Regions Financial Corporation (RF)

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Regions Financial Corp. (RF)

Q1 2009 Earnings Call

April 21, 2009; 11:00 am ET


Dowd Ritter - Chairman, President and Chief Executive Officer

Irene Esteves - Chief Financial Officer

Bill Wells - Chief Risk Officer

Mike Willoughby - Chief Credit Officer

Barb Guidon - Head of Consumer Credit

List Underwood - Investor Relation Officer


Chris Mutascio - Stifel Nicolaus

Kevin St Pierre - Bernstein

Brian Foran - Goldman Sachs

Scott Valentin - FBR Capital Markets

Christopher Marinac - FIG Partners

Greg Ketron - Citigroup

Jennifer Demba - SunTrust Robinson Humphrey

Ken Usdin - Banc of America-Merrill Lynch



Good morning and welcome to the Regions Financial Corporation’s quarterly earnings call. My name is Abigail and I will be your operator for today’s call. I would like to remind everyone that all participants’ phone lines have been placed on listen-only. At the end of the call, there will be a question-and-answer session. (Operator instructions).

I will now turn the call over to Mr. List Underwood before Mr. Ritter begins the conference call.

List Underwood

Thank you, Abigail and good morning everyone. We appreciate your participation on a very busy earnings day.

Our presenters this morning are Dowd Ritter, Chairman, President and Chief Executive Officer; Irene Esteves, our Chief Financial Officer. Also joining us and available to answer questions are Bill Wells, our Chief Risk Officer; Mike Willoughby, our Chief Credit Officer; and Barb Guidon, our Head of Consumer Credit.

Let me quickly mention our presentation format. We have prepared a short slide presentation to accompany Irene’s comments. It’s available under the IR section of For those of you in the investment community, that dialed in by phone, once you are on the Investor Relations section of our website, just click on via phone player and the slides will automatically advance in sync with the audio of Irene’s presentation.

A copy of the slides will be available on our website shortly after the call. Our presentation this morning will discuss Regions’ business outlook and includes forward-looking statements. These statements may include descriptions of management’s plans, objectives, or goals for future operations, products, or services, forecasts of financial or other performance measures, statements about the expected quality, performance, or collectability of loans and statements about Regions’ general outlook for economic and business conditions.

We also may make other forward-looking statements in the question-and-answer period following the discussion. These forward-looking statements are subject to a number of risks and uncertainties, and actual results may differ materially.

Information on the risk factors that could cause actual results to differ is available from today’s earnings press release, in today’s Form 8-K, and in our Form 10-K for the year-ended December 31, 2008. As a reminder, forward-looking statements are effective only as of the date they are made and we assume no obligation to update information concerning our expectations.

Finally, let me also mention that our discussions may include the use of non-GAAP financial measures. A reconciliation of these to the same measures on a GAAP basis can be found in our earnings release and related supplemental financial schedules.

I will now turn it over to Dowd.

Dowd Ritter

Thank you, List. We appreciate all of you joining us for Regions first quarter earnings conference call.

As we announced a little earlier this morning, Regions earned $0.04 per fully diluted share in the first quarter, a recovery from our fourth quarter 2008 loss. We’re extremely pleased with this quarter’s strong deposit growth in account production as well as our account retention and continued progress on the credit front.

During the quarter, we continued to de-risk the balance sheet aggressively dealing with problem credits, and at the same time improving our tangible common equity to assets ratio to 5.41%. Our Tier 1 capital ratio remains strong at an estimated 10.37%.

At the same time, we remained firmly focused on serving our customers needs, making approximately $15.7 billion in new and renewed loan commitments during the first quarter of 2009. We originated some $2.8 billion in residential mortgages, reaching the highest quarterly level in the company’s history, and resulted in a doubling of mortgage income to $73 million versus the prior quarter.

Additionally, we opened over 243,000 new retail and business checking accounts, a record quarterly amount, while the ratio of checking accounts opened to those closed improved 26% compared with the same period a year ago. These results drove a 4% increase in both low cost and customer deposits. Morgan Keegan continued to demonstrate growth, adding more than $1 billion in new assets under management during the quarter.

Furthermore, we are providing these and all customers with great service. In 2008, we focused our quality performance activities on improving the customer experience and the results thus far have been outstanding. Our recent customer satisfaction scores reached an all-time high, well into the top quartile for retail banks, reflecting continued success in meeting the needs of customers and delivering higher customer service levels.

There is no doubt that establishing new relationships, and at the same time, strengthening the existing ones will be a key advantage as this economy recovers. I am not about to suggest that the tough times are behind us because they are not. This economy remains weak, pressuring Regions overall revenues which were disappointing in the first quarter, and although our net loan losses and provisioning declined sharply from fourth to first quarter, they remain elevated and non-performing loans remain stubbornly highly, all of which Irene will discuss in just a few minutes.

It is clear however from the underlying business performance that we are taking the necessary actions to ensure that regions were not only successfully managed through these difficult days but be prepared to take full advantage of this economic recovery when it does occur. I am encouraged by recently announced government programs that are aid in stabilizing housing, unfreezing securitization markets, removing problem assets from bank’s balance sheets, and improving liquidity in the mortgage securities markets.

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