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RF Supplement 2Q2014

Regions Financial Corporation (NYSE:RF) today announced earnings for the second quarter of 2014. The company reported net income available to common shareholders of $292 million and earnings per diluted share of $0.21.

Steady progress

Regions’ second quarter results reflect the company’s steady progress and its ongoing commitment to meeting a broad range of customer needs in a prudent and sustainable manner. The company increased revenue by growing loans, deposits, checking accounts and quality households. In addition, the company reduced adjusted non-interest expenses (1), creating positive operating leverage and improved efficiencies.

“These results demonstrate continued momentum as we effectively execute our business plans,” said Grayson Hall, chairman, president and CEO. “By focusing on meeting our customers’ needs, we are delivering sustainable and diversified revenue growth while controlling expenses and maintaining prudent credit standards.”

Balance sheet continues to strengthen

Total ending loan balances increased $833 million or 1.1 percent from the prior quarter to $77 billion. Total new and renewed loan production was up 22 percent over the previous quarter as the company expanded its customer base and deepened existing relationships. Importantly, both the business and consumer lending portfolios achieved broad-based growth across the company's geographic markets.

Business lending achieved another solid quarter of growth as loans increased 1 percent, bringing the portfolio to $48 billion. The company’s specialized lending groups, asset-based lending and middle market commercial lending were the primary drivers of growth. Commercial and industrial loans increased 3 percent, while the investor real estate portfolio was relatively flat. Commercial and industrial production increased 26 percent from the previous quarter, line utilization increased 30 basis points and commitments for new loans increased 3 percent.

The consumer lending portfolio totaled $29 billion at the end of the quarter, an increase of 1 percent over the prior quarter as production increased 22 percent. Indirect auto lending continued to exhibit solid growth as balances increased 5 percent, and production increased 5 percent. These increases were primarily driven by an 18 percent increase in the average number of loans per dealer this year as the company improved the efficiencies in back-office automation. Credit card balances increased 3 percent as spend volume increased 14 percent, and sales of new cards increased 3 percent. Mortgage balances were up slightly over the prior quarter as production increased 31 percent and mortgage prepayments slowed significantly. Mortgage originations continued to be driven by purchases of new homes and represented 76 percent of total originations.

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