Regions Financial's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Regions Financial (RF)

Q1 2012 Earnings Call

April 24, 2012 11:00 am ET


M. List Underwood - Director of Investor Relations

O. B. Grayson Hall - Vice Chairman, Chief Executive Officer, President, Chief Executive Officer of Regions Bank, President of Regions Bank and Director of Regions Bank

David J. Turner - Chief Financial Officer, Senior Executive Vice President, Member of the Executive Council, President of Central Region, Chief Financial Officer of Regions Bank and Senior Executive Vice President of Regions Bank

Barbara Godin - Chief Credit Officer, Executive Vice President and Head of Credit Operations - Regions Bank


Jefferson Harralson - Keefe, Bruyette, & Woods, Inc., Research Division

Matthew D. O'Connor - Deutsche Bank AG, Research Division

Kenneth M. Usdin - Jefferies & Company, Inc., Research Division

Betsy Graseck - Morgan Stanley, Research Division

Paul J. Miller - FBR Capital Markets & Co., Research Division

Craig Siegenthaler - Crédit Suisse AG, Research Division

Erika Penala

Matthew H. Burnell - Wells Fargo Securities, LLC, Research Division

Brian Foran - Nomura Securities Co. Ltd., Research Division

Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division

John G. Pancari - Evercore Partners Inc., Research Division



Good morning, and welcome to the Regions Financial Corporation's Quarterly Earnings Call. My name is Nicole, and I will be your operator for today's call. [Operator Instructions] I will now turn the call over to Mr. List Underwood to begin.

M. List Underwood

Thank you, operator, and good morning, everyone. We appreciate your participation on the call this morning. Our presenters today are our President and Chief Executive Officer, Grayson Hall; our Chief Financial Officer, David Turner. And also with us and available to answer questions are Matt Lusco, our Chief Risk Officer; and Barb Godin, our Chief Credit Officer.

As part of our earnings call, we will be referencing a slide presentation that is available under the Investor Relations section at

With that said, let me remind you that in this call, we may make forward-looking statements, which reflect our current views with respect to future events and financial performance. Forward-looking statements are not based on historical information but rather are related to future operations, strategies, financial results or other developments. Those statements are based on general assumptions and are subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements. Additional information regarding these factors can be found on our forward-looking statement that is located in the appendix of the presentation.

Let me now turn it over to Grayson.

O. B. Grayson Hall

Good morning, and thank you all for participating in Regions' First Quarter 2012 Earnings Conference Call. Simply put, this has been a quarter of significant accomplishment. In fact, I would characterize it as a pivotal quarter, with regions now fundamentally stronger, strategically focused and well positioned to grow our franchise profitably. We certainly still have plenty of work left to fully accomplish our goals, but the past quarter's results position Regions well.

Let's look at the key milestones that have occurred over the past few months. We successfully completed an approximate $900 million public offering of common stock. The overnight offering was significantly oversubscribed and priced at a premium from the previous day's close. Our equity rates, following the results of Federal Reserve's large bank capital analysis review, there were no objections that are planned demonstrating what we believe is the strength of our capital planning process.

Subsequently, a major credit rating agency upgraded Regions, restoring us to investment grade status and attributing the upgrade to improving profitability, rise of asset quality and capital trends. Also, we completed the sale of Morgan Keegan, which closed on April 2, reducing our overall risk profile and improving liquidity and capital.

And finally, on April 4, we redeemed the entire $3.5 billion of Series A preferred stock issued in the U.S. Treasury. On an ongoing basis, the redemption eliminates the payment of preferred dividends, as well as amortization of the discount, which cost us in total $214 million or $0.17 per share in 2011.

In addition to these important milestones, we also achieved broad-based asset quality improvement, providing strong evidence that we are at a long-awaited inflection point in overall credit quality trends. Plus, we continue to demonstrate disciplined progress in improving customer service quality in all of our business locations.

Further, Regions' first quarter earnings from continuing operations were a solid $0.14 per diluted share and despite seasonal factors and legislative headwinds, adjusted pretax, pre-provisioned income approximated $419 million, a level that we believe will mark 2012's quarterly low point. We're off to a very good start in 2012 and given our recent capital accomplishments, as well as the ongoing successful execution of our business plans, Regions' outlook for the full year is encouraging.

There's no question that the first few months of the year has been busy and eventful for Regions. We have accomplished a great deal and all these actions served and enhanced our overall risk profile and allows us to focus on core fundamentals. As a result, we're a fundamentally stronger company that has encouraging momentum.

Let me turn the call over to David who will provide first quarter's financial details. After which, I'll return for some closing comments before opening the call up for questions. David?

David J. Turner

Thank you, Grayson, and good morning, everyone. Let's begin on Slide 3 with a quick snapshot of our first quarter 2012 financial results. We reported net income available to common shareholders of $145 million or $0.11 per diluted share, and income from continuing operations totaled $185 million or $0.14 per diluted share. A net loss from discontinued operations of $40 million or $0.03 per diluted share is attributable to an increase in professional and legal fees.

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