Regions Financial Corporation (RF)

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Regions Financial Corporation (RF)

Q4 2009 Earnings Call

January 26, 2010 11:00 am ET


List Underwood – IR

Dowd Ritter – Chairman and CEO

Grayson Hall – President and COO

Irene Esteves – Senior EVP, Finance Group and CFO

Bill Wells – Senior EVP, Risk Management Group and Chief Risk Officer

Barb Godin – Head of Consumer Credit


Matt O'Connor – Deutsche Bank

Craig Siegenthaler – Credit Suisse

Scott Valentin – FBR Capital Markets

Jason Goldberg – Barclays Capital

Jennifer Demba – SunTrust Robinson Humphrey

Jefferson Harralson – KBW

Ken Usdin – Bank of America/Merrill Lynch

Chris Mutascio – Stifel Nicolaus

Marty Mosby – FTN Equity Capital Markets



Good morning and welcome to the Regions Financial Corporation's quarterly earnings call. My name is Christine, 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'll now turn the call over to Mr. List Underwood before Mr. Ritter begins the conference call.

List Underwood

Thank you, operator. And good morning, everyone. We appreciate your participation this morning. Our presenters today are our Chairman and Chief Executive Officer, Dowd Ritter; our President and Chief Operating Officer, Grayson Hall; our Chief Financial Officer, Irene Esteves and Bill Wells, our Chief Risk Officer. Also here and available to answer questions are Tom Neely, our Director of Risk Analytics and Barb Godin, our Head of Consumer Credit.

Let me quickly touch on our presentation format. We have prepared a short slide presentation to accompany Irene and Bill's comments; it's available under the Investor Relations section of

For those of you in the investment community that dialed in by phone, once you're on the Investor Relations section of our website just click on live photo player and the slides will automatically advance in sync with the audio of Irene and Bill's presentation. A copy of the slides will be available on our website shortly after the call. I would also request in the interests of time that anyone asking a question please limit it to one per caller.

Our presentation this morning will discuss Regions's business outlook and includes forward-looking statements. These statements may include descriptions of management's plan, 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's 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, our 10-Qs for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009 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.

Let me also mention that our discussions may include the use of non-GAAP financial measures. A reconciliation of these, the same measures on a GAAP basis, can be found in our earnings release and related supplemental financial schedules. Now, we'll turn it over to Dowd.

Dowd Ritter

Thank you, List. And good morning, everyone. We appreciate all of you joining Regions for our fourth quarter earnings conference call. In the fourth quarter, we took further aggressive actions to improve the risk profile of Region's balance sheet which resulted in a loss of $0.51 per fully diluted share.

Throughout 2009 we have taken steps to proactively recognize and reserve for credit-related problems, improve our operating efficiency, bolster our net interest margin and strengthen customer service and relationships. As a result, Regions is entering 2010 with a stronger foundation and a more effective and competitive business model.

I'm confident about Regions's future and the opportunities but acknowledge that we, along with our industry, still face some near-term credit and economic challenges. There is no better person, I believe than Grayson Hall to guide Regions through the new decade and ensure that Regions is fully prepared to realize its attractive profit potential once these current headwinds dissipate.

As you know, I'll be retiring at the end of this first quarter, at which time Grayson will become the Chief Executive Officer of Regions. During his 30 years with Regions, Grayson has played an instrumental role in growing and reshaping this company. His excellent leadership skills, along with a strong senior management team and a very talented and hard working group of associates, make me confident that Regions will prosper for years to come.

Let me now turn the call over to Grayson who'll spend a few minutes discussing Regions progress and outlook.

Grayson Hall

Thank you, Dowd. And good morning. We are obviously not pleased with either fourth quarter or full year 2009's earning loss but believe that actions we've taken to be prudent and in the best interests of Regions over the long term.

Our immediate focus is to best position our organization for a prompt return to profitability and we're taking aggressive and appropriate actions to make this happen. As part of our effort to reduce balance sheet risk, we have charged off an appropriate reserve for problem credits. For example, we increased the allowance for credit losses by a net $1.3 billion in 2009 with approximately $500 million in the net increase to reserves occurring in the fourth quarter.

To put this into perspective, loan loss provision and OREO cost totaled $1.2 billion or $0.65 a share in the fourth quarter alone and $3.7 billion or $2.33 per share full-year 2009. Credit related costs while remaining elevated should begin to decline in 2010 given our 2009 proactive stance towards credit loss recognition and prudent reserve bill.

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