UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 18, 2016
 
 
REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
 
DELAWARE
 
001-34034
 
63-0589368
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
1900 FIFTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
(Address, including zip code, of principal executive office)
Registrant’s telephone number, including area code: (800) 734-4667
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
On July 19, 2016, Regions Financial Corporation (“Regions”) will issue a press release announcing its preliminary results of operations for the quarter ended June 30, 2016. A copy of the press release is attached hereto as Exhibit 99.1. Supplemental financial information for the quarter ended June 30, 2016 is attached as Exhibit 99.2. Executives from Regions will review the results via teleconference and live audio webcast at 11:00 a.m. Eastern time on July 19, 2016. A copy of a visual presentation that will be a part of that review is attached as Exhibit 99.3. All of the attached exhibits are incorporated herein and may also be found on Regions' website at www.regions.com, and an archived webcast of the teleconference will be available through August 19, 2016.
In accordance with general instruction B.2 of Form 8-K, this information is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.

Item 9.01 Financial Statements and Exhibits
(d) Exhibits
 
99.1

  
Press Release dated July 19, 2016
99.2

  
Supplemental Financial Information
99.3

  
Visual Presentation of July 19, 2016






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
REGIONS FINANCIAL CORPORATION
 
 
By:
/s/ Fournier J. Gale, III
Name:
Fournier J. Gale, III
Title:
Senior Executive Vice President, General Counsel and Corporate Secretary

 

Date: July 18, 2016


Exhibit



Exhibit 99.1
  
Media Contact:
  
 
  
Investor Relations Contact:
Evelyn Mitchell
  
 
  
Dana Nolan
(205) 264-4551
  
 
  
(205) 264-7040

Regions reports earnings of $259 million and earnings per share of $0.20 for the second quarter of 2016

BIRMINGHAM, Ala. - (BUSINESS WIRE) - July 19, 2016 - Regions Financial Corporation (NYSE:RF) today announced earnings for the second quarter ended June 30, 2016. The company reported net income available to common shareholders of $259 million and earnings per diluted share of $0.20.

“Our results in the second quarter, and throughout 2016, reflect continued progress toward reaching our goals of diversifying revenue streams and making prudent investments that position Regions for further growth,”
said Grayson Hall, chairman, president and CEO. “We continue to focus on managing expenses in a manner that increases efficiency long-term. Further, we are pleased to have successfully completed the Comprehensive Capital Analysis and Review (CCAR) process and received no objection regarding our planned capital actions. This reflects the strength of our process for deploying capital effectively and returning an appropriate amount to shareholders.”

During the second quarter, Regions was recognized by the advisory firm Reputation Institute and American Banker magazine as having the best overall reputation among top U.S. banks. Regions was also recognized as having the best reputation among customers - the second consecutive year Regions has earned this distinction. In addition, Regions was recently ranked among the top 10 percent of companies rated in the 2016 Temkin Web Experience Ratings, placing Regions in the category of companies ranked "very strong" in online experience. The ratings are compiled by the Temkin Group, a nationally recognized customer experience research firm.

“Regions customers are responding to the deliberate, prescriptive approach we have taken to strengthening customer service and deepening customer relationships,” Hall said. “We are honored to receive these awards recognizing Regions associates' comprehensive approach to identifying and meeting the needs of our customers and the communities we serve.”
 

1


SUMMARY OF SECOND QUARTER 2016 RESULTS:
 
 
Quarter Ended
($ amounts in millions, except per share data)
 
6/30/2016
 
3/31/2016
 
6/30/2015
Income from continuing operations (A)
 
$
272

 
$
273

 
$
289

Income (loss) from discontinued operations, net of tax
 
3

 
—

 
(4
)
Net income
 
275

 
273

 
285

Preferred dividends (B)
 
16

 
16

 
16

Net income available to common shareholders
 
$
259

 
$
257

 
$
269

Net income from continuing operations available to common
shareholders (A) – (B)
 
$
256

 
$
257

 
$
273

 
 
 
 
 
 
 
Diluted earnings per common share from continuing operations
 
$
0.20

 
$
0.20

 
$
0.20

 
 
 
 
 
 
 
Diluted earnings per common share
 
$
0.20

 
$
0.20

 
$
0.20

 
 
 
 
 
 
 

SECOND QUARTER 2016 FINANCIAL RESULTS:
Selected items impacting earnings:
 
 
Quarter Ended
($ amounts in millions, except per share data)
 
6/30/2016
3/31/2016
6/30/2015
Pre-tax select items:
 
 
 
 
 
 
 
Branch consolidation, property and equipment charges
 
$
(22
)
 
$
(14
)
 
$
(27
)
 
Professional, legal and regulatory (expense)/recovery
 
(3
)
 
7

 
(48
)
 
Salaries and benefits related to severance charges
 
(1
)
 
(12
)
 
—

 
FDIC insurance (assessment)/refund
 
6

 
—

 
6

 
Insurance proceeds
 
—

 
3

 
90

 
Bank-owned life insurance benefits (tax free)
 
—

 
14

 
—

 
 
 
 
 
 
 
 
 
Diluted EPS impact
 
$
(0.01
)
 
$
—

 
$
0.01

 

As part of the company's ongoing plans to operate more efficiently throughout its branch network, during the second quarter of 2016, Regions incurred $22 million of property-related expenses primarily related to the consolidation of approximately 60 branches as well as other occupancy optimization initiatives. These branches are expected to close in the fourth quarter of 2016. Including these 60 branches, Regions has announced the consolidation of approximately 90 branches as part of the company’s previous announcement to consolidate 100 to 150 branches through 2018. The company also incurred $1 million of severance expense. Both of these charges were related to ongoing efficiency efforts as the company executes its plan to eliminate $300 million in expenses through 2018.

The company also incurred $3 million of additional legal and regulatory charges related to the pending settlement of previously disclosed matters. In addition, the company benefited from a $6 million FDIC insurance refund related to overpayments in prior periods.


2


Second quarter 2016 results compared to first quarter 2016:
•
Average loans and leases totaled $82 billion, an increase of 1 percent.
◦
Business lending balances increased $147 million on an average basis.
◦
Consumer lending balances increased $303 million on an average basis.
•
Average deposit balances totaled $97 billion, a decrease of $253 million.
•
Net interest income and other financing income on a fully taxable equivalent basis decreased $14 million or 2 percent. The resulting net interest margin was 3.15 percent.
•
Non-interest income increased 4 percent, or 2 percent on an adjusted basis(1).
•
Non-interest expenses increased 5.3 percent, or 5.5 percent on an adjusted basis(1).
•
Net charge-offs increased 6 percent while non-accrual loans, excluding loans held for sale, increased 3 percent and represented 1.25 percent of loans outstanding.
•
The Common Equity Tier 1 ratio(2) was estimated at 10.9 percent at June 30, 2016. The fully phased-in pro-forma Common Equity Tier 1 ratio(1)(2) was estimated at 10.7 percent and the loan-to-deposit ratio was 84 percent.

Second quarter 2016 results compared to second quarter 2015:
•
Average loans and leases increased $2.8 billion or 4 percent.
◦
Business lending balances increased $1.3 billion or 3 percent on an average basis.
◦
Consumer lending balances increased $1.4 billion or 5 percent on an average basis.
•
Average deposit balances increased $397 million.
•
Net interest income and other financing income on a fully taxable equivalent basis increased $30 million or 4 percent.
•
Non-interest income decreased 11 percent; however, on an adjusted basis(1) increased 5 percent.
•
Non-interest expenses decreased 2 percent; however, on an adjusted basis(1) increased 4 percent.
•
Net charge-offs increased $26 million and represented 0.35 percent of average loans, and non-accrual loans, excluding loans held for sale, increased 36 percent.


3


Total revenue
 
 
Quarter Ended
($ amounts in millions)
 
6/30/2016
 
3/31/2016
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Net interest income and other financing income
 
$
848

 
$
862

 
$
820

 
$
(14
)
 
(1.6
)%
 
$
28

 
3.4
 %
Net interest income and other financing income - fully taxable equivalent (FTE)
 
$
869

 
$
883

 
$
839

 
$
(14
)
 
(1.6
)%
 
$
30

 
3.6
 %
Net interest margin (FTE)
 
3.15
%
 
3.19
%
 
3.16
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
 
166

 
159

 
168

 
7

 
4.4
 %
 
(2
)
 
(1.2
)%
Wealth Management
 
103

 
106

 
97

 
(3
)
 
(2.8
)%
 
6

 
6.2
 %
Card and ATM fees
 
99

 
95

 
90

 
4

 
4.2
 %
 
9

 
10.0
 %
Mortgage income
 
46

 
38

 
46

 
8

 
21.1
 %
 
—

 
—
 %
Capital markets fee income and other
 
38

 
41

 
27

 
(3
)
 
(7.3
)%
 
11

 
40.7
 %
Bank-owned life insurance
 
20

 
33

 
18

 
(13
)
 
(39.4
)%
 
2

 
11.1
 %
Commercial credit fee income
 
18

 
19

 
21

 
(1
)
 
(5.3
)%
 
(3
)
 
(14.3
)%
Insurance proceeds
 
—

 
3

 
90

 
(3
)
 
(100.0
)%
 
(90
)
 
(100.0
)%
Net revenue from affordable housing
 
3

 
11

 
6

 
(8
)
 
(72.7
)%
 
(3
)
 
(50.0
)%
Market value adjustments on employee benefit assets*
 
8

 
(12
)
 
2

 
20

 
(166.7
)%
 
6

 
300.0
 %
Securities gains (losses), net
 
6

 
(5
)
 
6

 
11

 
(220.0
)%
 
—

 
—
 %
Other
 
19

 
18

 
19

 
1

 
5.6
 %
 
—

 
—
 %
Non-interest income
 
$
526

 
$
506

 
$
590

 
$
20

 
4.0
 %
 
$
(64
)
 
(10.8
)%
Total revenue, taxable-equivalent basis
 
$
1,395

 
$
1,389

 
$
1,429

 
$
6

 
0.4
 %
 
$
(34
)
 
(2.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted total revenue, taxable-equivalent basis (non-GAAP)(1)
 
$
1,389

 
$
1,391

 
$
1,333

 
$
(2
)
 
(0.1
)%
 
$
56

 
4.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* These market value adjustments relate to assets held for certain employee benefits, which are offset within salaries and employee benefits expense.
Comparison of second quarter 2016 to first quarter 2016
Total revenue on a fully taxable equivalent basis was $1.4 billion in the second quarter, an increase of $6 million. On an adjusted basis(1) compared to the prior quarter, total revenue on a fully taxable equivalent basis decreased $2 million. Net interest income and other financing income on a fully taxable equivalent basis was $869 million, a decrease of $14 million or 2 percent, and the resulting net interest margin was 3.15 percent. Net interest income and other financing income was impacted by recent long-term debt issuances, lower loan fees, reduced dividends from trading assets, and less favorable credit related interest recoveries, partially offset by loan growth.

Non-interest income totaled $526 million in the second quarter, an increase of $20 million or 4 percent. On an adjusted basis(1), non-interest income increased 2 percent driven primarily by an increase in service charges,

4


mortgage income, and card & ATM fees. Highlighting the strength of the retail franchise, continued growth in checking accounts contributed to a 4 percent increase in service charges. Mortgage income increased 21 percent driven by seasonally higher mortgage production and increased servicing income. Within total mortgage production, 75 percent was related to purchase activity and 25 percent related to refinancing. Card and ATM income increased 4 percent as active debit cards increased 1 percent and transaction volume increased 8 percent. Market value adjustments related to assets held for certain employee benefits, which are offset in salaries and benefits also increased $20 million compared to the first quarter.

Capital markets income declined $3 million or 7 percent relative to the prior quarter’s strong results as increased fees from merger and acquisition advisory services were offset by declines in fees generated from the placement of permanent financing for real estate customers, as well as syndicated loan transactions. Wealth Management income decreased $3 million or 3 percent primarily due to seasonal decreases in insurance income partially offset by increased investment management and trust fees in the second quarter. Bank-owned life insurance also decreased $13 million or 39 percent primarily due to claim benefits and a gain from an exchange of policies recognized in the first quarter.

Comparison of second quarter 2016 to second quarter 2015
Total revenue on a fully taxable equivalent basis decreased $34 million or 2 percent compared to the second quarter of 2015. However, total revenue on a fully taxable equivalent basis increased $56 million or 4 percent on an adjusted basis(1). Net interest income and other financing income on a fully taxable equivalent basis increased $30 million or 4 percent driven primarily by loan growth, balance sheet hedging and optimization strategies, as well as the impact of higher short-term interest rates.
 
Non-interest income decreased $64 million or 11 percent compared to the second quarter of 2015 primarily due to $90 million of insurance proceeds related to the settlement of a previously disclosed case that was recognized in the prior year. On an adjusted basis(1), non-interest income increased $26 million or 5 percent driven primarily by revenue diversification initiatives and increased card and ATM income. Capital markets income increased $11 million or 41 percent as the company expanded merger and acquisition advisory service offerings and increased

5


loan syndication volume. Wealth Management income improved $6 million or 6 percent as the company expanded insurance capabilities and increased investment services fee income by deepening customer relationships.

Card and ATM income increased $9 million or 10 percent compared to the second quarter of 2015, primarily due to an increase in transaction volume as the company grew active debit cards 4 percent. Service charges were down 1 percent reflecting the impact of posting order changes that went into effect in early November 2015. The impact of these changes was partially offset by growth in checking accounts of 2 percent.

Non-interest expense
 
 
Quarter Ended
($ amounts in millions)
 
6/30/2016
 
3/31/2016
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Salaries and employee benefits
 
$
480

 
$
475

 
$
477

 
$
5

 
1.1
 %
 
$
3

 
0.6
 %
Net occupancy expense
 
86

 
86

 
89

 
—

 
—
 %
 
(3
)
 
(3.4
)%
Furniture and equipment expense
 
79

 
78

 
76

 
1

 
1.3
 %
 
3

 
3.9
 %
Outside services
 
39

 
36

 
40

 
3

 
8.3
 %
 
(1
)
 
(2.5
)%
Marketing
 
28

 
25

 
25

 
3

 
12.0
 %
 
3

 
12.0
 %
Professional, legal and regulatory expenses
 
21

 
13

 
71

 
8

 
61.5
 %
 
(50
)
 
(70.4
)%
FDIC insurance assessments
 
17

 
25

 
15

 
(8
)
 
(32.0
)%
 
2

 
13.3
 %
Credit/checkcard expenses
 
14

 
13

 
13

 
1

 
7.7
 %
 
1

 
7.7
 %
Branch consolidation, property and equipment charges
 
22

 
14

 
27

 
8

 
57.1
 %
 
(5
)
 
(18.5
)%
Other
 
129

 
104

 
101

 
25

 
24.0
 %
 
28

 
27.7
 %
Total non-interest expense from continuing operations
 
$
915

 
$
869

 
$
934

 
$
46

 
5.3
 %
 
$
(19
)
 
(2.0
)%
Total adjusted non-interest expense(1)
 
$
889

 
$
843

 
$
859

 
$
46

 
5.5
 %
 
$
30

 
3.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


6


Comparison of second quarter 2016 to first quarter 2016
Non-interest expense totaled $915 million in the second quarter, an increase of $46 million or 5.3 percent. On an adjusted basis(1), non-interest expense increased 5.5 percent. Total salaries and benefits increased $5 million and included expenses related to market value adjustments associated with assets held for certain employee benefits, which are offset in non-interest income. The impact of the second quarter market value adjustment increased salaries and benefits by approximately $20 million compared to the first quarter. In addition, severance expense declined by $11 million over the same period. Excluding the impact of the market value adjustment and severance decline, total salaries and benefits would have declined compared to the first quarter. Staffing levels declined 2 percent compared to the first quarter, serving to lower base salaries and fully offset the impact of the company’s annual merit increase.

Legal expenses increased $8 million or 62 percent primarily due to legal and regulatory charges of $3 million related to the pending settlement of previously disclosed matters, as well as a $7 million favorable legal settlement recognized in the first quarter. Other expenses increased $25 million, including an $11 million increase to the company’s reserve for unfunded commitments, as well as $9 million of credit related charges associated with other real estate and held for sale loans. FDIC insurance assessments decreased $8 million from the first quarter primarily due to a $6 million refund related to overpayments in prior periods.

The company’s efficiency ratio was 65.6 percent in the second quarter and 64.1 percent year-to-date. The adjusted efficiency ratio(1) was 64.0 percent in the quarter and 62.3 percent year-to-date. The company has generated 4 percent positive operating leverage year-to-date on an adjusted basis(1). Under the current operating environment with continued low interest rates, the company remains committed to disciplined expense management and is taking steps to continue to improve efficiencies and lower costs.

The effective tax rate for the second quarter was 29.7 percent compared to 29.3 percent in the first quarter. The effective tax rate is expected to remain in the 29 to 31 percent range for the remainder of 2016.


7


Comparison of second quarter 2016 to second quarter 2015
Non-interest expense decreased $19 million or 2 percent from the second quarter of last year. Non-interest expense increased $30 million or 4 percent on an adjusted basis(1). Total salaries and benefits increased $3 million from the previous year, primarily attributable to increased incentives partially offset by the impact of staffing reductions. Year-over-year, staffing levels have declined 3 percent. Occupancy expense decreased $3 million from the previous year reflecting the benefits from property-related optimization and efficiency initiatives. Related, the company incurred branch consolidation, property and equipment charges totaling $22 million in the second quarter of 2016 and $27 million in the second quarter of 2015.

Legal expenses declined $50 million from the prior year, primarily related to a $48 million charge in the second quarter of 2015 for contingent legal and regulatory items associated with previously disclosed matters. Other expenses increased $28 million from the second quarter of last year primarily due to an increase in the company's reserve for unfunded commitments, as well as higher credit related charges associated with other real estate and held for sale loans.

