Regions Financial Regions Financial 1 st Quarter 2013 Earnings - PowerPoint PPT Presentation

Regions Financial Regions Financial 1 st Quarter 2013 Earnings Conference Call Conference Call April 23, 2013 1

Moving Forward g 1Q13 Highlights ($ in millions, except per share data) • Loan balances steady; 2013 ending Loan balances steady; 2013 ending Net Interest Income $798 balances expected to increase • Net checking account growth Non-Interest Revenue $501 • Mortgage fees continue to • Mortgage fees continue to Non-Interest Expense $842 contribute to revenue • Committed to creating positive PPI (1) $457 operating leverage operating leverage Net Income (2) $327 • Asset quality trends positive Diluted EPS $0.23 “Continuing to drive solid performance across our franchise.” 2 (1) Non-GAAP, see appendix for GAAP to Non-GAAP reconciliation (2) Available to common shareholders

Steady loan balances Total Loan Balances (1) $76,720 $76,202 $75,259 $73,995 $73,936 • Investor real estate decline 28,875 28 875 30,299 30 299 29,878 29 878 29 554 29,554 29,202 subsided; now comprises 10% of total loan portfolio (1) • Commercial and industrial 46,421 46,324 45,705 45,061 44,793 production increased 3% and production increased 3% and commitments increased 12% over 1Q12 2Q12 3Q12 4Q12 1Q13 Commercial and Investor Real Estate Consumer Lending last year ($ in millions) • Total commercial and investor real Commercial and Industrial Loan Balances (1) estate loans flat linked quarter (1) • Indirect auto loan balances 10% increase Y-O-Y $27,602 $26,674 increased 6% linked quarter (1) $26,375 $25,990 $25,098 • Continue to project loan growth in the low single-digits for 2013 1Q12 1Q12 2Q12 2Q12 3Q12 3Q12 4Q12 4Q12 1Q13 1Q13 ($ in millions) (1) Ending basis 3

Strengthened deposit profile g p p Deposit Balances (1) and Deposit Costs • Deposit mix and costs continued $95,863 $94,609 $94,805 $96,061 $93,864 to improve 17,175 14,220 12,904 15,536 19,053 • Time deposits as a % of total average deposits decreased to d it d d t 14% in 1Q13 from 20% in 1Q12 37 bps • Total funding costs improved to 32 bps 28 bps 45 bps, down 20 bps from one 45 bps, down 20 bps from one 22 bps year ago 18 bps • Remaining CD maturities in 78,688 2013: 77,008 79,073 80,585 80,960 • $5.6B at 93 basis points 1Q12 2Q12 3Q12 4Q12 1Q13 Low Cost Deposits Time Deposits + Other Deposit Costs ($ in millions) ($ in millions) 4 (1) Average basis

Net interest margin improves g p Net Interest Income and Net Interest Margin • Net interest income was down 2% linked quarter, driven by a fewer $839 $850 $831 $830 number of days in the quarter and a $811 decline in earning assets 3.16% 3.13% 3.10% • Loan yields were 4 14% down 7 3.09% 3.09% Loan yields were 4.14%, down 7 3.08% 3 08% basis points linked quarter, primarily related to the impact of a continued low rate environment on the reinvestment rates of higher fixed reinvestment rates of higher fixed rate loans • Net interest margin was up 3 bps linked quarter, driven by reduced day q , y y count and debt management activities in the fourth quarter 1Q12 2Q12 3Q12 4Q12 1Q13 • Outlook is for a relatively stable Net Interest Income (FTE) ( ) Net Interest Margin g margin in 2013 ($ in millions) 5

Non-interest revenue impacted by seasonal trends trends Non-Interest Revenue $536 $533 $524 • Mortgage income decreased in the $507 $501 first quarter, but remains well above 137 144 142 historical levels 135 139 28 • Loan production was $1.8 27 28 26 18 21 30 23 23 18 billion, up 13% over last year 77 90 90 106 72 • Purchased servicing rights of approximately $3 billion of approximately $3 billion of mortgage loans 254 254 244 242 233 • Service charges income decline driven by seasonality in NSF fees y y • Experienced an increase in 1Q12 2Q12 3Q12 4Q12 1Q13 Service charges Mortgage Income number of households Credit Card/Bankcard Income Insurance Income Other ($ in millions) 6

Expense control – a culture, not a campaign Adjusted Non-Interest Expenses (1) • Other real estate expenses decreased to $2 million, down from $6 million in $ $913 8% decrease Y-O-Y the fourth quarter $869 $849 • Held for sale experienced net gains of $842 $840 $6 million related to property sales, reflecting asset value improvements, fl ti t l i t compared to $10 million in net gains in the prior quarter • Seasonal increase in salaries and Seasonal increase in salaries and benefits primarily related to payroll taxes • Legal expenses normalized 1Q12 2Q12 3Q12 4Q12 1Q13 • Overall 2013 expenses are expected to be below 2012 ($ in millions) 7 (1) Excluding certain adjustments-Non-GAAP, see appendix for GAAP to Non-GAAP reconciliation

Continued improvement in asset quality Net Charge-Offs and Ratio NPLs and Coverage Ratio 46% Decline (1) 26% Decline in Total NPLs (1) $332 130% $265 $262 118% 125% 120% 1.73% 114% 120% 109% 110% 1.39% 1.38% 115% $180 $180 110% $2,151 0.99% 0.96% 105% $1,915 $1,884 $1,681 100% $1,586 $1 586 95% 90% 1Q12 2Q12 3Q12 4Q12 1Q13 1Q12 2Q12 3Q12 4Q12 1Q13 (2) (2) NPLs ALL / NPL ($ in millions) ($ in millions) All Allowance for Loan Losses / Total f L L / T t l Criticized and Classified Loans (3) Loans 31% Decline (1) 93 bps Decline (1) 3.30% 3.01% $5,979 2.74% $5,436 2.59% $5,131 2.37% $4,492 1,652 , $4,100 $4,100 1 548 1,548 1,707 1,336 1,136 4,327 3,888 3,424 3,156 2,964 1Q12 1Q12 2Q12 2Q12 3Q12 3Q12 4Q12 4Q12 1Q13 1Q13 1Q12 1Q12 2Q12 2Q12 3Q12 3Q12 4Q12 4Q12 1Q13 1Q13 Classified Loans Special Mention ($ in millions) ($ in millions) (1) Year-over-year change 8 (2) Excludes loans held for sale (3) Includes commercial and investor real estate loans only

Capital ratios remain strong Loan to deposit ratio (4) • Basel III Tier 1 Common ratio (1)(2) estimated under 80% 80% the new proposed rules at 9 1% the new proposed rules at 9.1% 79% 79% 79% 79% 79% 79% 78% • Loan to deposit ratio remains low, allowing Regions to be ready for loan growth when the market demand increases 1Q12 2Q12 3Q12 4Q12 1Q13 Tier 1 capital ratio (1) Tier 1 common ratio (1)(2) p 11.2% 10.8% 14.3% 10.5% 12.3% 10.0% 12.0% 11.5% 11.0% 9.6% 3.8% 12.3% 12.0% 11.5% 11.0% 10.5% 1Q13 (1) 1Q12 2Q12 3Q12 4Q12 1Q13 (1) 1Q12 2Q12 3Q12 4Q12 (2) (2) (3) (3) Tier 1 Capital Excluding TARP TARP Impact (1) Current quarter ratios are estimated (2) Non-GAAP – See appendix for reconciliation 9 (3) Includes Series A Preferred Stock issued to the US Treasury and associated warrant (4) Based on ending balances

10 Appendix Appendix