (non-GAAP) D $ 52 $ 48 $ 41 $ 57 $ 68 Total net charge-offs (GAAP) E $ 83 $ 75 $ 67 $ 82 $ 278 Less: Net charge-offs associated with transfer to loans held for sale 151 Adjusted net charge-offs (non-GAAP) F $ 83 $ 75 $ 67 $ 82 $ 127 Average residential first mortgage loans (GAAP) G $ 12,273 $ 12,212 $ 12,137 $ 12,127 $ 12,752 Add: Average balances of residential first mortgage loans transferred to loans held for sale 74 Adjusted average residential first mortgage loans (non-GAAP) H $ 12,273 $ 12,212 $ 12,137 $ 12,127 $ 12,826 Average total consumer loans (GAAP) I $ 28,996 $ 28,840 $ 28,687 $ 28,603 $ 29,147 Add: Average balances of residential first mortgage loans transferred to loans held for sale 74 Adjusted average total consumer loans (non-GAAP) J $ 28,996 $ 28,840 $ 28,687 $ 28,603 $ 29,221 Total average loans (GAAP) K $ 77,182 $ 76,279 $ 76,390 $ 75,139 $ 75,843 Add: Average balances of residential first mortgage loans transferred to loans held for sale 74 Adjusted total average loans (non-GAAP) L $ 77,182 $ 76,279 $ 76,390 $ 75,139 $ 75,917 Residential first mortgage net charge-off percentage (GAAP)* A/G 0.18 % 0.22 % 0.20 % 0.32 % 5.10 % Adjusted residential first mortgage net charge-off percentage (non-GAAP)* B/H 0.18 % 0.22 % 0.20 % 0.32 % 0.41 % Total consumer net charge-off percentage (GAAP)* C/I 0.70 % 0.67 % 0.57 % 0.81 % 2.98 % Adjusted total consumer net charge-off percentage (non-GAAP)* D/J 0.70 % 0.67 % 0.57 % 0.81 % 0.93 % Total net charge-off percentage (GAAP)* E/K 0.42 % 0.39 % 0.35 % 0.44 % 1.46 % Adjusted total net charge-off percentage (non-GAAP)* F/L 0.42 % 0.39 % 0.35 % 0.44 % 0.67 %
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Non-GAAP reconciliation: Tier 1 common The following table provides calculations of Tier 1 capital (regulatory) and "Tier 1 common equity" (non-GAAP). Traditionally, the Federal Reserve and other banking regulatory bodies have assessed a bank's capital adequacy based on Tier 1 capital, the calculation of which is prescribed in amount by federal banking regulations. In connection with the Company's Comprehensive Capital Analysis and Review ("CCAR"), these regulators are supplementing their assessment of the capital adequacy of a bank based on a variation of Tier 1 capital, known as Tier 1 common equity. While not prescribed in amount by federal banking regulations (under Basel I), analysts and banking regulators have assessed Regions' capital adequacy using the Tier 1 common equity measure. Because Tier 1 common equity is not formally defined by GAAP or prescribed in any amount by federal banking regulations (under Basel I), this measure is currently considered to be a non-GAAP financial measure and other entities may calculate it differently than Regions' disclosed calculations. Since analysts and banking regulators may assess Regions' capital adequacy using Tier 1 common equity, management believes that it is useful to provide investors the ability to assess Regions' capital adequacy on this same basis. Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a company's balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then multiplied by the risk-weighted category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity (non-GAAP). Tier 1 common equity (non-GAAP) is also divided by the risk-weighted assets to determine the Tier 1 common equity ratio (non-GAAP). The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements. (1) Current quarter amount and the resulting ratio are estimated. 15 As of and for Quarter Ended ($ amounts in millions) 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013 TIER 1 COMMON RISK-BASED RATIO(1) CONSOLIDATED Stockholders equity (GAAP) $ 16,989 $ 17,160 $ 17,029 $ 16,132 $ 15,768 Accumulated other comprehensive (income) loss 238 174 52 229 319 Non-qualifying goodwill and intangibles (4,809 ) (4,808 ) (4,797 ) (4,804 ) (4,798 ) Disallowed servicing assets (27 ) (29 ) (28 ) (29 ) (31 ) Tier 1 capital (regulatory) $ 12,391 $ 12,497 $ 12,256 $ 11,528 $ 11,258 Preferred stock (GAAP) (884 ) (900 ) (920 ) (442 ) (450 ) Tier 1 common equity (non-GAAP) A $ 11,507 $ 11,597 $ 11,336 $ 11,086 $ 10,808 Risk-weighted assets (regulatory) B $ 98,974 $ 98,381 $ 98,098 $ 97,418 $ 96,416 Tier 1 common risk-based ratio (non-GAAP) A/B 11.6 % 11.8 % 11.6 % 11.4 % 11.2 %
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Non-GAAP reconciliation: Basel III common equity Tier 1 The following table provides calculations of common equity Tier 1" (CET1) (non-GAAP), based on Regions current understanding of the Final Basel III requirements. In December 2010, the Basel Committee on Banking Supervision (the Basel Committee ) released its final framework for Basel III, which will strengthen international capital and liquidity regulation. In June 2012, U.S. Regulators released three separate Notices of Proposed Rulemaking covering U.S. implementation of the Basel III framework. In July 2013, U.S. Regulators released final rules covering the U.S. implementation of the Basel III framework, which will change capital requirements and place greater emphasis on common equity. For Regions, the Basel III framework will be phased in beginning in 2015 with full implementation complete beginning in 2019. The calculations provided below are estimates, based on Regions current understanding of the final framework, including the Companys interpretation of the requirements, and informal feedback received through the regulatory process. Regions understanding of the framework is evolving and will likely change as analysis and discussions with