Loans and Leases
 
 
Average Balances
 
 
 
 
 
 
 
 
 
 
 
($ amounts in millions)
 
2Q16
 
1Q16
 
2Q15
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Total commercial
 
$
44,152

 
$
43,974

 
$
42,831

 
$
178

 
0.4
 %
 
$
1,321

 
3.1%
Total investor real estate
 
6,990

 
7,021

 
6,965

 
(31
)
 
(0.4
)%
 
25

 
0.4%
Business Loans
 
51,142

 
50,995

 
49,796

 
147

 
0.3
 %
 
1,346

 
2.7%
Residential first mortgage
 
12,990

 
12,828

 
12,471

 
162

 
1.3
 %
 
519

 
4.2%
Home equity
 
10,869

 
10,956

 
10,867

 
(87
)
 
(0.8
)%
 
2

 
—%
Indirect—vehicles
 
4,149

 
4,056

 
3,768

 
93


2.3
 %
 
381

 
10.1%
Indirect—other consumer
 
686

 
599

 
328

 
87

 
14.5
 %
 
358

 
109.1%
Consumer credit card
 
1,066

 
1,050

 
975

 
16

 
1.5
 %
 
91

 
9.3%
Other consumer
 
1,058

 
1,026

 
970

 
32

 
3.1
 %
 
88

 
9.1%
Consumer Lending
 
30,818

 
30,515

 
29,379

 
303

 
1.0
 %
 
1,439

 
4.9%
Total Loans
 
$
81,960

 
$
81,510

 
$
79,175

 
$
450

 
0.6
 %
 
$
2,785

 
3.5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



8


Comparison of second quarter 2016 to first quarter 2016

Average loans and leases were $82 billion for the second quarter, an increase of $450 million or 1 percent. Average balances in the business lending portfolio were $51 billion during the second quarter, an increase of $147 million. This increase was driven primarily by Corporate Banking as the company’s specialized lending groups achieved solid loan growth, driven largely by new relationships within Technology & Defense and Financial Services. Average commercial loan balances increased $178 million inclusive of a $64 million decline in average direct energy loans. On a point-to-point basis, direct energy loans decreased $324 million linked quarter. Commercial commitments and line utilization were relatively flat from the previous quarter.

The consumer lending portfolio experienced growth in almost every product category as average balances increased $303 million or 1 percent from the prior quarter. Indirect-vehicle lending balances increased $93 million or 2 percent. Indirect-other continued to expand as balances increased $87 million or 15 percent as the company continued its point-of-sale initiatives. Residential first mortgage balances increased $162 million reflecting a 49 percent seasonal increase in production while home equity balances decreased $87 million as the pace of run-off exceeded production. Consumer credit card balances increased $16 million as active credit cards increased 4 percent.

Comparison of second quarter 2016 to second quarter 2015

Average loans and leases increased $2.8 billion or 4 percent over the prior year as both the business and consumer lending portfolios achieved growth.

Average business lending balances increased $1.3 billion or 3 percent, as Corporate Banking, Commercial Banking and Real Estate Banking all achieved solid growth. Within Corporate Banking, the company’s specialized lending groups achieved solid loan growth from new relationships within Restaurant, Transportation, Technology & Defense and Financial Services. Average commercial loan balances increased $1.3 billion or 3 percent, and investor real estate loans were relatively unchanged. Commitments increased 4 percent and commercial line utilization increased 80 basis points from the previous year.

The consumer lending portfolio experienced growth in every product category as average balances increased $1.4 billion or 5 percent from the prior year. Residential first mortgage balances increased $519 million or 4 percent benefiting from an increase in new home purchases and continued low interest rates. Home equity balances increased $2 million. Indirect-vehicle lending balances increased $381 million or 10 percent as production increased 12 percent. Indirect-other increased $358 million, more than double the prior year balances, as the company continued to execute its point-of-sale initiatives. Additionally, consumer credit card balances

9


increased $91 million or 9 percent as active credit cards increased 13 percent, and the company’s penetration rate of deposit base customers increased 130 basis points over the prior year to approximately 17.7 percent.

Deposits
 
 
Average Balances
 
 
 
 
 
 
 
 
 
 
 
($ amounts in millions)
 
2Q16
 
1Q16
 
2Q15
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Low-cost deposits
 
$
90,159

 
$
90,382

 
$
88,850

 
$
(223
)
 
(0.2)%
 
$
1,309

 
1.5%
Time deposits
 
7,338

 
7,368


8,250

 
(30
)
 
(0.4)%
 
(912
)
 
(11.1)%
Total Deposits
 
$
97,497

 
$
97,750

 
$
97,100

 
$
(253
)
 
(0.3)%
 
$
397

 
0.4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ amounts in millions)
 
2Q16
 
1Q16
 
2Q15
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Consumer Bank Segment
 
$
54,703

 
$
53,492

 
$
53,089

 
$
1,211

 
2.3%
 
$
1,614

 
3.0%
Corporate Bank Segment
 
27,618

 
27,608

 
27,234

 
10

 
—%
 
384

 
1.4%
Wealth Management Segment
 
11,280

 
12,311

 
12,544

 
(1,031
)
 
(8.4)%
 
(1,264
)
 
(10.1)%
Other
 
3,896

 
4,339

 
4,233

 
(443
)
 
(10.2)%
 
(337
)
 
(8.0)%
Total Deposits
 
$
97,497

 
$
97,750

 
$
97,100

 
$
(253
)
 
(0.3)%
 
$
397

 
0.4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Comparison of second quarter 2016 to first quarter 2016

Total average deposit balances were $97 billion in the second quarter, reflecting a decrease of $253 million compared to the prior quarter. Average low-cost deposits decreased $223 million and represented 92 percent of average deposits. Deposit costs remained near historical lows at 12 basis points, and total funding costs totaled 29 basis points in the second quarter.

Average deposits in the Consumer segment increased $1.2 billion or 2 percent from the prior quarter. Average Corporate segment deposits remained relatively flat and reflects the reduction of certain financial services account deposits. Average deposits in the Wealth Management segment declined $1.0 billion or 8 percent as a result of the strategic reduction of certain deposits, and contributed to the decline in total average deposits.

Comparison of second quarter 2016 to second quarter 2015

Total average deposit balances increased $397 million from the prior year. Average low-cost deposits increased $1.3 billion or 2 percent. Average deposits in the Consumer segment increased $1.6 billion or 3 percent from the prior year, and average Corporate segment deposits increased $384 million or 1 percent. Average deposits in the Wealth Management segment declined $1.3 billion or 10 percent.


10


Asset quality
 
 
As of and for the Quarter Ended
($ amounts in millions)
 
6/30/2016
 
3/31/2016
 
6/30/2015
ALL/Loans, net~
 
1.41%
 
1.41%
 
1.39%
Net loan charge-offs as a % of average loans, annualized
 
0.35%
 
0.34%
 
0.23%
Non-accrual loans, excluding loans held for sale/Loans, net
 
1.25%
 
1.22%
 
0.94%
NPAs (ex. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale
 
1.40%
 
1.36%
 
1.13%
NPAs (inc. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale
 
1.61%
 
1.61%
 
1.38%
Total TDRs
 
$1,325
 
$1,276
 
$1,404
Total Criticized Loans—Business Services*
 
$3,664
 
$3,625
 
$2,950
* Business services represents the combined total of commercial and investor real estate loans.
~ ALL excludes operating leases

Comparison of second quarter 2016 to first quarter 2016

Net charge-offs totaled $72 million, a 5 percent increase from the previous quarter. Net charge-offs as a percent of average loans were 0.35 percent compared to 0.34 percent in the first quarter. The provision for loan losses essentially matched charge-offs, and the resulting allowance for loan and lease losses remained unchanged from the prior quarter at 1.41 percent of total loans outstanding. Net charge-offs related to the company’s energy portfolio totaled $17 million in the quarter. The total loan loss allowance for the direct energy loan portfolio increased to 9.4 percent in the second quarter compared to 8.0 percent in the first quarter. The increase is primarily due to the decline in direct energy loans.

Total non-accrual loans, excluding loans held for sale, increased 3 percent from the previous quarter. Troubled debt restructured loans increased 4 percent, and total business services criticized loans increased 1 percent. At quarter-end, the company’s allowance for loan losses as a percentage of non-accrual loans, or coverage ratio, was approximately 112 percent. Given the current phase of the credit cycle, volatility in certain credit metrics can be expected, especially related to large-dollar commercial credits and fluctuating commodity prices.

Comparison of second quarter 2016 to second quarter 2015

Net charge-offs increased $26 million from the second quarter of 2015. Net charge-offs as a percent of average loans were 0.35 percent compared to 0.23 percent in the prior year. The allowance for loan and lease losses as a percent of total loans increased 2 basis points.


11


Total non-accrual loans, excluding loans held for sale, increased $274 million from the previous year, while troubled debt restructured loans declined 6 percent. Total business services criticized loans increased 24 percent, primarily related to risk rating migration in the energy portfolio.


Capital and liquidity
 
 
As of and for Quarter Ended
 
 
6/30/2016
 
3/31/2016
 
6/30/2015
Basel III Common Equity Tier 1 ratio(2)
 
10.9%
 
10.9%
 
11.3%
Basel III Common Equity Tier 1 ratio — Fully Phased-In Pro-Forma (non-GAAP)(1)(2)
 
10.7%
 
10.7%
 
11.1%
Tier 1 capital ratio(2)
 
11.6%
 
11.6%
 
12.1%
Tangible common stockholders’ equity to tangible assets (non-GAAP)(1)
 
9.57%
 
9.48%
 
9.52%
Tangible common book value per share (non-GAAP)(1)
 
$9.22
 
$8.97
 
$8.37

Under the Basel III capital rules, Regions’ estimated ratios remain well above current regulatory requirements. The Tier 1(2) and Common Equity Tier 1(2) ratios were estimated at 11.6 percent and 10.9 percent, respectively, at quarter-end under the phase-in provisions. In addition, the Common Equity Tier 1 ratio(1)(2) was estimated at 10.7 percent on a fully phased-in basis.

During the second quarter, the company repurchased $179 million or 19.4 million shares of common stock. In addition, the company declared $79 million in dividends to common shareholders. The company’s liquidity position remained solid with its loan-to-deposit ratio at the end of the quarter at 84 percent, and, as of quarter-end, the company remained fully compliant with the liquidity coverage ratio rule.

Additionally, during the second quarter, Regions completed the annual Comprehensive Capital Analysis and Review (CCAR) process and received no objection regarding planned capital actions. In addition to continuing the $0.065 quarterly common stock dividend, planned capital actions include the repurchase of up to $640 million in common shares over the next four quarters and the potential for a dividend increase beginning in the second quarter of 2017. The $640 million share repurchase program was approved by the Board of Directors on July 14, 2016, and the potential dividend increase will be considered by the Board of Directors in early 2017.

(1)
Non-GAAP, refer to pages 11, 12 and 23 of the financial supplement to this earnings release
(2)
Current quarter Basel III common equity Tier 1, and Tier 1 capital ratios are estimated.


12


Conference Call
A replay of the earnings call will be available from Tuesday, July 19, 2016, at 2 p.m. ET through Friday, August 19, 2016. To listen by telephone, please dial 1-855-859-2056, and use access code 26351405. An archived webcast will also be available until August 19 on the Investor Relations page of www.regions.com.

About Regions Financial Corporation
Regions Financial Corporation (NYSE:RF), with $126 billion in assets, is a member of the S&P 500 Index and is one of the nation’s largest full-service providers of consumer and commercial banking, wealth management, mortgage, and insurance products and services. Regions serves customers across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates approximately 1,600 banking offices and 2,000 ATMs. Additional information about Regions and its full line of products and services can be found at www.regions.com.


Forward-Looking Statements
This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions’ 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. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. 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. These risks, uncertainties and other factors include, but are not limited to, those described below:

•
Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, unemployment rates and potential reductions of economic growth, which may adversely affect our lending and other businesses and our financial results and conditions.
•
Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations, which could have a material adverse effect on our earnings.
•
The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook, which could result in risks to us and general economic conditions that we are not able to predict.
•
Possible changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital and liquidity.
•
Any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets due to adverse changes in the economic environment, declining operations of the reporting unit, or other factors.
•
Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans.
•
Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses where our allowance for loan losses may not be adequate to cover our eventual losses.
•
Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities.
•
Our ability to effectively compete with other financial services companies, some of whom possess greater financial resources than we do and are subject to different regulatory standards than we are.
•
Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments, which could increase our funding costs.
•
Our inability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner could have a negative impact on our revenue.
•
The effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or any of our subsidiaries.
•
Changes in laws and regulations affecting our businesses, such as the Dodd-Frank Act and other legislation and regulations relating to bank products and services, as well as changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses.

13


•
Our ability to obtain a regulatory non-objection (as part of the CCAR) process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or redeem preferred stock or other regulatory capital instruments, may impact our ability to return capital to stockholders and market perceptions of us.
•
Our ability to comply with stress testing and capital planning requirements (as part of the CCAR process or otherwise) may continue to require a significant investment of our managerial resources due to the importance and intensity of such tests and requirements.
•
Our ability to comply with applicable capital and liquidity requirements (including, among other things, the Basel III capital standards and the LCR rule), including our ability to generate capital internally or raise capital on favorable terms, and if we fail to meet requirements, our financial condition could be negatively impacted.
•
The Basel III framework calls for additional risk-based capital surcharges for globally systemically important banks. Although we are not subject to such surcharges, it is possible that in the future we may become subject to similar surcharges.
•
The costs, including possibly incurring fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party, and which may adversely affect our results.
•
Our ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support our business.
•
Our ability to execute on our strategic and operational plans, including our ability to fully realize the financial and non-financial benefits relating to our strategic initiatives.
•
The success of our marketing efforts in attracting and retaining customers.
•
Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits, which could adversely affect our net income.
•
Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes in laws and regulations in effect from time to time.
•
Fraud or misconduct by our customers, employees or business partners.
•
Any inaccurate or incomplete information provided to us by our customers or counterparties.
•
The risks and uncertainties related to our acquisition and integration of other companies.
•
Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers, which could, among other things, result in a breach of operating or security systems as a result of a cyber attack or similar act.
•
The inability of our internal disclosure controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts.
•
The effects of geopolitical instability, including wars, conflicts and terrorist attacks and the potential impact, directly or indirectly, on our businesses.
•
The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes, and environmental damage, which may negatively affect our operations and/or our loan portfolios and increase our cost of conducting business.
•
Changes in commodity market prices and conditions could adversely affect the cash flows of our borrowers operating in industries that are impacted by changes in commodity prices (including businesses indirectly impacted by commodities prices such as businesses that transport commodities or manufacture equipment used in the production of commodities), which could impair their ability to service any loans outstanding to them and/or reduce demand for loans in those industries.
•
Our inability to keep pace with technological changes could result in losing business to competitors.
•
Our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information; increased costs; losses; or adverse effects to our reputation.
•
Our ability to realize our efficiency ratio target as part of our expense management initiatives.
•
Significant disruption of, or loss of public confidence in, the Internet and services and devices used to access the Internet could affect the ability of our customers to access their accounts and conduct banking transactions.
•
Possible downgrades in our credit ratings or outlook could increase the costs of funding from capital markets.
•
The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally could require us to change certain business practices, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses.
•
The effects of the failure of any component of our business infrastructure provided by a third party could disrupt our businesses; result in the disclosure of and/or misuse of confidential information or proprietary information; increase our costs; negatively affect our reputation; and cause losses.
•
Our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay dividends to stockholders.

14


•
Changes in accounting policies or procedures as may be required by the FASB or other regulatory agencies could materially affect how we report our financial results.
•
Other risks identified from time to time in reports that we file with the SEC.
•
The effects of any damage to our reputation resulting from developments related to any of the items identified above.
The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions “Forward-Looking Statements” and “Risk Factors” of Regions’ Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission.
The words “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can,” and similar expressions often signify forward-looking statements. You should not place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no obligation to update or revise any forward-looking statements that are made from time to time.
Regions’ Investor Relations contact is Dana Nolan at (205) 264-7040; Regions’ Media contact is Evelyn Mitchell at (205) 264-4551.

Use of non-GAAP financial measures
Management uses the adjusted efficiency ratio (non-GAAP) and the adjusted fee income ratio (non-GAAP) to monitor performance and believes these measures provide meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the efficiency ratio. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the fee income ratio. Net interest income and other financing income on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the fee income and efficiency ratios. Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.

Tangible common stockholders’ equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Analysts and banking regulators have assessed Regions’ capital adequacy using the tangible common stockholders’ equity measure. Because tangible common stockholders’ equity is not formally defined by GAAP or prescribed in any amount by federal banking regulations it is currently considered to be a non-GAAP financial measure and other entities may calculate it differently than Regions’ disclosed calculations. Since analysts and banking regulators may assess Regions’ capital adequacy using tangible common stockholders’ equity, management believes that it is useful to provide investors the ability to assess Regions’ capital adequacy on this same basis.


The calculation of the fully phased-in pro-forma "Common equity Tier 1" (CET1) is based on Regions’ understanding of the Final Basel III requirements. For Regions, the Basel III framework became effective on a phased-in approach starting in 2015 with full implementation beginning in 2019. The calculation includes estimated pro-forma amounts for the ratio on a fully phased-in basis. Regions’ current understanding of the final framework includes certain assumptions, including the Company’s interpretation of the requirements, and informal feedback received through the regulatory process. Regions’ understanding of the framework is evolving and will likely change as analysis and discussions with regulators continue. Because Regions is not currently subject to the fully-phased in capital rules, this pro-forma measure is considered to be a non-GAAP financial measure, and other entities may calculate it differently from Regions’ disclosed calculation.

