Regions Financial Corporation (RF)

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Regions Financial Corporation (RF)

Q1 2010 Earnings Call Transcript

April 20, 2010 11:00 am ET

Executives

List Underwood – Director, IR

Grayson Hall – President and CEO

David Turner – CFO and Senior EVP

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

Barb Godin – EVP and Consumer Credit Executive

Analysts

Matthew O'Connor – Deutsche Bank

Craig Siegenthaler – Credit Suisse

Brian Foran – Goldman Sachs

Chris Mutascio – Stifel Nicolaus

Ken Usdin – Bank of America

Betsy Graseck – Morgan Stanley

Kevin St. Pierre – Bernstein

Scott Valentin – FBR Capital Markets

Christopher Marinac – FIG Partners

Presentation

Operator

Good morning, and welcome to the Regions Financial Corporation's quarterly earnings call. My name is Christine and I will be your operator for today's call. I would like to remind everyone that all participant 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 to begin the conference call.

List Underwood

Thank you, operator, and good morning, everyone. We very much appreciate your participation in our call today. Our presenters this morning are our President and Chief Executive Officer, Grayson Hall; our Chief Financial Officer, David Turner; and Bill Wells, our Chief Risk Officer. Accompanying Bill is Tom Neely, our Director of Risk Analytics; and, Barb Godin, our Head of Consumer Credit. Also here with us this morning, our heads of our lines of business, Tim Laney who heads our business services line of business; John Owen, who heads our consumer credit line of business; and, John Carson, who heads Morgan Keegan.

Let me quickly touch on our presentation format. We have prepared a short slide presentation to accompany David and Bill's comments. It's available under the Investor Relations section of regions.com. For those of you in the investment community that dialed in by phone, once you're on the Investor Relations section of our Web site, just click on live phone player and the slides will automatically advance in sync with the audio of the presentation. A copy of the slides will be available on our Web site shortly after the call.

Our presentation this morning will discuss Regions' business outlook and includes forward-looking statements. These statements may include description 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, in our Form 10-K for the year ended December 31, 2009. 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 to 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 Grayson.

Grayson Hall

Good morning, and thanks everyone for your time and attention today. Earlier, Regions reported a first quarter loss of $0.21 per share. This loss is in line with our internal expectations and is a notable improvement from the $0.51 per share loss we reported in the first – or fourth quarter of 2009. We are encouraged by the continual – continued financial progress. But clearly, no one at Regions is satisfied with this performance. And we're focused on our efforts to return to a – and sustainable profitability. We did clearly see credit and recession related expenses, improved (inaudible). They do remain elevated and continued to more than offset our strong underlying core earnings.

I can assure you that my primary focus is returning the company to a level of sustained profitability. Getting back to profitability may not happen as promptly as any of us would desire, and we've got a lot of work yet to do. But I tell you today that I am convinced that we have the right team and we're taking the right actions to not only restore Regions' profitability, but more importantly, to build a stronger business model and a stronger franchise that will produce competitive long term financial performance.

We have strategic priorities that we are confident will return our company to profitability. We're keeping our business focused on the customer. We're building for our future. We're restoring our financial performance. And we're committed to executing with excellence. We are absolutely keeping our team focused on the customer by historically and expanding our customer relationships with valued products and excellent service, and retaining more customer relationships than ever before. These priorities are our business guidelines for how we operate.

We're building for our future by de-risking the balance sheet, aggressively addressing credit issues, and making sure our capital liquidity levels remain strong. And we will restore our financial performance by growing and diversifying our revenue base as well as improving our operating efficiency. The key factor to returning profitability is strong execution across the organization. And we have solid business plans for paying attention to the bills and driving for results with clear goals and accountability to prop results.

Looking beyond first quarter's bottom line, there's significant evidence that our priorities are being achieved. But keep in mind it may take some time to fully realize the benefit of these initiatives in a slow growth, higher unemployment operating environment. But more importantly, during the first quarter, we continued to de-risk our balance sheet by appropriately charging off and providing for problem threats, proactively liquidating foreclosed assets, and reducing exposure to higher risk loan portfolio segments. As a result, loan loss provision and OREO costs, including a $70 million net addition to our loan loss reserve totaled $812 million, impacting earnings on a per share basis of $0.42.

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