regulators continue. Because the Basel III implementation regulations are not formally defined by GAAP, these measures are considered to be non-GAAP financial measures, and other entities may calculate them differently from Regions disclosed calculations. Since analysts and banking regulators may assess Regions capital adequacy using the Basel III framework, we believe that it is useful to provide investors the ability to assess Regions capital adequacy on the same basis. (1) Current quarter amounts and the resulting ratio are estimated. (2) Under Basel III, regulatory capital must be reduced by purchased credit card relationship intangible assets. These assets are partially allowed in Basel I capital. (3) Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III. The amount included above is a reasonable approximation, based on our understanding of the requirements. 16 As of and for Quarter Ended ($ amounts in millions) 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013 BASEL III COMMON EQUITY TIER 1 RATIO(1) Stockholder's equity (GAAP) $ 16,989 $ 17,160 $ 17,029 $ 16,132 $ 15,768 Non-qualifying goodwill and intangibles(2) (4,906 ) (4,918 ) (4,911 ) (4,923 ) (4,922 ) Adjustments, including all components of accumulated other comprehensive income, disallowed deferred tax assets, threshold deductions and other adjustments 116 36 (100 ) 61 130 Preferred stock (GAAP) (884 ) (900 ) (920 ) (442 ) (450 ) Basel III common equity Tier 1 (non-GAAP) A $ 11,315 $ 11,378 $ 11,098 $ 10,828 $ 10,526 Basel III risk-weighted assets (non-GAAP)(3) B $ 101,997 $ 101,390 $ 100,968 $ 100,566 $ 99,483 Basel III common equity Tier 1 ratio (non-GAAP) A/B 11.1 % 11.2 % 11.0 % 10.8 % 10.6 %
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Forward-looking statements The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions Forward-Looking Statements and Risk Factors" of Regions' Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission. The words anticipates, intends, plans, seeks, believes, estimates, expects, targets, projects, outlook, forecast, will, may, could, should, can, 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. We assume no obligation to update or revise any forward-looking statements that are made from time to time. This presentation may include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions current views with respect to future events and financial performance. 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 managements 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: 17 " Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, unemployment rates and potential reduction of economic growth. " Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations. " The effects of a possible downgrade in the U.S. governments sovereign credit rating or outlook. " Possible changes in market interest rates. " Any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets due to adverse changes in the economic environment, declining operations of the reporting unit, or other factors. " Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans. " Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses. " Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities. " Our ability to effectively compete with other financial services companies, some of whom possess greater financial resources than we do and are subject to different regulatory standards than we are. " Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments. " Our ability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner. " Changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies. " Our ability to obtain regulatory approval (as part of the CCAR process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or redeem preferred stock or other regulatory capital instruments. " Our ability to comply with applicable capital and liquidity requirements (including finalized Basel III capital standards), including our ability to generate capital internally or raise capital on favorable terms. " The costs and other effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party. " Any adverse change to our ability to collect interchange fees in a profitable manner, whether such change is the result of regulation, litigation, legislation, or other governmental action. " Our 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 our business. " Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits. " Any inaccurate or incomplete information provided to us by our customers or counterparties. " Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers. " The inability of our internal disclosure controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts. " The effects of geopolitical instability, including wars, conflicts and terrorist attacks. " The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes and environmental damage. " Our ability to keep pace with technological changes. " Our ability to identify and address cyber-security risks such as data security breaches, denial of service attacks, hacking and identity theft. " Possible downgrades in our credit ratings or outlook. " The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally. " The effects of the failure of any component of our business infrastructure which is provided by a third party. " Our ability to receive dividends from our subsidiaries. " Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. " The effects of any damage to our reputation resulting from developments related to any of the items identified above.
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