A company's regulatory capital is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a company’s balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to broad risk categories. The aggregated dollar amount in each category is then multiplied by the prescribed risk-weighted percentage. The resulting weighted values from each of the categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. CET1 capital is then divided by this denominator (risk-weighted assets) to determine the CET1 capital ratio. The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements on a fully phased-in basis.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to stockholders.
Management and the Board of Directors utilize non-GAAP measures as follows:
•Preparation of Regions' operating budgets
•Monthly financial performance reporting
•Monthly close-out reporting of consolidated results (management only)
•Presentation to investors of company performance

15
Exhibit
Exhibit 99.2

Regions Financial Corporation and Subsidiaries
Financial Supplement
Second Quarter 2016


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release


Table of Contents
 
 
 
 
 
  
Page
 
 
Financial Highlights
  
 
 
Selected Ratios and Other Information
  
 
 
Consolidated Statements of Income
  
 
 
Consolidated Average Daily Balances and Yield / Rate Analysis from Continuing Operations
  
 
 
Pre-Tax Pre-Provision Income ("PPI") and Adjusted PPI
  
 
 
Non-Interest Income, Mortgage Income and Wealth Management Income
  
 
 
Non-Interest Expense
  
 
 
Reconciliation to GAAP Financial Measures
  
 
Adjusted Efficiency Ratios, Adjusted Fee Income Ratios, Adjusted Non-Interest Income / Expense, Adjusted Operating Leverage Ratios, and Return Ratios
 
 
 
Statements of Discontinued Operations
  
 
 
Credit Quality
  
 
Allowance for Credit Losses, Net Charge-Offs and Related Ratios
  
Non-Accrual Loans (excludes loans held for sale), Criticized and Classified Loans - Business Services, and Home Equity Lines of Credit - Future Principal Payment Resets
  
Early and Late Stage Delinquencies
  
Troubled Debt Restructurings
  
 
 
Consolidated Balance Sheets
  
 
  
Loans and Leases
  
 
 
Deposits
  
 
 
Reconciliation to GAAP Financial Measures
  
 
Tangible Common Ratios and Capital
 
 
 
Forward-Looking Statements
 



Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Financial Highlights
 
Quarter Ended
($ amounts in millions, except per share data)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Earnings Summary
 
 
 
 
 
 
 
 
 
Interest income and other financing income - taxable equivalent
$
973

 
$
984

 
$
953

 
$
920

 
$
902

Interest expense - taxable equivalent
78

 
74

 
69

 
65

 
63

Depreciation expense on operating lease assets
26

 
27

 
28

 
—

 
—

Net interest income and other financing income - taxable equivalent
869

 
883

 
856

 
855

 
839

Less: Taxable-equivalent adjustment
21

 
21

 
20

 
19

 
19

Net interest income and other financing income
848

 
862

 
836

 
836

 
820

Provision for loan losses
72

 
113

 
69

 
60

 
63

Net interest income and other financing income after provision for loan losses
776

 
749

 
767

 
776

 
757

Non-interest income
526

 
506

 
514

 
497

 
590

Non-interest expense
915

 
869

 
873

 
895

 
934

Income from continuing operations before income taxes
387

 
386

 
408

 
378

 
413

Income tax expense
115

 
113

 
120

 
116

 
124

Income from continuing operations
272

 
273

 
288

 
262

 
289

Income (loss) from discontinued operations before income taxes
5

 
—

 
(6
)
 
(6
)
 
(6
)
Income tax expense (benefit)
2

 
—

 
(3
)
 
(2
)
 
(2
)
Income (loss) from discontinued operations, net of tax
3

 
—

 
(3
)
 
(4
)
 
(4
)
Net income
$
275

 
$
273

 
$
285

 
$
258

 
$
285

Income from continuing operations available to common shareholders
$
256

 
$
257

 
$
272

 
$
246

 
$
273

Net income available to common shareholders
$
259

 
$
257

 
$
269

 
$
242

 
$
269

 

 
 
 
 
 
 
 
 
Earnings per common share from continuing operations - basic
$
0.20

 
$
0.20

 
$
0.21

 
$
0.19

 
$
0.20

Earnings per common share from continuing operations - diluted
0.20

 
0.20

 
0.21

 
0.19

 
0.20

Earnings per common share - basic
0.20

 
0.20

 
0.21

 
0.18

 
0.20

Earnings per common share - diluted
0.20

 
0.20

 
0.21

 
0.18

 
0.20

 

 
 
 
 
 
 
 
 
Balance Sheet Summary

 
 
 
 
 
 
 
 
At quarter-end—Consolidated

 
 
 
 
 
 
 
 
Loans, net of unearned income
$
81,702

 
$
81,606

 
$
81,162

 
$
81,063

 
$
80,149

Allowance for loan losses
(1,151
)
 
(1,151
)
 
(1,106
)
 
(1,115
)
 
(1,115
)
Assets
126,212

 
125,539

 
126,050

 
124,789

 
121,855

Deposits
97,245

 
98,154

 
98,430

 
97,178

 
97,075

Long-term debt
8,968

 
7,851

 
8,349

 
7,364

 
3,602

Stockholders' equity
17,385

 
17,211

 
16,844

 
16,952

 
16,899

Average balances—Continuing Operations

 
 
 
 
 
 
 
 
Loans, net of unearned income
$
81,960

 
$
81,510

 
$
80,760

 
$
80,615

 
$
79,175

Assets
125,412

 
125,960

 
124,645

 
122,920

 
120,875

Deposits
97,497

 
97,750

 
97,488

 
97,166

 
97,100

Long-term debt
8,523

 
8,806

 
7,740

 
6,112

 
2,903

Stockholders' equity
17,151

 
17,086

 
16,901

 
16,874

 
16,950





1


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Selected Ratios and Other Information
 
As of and for Quarter Ended
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Return on average assets from continuing operations*
0.82
%
 
0.82
%
 
0.87
%
 
0.79
%
 
0.90
%
Return on average tangible common stockholders’ equity (non-GAAP)* (1)
9.15
%
 
9.16
%
 
9.61
%
 
8.65
%
 
9.66
%
Efficiency ratio from continuing operations
65.6
%
 
62.5
%
 
63.7
%
 
66.2
%
 
65.4
%
Adjusted efficiency ratio from continuing operations (non-GAAP) (1)(2)
64.0
%
 
60.6
%
 
63.4
%
 
66.8
%
 
64.5
%
Common book value per share
$
13.16

 
$
12.86

 
$
12.35

 
$
12.36

 
$
12.06

Tangible common book value per share (non-GAAP) (1)
$
9.22

 
$
8.97

 
$
8.52

 
$
8.58

 
$
8.37

Tangible common stockholders’ equity to tangible assets (non-GAAP) (1)
9.57
%
 
9.48
%
 
9.13
%
 
9.34
%
 
9.52
%
Basel III common equity (3)
$
11,507

 
$
11,496

 
$
11,543

 
$
11,438

 
$
11,527

Basel III common equity Tier 1 ratio (3)
10.9
%
 
10.9
%
 
10.9
%
 
11.0
%
 
11.3
%
Basel III common equity Tier 1 ratio—Fully Phased-In Pro-Forma (non-GAAP) (1)(3)
10.7
%
 
10.7
%
 
10.7
%
 
10.8
%
 
11.1
%
Tier 1 capital ratio (3)
11.6
%
 
11.6
%
 
11.7
%
 
11.7
%
 
12.1
%
Total risk-based capital ratio (3)
13.8
%
 
13.9
%
 
13.9
%
 
14.0
%
 
14.4
%
Leverage ratio (3)
10.2
%
 
10.1
%
 
10.3
%
 
10.4
%
 
10.6
%
Effective tax rate (4)
29.7
%
 
29.3
%
 
29.3
%
 
30.7
%
 
30.1
%
Allowance for loan losses as a percentage of loans, net of unearned income
1.41
%
 
1.41
%
 
1.36
%
 
1.38
%
 
1.39
%
Allowance for loan losses to non-performing loans, excluding loans held for sale
1.12x

 
1.16x

 
1.41x

 
1.41x

 
1.49x

Net interest margin (FTE) from continuing operations*(5)
3.15
%
 
3.19
%
 
3.08
%
 
3.13
%
 
3.16
%
Loans, net of unearned income, to total deposits
84.0
%
 
83.1
%
 
82.5
%
 
83.4
%
 
82.6
%
Net charge-offs as a percentage of average loans*
0.35
%
 
0.34
%
 
0.38
%
 
0.30
%
 
0.23
%
Non-accrual loans, excluding loans held for sale, as a percentage of loans
1.25
%
 
1.22
%
 
0.96
%
 
0.97
%
 
0.94
%
Non-performing assets (excluding loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale
1.40
%
 
1.36
%
 
1.13
%
 
1.14
%
 
1.13
%
Non-performing assets (including loans 90 days past due) as a percentage of loans, foreclosed properties and non-performing loans held for sale (6)
1.61
%
 
1.61
%
 
1.39
%
 
1.40
%
 
1.38
%
Associate headcount—full-time equivalent
22,447

 
22,855

 
23,393

 
23,423

 
23,155

ATMs
1,957

 
1,950

 
1,962

 
1,966

 
1,960

 

 
 
 
 
 
 
 
 
Branch Statistics

 
 
 
 
 
 
 
 
Full service
1,520

 
1,525

 
1,548

 
1,549

 
1,549

Drive-thru/transaction service only
79

 
80

 
79

 
81

 
82

Total branch outlets
1,599

 
1,605

 
1,627

 
1,630

 
1,631

             
*Annualized
(1)
See reconciliation of GAAP to non-GAAP Financial Measures on pages 11, 12 and 23.
(2)
During the fourth quarter of 2015, Regions corrected the accounting for certain leases, for which Regions is the lessor. These leases had been previously classified as capital leases but were subsequently determined to be operating leases and totaled approximately $834 million at December 31, 2015. The aggregate impact of this adjustment lowered net interest income and other financing income $15 million. Excluding the negative impact of the $15 million, the adjusted efficiency ratio would have been 62.7%. During the third quarter of 2015, approximately $23 million of FDIC insurance assessment adjustments to prior assessments were recorded. Excluding the $23 million, the adjusted efficiency ratio would have been 65.0%.
(3)
Current quarter Basel III common equity as well as the Basel III common equity Tier 1, Tier 1 capital, Total risk-based capital and Leverage ratios are estimated.
(4)
The first quarter of 2016 includes an income tax benefit related to the conclusion of a state tax examination. The fourth quarter of 2015 reflects the impact of higher than expected income tax benefits related to affordable housing investments. The second quarter of 2015 includes an income tax benefit related to the conclusion of certain state and federal examinations.
(5)
Excluding the negative impact of the $15 million lease adjustment discussed above, net interest margin would have been 3.13% for the fourth quarter of 2015.
(6)
Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing. Refer to the footnotes on page 16 for amounts related to these loans.



2


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Consolidated Statements of Income (unaudited)
 
Quarter Ended
($ amounts in millions, except per share data)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Interest income, including other financing income on:
 
 
 
 
 
 
 
 
 
Loans, including fees (1)
$
762

 
$
768

 
$
741

 
$
748

 
$
728

Securities—taxable
145

 
147

 
140

 
137

 
141

Loans held for sale
4

 
3

 
4

 
5

 
4

Trading account securities
1

 
3

 
1

 
—

 
1

Other earning assets
8

 
10

 
14

 
11

 
9

Operating lease assets (1)
32

 
32

 
33

 
—

 
—

Total interest income, including other financing income
952

 
963

 
933

 
901

 
883

Interest expense on:
 
 
 
 
 
 
 
 
 
Deposits
28

 
27

 
27

 
27

 
27

Short-term borrowings
—

 
—

 
—

 
—

 
1

Long-term borrowings
50

 
47

 
42

 
38

 
35

Total interest expense
78

 
74

 
69

 
65

 
63

Depreciation expense on operating lease assets (1)
26

 
27

 
28

 
—

 
—

Total interest expense and depreciation expense on operating lease assets
104

 
101

 
97

 
65

 
63

Net interest income and other financing income
848

 
862

 
836

 
836

 
820

Provision for loan losses
72

 
113

 
69

 
60

 
63

Net interest income and other financing income after provision for loan losses
776

 
749

 
767

 
776

 
757

Non-interest income:


 
 
 
 
 
 
 
 
Service charges on deposit accounts
166

 
159

 
166

 
167

 
168

Card and ATM fees
99

 
95

 
96

 
93

 
90

Mortgage income
46

 
38

 
37

 
39

 
46

Securities gains (losses), net
6

 
(5
)
 
11

 
7

 
6

Other
209

 
219

 
204

 
191

 
280

Total non-interest income
526

 
506

 
514

 
497

 
590

Non-interest expense:


 
 
 
 
 
 
 
 
Salaries and employee benefits
480

 
475

 
478

 
470

 
477

Net occupancy expense
86

 
86

 
91

 
90

 
89

Furniture and equipment expense
79

 
78

 
79

 
77

 
76

Other
270

 
230

 
225

 
258

 
292

Total non-interest expense
915

 
869

 
873

 
895

 
934

Income from continuing operations before income taxes
387

 
386

 
408

 
378

 
413

Income tax expense
115

 
113

 
120

 
116

 
124

Income from continuing operations
272

 
273


288

 
262

 
289

Discontinued operations:


 
 
 
 
 
 
 
 
Income (loss) from discontinued operations before income taxes
5

 
—

 
(6
)
 
(6
)
 
(6
)
Income tax expense (benefit)
2

 
—

 
(3
)
 
(2
)
 
(2
)
Income (loss) from discontinued operations, net of tax
3

 
—

 
(3
)
 
(4
)
 
(4
)
Net income
$
275

 
$
273


$
285

 
$
258

 
$
285

Net income from continuing operations available to common shareholders
$
256

 
$
257

 
$
272

 
$
246

 
$
273

Net income available to common shareholders
$
259

 
$
257

 
$
269

 
$
242

 
$
269

Weighted-average shares outstanding—during quarter:


 
 
 
 
 
 
 
 
Basic
1,265

 
1,286

 
1,301

 
1,319

 
1,335

Diluted
1,268

 
1,291

 
1,308

 
1,326

 
1,346

Actual shares outstanding—end of quarter
1,259

 
1,275

 
1,297

 
1,304

 
1,331

Earnings per common share from continuing operations:


 
 
 
 
 
 
 
 
Basic
$
0.20

 
$
0.20

 
$
0.21

 
$
0.19

 
$
0.20

Diluted
$
0.20

 
$
0.20

 
$
0.21

 
$
0.19

 
$
0.20

Earnings per common share:


 
 
 
 
 
 
 
 
Basic
$
0.20

 
$
0.20

 
$
0.21

 
$
0.18

 
$
0.20

Diluted
$
0.20

 
$
0.20

 
$
0.21

 
$
0.18

 
$
0.20

Cash dividends declared per common share
$
0.065

 
$
0.06

 
$
0.06

 
$
0.06

 
$
0.06

Taxable-equivalent net interest income and other financing income from continuing operations
$
869

 
$
883

 
$
856

 
$
855

 
$
839

_________
(1) During the fourth quarter of 2015, Regions corrected the accounting for certain leases, for which Regions is the lessor. These leases had been previously classified as capital leases but were subsequently determined to be operating leases and totaled approximately $834 million at December 31, 2015. The aggregate impact of this adjustment lowered net interest income and other financing income $15 million in the fourth quarter of 2015.
 



3


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Consolidated Statements of Income (Continued) (unaudited)
 
Six Months Ended June 30
($ amounts in millions, except per share data)
2016
 
2015
Interest income, including other financing income on:
 
 
 
Loans, including fees
$
1,530

 
$
1,453

Securities—taxable (1)
292

 
286

Loans held for sale
7

 
7

Trading account securities
4

 
4

Other earning assets (1)
18

 
19

Operating lease assets
64

 
—

Total interest income, including other financing income
1,915

 
1,769

Interest expense on:
 
 
 
Deposits
55

 
55

Short-term borrowings
—

 
1

Long-term borrowings
97

 
78

Total interest expense
152

 
134

Depreciation expense on operating lease assets
53

 
—

Total interest expense and depreciation expense on operating lease assets
205

 
134

Net interest income and other financing income
1,710

 
1,635

Provision for loan losses
185

 
112

Net interest income and other financing income after provision for loan losses
1,525

 
1,523

Non-interest income:
 
 
 
Service charges on deposit accounts
325

 
329

Card and ATM fees
194

 
175

Mortgage income
84

 
86

Securities gains, net
1

 
11

Other
428

 
459

Total non-interest income
1,032

 
1,060

Non-interest expense:
 
 
 
Salaries and employee benefits
955

 
935

Net occupancy expense
172

 
180

Furniture and equipment expense
157

 
147

Other
500

 
577

Total non-interest expense
1,784

 
1,839

Income from continuing operations before income taxes
773

 
744

Income tax expense
228

 
219

Income from continuing operations
545

 
525

Discontinued operations:
 
 
 
Income (loss) from discontinued operations before income taxes
5

 
(10
)
Income tax expense (benefit)
2

 
(4
)
Income (loss) from discontinued operations, net of tax
3

 
(6
)
Net income
$
548

 
$
519

Net income from continuing operations available to common shareholders
$
513

 
$
493

Net income available to common shareholders
$
516

 
$
487

Weighted-average shares outstanding—during year:


 
 
Basic
1,275

 
1,340

Diluted
1,279

 
1,352

Actual shares outstanding—end of period
1,259

 
1,331

Earnings per common share from continuing operations:


 
 
Basic
$
0.40

 
$
0.37

Diluted
$
0.40

 
$
0.36

Earnings per common share:


 
 
Basic
$
0.40

 
$
0.36

Diluted
$
0.40

 
$
0.36

Cash dividends declared per common share
$
0.125

 
$
0.11

Taxable-equivalent net interest income and other financing income from continuing operations
$
1,752

 
$
1,671

_________
(1) Investments and related income from Federal Reserve Bank and Federal Home Loan Bank stock were reclassified from securities available for sale to other earning assets during the fourth quarter of 2015. All periods presented have been revised to reflect this presentation.

