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Regions Financial Corporation And Subsidiaries Financial Supplement To Fourth Quarter 2013 Earnings Release

Regions Financial Corporation (NYSE:RF) today announced earnings for the fourth quarter and full year ended December 31, 2013. For the fourth quarter, the company reported net income available to common shareholders of $219 million and earnings per diluted share of $0.16. For the full year 2013, Regions reported net income available to common shareholders of $1.1 billion, an increase of 10 percent over 2012. Earnings per diluted share for 2013 was $0.77, an increase of 8.5 percent from the prior year. The full year results reflect continued loan growth and an expanding customer base.

There were a number of notable items in the fourth quarter, detailed below, which had the combined effect of reducing fourth quarter net income available to common shareholders by $75 million and diluted earnings per share by $0.05.

These items include the transfer of certain loans totaling $686 million, classified as troubled debt restructurings (TDRs), to held-for-sale as part of Regions’ continued effort to further simplify and strengthen the balance sheet. This transfer resulted in an after-tax charge of $46 million. Also, the company benefited from certain leveraged lease terminations resulting in an after-tax impact of $6 million. During the quarter the company announced the consolidation of 30 branches that will drive greater efficiencies in the branch network, and resulted in an after-tax charge of $3 million. In addition, during the fourth quarter, Regions recorded a non-tax deductible charge of $58 million related to previously disclosed inquiries from government authorities concerning matters from 2009. Regions is in discussions with its banking supervisors to resolve their inquiries on these matters. The company also recorded a $40 million reduction to overall income tax expenses primarily related to valuation allowance adjustments. Finally, the company incurred an additional $25 million in pre-tax legal expenses related to adjustments to the indemnification reserve established in connection with the sale of Morgan Keegan, which is reflected in discontinued operations.

  Impact
($ in millions, except per share data)   Pre-tax $   After-tax $   EPS
Impact of Loans Transferred to Held-For-Sale (75 )   (46 )  
Leveraged Lease Terminations 39 6
Branch Consolidations (5 ) (3 )
Regulatory Charge (58 ) (58 )
Tax Reduction, Primarily Valuation Allowance -   40      
Total Impact to Continuing Operations (99 ) (61 ) $ (0.04 )
Indemnification Legal Reserve Increase (25 )   (14 )   $ (0.01 )
Total Impact to Net Income Available to Common Shareholders (124 ) (75 ) $ (0.05 )
 

Continued execution of business priorities

Throughout 2013, Regions continued to successfully execute on its key business priorities. By leveraging Regions360, the company grew loans and expanded the number of customers while continuing to prudently manage expenses.

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