4


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations
 
Quarter Ended
 
6/30/2016
 
3/31/2016
($ amounts in millions; yields on taxable-equivalent basis)
Average Balance
 
Income/ Expense
 
Yield/ Rate
 
Average Balance
 
Income/ Expense
 
Yield/ Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
Earning assets:
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and securities purchased under agreements to resell
$
3

 
$
—

 
—
%
 
$
11

 
$
—

 
—
%
Trading account securities
114

 
1

 
0.99


132

 
3

 
10.20

Securities:


 


 
 
 
 
 
 
 
 
Taxable
24,682

 
145

 
2.36

 
24,618

 
147

 
2.39

Tax-exempt
1

 
—

 
—

 
1

 
—

 
—

Loans held for sale
458

 
4

 
3.45

 
362

 
3

 
3.30

Loans, net of unearned income:


 


 


 
 
 
 
 
 
Commercial and industrial
36,493

 
316

 
3.47

 
36,103

 
321

 
3.56

Commercial real estate mortgage—owner-occupied
7,311

 
87

 
4.74

 
7,512

 
91

 
4.79

Commercial real estate construction—owner-occupied
348

 
4

 
4.46

 
359

 
4

 
4.17

Commercial investor real estate mortgage
4,399

 
33

 
3.00

 
4,430

 
34

 
3.07

Commercial investor real estate construction
2,591

 
20

 
3.12

 
2,591

 
20

 
3.11

Residential first mortgage
12,990

 
126

 
3.87

 
12,828

 
125

 
3.89

Home equity
10,869

 
99

 
3.65

 
10,956

 
99

 
3.63

Indirect—vehicles
4,149

 
33

 
3.15

 
4,056

 
32

 
3.18

Indirect—other consumer
686

 
12

 
6.86

 
599

 
10

 
6.41

Consumer credit card
1,066

 
31

 
11.72

 
1,050

 
31

 
12.01

Other consumer
1,058

 
22

 
8.31

 
1,026

 
22

 
8.47

Total loans, net of unearned income
81,960

 
783

 
3.82

 
81,510

 
789

 
3.87

Investment in operating leases, net
792

 
6

 
2.81

 
825

 
5

 
2.71

Other earning assets
2,970

 
8

 
1.10

 
4,046

 
10

 
0.98

Total earning assets
110,980

 
947

 
3.41

 
111,505

 
957

 
3.43

Allowance for loan losses
(1,158
)
 
 
 
 
 
(1,108
)
 
 
 
 
Cash and due from banks
1,792

 
 
 
 
 
1,710

 
 
 
 
Other non-earning assets
13,798

 
 
 
 
 
13,853

 


 


 
$
125,412

 
 
 
 
 
$
125,960

 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Savings
$
7,794

 
2

 
0.14

 
$
7,491

 
3

 
0.16

Interest-bearing checking
20,760

 
5

 
0.09

 
21,244

 
5

 
0.10

Money market
26,585

 
7

 
0.11

 
26,821

 
7

 
0.10

Time deposits
7,338

 
14

 
0.73

 
7,368

 
12

 
0.67

Total interest-bearing deposits (1)
62,477

 
28

 
0.18

 
62,924

 
27

 
0.18

Other short-term borrowings
—

 
—

 
—

 
8

 
—

 
—

Long-term borrowings
8,523

 
50

 
2.33

 
8,806

 
47

 
2.13

Total interest-bearing liabilities
71,000

 
78

 
0.44

 
71,738

 
74

 
0.42

Non-interest-bearing deposits (1)
35,020

 
—

 
—

 
34,826

 
—

 
—

Total funding sources
106,020

 
78

 
0.29

 
106,564

 
74

 
0.28

Net interest spread


 


 
2.97

 
 
 
 
 
3.01

Other liabilities
2,241

 


 


 
2,310

 
 
 
 
Stockholders’ equity
17,151

 


 


 
17,086

 
 
 
 
 
$
125,412

 


 


 
$
125,960

 
 
 
 
Net interest income and other financing income/margin FTE basis
 
 
$
869

 
3.15
%
 
 
 
$
883

 
3.19
%
_______
(1)
Total deposit costs from continuing operations may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs from continuing operations equal 0.12% and 0.11% for the quarters ended June 30, 2016 and March 31, 2016, respectively.


5


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Consolidated Average Daily Balances and Yield/Rate Analysis from Continuing Operations (Continued)
 
Quarter Ended
 
12/31/2015
 
9/30/2015
 
6/30/2015
($ amounts in millions; yields on taxable-equivalent basis)
Average Balance
 
Income/ Expense
 
Yield/ Rate
 
Average Balance
 
Income/ Expense
 
Yield/ Rate
 
Average Balance
 
Income/ Expense
 
Yield/ Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal funds sold and securities purchased under agreements to resell
$
10

 
$
—

 
—
%
 
$
3

 
$
—

 
—
%
 
$
2

 
$
—

 
—
%
Trading account securities
138

 
1

 
3.71

 
111


—

 
—

 
112

 
1

 
1.06

Securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
24,325

 
140

 
2.28

 
23,912

 
137

 
2.28

 
24,114

 
141

 
2.35

Tax-exempt
1

 
—

 
—

 
1

 
—

 
—

 
2

 
—

 
—

Loans held for sale
404

 
4

 
4.18

 
492

 
5

 
3.58

 
463

 
4

 
3.44

Loans, net of unearned income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial (1)
35,511

 
290

 
3.24

 
35,647

 
302

 
3.37

 
34,480

 
291

 
3.38

Commercial real estate mortgage—owner-occupied
7,675

 
97

 
5.04

 
7,768

 
99

 
5.04

 
7,921

 
97

 
4.89

Commercial real estate construction—owner-occupied
415

 
5

 
4.48

 
443

 
5

 
4.31

 
430

 
5

 
4.25

Commercial investor real estate mortgage
4,332

 
35

 
3.20

 
4,441

 
35

 
3.14

 
4,549

 
36

 
3.15

Commercial investor real estate construction
2,576

 
19

 
2.97

 
2,455

 
18

 
2.96

 
2,416

 
18

 
3.00

Residential first mortgage
12,753

 
127

 
3.93

 
12,649

 
123

 
3.86

 
12,471

 
121

 
3.91

Home equity
10,948

 
96

 
3.48

 
10,902

 
96

 
3.51

 
10,867

 
96

 
3.55

Indirect—vehicles
3,969

 
32

 
3.22

 
3,863

 
31

 
3.23

 
3,768

 
31

 
3.29

Indirect—other consumer
523

 
8

 
5.71

 
439

 
6

 
5.44

 
328

 
4

 
4.83

Consumer credit card
1,031

 
30

 
11.52

 
1,004

 
30

 
11.57

 
975

 
27

 
11.23

Other consumer
1,027

 
22

 
8.50

 
1,004

 
22

 
8.61

 
970

 
21

 
8.63

Total loans, net of unearned income (1)
80,760

 
761

 
3.74

 
80,615

 
767

 
3.78

 
79,175

 
747

 
3.78

Investment in operating leases, net (1)
852

 
5

 
2.60

 
—

 
—

 
—

 
—

 
—

 
—

Other earning assets
3,709

 
14

 
1.39

 
3,441

 
11

 
1.21

 
2,659

 
9

 
1.44

Total earning assets
110,199

 
925

 
3.33

 
108,575

 
920

 
3.36

 
106,527

 
902

 
3.40

Allowance for loan losses
(1,120
)
 
 
 
 
 
(1,111
)
 
 
 
 
 
(1,097
)
 
 
 
 
Cash and due from banks
1,642

 
 
 
 
 
1,687

 
 
 
 
 
1,706

 


 
 
Other non-earning assets
13,924

 



 
 
13,769

 


 
 
 
13,739

 


 
 
 
$
124,645

 
 
 
 
 
$
122,920

 
 
 
 
 
$
120,875

 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings
$
7,245

 
2

 
0.12

 
$
7,182

 
2

 
0.13

 
$
7,165

 
3

 
0.12

Interest-bearing checking
21,052

 
5

 
0.08

 
20,992

 
4

 
0.08

 
21,494

 
4

 
0.08

Money market
26,627

 
7

 
0.10

 
26,793

 
7

 
0.10

 
26,483

 
7

 
0.11

Time deposits
7,818

 
13

 
0.67

 
8,110

 
14

 
0.67

 
8,250

 
13

 
0.67

Total interest-bearing deposits (2)
62,742

 
27

 
0.17

 
63,077

 
27

 
0.17

 
63,392

 
27

 
0.17

Federal funds purchased and securities sold under agreements to repurchase
10

 
—

 
—

 
46

 
—

 
—

 
637

 
—

 
—

Other short-term borrowings
3

 
—

 
—

 
250

 
—

 
—

 
942

 
1

 
0.21

Long-term borrowings
7,740

 
42

 
2.19

 
6,112

 
38

 
2.45

 
2,903

 
35

 
4.83

Total interest-bearing liabilities 
70,495

 
69

 
0.39

 
69,485

 
65

 
0.37

 
67,874

 
63

 
0.37

Non-interest-bearing deposits (2)
34,746

 
—

 
—

 
34,089

 
—

 
—

 
33,708

 
—

 
—

Total funding sources
105,241

 
69

 
0.26

 
103,574

 
65

 
0.25

 
101,582

 
63

 
0.25

Net interest spread
 
 
 
 
2.94

 
 
 
 
 
2.99

 
 
 
 
 
3.03

Other liabilities
2,503

 
 
 
 
 
2,472

 
 
 
 
 
2,343

 
 
 
 
Stockholders’ equity
16,901

 
 
 
 
 
16,874

 
 
 
 
 
16,950

 
 
 
 
 
$
124,645

 
 
 
 
 
$
122,920

 
 
 
 
 
$
120,875

 
 
 
 
Net interest income and other financing income/margin FTE basis (1)
 
 
$
856

 
3.08
%
 
 
 
$
855

 
3.13
%
 
 
 
$
839

 
3.16
%
_______
(1)
During the fourth quarter of 2015, Regions corrected the accounting for approximately $852 million of average balances of leases, for which Regions is the lessor. These leases had been previously classified as capital leases but were subsequently determined to be operating leases. Net interest margin, excluding the negative impact of the $15 million lease adjustment recorded in the fourth quarter of 2015 would have been 3.13%.
(2)
Total deposit costs from continuing operations may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest bearing deposits. The rates for total deposit costs from continuing operations equal 0.11% for each of the quarters ended December 31, 2015, September 30, 2015, and June 30, 2015.


6


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Pre-Tax Pre-Provision Income ("PPI") and Adjusted PPI (non-GAAP)
The Pre-Tax Pre-Provision Income table below presents computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the presentation of PPI and the exclusion of certain items from PPI provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of income that excludes certain adjustments does not represent the amount that effectively accrues directly to stockholders.
 
 
Quarter Ended
($ amounts in millions)
6/30/2016

 
3/31/2016

 
12/31/2015
 
9/30/2015
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Net income from continuing operations available to common shareholders (GAAP)
$
256

 
$
257

 
$
272

 
$
246

 
$
273

 
$
(1
)
 
(0.4
)%
 
$
(17
)
 
(6.2
)%
Preferred dividends (GAAP)
16

 
16

 
16

 
16

 
16

 
—

 
NM

 
—

 
NM

Income tax expense (GAAP)
115

 
113

 
120

 
116

 
124

 
2

 
1.8
 %
 
(9
)
 
(7.3
)%
Income from continuing operations before income taxes (GAAP)
387

 
386

 
408

 
378

 
413

 
1

 
0.3
 %
 
(26
)
 
(6.3
)%
Provision for loan losses (GAAP)
72

 
113

 
69

 
60

 
63

 
(41
)
 
(36.3
)%
 
9

 
14.3
 %
Pre-tax pre-provision income from continuing operations (non-GAAP)
459

 
499

 
477

 
438

 
476

 
(40
)
 
(8.0
)%
 
(17
)
 
(3.6
)%
Other adjustments:
 
 
 
 
 
 
 
 
 
 


 


 

 


Securities (gains) losses, net
(6
)
 
5

 
(11
)
 
(7
)
 
(6
)
 
(11
)
 
(220.0
)%
 
—

 
NM

Insurance proceeds (1)
—

 
(3
)
 
(1
)
 
—

 
(90
)
 
3

 
(100.0
)%
 
90

 
(100.0
)%
Leveraged lease termination gains, net
—

 
—

 
—

 
(6
)
 
—

 
—

 
NM

 
—

 
NM

Salaries and employee benefits—severance charges
1

 
12

 
6

 
—

 
—

 
(11
)
 
(91.7
)%
 
1

 
NM

Professional, legal and regulatory expenses (2)
3

 
—

 
—

 
—

 
48

 
3

 
NM

 
(45
)
 
(93.8
)%
Branch consolidation, property and equipment charges (3)
22

 
14

 
6

 
1

 
27

 
8

 
57.1
 %
 
(5
)
 
(18.5
)%
Total other adjustments
20

 
28

 
—

 
(12
)
 
(21
)
 
(8
)
 
(28.6
)%
 
41

 
(195.2
)%
Adjusted pre-tax pre-provision income from continuing operations (non-GAAP)
$
479

 
$
527

 
$
477

 
$
426

 
$
455

 
$
(48
)
 
(9.1
)%
 
$
24

 
5.3
 %
 
NM - Not Meaningful
(1)
Insurance proceeds recognized in all periods presented are related to the settlement of the previously disclosed 2010 class-action lawsuit.
(2)
Regions recorded $3 million, $50 million and $100 million of contingent legal and regulatory accruals during the second quarter of 2016, the second quarter of 2015, and the fourth quarter of 2014, respectively, related to previously disclosed matters. The fourth quarter of 2014 accruals were settled in the second quarter of 2015 for $2 million less than originally estimated and a corresponding recovery was recognized.
(3)
Charges in the second quarter of 2015 resulted from the transfer of land, previously held for future branch expansion, to held for sale based on changes in management's intent.



7


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Non-Interest Income
 
Quarter Ended
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Service charges on deposit accounts
$
166

 
$
159

 
$
166

 
$
167

 
$
168

 
$
7

 
4.4
 %
 
$
(2
)
 
(1.2
)%
Card and ATM fees
99

 
95

 
96

 
93

 
90

 
4

 
4.2
 %
 
9

 
10.0
 %
Investment management and trust fee income
52

 
50

 
51

 
49

 
51

 
2

 
4.0
 %
 
1

 
2.0
 %
Mortgage income
46

 
38

 
37

 
39

 
46

 
8

 
21.1
 %
 
—

 
NM

Insurance commissions and fees
36

 
40

 
34

 
38

 
33

 
(4
)
 
(10.0
)%
 
3

 
9.1
 %
Capital markets fee income and other (1)
38

 
41

 
28

 
29

 
27

 
(3
)
 
(7.3
)%
 
11

 
40.7
 %
Insurance proceeds
—

 
3

 
1

 
—

 
90

 
(3
)
 
(100.0
)%
 
(90
)
 
(100.0
)%
Commercial credit fee income
18

 
19

 
19

 
20

 
21

 
(1
)
 
(5.3
)%
 
(3
)
 
(14.3
)%
Bank-owned life insurance
20

 
33

 
19

 
17

 
18

 
(13
)
 
(39.4
)%
 
2

 
11.1
 %
Investment services fee income
15

 
16

 
15

 
15

 
13

 
(1
)
 
(6.3
)%
 
2

 
15.4
 %
Securities gains (losses), net
6

 
(5
)
 
11

 
7

 
6

 
11

 
(220.0
)%
 
—

 
NM

Net revenue from affordable housing
3

 
11

 
14

 
2

 
6

 
(8
)
 
(72.7
)%
 
(3
)
 
(50.0
)%
Market value adjustments on employee benefit assets
8

 
(12
)
 
2

 
(5
)
 
2

 
20

 
(166.7
)%
 
6

 
300.0
 %
Other
19

 
18

 
21

 
26

 
19

 
1

 
5.6
 %
 
—

 
NM

Total non-interest income from continuing operations
$
526

 
$
506

 
$
514

 
$
497

 
$
590

 
$
20

 
4.0
 %
 
$
(64
)
 
(10.8
)%
Mortgage Income
 
Quarter Ended
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Production and sales
$
32

 
$
27

 
$
23

 
$
30

 
$
31

 
$
5

 
18.5
 %
 
$
1

 
3.2
 %
Loan servicing
22

 
20

 
20

 
20

 
20

 
2

 
10.0
 %
 
2

 
10.0
 %
MSR and related hedge impact:


 
 
 
 
 
 
 
 
 


 


 


 


MSRs fair value increase (decrease) due to change in valuation inputs or assumptions
(22
)
 
(36
)
 
12

 
(25
)
 
28

 
14

 
(38.9
)%
 
(50
)
 
(178.6
)%
MSRs hedge gain (loss)
24

 
35

 
(9
)
 
25

 
(22
)
 
(11
)
 
(31.4
)%
 
46

 
(209.1
)%
MSRs change due to payment decay
(10
)
 
(8
)
 
(9
)
 
(11
)
 
(11
)
 
(2
)
 
25.0
 %
 
1

 
(9.1
)%
MSR and related hedge impact
(8
)
 
(9
)

(6
)

(11
)

(5
)
 
1

 
(11.1
)%
 
(3
)
 
60.0
 %
Total mortgage income
$
46

 
$
38

 
$
37

 
$
39

 
$
46

 
$
8

 
21.1
 %
 
$
—

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage production - purchased
$
1,235

 
$
756

 
$
852

 
$
1,057

 
$
1,097

 
$
479

 
63.4
 %
 
$
138

 
12.6
 %
Mortgage production - refinanced
421

 
355

 
338

 
364

 
505

 
66

 
18.6
 %
 
(84
)
 
(16.6
)%
Total mortgage production (2)
$
1,656

 
$
1,111

 
$
1,190

 
$
1,421

 
$
1,602

 
$
545

 
49.1
 %
 
$
54

 
3.4
 %
 
Wealth Management Income
 
Quarter Ended
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Investment management and trust fee income
$
52

 
$
50

 
$
51

 
$
49

 
$
51

 
$
2

 
4.0
 %
 
$
1

 
2.0
%
Insurance commissions and fees
36

 
40

 
34

 
38

 
33

 
(4
)
 
(10.0
)%
 
3

 
9.1
%
Investment services fee income
15

 
16

 
15

 
15

 
13

 
(1
)
 
(6.3
)%
 
2

 
15.4
%
Total wealth management income (3)
$
103

 
$
106


$
100

 
$
102

 
$
97

 
$
(3
)
 
(2.8
)%
 
$
6

 
6.2
%
_________
NM - Not Meaningful
(1)
Capital markets fee income and other primarily relates to capital raising activities that includes securities underwriting and placement, loan syndication and placement, as well as foreign exchange, derivative and advisory services. Beginning in the fourth quarter of 2015, this category also includes revenue derived from the purchase of BlackArch Partners, a private, middle-market mergers and acquisitions advisory firm headquartered in Charlotte, North Carolina.
(2)
Total mortgage production represents production during the period, including amounts sold into the secondary market as well as amounts retained in Regions' residential first mortgage loan portfolio.
(3)
Total Wealth Management income presented above does not include the portion of service charges on deposit accounts and similar smaller dollar amounts that are also attributable to the Wealth Management segment.
Selected Non-Interest Income Variance Analysis
•
Service charges on deposit accounts increased compared to the first quarter of 2016 primarily due to checking account growth.
•
Total wealth management income decreased compared to the first quarter of 2016 primarily due to seasonal decreases in insurance income partially offset by increased investment management and trust fees.
•
Capital markets and other income decreased compared to the first quarter of 2016 as increased fees from mergers and acquisition advisory services were offset by declines in fees generated from the placement of permanent financing for real estate customers, as well as syndicated loan transactions.
•
Bank-owned life insurance decreased compared to the first quarter of 2016 primarily due to claims benefits as well as a gain on exchange of policies recognized in the first quarter.
•
Securities gains (losses) increased compared to the first quarter of 2016 as the Company recognized losses in the first quarter while reducing its energy exposure in its investment portfolio.
•
Market value adjustments on employee benefit assets increased compared to the first quarter of 2016 reflecting increased market value related to assets held for certain employee benefits, which is offset in salaries and benefits expense.

8


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Non-Interest Income
 
Six Months Ended
 
Change June 30, 2016 vs. June 30, 2015
($ amounts in millions)
6/30/2016
 
6/30/2015
 
Amount
 
Percent
Service charges on deposit accounts
$
325

 
$
329

 
$
(4
)
 
(1.2
)%
Card and ATM fees
194

 
175

 
19

 
10.9
 %
Investment management and trust fee income
102

 
102

 
—

 
NM

Mortgage income
84

 
86

 
(2
)
 
(2.3
)%
Insurance commissions and fees
76

 
68

 
8

 
11.8
 %
Capital markets fee income and other (1)
79

 
47

 
32

 
68.1
 %
Insurance proceeds
3

 
90

 
(87
)
 
(96.7
)%
Commercial credit fee income
37

 
37

 
—

 
NM

Bank-owned life insurance
53

 
38

 
15

 
39.5
 %
Investment services fee income
31

 
25

 
6

 
24.0
 %
Securities gains, net
1

 
11

 
(10
)
 
(90.9
)%
Net revenue from affordable housing
14

 
8

 
6

 
75.0
 %
Market value adjustments on employee benefit assets
(4
)
 
—

 
(4
)
 
NM

Other
37

 
44

 
(7
)
 
(15.9
)%
Total non-interest income from continuing operations
$
1,032

 
$
1,060

 
$
(28
)
 
(2.6
)%

Mortgage Income
 
Six Months Ended
 
Change June 30, 2016 vs. June 30, 2015
($ amounts in millions)
6/30/2016
 
6/30/2015
 
Amount
 
Percent
Production and sales
$
59

 
$
58

 
$
1

 
1.7
 %
Loan servicing
42

 
41

 
1

 
2.4
 %
MSR and related hedge impact:
 
 
 
 
 
 
 
MSRs fair value increase (decrease) due to change in valuation inputs or assumptions
(58
)
 
11

 
(69
)
 
NM

MSRs hedge gain (loss)
59

 
(5
)
 
64

 
NM

MSRs change due to payment decay
(18
)
 
(19
)
 
1

 
(5.3
)%
MSR and related hedge impact
(17
)
 
(13
)
 
(4
)
 
30.8
 %
Total mortgage income
$
84

 
$
86

 
$
(2
)
 
(2.3
)%
 
 
 
 
 
 
 
 
Mortgage production - purchased
$
1,991

 
$
1,840

 
$
151

 
8.2
 %
Mortgage production - refinanced
776

 
1,032

 
(256
)
 
(24.8
)%
Total mortgage production (2)
$
2,767

 
$
2,872

 
$
(105
)
 
(3.7
)%

Wealth Management Income
 
Six Months Ended
 
Change June 30, 2016 vs. June 30, 2015
($ amounts in millions)
6/30/2016
 
6/30/2015
 
Amount
 
Percent
Investment management and trust fee income
$
102

 
$
102

 
$
—

 
NM

Insurance commissions and fees
76

 
68

 
8

 
11.8
%
Investment services fee income
31

 
25

 
6

 
24.0
%
Total wealth management income (3)
$
209

 
$
195

 
$
14

 
7.2
%
_________
NM - Not Meaningful
(1)
Capital markets fee income and other primarily relates to capital raising activities that includes securities underwriting and placement, loan syndication and placement, as well as foreign exchange, derivative and advisory services. Beginning in the fourth quarter of 2015, this category also includes revenue derived from the purchase of BlackArch Partners, a private, middle-market mergers and acquisitions advisory firm headquartered in Charlotte, North Carolina.
(2)
Total mortgage production represents production during the period, including amounts sold into the secondary market as well as amounts retained in Regions' residential first mortgage loan portfolio.
(3)
Total Wealth Management income presented above does not include the portion of service charges on deposit accounts and similar smaller dollar amounts that are also attributable to the Wealth Management segment.


9


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Non-Interest Expense
 
Quarter Ended
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Salaries and employee benefits
$
480

 
$
475

 
$
478

 
$
470

 
$
477

 
$
5

 
1.1
 %

$
3

 
0.6
 %
Net occupancy expense
86

 
86

 
91

 
90

 
89

 
—

 
NM

 
(3
)
 
(3.4
)%
Furniture and equipment expense
79

 
78

 
79

 
77

 
76

 
1

 
1.3
 %
 
3

 
3.9
 %
Outside services
39

 
36

 
40

 
38

 
40

 
3

 
8.3
 %
 
(1
)
 
(2.5
)%
Marketing
28

 
25

 
23

 
24

 
25

 
3

 
12.0
 %
 
3

 
12.0
 %
Professional, legal and regulatory expenses
21

 
13

 
22

 
25

 
71

 
8

 
61.5
 %
 
(50
)
 
(70.4
)%
FDIC insurance assessments
17

 
25

 
22

 
46

 
15

 
(8
)
 
(32.0
)%
 
2

 
13.3
 %
Credit/checkcard expenses
14

 
13

 
13

 
15

 
13

 
1

 
7.7
 %
 
1

 
7.7
 %
Branch consolidation, property and equipment charges
22

 
14

 
6

 
1

 
27

 
8

 
57.1
 %
 
(5
)
 
(18.5
)%
Other
129

 
104

 
99

 
109

 
101

 
25

 
24.0
 %
 
28

 
27.7
 %
Total non-interest expense from continuing operations
$
915

 
$
869

 
$
873

 
$
895

 
$
934

 
$
46

 
5.3
 %
 
$
(19
)
 
(2.0
)%

 
Six Months Ended
 
Change June 30, 2016 vs. June 30, 2015
($ amounts in millions)
6/30/2016
 
6/30/2015
 
Amount
 
Percent
Salaries and employee benefits
$
955

 
$
935

 
$
20

 
2.1
 %
Net occupancy expense
172

 
180

 
(8
)
 
(4.4
)%
Furniture and equipment expense
157

 
147

 
10

 
6.8
 %
Outside services
75

 
71

 
4

 
5.6
 %
Marketing
53

 
51

 
2

 
3.9
 %
Professional, legal and regulatory expenses
34

 
90

 
(56
)
 
(62.2
)%
FDIC insurance assessments
42

 
37

 
5

 
13.5
 %
Credit/checkcard expenses
27

 
26

 
1

 
3.8
 %
Branch consolidation, property and equipment charges
36

 
49

 
(13
)
 
(26.5
)%
Loss on early extinguishment of debt
—

 
43

 
(43
)
 
(100.0
)%
Other
233

 
210

 
23

 
11.0
 %
Total non-interest expense from continuing operations
$
1,784

 
$
1,839

 
$
(55
)
 
(3.0
)%
_________
NM - Not Meaningful

Selected Non-Interest Expense Variance Analysis

•
Salaries and employee benefits increased compared to the first quarter of 2016. The increase for the quarter was primarily due to approximately $20 million of market value improvement in assets held for certain employee benefits, which are offset in non-interest income. The market value improvements were partially offset by reduced severance expense compared to the first quarter. Staffing levels declined 2 percent compared to the first quarter of 2016, serving to lower base salaries and fully offset the impact of the Company's annual merit increase.
•
Professional, legal, and regulatory expenses increased compared to the first quarter of 2016 primarily due to legal and regulatory charges of $3 million related to the pending settlement of previously disclosed matters, as well as a $7 million favorable legal settlement recognized in the first quarter.
•
FDIC insurance assessments decreased compared to the first quarter of 2016 primarily due to a $6 million refund related to overpayments in prior periods.
•
Branch consolidation, property and equipment charges in the first and second quarters of 2016 include costs related to branch consolidations as well as occupancy optimization initiatives.
•
Other expenses increased compared to the first quarter of 2016 primarily due to an $11 million increase to the reserve for unfunded commitments, as well as $9 million of credit-related charges associated with other real estate and held for sale loans.






10


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Reconciliation to GAAP Financial Measures
Adjusted Efficiency Ratios, Adjusted Fee Income Ratios, Adjusted Non-Interest Income/Expense, Adjusted Operating Leverage Ratios, and Return Ratios
The table below and on the following page present computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. The table also shows the fee income ratio (non-GAAP), generally calculated as non-interest income divided by total revenue. Management uses these ratios to monitor performance and believes these measures provide meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the efficiency ratio. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the fee income ratio. Net interest income and other financing income on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the fee income and efficiency ratios. Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. The table on the following page presents a computation of the operating leverage ratio (non-GAAP) which is the period to period percentage change in adjusted total revenue on a taxable-equivalent basis (non-GAAP) less the percentage change in adjusted non-interest expense (non-GAAP). Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.
The table on the following page also provides a calculation of “return on average tangible common stockholders’ equity”. Tangible common stockholders’ equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Analysts and banking regulators have assessed Regions’ capital adequacy using the tangible common stockholders’ equity measure. Because tangible common stockholders’ equity is not formally defined by GAAP or prescribed in any amount by federal banking regulations it is currently considered to be a non-GAAP financial measure and other entities may calculate it differently than Regions’ disclosed calculations. Since analysts and banking regulators may assess Regions’ capital adequacy using tangible common stockholders’ equity, management believes that it is useful to provide investors the ability to assess Regions’ capital adequacy on this same basis.
 
 
Quarter Ended
($ amounts in millions)
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
ADJUSTED EFFICIENCY AND FEE INCOME RATIOS, ADJUSTED NON-INTEREST INCOME/EXPENSE- CONTINUING OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expense (GAAP)
A
$
915

 
$
869

 
$
873

 
$
895

 
$
934

 
$
46

 
5.3
 %
 
$
(19
)
 
(2.0
)%
Adjustments:
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Professional, legal and regulatory expenses (1)
 
(3
)
 
—

 
—

 
—

 
(48
)
 
(3
)
 
NM

 
45

 
(93.8
)%
Branch consolidation, property and equipment charges(1)
 
(22
)
 
(14
)
 
(6
)
 
(1
)
 
(27
)
 
(8
)
 
57.1
 %
 
5

 
(18.5
)%
Salary and employee benefits—severance charges
 
(1
)
 
(12
)
 
(6
)
 
—

 
—

 
11

 
(91.7
)%
 
(1
)
 
NM

Adjusted non-interest expense (non-GAAP)
B
$
889

 
$
843

 
$
861

 
$
894

 
$
859

 
$
46

 
5.5
 %
 
$
30

 
3.5
 %
Net interest income and other financing income (GAAP)
 
$
848

 
$
862

 
$
836

 
$
836

 
$
820

 
$
(14
)
 
(1.6
)%
 
$
28

 
3.4
 %
Taxable-equivalent adjustment
 
21

 
21

 
20

 
19

 
19

 
—

 
NM

 
2

 
10.5
 %
Net interest income and other financing income, taxable-equivalent basis
C
$
869

 
$
883

 
$
856

 
$
855

 
$
839

 
$
(14
)
 
(1.6
)%
 
$
30

 
3.6
 %
Non-interest income (GAAP)
D
$
526

 
$
506

 
$
514

 
$
497

 
$
590

 
$
20

 
4.0
 %
 
$
(64
)
 
(10.8
)%
Adjustments:
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities (gains) losses, net
 
(6
)
 
5

 
(11
)
 
(7
)
 
(6
)
 
(11
)
 
(220.0
)%
 
—

 
NM

Insurance proceeds (1)
 
—

 
(3
)
 
(1
)
 
—

 
(90
)
 
3

 
(100.0
)%
 
90

 
(100.0
)%
Leveraged lease termination gains, net
 
—

 
—

 
—

 
(6
)
 
—

 
—

 
NM

 
—

 
NM

Adjusted non-interest income (non-GAAP)
E
$
520

 
$
508

 
$
502

 
$
484

 
$
494

 
$
12

 
2.4
 %
 
$
26

 
5.3
 %
Total revenue, taxable-equivalent basis
C+D=F
$
1,395

 
$
1,389

 
$
1,370

 
$
1,352

 
$
1,429

 
$
6

 
0.4
 %
 
$
(34
)
 
(2.4
)%
Adjusted total revenue, taxable-equivalent basis (non-GAAP)
C+E=G
$
1,389

 
$
1,391

 
$
1,358

 
$
1,339

 
$
1,333

 
$
(2
)
 
(0.1
)%
 
$
56

 
4.2
 %
Efficiency ratio (GAAP)
A/F
65.6
%
 
62.5
%
 
63.7
%
 
66.2
%
 
65.4
%
 
 
 
 
 
 
 
 
Adjusted efficiency ratio (non-GAAP) (2)(3)
B/G
64.0
%
 
60.6
%
 
63.4
%
 
66.8
%
 
64.5
%
 
 
 
 
 
 
 
 
Fee income ratio (GAAP)
D/F
37.7
%
 
36.4
%
 
37.5
%
 
36.8
%
 
41.2
%
 
 
 
 
 
 
 
 
Adjusted fee income ratio (non-GAAP)
E/G
37.5
%
 
36.5
%
 
37.0
%
 
36.2
%
 
37.0
%
 
 
 
 
 
 
 
 
________
*Annualized
NM - Not Meaningful
(1)
See page 7 for additional information regarding these adjustments.
(2)
Excluding $23 million of FDIC insurance assessment adjustments to prior assessments recorded in the third quarter of 2015, the adjusted efficiency ratio would have been 65.0%.
(3)
During the fourth quarter of 2015, Regions corrected the accounting for certain leases, for which Regions is the lessor. These leases had been previously classified as capital leases but were subsequently determined to be operating leases and totaled approximately $834 million at December 31, 2015. The aggregate impact of this adjustment lowered net interest income and other financing income $15 million. Excluding the negative impact of the $15 million, the adjusted efficiency ratio would have been 62.7%.





11


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Reconciliation to GAAP Financial Measures
Adjusted Efficiency Ratios, Adjusted Fee Income Ratios, Adjusted Non-Interest Income/Expense, Adjusted Operating Leverage Ratios, and Return Ratios (Continued)
 
 
Six Months Ended June 30
($ amounts in millions)
 
2016
 
2015
 
2016 vs. 2015
ADJUSTED EFFICIENCY, FEE INCOME AND OPERATING LEVERAGE RATIOS, ADJUSTED NON-INTEREST INCOME/EXPENSE- CONTINUING OPERATIONS
 
 
 
 
 
 
 
Non-interest expense (GAAP)
H
$
1,784

 
$
1,839

 
$
(55
)
 
(3.0
)%
Adjustments:
 
 
 
 
 
 
 
 
Professional, legal and regulatory expenses (1)
 
(3
)
 
(48
)
 
45

 
(93.8
)%
Branch consolidation, property and equipment charges (1)
 
(36
)
 
(49
)
 
13

 
(26.5
)%
Loss on early extinguishment of debt
 
—

 
(43
)
 
43

 
(100.0
)%
Salary and employee benefits—severance charges
 
(13
)
 
—

 
(13
)
 
NM

Adjusted non-interest expense (non-GAAP)
I
$
1,732

 
$
1,699

 
$
33

 
1.9
 %
Net interest income and other financing income (GAAP)
 
$
1,710

 
$
1,635

 
$
75

 
4.6
 %
Taxable-equivalent adjustment
 
42

 
36

 
6

 
16.7
 %
Net interest income and other financing income, taxable-equivalent basis
J
$
1,752

 
$
1,671

 
$
81

 
4.8
 %
Non-interest income (GAAP)
K
$
1,032

 
$
1,060

 
$
(28
)
 
(2.6
)%
Adjustments:
 
 
 
 
 
 
 
 
Securities gains, net
 
(1
)
 
(11
)
 
10

 
(90.9
)%
Insurance proceeds (1)
 
(3
)
 
(90
)
 
87

 
(96.7
)%
Leveraged lease termination gains, net
 
—

 
(2
)
 
2

 
(100.0
)%
Adjusted non-interest income (non-GAAP)
L
$
1,028

 
$
957

 
$
71

 
7.4
 %
Total revenue, taxable-equivalent basis
J+K=M
$
2,784

 
$
2,731

 
$
53

 
1.9
 %
Adjusted total revenue, taxable-equivalent basis (non-GAAP)
J+L=N
$
2,780

 
$
2,628

 
$
152

 
5.8
 %
Operating leverage ratio (GAAP)
M-H
 
 
 
 
 
 
4.9
 %
Adjusted operating leverage ratio (non-GAAP)
N-I
 
 
 
 
 
 
3.9
 %
Efficiency ratio (GAAP)
H/M
64.1
%
 
67.4
%
 
 
 
 
Adjusted efficiency ratio (non-GAAP)
I/N
62.3
%
 
64.7
%
 
 
 
 
Fee income ratio (GAAP)
K/M
37.1
%
 
38.8
%
 
 
 
 
Adjusted fee income ratio (non-GAAP)
L/N
37.0
%
 
36.4
%
 
 
 
 
 
 
Quarter Ended
($ amounts in millions)
 
6/30/2016

 
3/31/2016

 
12/31/2015

 
9/30/2015

 
6/30/2015

RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY- CONSOLIDATED
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders (GAAP)
O
$
259

 
$
257

 
$
269

 
$
242

 
$
269

Average stockholders' equity (GAAP)
 
$
17,151

 
$
17,086

 
$
16,889

 
$
16,866

 
$
16,946

Less:
 
 
 
 
 
 
 
 
 
 
Average intangible assets (GAAP)
 
5,124

 
5,131

 
5,132

 
5,089

 
5,083

Average deferred tax liability related to intangibles (GAAP)
 
(163
)
 
(165
)
 
(167
)
 
(169
)
 
(171
)
Average preferred stock (GAAP)
 
820

 
820

 
822

 
838

 
856

Average tangible common stockholders' equity (non-GAAP)
P
$
11,370

 
$
11,300

 
$
11,102

 
$
11,108

 
$
11,178

Return on average tangible common stockholders' equity (non-GAAP)*
O/P
9.15
%
 
9.16
%
 
9.61
%
 
8.65
%
 
9.66
%
________
*Annualized
NM - Not Meaningful
(1)
See page 7 for additional information regarding these adjustments.




12


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Statements of Discontinued Operations (unaudited)
On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and Company, Inc. and related affiliates to Raymond James Financial Inc. The sale was closed on April 2, 2012. Regions Investment Management, Inc. (formerly known as Morgan Asset Management, Inc.) and Regions Trust were not included in the sale. In connection with the agreement, the results of the entities sold are reported as discontinued operations. The following tables represent the unaudited condensed results for discontinued operations.
 
 
Quarter Ended
($ amounts in millions, except per share data)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Non-interest expense:
 
 
 
 
 
 
 
 
 
Professional and legal expenses
$
(5
)
 
$
—

 
$
5

 
$
7

 
$
5

Other
—

 
—

 
1

 
(1
)
 
1

Total non-interest expense
(5
)
 
—

 
6

 
6

 
6

Income (loss) from discontinued operations before income tax
5

 
—

 
(6
)
 
(6
)
 
(6
)
Income tax expense (benefit)
2

 
—

 
(3
)
 
(2
)
 
(2
)
Income (loss) from discontinued operations, net of tax
$
3

 
$
—

 
$
(3
)
 
$
(4
)
 
$
(4
)
Weighted-average shares outstanding—during quarter (1):
 
 
 
 
 
 
 
 
 
Basic
1,265

 
1,286

 
1,301

 
1,319

 
1,335

Diluted
1,268

 
1,291

 
1,301

 
1,319

 
1,335

Earnings (loss) per common share from discontinued operations:
 
 
 
 
 
 
 
 
 
Basic
$
0.00

 
$
0.00

 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
Diluted
$
0.00

 
$
0.00

 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
 
_________
(1)
In a period where there is a loss from discontinued operations, basic and diluted weighted-average common shares outstanding are the same.
 
 
 
 



13


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Credit Quality

As of and for Quarter Ended
($ amounts in millions)
6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015
Components:









Allowance for loan losses (ALL)
$
1,151


$
1,151


$
1,106


$
1,115


$
1,115

Reserve for unfunded credit commitments
64


53


52


64


64

Allowance for credit losses (ACL)
$
1,215


$
1,204


$
1,158


$
1,179


$
1,179
















Provision for loan losses
$
72


$
113


$
69


$
60


$
63

Provision (credit) for unfunded credit losses
11


1


(12
)

—


(2
)















Net loans charged-off:














Commercial and industrial
29


18


43


16


4

Commercial real estate mortgage—owner-occupied
5


3


1


3


3

Commercial real estate construction—owner-occupied
—


1


—


—


—

Total commercial
34


22


44


19


7

Commercial investor real estate mortgage
—


(3
)

(2
)

(2
)

1

Commercial investor real estate construction
—


(1
)

(7
)

—


(2
)
Total investor real estate
—


(4
)

(9
)

(2
)

(1
)
Residential first mortgage
2


3


5


6


4

Home equity—first lien
2


5


2


4


5

Home equity—second lien
5


9


5


7


7

Indirect—vehicles
6


8


9


6


5

Indirect—other consumer
3

 
3

 
—

 
—

 
—

Consumer credit card
7


9


8


7


8

Other consumer
13


13


14


13


11

Total consumer
38


50


43


43


40

Total
$
72


$
68


$
78


$
60


$
46

Net loan charge-offs as a % of average loans, annualized:









Commercial and industrial
0.32
 %

0.20
 %

0.48
 %

0.18
 %

0.04
 %
Commercial real estate mortgage—owner-occupied
0.22
 %

0.19
 %

0.08
 %

0.14
 %

0.14
 %
Commercial real estate construction—owner-occupied
0.19
 %

0.73
 %

(0.13
)%

(0.09
)%

(0.03
)%
Total commercial
0.31
 %

0.20
 %

0.40
 %

0.17
 %

0.06
 %
Commercial investor real estate mortgage
(0.02
)%

(0.23
)%

(0.22
)%

(0.17
)%

0.09
 %
Commercial investor real estate construction
(0.07
)%

(0.15
)%

(1.00
)%

(0.15
)%

(0.23
)%
Total investor real estate
(0.04
)%

(0.20
)%

(0.51
)%

(0.16
)%

(0.02
)%
Residential first mortgage
0.04
 %

0.11
 %

0.16
 %

0.17
 %

0.15
 %
Home equity—first lien
0.14
 %

0.29
 %

0.11
 %

0.24
 %

0.30
 %
Home equity—second lien
0.45
 %

0.86
 %

0.47
 %

0.62
 %

0.67
 %
Indirect—vehicles
0.59
 %

0.79
 %

0.83
 %

0.68
 %

0.50
 %
Indirect—other consumer
1.86
 %
 
1.79
 %
 
—
 %
 
—
 %
 
—
 %
Consumer credit card
3.00
 %

3.31
 %

3.14
 %

3.01
 %

3.13
 %
Other consumer
4.99
 %

5.02
 %

5.25
 %

5.37
 %

4.27
 %
Total consumer
0.51
 %

0.65
 %

0.55
 %

0.59
 %

0.54
 %
Total
0.35
 %

0.34
 %

0.38
 %

0.30
 %

0.23
 %
Non-accrual loans, excluding loans held for sale
$
1,025


$
993


$
782


$
789


$
751

Non-performing loans held for sale
31


22


38


26


26

Non-accrual loans, including loans held for sale
1,056


1,015


820


815


777

Foreclosed properties
89


97


100


111


134

Non-performing assets (NPAs)
$
1,145


$
1,112


$
920


$
926


$
911

Loans past due > 90 days (1)
$
174


$
201


$
213


$
210


$
197

Accruing restructured loans not included in categories above (2)
$
1,051


$
993


$
1,039


$
1,046


$
1,150

Credit Ratios:














ACL/Loans, net
1.49
 %

1.48
 %

1.43
 %

1.45
 %

1.47
 %
ALL/Loans, net
1.41
 %

1.41
 %

1.36
 %

1.38
 %

1.39
 %
Allowance for loan losses to non-performing loans, excluding loans held for sale
1.12x


1.16x


1.41x


1.41x


1.49x

Non-accrual loans, excluding loans held for sale/Loans, net
1.25
 %

1.22
 %

0.96
 %

0.97
 %

0.94
 %
NPAs (ex. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale
1.40
 %

1.36
 %

1.13
 %

1.14
 %

1.13
 %
NPAs (inc. 90+ past due)/Loans, foreclosed properties and non-performing loans held for sale (1)
1.61
 %

1.61
 %

1.39
 %

1.40
 %

1.38
 %
           
(1)
Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing. Refer to the footnotes on page 16 for amounts related to these loans.
(2)
See page 17 for detail of restructured loans.


14


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

 
 
 
 
 Non-Accrual Loans (excludes loans held for sale)
 
As of
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Commercial and industrial
$
596

 
1.65
%
 
$
556

 
1.53
%
 
$
325

 
0.91
%
 
$
350

 
0.97
%
 
$
297

 
0.84
%
Commercial real estate mortgage—owner-occupied
240

 
3.34
%
 
254

 
3.44
%
 
268

 
3.55
%
 
233

 
3.01
%
 
203

 
2.60
%
Commercial real estate construction—owner-occupied
3

 
0.91
%
 
2

 
0.68
%
 
2

 
0.50
%
 
3

 
0.81
%
 
4

 
0.96
%
Total commercial
839

 
1.92
%
 
812

 
1.85
%
 
595

 
1.36
%
 
586

 
1.33
%
 
504

 
1.16
%
Commercial investor real estate mortgage
33

 
0.77
%
 
28

 
0.62
%
 
31

 
0.73
%
 
39

 
0.89
%
 
63

 
1.38
%
Commercial investor real estate construction
—

 
—
%
 
—

 
—
%
 
—

 
—
%
 
1

 
0.02
%
 
2

 
0.08
%
Total investor real estate
33

 
0.48
%
 
28

 
0.39
%
 
31

 
0.45
%
 
40

 
0.57
%
 
65

 
0.93
%
Residential first mortgage
52

 
0.40
%
 
54

 
0.42
%
 
63

 
0.49
%
 
67

 
0.53
%
 
86

 
0.68
%
Home equity
101

 
0.93
%
 
99

 
0.90
%
 
93

 
0.84
%
 
96

 
0.88
%
 
96

 
0.88
%
Total consumer
153

 
0.49
%
 
153

 
0.50
%
 
156

 
0.51
%
 
163

 
0.54
%
 
182

 
0.61
%
Total non-accrual loans
$
1,025

 
1.25
%
 
$
993

 
1.22
%
 
$
782

 
0.96
%
 
$
789

 
0.97
%
 
$
751

 
0.94
%

Criticized and Classified Loans—Business Services (1)(2)
 
As of
 
 
 
 
 
 
 
 
 
 
 
6/30/2016
 
6/30/2016
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
vs. 3/31/2016
 
vs. 6/30/2015
Accruing classified
$
1,596

 
$
1,800

 
$
1,311

 
$
1,212

 
$
1,218

 
$
(204
)
 
(11.3
)%
 
$
378

 
31.0
%
Non-accruing classified
872

 
840

 
626

 
626

 
569

 
32

 
3.8
 %
 
303

 
53.3
%
Total classified
2,468

 
2,640

 
1,937

 
1,838

 
1,787

 
(172
)
 
(6.5
)%
 
681

 
38.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Special mention
1,196

 
985

 
1,434

 
1,416

 
1,163

 
211

 
21.4
 %
 
33

 
2.8
%
Total criticized
$
3,664

 
$
3,625

 
$
3,371

 
$
3,254

 
$
2,950

 
$
39

 
1.1
 %
 
$
714

 
24.2
%
                 
(1)
Business services represents the combined total of commercial and investor real estate loans.
(2)
Beginning primarily in the third quarter of 2015, low oil prices began to drive the migration of a number of large energy credits into criticized (primarily in the exploration and production and oil field services sectors). Continued low oil prices prompted further migration of some of those credits into accruing classified and non-accruing classified during the first quarter of 2016.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Home Equity Lines of Credit - Future Principal Payment Resets (3) 
 
As of 6/30/2016
($ amounts in millions)
First Lien
 
% of Total
 
Second Lien
 
% of Total
 
Total
2016
$
14

 
0.19
%
 
$
26

 
0.34
%
 
$
40

2017
4

 
0.05
%
 
9

 
0.12
%
 
13

2018
13

 
0.17
%
 
19

 
0.25
%
 
32

2019
84

 
1.11
%
 
76

 
1.00
%
 
160

2020
174

 
2.30
%
 
133

 
1.76
%
 
307

2021-2025
1,489

 
19.69
%
 
1,472

 
19.46
%
 
2,961

2026-2030
2,036

 
26.92
%
 
2,013

 
26.62
%
 
4,049

Thereafter
—

 
—
%
 
1

 
0.02
%
 
1

Total
$
3,814

 
50.43
%
 
$
3,749

 
49.57
%
 
$
7,563

                 
(3)
The balance of Regions' home equity portfolio was $10,832 million at June 30, 2016 consisting of $7,563 million of home equity lines of credit and $3,269 million of closed-end home equity loans. The home equity lines of credit presented in the table above are based on maturity date for lines with a balloon payment and draw period expiration date for lines that convert to a repayment period. The closed-end loans were primarily originated as amortizing loans, and were therefore excluded from the table above.



15


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Early and Late Stage Delinquencies

Accruing 30-89 Days Past Due Loans
As of
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Commercial and industrial
$
38

 
0.11
%
 
$
24

 
0.07
%
 
$
17

 
0.05
%
 
$
16

 
0.05
%
 
$
23

 
0.06
%
Commercial real estate mortgage—owner-occupied
27

 
0.38
%
 
34

 
0.46
%
 
31

 
0.42
%
 
41

 
0.53
%
 
38

 
0.49
%
Commercial real estate construction—owner-occupied
1

 
0.09
%
 
1

 
0.18
%
 
1

 
0.29
%
 
1

 
0.18
%
 
—

 
0.10
%
Total commercial
66

 
0.15
%
 
59

 
0.13
%
 
49

 
0.11
%
 
58

 
0.13
%
 
61

 
0.14
%
Commercial investor real estate mortgage
27

 
0.63
%
 
21

 
0.47
%
 
27

 
0.63
%
 
24

 
0.54
%
 
18

 
0.39
%
Commercial investor real estate construction
—

 
0.01
%
 
3

 
0.12
%
 
2

 
0.06
%
 
1

 
0.02
%
 
—

 
0.01
%
Total investor real estate
27

 
0.39
%
 
24

 
0.34
%
 
29

 
0.41
%
 
25

 
0.35
%
 
18

 
0.26
%
Residential first mortgage—non-guaranteed (1)
120

 
0.94
%
 
108

 
0.86
%
 
122

 
0.98
%
 
116

 
0.94
%
 
124

 
1.02
%
Home equity
74

 
0.69
%
 
75

 
0.68
%
 
84

 
0.76
%
 
98

 
0.89
%
 
84

 
0.77
%
Indirect—vehicles
55

 
1.33
%
 
49

 
1.20
%
 
63

 
1.59
%
 
52

 
1.33
%
 
46

 
1.21
%
Indirect—other consumer
5

 
0.60
%
 
3

 
0.50
%
 
3

 
0.57
%
 
2

 
0.33
%
 
1

 
0.14
%
Consumer credit card
12

 
1.06
%
 
11

 
1.08
%
 
12

 
1.08
%
 
11

 
1.13
%
 
10

 
1.02
%
Other consumer
17

 
1.53
%
 
12

 
1.20
%
 
15

 
1.44
%
 
14

 
1.41
%
 
14

 
1.42
%
Total consumer (1)
283

 
0.92
%
 
258

 
0.85
%
 
299

 
0.99
%
 
293

 
0.99
%
 
279

 
0.95
%
Total accruing 30-89 days past due loans (1)
$
376

 
0.46
%
 
$
341

 
0.42
%
 
$
377

 
0.47
%
 
$
376

 
0.47
%
 
$
358

 
0.45
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accruing 90+ Days Past Due Loans
As of
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Commercial and industrial
$
6

 
0.02
%
 
$
3

 
0.01
%
 
$
9

 
0.02
%
 
$
7

 
0.02
%
 
$
3

 
0.01
%
Commercial real estate mortgage—owner-occupied
3

 
0.05
%
 
3

 
0.04
%
 
3

 
0.03
%
 
6

 
0.08
%
 
2

 
0.02
%
Total commercial
9

 
0.02
%
 
6

 
0.02
%
 
12

 
0.03
%
 
13

 
0.03
%
 
5

 
0.01
%
Commercial investor real estate mortgage
3

 
0.08
%
 
2

 
0.04
%
 
4

 
0.10
%
 
2

 
0.05
%
 
1

 
0.01
%
Commercial investor real estate construction
—

 
—
%
 
8

 
0.30
%
 
—

 
—
%
 
—

 
—
%
 
—

 
—
%
Total investor real estate
3

 
0.05
%
 
10

 
0.14
%
 
4

 
0.06
%
 
2

 
0.03
%
 
1

 
0.01
%
Residential first mortgage—non-guaranteed (2)
104

 
0.82
%
 
115

 
0.92
%
 
113

 
0.91
%
 
121

 
0.98
%
 
109

 
0.89
%
Home equity
34

 
0.31
%
 
45

 
0.42
%
 
59

 
0.54
%
 
51

 
0.47
%
 
61

 
0.55
%
Indirect—vehicles
8

 
0.20
%
 
8

 
0.20
%
 
9

 
0.22
%
 
8

 
0.20
%
 
6

 
0.18
%
Consumer credit card
13

 
1.13
%
 
12

 
1.10
%
 
12

 
1.12
%
 
11

 
1.07
%
 
11

 
1.10
%
Other consumer
3

 
0.31
%
 
5

 
0.42
%
 
4

 
0.37
%
 
4

 
0.40
%
 
4

 
0.37
%
Total consumer (2)
162

 
0.53
%
 
185

 
0.61
%
 
197

 
0.66
%
 
195

 
0.66
%
 
191

 
0.65
%
Total accruing 90+ days past due loans (2)
$
174

 
0.21
%
 
$
201

 
0.25
%
 
$
213

 
0.26
%
 
$
210

 
0.26
%
 
$
197

 
0.25
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total delinquencies (1) (2)
$
550

 
0.68
%
 
$
542

 
0.67
%
 
$
590

 
0.73
%
 
$
586

 
0.73
%
 
$
555

 
0.70
%
                 
(1)
Excludes loans that are 100% guaranteed by FHA. Total 30-89 days past due guaranteed loans excluded were $28 million at 6/30/2016, $19 million at 3/31/2016, $26 million at 12/31/2015, $23 million at 9/30/2015, and $23 million at 6/30/2015.
(2)
Excludes loans that are 100% guaranteed by FHA and all guaranteed loans sold to GNMA where Regions has the right but not the obligation to repurchase. Total 90 days or more past due guaranteed loans excluded were $95 million at 6/30/2016, $105 million at 3/31/2016, $107 million at 12/31/2015, $110 million at 9/30/2015, and $103 million at 6/30/2015.

16


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Troubled Debt Restructurings
 
 
As of
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Current:
 
 
 
 
 
 
 
 
 
Commercial
$
206

 
$
136

 
$
135

 
$
147

 
$
202

Investor real estate
100

 
103

 
149

 
145

 
194

Residential first mortgage
343

 
345

 
341

 
334

 
328

Home equity
291

 
301

 
306

 
309

 
317

Consumer credit card
2

 
2

 
2

 
2

 
2

Other consumer
11

 
12

 
12

 
13

 
14

Total current
953

 
899

 
945

 
950

 
1,057

Accruing 30-89 DPD:
 
 
 
 
 
 
 
 
 
Commercial
8

 
10

 
11

 
12

 
16

Investor real estate
22

 
16

 
8

 
6

 
5

Residential first mortgage
52

 
52

 
57

 
58

 
53

Home equity
15

 
15

 
17

 
19

 
18

Other consumer
1

 
1

 
1

 
1

 
1

Total accruing 30-89 DPD
98

 
94

 
94

 
96

 
93

Total accruing and <90 DPD
1,051

 
993

 
1,039

 
1,046

 
1,150

Non-accrual or 90+ DPD:
 
 
 
 
 
 
 
 
 
Commercial
147

 
149

 
135

 
118

 
93

Investor real estate
19

 
27

 
22

 
25

 
31

Residential first mortgage
82

 
80

 
81

 
88

 
90

Home equity
18

 
19

 
18

 
21

 
22

Total non-accrual or 90+DPD
266

 
275

 
256

 
252

 
236

Total TDRs - Loans
$
1,317

 
$
1,268

 
$
1,295

 
$
1,298

 
$
1,386

TDRs - Held For Sale
8

 
8

 
8

 
14

 
18

Total TDRs
$
1,325

 
$
1,276

 
$
1,303

 
$
1,312

 
$
1,404

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total TDRs - Loans by Portfolio
 
 
 
 
 
 
 
 
 
 
As of
($ amounts in millions)
6/30/2016

 
3/31/2016

 
12/31/2015

 
9/30/2015

 
6/30/2015

Total commercial TDRs
$
361


$
295


$
281


$
277


$
311

Total investor real estate TDRs
141


146


179


176


230

Total consumer TDRs
815


827


835


845


845

Total TDRs - Loans
$
1,317


$
1,268


$
1,295


$
1,298


$
1,386



17


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Consolidated Balance Sheets (unaudited)
 
As of
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Assets:
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
1,867

 
$
1,708

 
$
1,382

 
$
1,726

 
$
1,661

Interest-bearing deposits in other banks
2,370

 
2,682

 
3,932

 
3,217

 
2,094

Federal funds sold and securities purchased under agreements to resell
—

 
—

 
—

 
65

 
—

Trading account securities
117

 
110

 
143

 
106

 
110

Securities held to maturity
1,646

 
1,901

 
1,946

 
2,001

 
2,067

Securities available for sale
23,494

 
23,095

 
22,710

 
22,034

 
22,045

Loans held for sale
551

 
351

 
448

 
453

 
511

Loans, net of unearned income (1)
81,702

 
81,606

 
81,162

 
81,063

 
80,149

Allowance for loan losses
(1,151
)
 
(1,151
)
 
(1,106
)
 
(1,115
)
 
(1,115
)
Net loans
80,551

 
80,455


80,056

 
79,948

 
79,034

Other earning assets (1)
1,516

 
1,574

 
1,652

 
773

 
697

Premises and equipment, net
2,091

 
2,134

 
2,152

 
2,122

 
2,147

Interest receivable
312

 
314

 
319

 
316

 
305

Goodwill
4,882

 
4,878

 
4,878

 
4,831

 
4,816

Residential mortgage servicing rights at fair value (MSRs)
216

 
239

 
252

 
241

 
268

Other identifiable intangible assets
240

 
246

 
259

 
263

 
268

Other assets
6,359

 
5,852

 
5,921

 
6,693

 
5,832

Total assets
$
126,212

 
$
125,539


$
126,050

 
$
124,789

 
$
121,855

Liabilities and stockholders’ equity:
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
Non-interest-bearing
$
34,982

 
$
35,153

 
$
34,862

 
$
34,117

 
$
33,810

Interest-bearing
62,263

 
63,001

 
63,568

 
63,061

 
63,265

Total deposits
97,245

 
98,154


98,430

 
97,178

 
97,075

Borrowed funds:
 
 
 
 
 
 
 
 
 
Short-term borrowings:
 
 
 
 
 
 
 
 
 
Federal funds purchased and securities sold under agreements to repurchase
—

 
—

 
—

 
—

 
96

Other short-term borrowings
2

 
—

 
10

 
—

 
1,750

Total short-term borrowings
2


—


10

 
—

 
1,846

Long-term borrowings
8,968

 
7,851

 
8,349

 
7,364

 
3,602

Total borrowed funds
8,970

 
7,851


8,359

 
7,364


5,448

Other liabilities
2,612

 
2,323

 
2,417

 
3,295

 
2,433

Total liabilities
108,827

 
108,328


109,206

 
107,837

 
104,956

Stockholders’ equity:


 
 
 
 
 
 
 
 
Preferred stock, non-cumulative perpetual
820

 
820

 
820

 
836

 
852

Common stock
13

 
13

 
13

 
13

 
14

Additional paid-in capital
17,539

 
17,716

 
17,883

 
18,019

 
18,355

Retained earnings (deficit)
242

 
62

 
(115
)
 
(400
)
 
(658
)
Treasury stock, at cost
(1,377
)
 
(1,377
)
 
(1,377
)
 
(1,377
)
 
(1,377
)
Accumulated other comprehensive income (loss), net
148

 
(23
)
 
(380
)
 
(139
)
 
(287
)
Total stockholders’ equity
17,385

 
17,211


16,844

 
16,952

 
16,899

Total liabilities and stockholders’ equity
$
126,212

 
$
125,539


$
126,050

 
$
124,789

 
$
121,855

 
(1)
During the fourth quarter of 2015, certain capital leases, for which Regions is the lessor, were determined to be operating leases resulting in their reclassification out of loans into other earning assets. These lease balances were $834 million at December 31, 2015, $803 million at March 31, 2016, and $772 million at June 30,2016.





18


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Loans and Leases
 
As of
 
 
 
 
 
 
 
 
 
 
 
6/30/2016
 
6/30/2016
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
vs. 3/31/2016
 
vs. 6/30/2015
Commercial and industrial
$
36,124

 
$
36,200

 
$
35,821

 
$
35,906

 
$
35,347

 
$
(76
)
 
(0.2
)%
 
$
777

 
2.2
 %
Commercial real estate mortgage—owner-occupied
7,193

 
7,385

 
7,538

 
7,741

 
7,797

 
(192
)
 
(2.6
)%
 
(604
)
 
(7.7
)%
Commercial real estate construction—owner-occupied
344

 
346

 
423

 
406

 
448

 
(2
)
 
(0.6
)%
 
(104
)
 
(23.2
)%
Total commercial
43,661

 
43,931

 
43,782

 
44,053

 
43,592

 
(270
)
 
(0.6
)%
 
69

 
0.2
 %
Commercial investor real estate mortgage
4,302

 
4,516

 
4,255

 
4,386

 
4,509

 
(214
)
 
(4.7
)%
 
(207
)
 
(4.6
)%
Commercial investor real estate construction
2,660

 
2,554

 
2,692

 
2,525

 
2,419

 
106

 
4.2
 %
 
241

 
10.0
 %
Total investor real estate
6,962

 
7,070

 
6,947

 
6,911

 
6,928

 
(108
)
 
(1.5
)%
 
34

 
0.5
 %
Total business
50,623

 
51,001

 
50,729

 
50,964

 
50,520

 
(378
)
 
(0.7
)%
 
103

 
0.2
 %
Residential first mortgage
13,164

 
12,895

 
12,811

 
12,730

 
12,589

 
269

 
2.1
 %
 
575

 
4.6
 %
Home equity—first lien
6,727

 
6,723

 
6,696

 
6,577

 
6,424

 
4

 
0.1
 %
 
303

 
4.7
 %
Home equity—second lien
4,105

 
4,191

 
4,282

 
4,370

 
4,475

 
(86
)
 
(2.1
)%
 
(370
)
 
(8.3
)%
Indirect—vehicles
4,159

 
4,072

 
3,984

 
3,895

 
3,782

 
87

 
2.1
 %
 
377

 
10.0
 %
Indirect—other consumer
722

 
652

 
545

 
490

 
383

 
70

 
10.7
 %
 
339

 
88.5
 %
Consumer credit card
1,113

 
1,045

 
1,075

 
1,016

 
992

 
68

 
6.5
 %
 
121

 
12.2
 %
Other consumer
1,089

 
1,027

 
1,040

 
1,021

 
984

 
62

 
6.0
 %
 
105

 
10.7
 %
Total consumer
31,079

 
30,605

 
30,433

 
30,099

 
29,629

 
474

 
1.5
 %
 
1,450

 
4.9
 %
Total Loans
$
81,702

 
$
81,606

 
$
81,162

 
$
81,063

 
$
80,149

 
$
96

 
0.1
 %
 
$
1,553

 
1.9
 %
Operating leases previously reported as capital leases
772

 
803

 
834

 
—

 
—

 
NM

 
NM

 
772

 
NM

Adjusted Total Loans and Leases (non-GAAP) (1)
$
82,474

 
$
82,409

 
$
81,996

 
$
81,063

 
$
80,149

 
NM

 
NM

 
$
2,325

 
2.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances
($ amounts in millions)
2Q16
 
1Q16
 
4Q15
 
3Q15
 
2Q15
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Commercial and industrial
$
36,493

 
$
36,103

 
$
35,511

 
$
35,647

 
$
34,480

 
$
390

 
1.1
 %
 
$
2,013

 
5.8
 %
Commercial real estate mortgage—owner-occupied
7,311

 
7,512

 
7,675

 
7,768

 
7,921

 
(201
)
 
(2.7
)%
 
(610
)
 
(7.7
)%
Commercial real estate construction—owner-occupied
348

 
359

 
415

 
443

 
430

 
(11
)
 
(3.1
)%
 
(82
)
 
(19.1
)%
Total commercial
44,152

 
43,974

 
43,601

 
43,858

 
42,831

 
178

 
0.4
 %
 
1,321

 
3.1
 %
Commercial investor real estate mortgage
4,399

 
4,430

 
4,332

 
4,441

 
4,549

 
(31
)
 
(0.7
)%
 
(150
)
 
(3.3
)%
Commercial investor real estate construction
2,591

 
2,591

 
2,576

 
2,455

 
2,416

 
—

 
NM

 
175

 
7.2
 %
Total investor real estate
6,990

 
7,021

 
6,908

 
6,896

 
6,965

 
(31
)
 
(0.4
)%
 
25

 
0.4
 %
Total business
51,142

 
50,995

 
50,509

 
50,754

 
49,796

 
147

 
0.3
 %
 
1,346

 
2.7
 %
Residential first mortgage
12,990

 
12,828

 
12,753

 
12,649

 
12,471

 
162

 
1.3
 %
 
519

 
4.2
 %
Home equity—first lien
6,727

 
6,725

 
6,643

 
6,510

 
6,355

 
2

 
NM

 
372

 
5.9
 %
Home equity—second lien
4,142

 
4,231

 
4,305

 
4,392

 
4,512

 
(89
)
 
(2.1
)%
 
(370
)
 
(8.2
)%
Indirect—vehicles
4,149

 
4,056

 
3,969

 
3,863

 
3,768

 
93

 
2.3
 %
 
381

 
10.1
 %
Indirect—other consumer
686

 
599

 
523

 
439

 
328

 
87

 
14.5
 %
 
358

 
109.1
 %
Consumer credit card
1,066

 
1,050

 
1,031

 
1,004

 
975

 
16

 
1.5
 %
 
91

 
9.3
 %
Other consumer
1,058

 
1,026

 
1,027

 
1,004

 
970

 
32

 
3.1
 %
 
88

 
9.1
 %
Total consumer
30,818

 
30,515

 
30,251

 
29,861

 
29,379

 
303

 
1.0
 %
 
1,439

 
4.9
 %
Total Loans
$
81,960

 
$
81,510

 
$
80,760

 
$
80,615

 
$
79,175

 
$
450

 
0.6
 %
 
$
2,785

 
3.5
 %
Operating leases previously reported as capital leases
792

 
825

 
852

 
—

 
—

 
NM

 
NM

 
792

 
NM

Adjusted Total Loans and Leases (non-GAAP) (1)
$
82,752

 
$
82,335

 
$
81,612

 
$
80,615

 
$
79,175

 
NM

 
NM

 
$
3,577

 
4.5
 %
                  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NM - Not Meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Regions believes including the impact of the operating leases, reported as capital leases prior to the fourth quarter of 2015, provides a meaningful calculation of loan and lease
        growth rates and presents them on the same basis as that applied by management. All of these leases were previously included in the commercial and industrial loan category.
        Beginning in 2016, the linked quarter growth rates do not require an adjustment for operating leases because these leases are excluded from total loans in both periods.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

19


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Loans and Leases (Continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
End of Period Loan Portfolio Balances by Percentage
 
 
 
As of
 
 
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Commercial and industrial
 
 
 
44.2
%
 
44.4
%

44.1
 %
 
44.3
%
 
44.1
 %
Commercial real estate mortgage—owner-occupied
 
 
 
8.8
%
 
9.0
%

9.3
 %
 
9.5
%
 
9.7
 %
Commercial real estate construction—owner-occupied
 
 
 
0.4
%
 
0.4
%

0.5
 %
 
0.5
%
 
0.6
 %
Total commercial
 
 
 
53.4
%
 
53.8
%

53.9
 %
 
54.3
%
 
54.4
 %
Commercial investor real estate mortgage
 
 
 
5.3
%
 
5.6
%

5.3
 %
 
5.4
%
 
5.6
 %
Commercial investor real estate construction
 
 
 
3.3
%
 
3.1
%

3.3
 %
 
3.1
%
 
3.0
 %
Total investor real estate
 
 
 
8.6
%
 
8.7
%

8.6
 %
 
8.5
%
 
8.6
 %
Total business
 
 
 
62.0
%
 
62.5
%
 
62.5
 %
 
62.8
%
 
63.0
 %
Residential first mortgage
 
 
 
16.1
%
 
15.8
%

15.8
 %
 
15.7
%
 
15.7
 %
Home equity—first lien
 
 
 
8.2
%
 
8.2
%

8.2
 %
 
8.1
%
 
8.0
 %
Home equity—second lien
 
 
 
5.0
%
 
5.1
%

5.3
 %
 
5.4
%
 
5.6
 %
Indirect—vehicles
 
 
 
5.1
%
 
5.0
%

4.9
 %
 
4.8
%
 
4.7
 %
Indirect—other consumer
 
 
 
0.9
%
 
0.8
%
 
0.7
 %
 
0.6
%
 
0.5
 %
Consumer credit card
 
 
 
1.4
%
 
1.3
%

1.3
 %
 
1.3
%
 
1.3
 %
Other consumer
 
 
 
1.3
%
 
1.3
%

1.3
 %

1.3
%

1.2
%
Total consumer
 
 
 
38.0
%
 
37.5
%

37.5
 %
 
37.2
%
 
37.0
 %
Total Loans
 
 
 
100.0
%
 
100.0
%

100.0
 %
 
100.0
%
 
100.0
 %




20


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Deposits
 
As of
 
 
 
 
 
 
 
 
 
 
 
6/30/2016
 
6/30/2016
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
vs. 3/31/2016
 
vs. 6/30/2015
Customer Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-free deposits
$
34,982

 
$
35,153

 
$
34,862

 
$
34,117

 
$
33,810

 
$
(171
)
 
(0.5
)%
 
$
1,172

 
3.5
 %
Interest-bearing checking
20,571

 
21,172

 
21,902

 
21,096

 
21,315

 
(601
)
 
(2.8
)%
 
(744
)
 
(3.5
)%
Savings
7,786

 
7,768

 
7,287

 
7,184

 
7,157

 
18

 
0.2
 %
 
629

 
8.8
 %
Money market—domestic
26,138

 
26,607

 
26,468

 
26,541

 
26,417

 
(469
)
 
(1.8
)%
 
(279
)
 
(1.1
)%
Money market—foreign
258

 
270

 
243

 
256

 
258

 
(12
)
 
(4.4
)%
 
—

 
NM

Low-cost deposits
89,735

 
90,970

 
90,762

 
89,194

 
88,957

 
(1,235
)
 
(1.4
)%
 
778

 
0.9
 %
Time deposits
7,286

 
7,161

 
7,468

 
7,784

 
8,118

 
125

 
1.7
 %
 
(832
)
 
(10.2
)%
Total Customer Deposits
97,021

 
98,131

 
98,230

 
96,978

 
97,075

 
(1,110
)
 
(1.1
)%
 
(54
)
 
(0.1
)%
Corporate Treasury Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Time deposits
224

 
23

 
200

 
200

 
—

 
201

 
NM

 
224

 
NM

Total Deposits
$
97,245

 
$
98,154

 
$
98,430

 
$
97,178

 
$
97,075

 
$
(909
)
 
(0.9
)%
 
$
170

 
0.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
 
 
 
 
 
 
 
 
 
 
6/30/2016
 
6/30/2016
($ amounts in millions)
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
vs. 3/31/2016
 
vs. 6/30/2015
Consumer Bank Segment
$
54,773

 
$
54,482

 
$
53,825

 
$
52,082

 
$
52,798

 
$
291

 
0.5
 %
 
$
1,975

 
3.7
 %
Corporate Bank Segment
27,743

 
27,527

 
27,287

 
27,962

 
27,635

 
216

 
0.8
 %
 
108

 
0.4
 %
Wealth Management Segment
10,863

 
12,092

 
12,863

 
12,678

 
12,412

 
(1,229
)
 
(10.2
)%
 
(1,549
)
 
(12.5
)%
Other
3,866

 
4,053

 
4,455

 
4,456

 
4,230

 
(187
)
 
(4.6
)%
 
(364
)
 
(8.6
)%
Total Deposits
$
97,245

 
$
98,154

 
$
98,430

 
$
97,178

 
$
97,075

 
$
(909
)
 
(0.9
)%
 
$
170

 
0.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances
($ amounts in millions)
2Q16
 
1Q16
 
4Q15
 
3Q15
 
2Q15
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Customer Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-free deposits
$
35,020

 
$
34,826

 
$
34,746

 
$
34,089

 
$
33,708

 
$
194

 
0.6
 %
 
$
1,312

 
3.9
 %
Interest-bearing checking
20,760

 
21,244

 
21,052

 
20,992

 
21,494

 
(484
)
 
(2.3
)%
 
(734
)
 
(3.4
)%
Savings
7,794

 
7,491

 
7,245

 
7,182

 
7,165

 
303

 
4.0
 %
 
629

 
8.8
 %
Money market—domestic
26,331

 
26,575

 
26,371

 
26,522

 
26,233

 
(244
)
 
(0.9
)%
 
98

 
0.4
 %
Money market—foreign
254

 
246

 
256

 
271

 
250

 
8

 
3.3
 %
 
4

 
1.6
 %
Low-cost deposits
90,159

 
90,382

 
89,670

 
89,056

 
88,850

 
(223
)
 
(0.2
)%
 
1,309

 
1.5
 %
Time deposits
7,169

 
7,277

 
7,618

 
7,958

 
8,250

 
(108
)
 
(1.5
)%
 
(1,081
)
 
(13.1
)%
Total Customer Deposits
97,328

 
97,659

 
97,288

 
97,014

 
97,100

 
(331
)
 
(0.3
)%
 
228

 
0.2
 %
Corporate Treasury Deposits
 
 
 
 
 
 
 
 
 
 


 


 
 
 


Time deposits
169

 
91

 
200

 
152

 
—

 
78

 
85.7
 %
 
169

 
NM

Total Deposits
$
97,497

 
$
97,750

 
$
97,488

 
$
97,166

 
$
97,100

 
$
(253
)
 
(0.3
)%
 
$
397

 
0.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances
($ amounts in millions)
2Q16
 
1Q16
 
4Q15
 
3Q15
 
2Q15
 
2Q16 vs. 1Q16
 
2Q16 vs. 2Q15
Consumer Bank Segment
$
54,703

 
$
53,492

 
$
52,952

 
$
52,921

 
$
53,089

 
$
1,211

 
2.3
 %
 
$
1,614

 
3.0
 %
Corporate Bank Segment
27,618

 
27,608

 
27,580

 
27,491

 
27,234

 
10

 
—
 %
 
384

 
1.4
 %
Wealth Management Segment
11,280

 
12,311

 
12,497

 
12,312

 
12,544

 
(1,031
)
 
(8.4
)%
 
(1,264
)
 
(10.1
)%
Other
3,896

 
4,339

 
4,459

 
4,442

 
4,233

 
(443
)
 
(10.2
)%
 
(337
)
 
(8.0
)%
Total Deposits
$
97,497

 
$
97,750

 
$
97,488

 
$
97,166

 
$
97,100

 
$
(253
)
 
(0.3
)%
 
$
397

 
0.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

21


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Deposits (Continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
End of Period Deposits by Percentage
 
 
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Customer Deposits
 
 
 
 
 
 
 
 
 
 
 
 
Interest-free deposits
 
 
 
36.0
%
 
35.8
%

35.4
 %
 
35.1
%
 
34.8
 %
Interest-bearing checking
 
 
 
21.1
%
 
21.6
%

22.3
 %
 
21.7
%
 
22.0
 %
Savings
 
 
 
8.0
%
 
7.9
%

7.4
 %
 
7.4
%
 
7.4
 %
Money market—domestic
 
 
 
26.9
%
 
27.1
%
 
26.9
 %
 
27.3
%
 
27.2
 %
Money market—foreign
 
 
 
0.3
%
 
0.3
%

0.2
 %
 
0.3
%
 
0.3
 %
Low-cost deposits
 
 
 
92.3
%
 
92.7
%

92.2
 %
 
91.8
%
 
91.7
 %
Time deposits
 
 
 
7.5
%
 
7.3
%

7.6
 %
 
8.0
%
 
8.3
 %
Total Customer Deposits
 
 
 
99.8
%
 
100.0
%

99.8
 %
 
99.8
%
 
100.0
 %
Corporate Treasury Deposits
 
 
 
 
 
 
 
 
 
 
 
 
Time deposits
 
 
 
0.2
%
 
—
%

0.2
 %
 
0.2
%
 
—
 %
Total Deposits
 
 
 
100.0
%
 
100.0
%

100.0
 %
 
100.0
%
 
100.0
 %













22


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Reconciliation to GAAP Financial Measures
Tangible Common Ratios and Capital
The following tables provide the calculation of the end of period “tangible common stockholders’ equity” and "tangible common book value per share" ratios, a reconciliation of stockholders’ equity (GAAP) to tangible common stockholders’ equity (non-GAAP), and the fully phased-in pro-forma of Basel III common equity Tier 1 (non-GAAP).

The calculation of the fully phased-in pro-forma "Common equity Tier 1" (CET1) is based on Regions’ understanding of the Final Basel III requirements. For Regions, the Basel III framework became effective on a phased-in approach starting in 2015 with full implementation beginning in 2019. The calculation provided below includes estimated pro-forma amounts for the ratio on a fully phased-in basis. Regions’ current understanding of the final framework includes certain assumptions, including the Company’s interpretation of the requirements, and informal feedback received through the regulatory process. Regions’ understanding of the framework is evolving and will likely change as analysis and discussions with regulators continue. Because Regions is not currently subject to the fully phased-in capital rules, this pro-forma measure is considered to be a non-GAAP financial measure, and other entities may calculate it differently from Regions’ disclosed calculation.

A company's regulatory capital is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a company’s balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to broad risk categories. The aggregated dollar amount in each category is then multiplied by the prescribed risk-weighted percentage. The resulting weighted values from each of the categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Common equity Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the common equity Tier 1 capital ratio. The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements on a fully phased-in basis.

Since analysts and banking regulators may assess Regions’ capital adequacy using tangible common stockholders' equity and the fully phased-in Basel III framework, we believe that it is useful to provide investors the ability to assess Regions’ capital adequacy on these same bases.
 
 
As of and for Quarter Ended
($ amounts in millions, except per share data)
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
Tangible Common Ratios—Consolidated
 


 
 
 
 
 
 
 
 
Stockholders’ equity (GAAP)
 
$
17,385

 
$
17,211

 
$
16,844

 
$
16,952

 
$
16,899

Less:
 


 
 
 
 
 
 
 
 
Preferred stock (GAAP)
 
820

 
820

 
820

 
836

 
852

Intangible assets (GAAP)
 
5,122

 
5,124

 
5,137

 
5,094

 
5,084

Deferred tax liability related to intangibles (GAAP)
 
(163
)
 
(164
)
 
(165
)
 
(168
)
 
(170
)
Tangible common stockholders’ equity (non-GAAP)
A
$
11,606

 
$
11,431

 
$
11,052

 
$
11,190

 
$
11,133

Total assets (GAAP)
 
$
126,212

 
$
125,539

 
$
126,050

 
$
124,789

 
$
121,855

Less:
 


 
 
 
 
 
 
 
 
Intangible assets (GAAP)
 
5,122

 
5,124

 
5,137

 
5,094

 
5,084

Deferred tax liability related to intangibles (GAAP)
 
(163
)
 
(164
)
 
(165
)
 
(168
)
 
(170
)
Tangible assets (non-GAAP)
B
$
121,253

 
$
120,579

 
$
121,078

 
$
119,863

 
$
116,941

Shares outstanding—end of quarter
C
1,259

 
1,275

 
1,297

 
1,304

 
1,331

Tangible common stockholders’ equity to tangible assets (non-GAAP)
A/B
9.57
%
 
9.48
%
 
9.13
%
 
9.34
%
 
9.52
%
Tangible common book value per share (non-GAAP)
A/C
$
9.22

 
$
8.97

 
$
8.52

 
$
8.58

 
$
8.37


($ amounts in millions)
 
6/30/2016
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015

Basel III Common Equity Tier 1 Ratio—Fully Phased-In Pro-Forma (1)
 
 
 
 
 
 
 


 
 
Stockholder's equity (GAAP)
 
$
17,385

 
$
17,211

 
$
16,844

 
$
16,952

 
$
16,899

Non-qualifying goodwill and intangibles 
 
(4,946
)
 
(4,947
)
 
(4,958
)
 
(4,913
)
 
(4,902
)
Adjustments, including all components of accumulated other comprehensive income, disallowed deferred tax assets, threshold deductions and other adjustments
 
(227
)
 
(64
)
 
286

 
41

 
183

Preferred stock (GAAP)
 
(820
)
 
(820
)
 
(820
)
 
(836
)
 
(852
)
Basel III common equity Tier 1—Fully Phased-In Pro-Forma (non-GAAP)
D
$
11,392

 
$
11,380

 
$
11,352

 
$
11,244

 
$
11,328

Basel III risk-weighted assets—Fully Phased-In Pro-Forma (non-GAAP) (2)
E
$
106,314

 
$
106,227

 
$
106,188

 
$
104,645

 
$
102,479

Basel III common equity Tier 1 ratio—Fully Phased-In Pro-Forma (non-GAAP)
D/E
10.7
%
 
10.7
%
 
10.7
%
 
10.8
%
 
11.1
%
                
(1)
Current quarter amounts and the resulting ratio are estimated.
(2)
Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III on a fully phased-in basis. The amounts included above are a reasonable approximation, based on our understanding of the requirements.


23


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Forward-Looking Statements
This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions’ 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. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. 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. These risks, uncertainties and other factors include, but are not limited to, those described below:
•
Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, unemployment rates and potential reductions of economic growth, which may adversely affect our lending and other businesses and our financial results and conditions.
•
Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations, which could have a material adverse effect on our earnings.
•
The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook, which could result in risks to us and general economic conditions that we are not able to predict.
•
Possible changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital and liquidity.
•
Any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets due to adverse changes in the economic environment, declining operations of the reporting unit, or other factors.
•
Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans.
•
Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses where our allowance for loan losses may not be adequate to cover our eventual losses.
•
Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities.
•
Our ability to effectively compete with other financial services companies, some of whom possess greater financial resources than we do and are subject to different regulatory standards than we are.
•
Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments, which could increase our funding costs.
•
Our inability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner could have a negative impact on our revenue.
•
The effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or any of our subsidiaries.
•
Changes in laws and regulations affecting our businesses, such as the Dodd-Frank Act and other legislation and regulations relating to bank products and services, as well as changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses.
•
Our ability to obtain a regulatory non-objection (as part of the comprehensive capital analysis and review ("CCAR") process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or redeem preferred stock or other regulatory capital instruments, may impact our ability to return capital to stockholders and market perceptions of us.
•
Our ability to comply with stress testing and capital planning requirements (as part of the CCAR process or otherwise) may continue to require a significant investment of our managerial resources due to the importance and intensity of such tests and requirements.
•
Our ability to comply with applicable capital and liquidity requirements (including, among other things, the Basel III capital standards and the liquidity coverage ratio "LCR" rule), including our ability to generate capital internally or raise capital on favorable terms, and if we fail to meet requirements, our financial condition could be negatively impacted.
•
The Basel III framework calls for additional risk-based capital surcharges for globally systemically important banks. Although we are not subject to such surcharges, it is possible that in the future we may become subject to similar surcharges.
•
The costs, including possibly incurring fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party, and which may adversely affect our results.
•
Our ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support our business.
•
Our ability to execute on our strategic and operational plans, including our ability to fully realize the financial and non-financial benefits relating to our strategic initiatives.
•
The success of our marketing efforts in attracting and retaining customers.
•
Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits, which could adversely affect our net income.
•
Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes in laws and regulations in effect from time to time.
•
Fraud or misconduct by our customers, employees or business partners.
•
Any inaccurate or incomplete information provided to us by our customers or counterparties.
•
The risks and uncertainties related to our acquisition and integration of other companies.

24


Regions Financial Corporation and Subsidiaries                                
Financial Supplement to Second Quarter 2016 Earnings Release

Forward-Looking Statements (Continued)

•
Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers, which could, among other things, result in a breach of operating or security systems as a result of a cyber attack or similar act.
•
The inability of our internal disclosure controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts.
•
The effects of geopolitical instability, including wars, conflicts and terrorist attacks and the potential impact, directly or indirectly, on our businesses.
•
The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes, and environmental damage, which may negatively affect our operations and/or our loan portfolios and increase our cost of conducting business.
•
Changes in commodity market prices and conditions could adversely affect the cash flows of our borrowers operating in industries that are impacted by changes in commodity prices (including businesses indirectly impacted by commodities prices such as businesses that transport commodities or manufacture equipment used in the production of commodities), which could impair their ability to service any loans outstanding to them and/or reduce demand for loans in those industries.
•
Our inability to keep pace with technological changes could result in losing business to competitors.
•
Our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information; increased costs; losses; or adverse effects to our reputation.
•
Our ability to realize our efficiency ratio target as part of our expense management initiatives.
•
Significant disruption of, or loss of public confidence in, the Internet and services and devices used to access the Internet could affect the ability of our customers to access their accounts and conduct banking transactions.
•
Possible downgrades in our credit ratings or outlook could increase the costs of funding from capital markets.
•
The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally could require us to change certain business practices, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses.
•
The effects of the failure of any component of our business infrastructure provided by a third party could disrupt our businesses; result in the disclosure of and/or misuse of confidential information or proprietary information; increase our costs; negatively affect our reputation; and cause losses.
•
Our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay dividends to stockholders.
•
Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board ("FASB") or other regulatory agencies could materially affect how we report our financial results.
•
Other risks identified from time to time in reports that we file with the Securities and Exchange Commission ("SEC").
•
The effects of any damage to our reputation resulting from developments related to any of the items identified above.
The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions “Forward-Looking Statements” and “Risk Factors” of Regions’ Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC.
The words “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can,” and similar expressions often signify forward-looking statements. You should not place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no obligation to update or revise any forward-looking statements that are made from time to time.
Regions’ Investor Relations contact is Dana Nolan at (205) 264-7040; Regions’ Media contact is Evelyn Mitchell at (205) 264-4551.

25


rf20160630exhibit993r292
2nd Quarter Earnings Conference Call July 19, 2016 Exhibit 99.3

 
2nd quarter 2016 results • Generated positive operating leverage of 4%(2) on an adjusted basis year-to-date • Achieved year-to-date adjusted efficiency ratio of 62.3%(2) • Expanded customer base as checking accounts, households, credit cards and wealth relationships grew • Total adjusted revenue (FTE) increased 4%(1) over the prior year • Recognized as having the best overall reputation among U.S. banks and among the top 10% in online experience • Successfully completed annual CCAR process and received no objection to planned capital actions ($ in millions, except per share data) 2Q16 2Q15 Change Net Income(1) $259 $269 (4)% Diluted EPS - Continuing Operations $0.20 $0.20 — Average Loans and Leases 81,960 79,175 3.5% Average Deposits 97,497 97,100 0.4% Total Adjusted Revenue (FTE)(2) $1.4B $1.3B 4.2% YTD '16 YTD '15 Change Adjusted efficiency ratio(2) 62.3% 64.7% 240 bps (1) Available to common shareholders (2) Non-GAAP; see appendix for reconciliation Demonstrates we are successfully executing on our strategic plan 2

 
Continued loan growth Business Lending Consumer Lending 2Q15 3Q15 4Q15 1Q16 2Q16 49.8 50.7 50.5 51.0 51.2 29.4 29.9 30.3 30.5 30.8 ($ in billions) Quarter-over-Quarter: • Loan and lease balances up 1% • Consumer lending experienced another strong quarter with balances up 1% and production up 20% • As a result of softer pipelines, business lending balances were stable ◦ Direct energy loans down $64MM or 2% on an average basis and down $324MM or 12% on a point-to-point basis Year-over-Year: • Loan and lease balances up $2.8 billion or 4% • Consumer lending balances increased 5%, driven by new initiatives • Business lending balances increased 3% 3 $79.2 $80.6 $80.8 $81.5 $82.0 Average loan and lease balances

 
Prudently managing deposits; strong growth in consumer Low-cost deposits Time deposits + Other 2Q15 3Q15 4Q15 1Q16 2Q16 88.9 89.1 89.7 90.4 90.2 8.2 $97.1 8.1 $97.2 7.8 $97.5 7.4 $97.8 7.3 $97.5 ($ in billions) 4 Consumer Bank Corporate Bank Wealth Management Other 2Q15 3Q15 4Q15 1Q16 2Q16 53.1 52.9 53.0 53.5 54.7 27.2 27.5 27.6 27.6 27.6 12.5 12.3 12.5 12.3 11.3 4.3 4.5 4.4 4.4 3.9 ($ in billions) Quarter-over-Quarter: • Deposits down $253MM • Low-cost deposits down $223MM • Consumer segment deposits increased 2% • Certain deposits within Wealth Management and Corporate segments declined due to planned reductions • Deposit costs remained near historically low levels at 12 basis points • Funding costs remained low at 29 basis points Year-over-Year: • Total deposits up $397MM • Low-cost deposits up $1.3B or 1.5% • Consumer deposits increased 3% Average deposits by type $97.1 $97.2 $97.5 $97.8 $97.5 Average deposits by segment

 
Net interest income and other financing income and net interest margin Net Interest Income and Other Financing Income (FTE) Net Interest Margin 2Q15 3Q15 4Q15 1Q16 2Q16 $839 $855 $856 $883 $869 3.16% 3.13% 3.08% 3.19% 3.15% Quarter-over-Quarter: • Net interest income and other financing income (FTE) down $14MM or 2% ◦ Recent long-term debt issuances, lower loan fees, reduced dividends from trading assets and less favorable credit related interest recoveries were primary drivers behind decrease ◦ Decrease was only partially offset by higher loan balances Year-over-Year: • Net interest income and other financing income (FTE) up $30MM or 4% ◦ Increase driven primarily by loan growth, balance sheet hedging and optimization strategies, and the impact of higher short-term interest rates (1) During the fourth quarter of 2015, Regions corrected the accounting for certain leases which had previously been included in loans. The cumulative effect on pre-tax income lowered net interest income and other financing income $15 million, therefore net interest income and other financing income would have been $871 million. The correction also reduced the net interest margin by 5 basis points and would have been 3.13%. The company does not expect this adjustment to have a material impact to net interest income and other financing income or net interest margin in any future reporting period. ($ in millions) 5 (1)

 
Non-interest income growth driven by revenue diversification initiatives 2Q15 3Q15 4Q15 1Q16 2Q16 41 38 46 39 37 38 46 66 54 75 69 68 97 102 100 106 103 90 93 96 95 99 168 167 166 159 166 96 13 12 6 590 497 989 514 506 1,000 526 1,182 1,030 (1) Non-GAAP; see appendix for reconciliation (2) Total Wealth Management income presented above does not include the portion of service charges on deposit accounts and similar smaller dollar amounts that are also attributable to the Wealth Management segment. (3) Other income includes market value adjustments associated with certain employee benefits which are offset in salaries and benefits. Quarter-over-Quarter: • Non-interest income increased 4%: adjusted non-interest income increased 2%(1) • Service charges increased 4% - reflecting the benefit of 2% growth year-to-date in checking accounts • Mortgage income increased 21% • Card and ATM income increased 4% • Capital markets income was strong, but declined following a strong first quarter • Wealth Management declined primarily due to seasonal decreases in insurance income Year-over-Year: • Non-interest income decreased $64MM or 11% due to a large recovery from insurance proceeds in 2Q15; adjusted non-interest income increased $26MM or 5%(1) • Capital markets income increased $11MM or 41% • Wealth Management income increased $6MM or 6% • Card and ATM income increased $9MM or 10% $590 $497 $514 Selected Items(1) Other(3) Capital Markets Wealth Management Income(2) Mortgage Income Card and ATM fees Service charges on deposit accounts ($ in millions) $506 6 (2) 2927 28 $526

 
Expenses: Focused on what we can control in an uncertain environment 2Q15 3Q15 4Q15 1Q16 2Q16 859 894 861 843 889 75 1 12 26 26 Quarter-over-Quarter: • Expenses increased $46MM or 5.3%; adjusted expenses increased $46MM or 5.5%(1) • Total salaries and benefits increased $5MM ◦ Market value adjustments increased $20MM associated with assets held for certain employee benefits, which are offset in other non-interest income ◦ Severance expense declined by $11 million ◦ Year-to-date staffing levels have declined 4% • The company's reserve for unfunded commitments increased $11MM and other credit related charges increased $9MM • Incurred $22 million of property-related expenses primarily related to the consolidation of approximately 60 branches as well as other occupancy optimization initiatives Year-over-Year: • Expenses decreased $19MM or 2%; adjusted expenses increased $30MM or 4%(1) • Total salaries and benefits increased $3MM, primarily attributable to increased incentives and merit partially offset by impact of staffing reductions • Other expenses increased $28MM related to unfunded commitments and higher credit related charges (1) Non-GAAP; see appendix for reconciliation ($ in millions) Selected Items(1) Adjusted Non-Interest Expense(1) $934 $895 $873 $869 7 $915

 
Net Charge-Offs Net Charge-Offs ratio 2Q15 3Q15 4Q15 1Q16 2Q16 $46 $60 $78 $68 $72 0.23% 0.30% 0.38% 0.34% 0.35% NPLs Coverage Ratio 2Q15 3Q15 4Q15 1Q16 2Q16 $751 $789 $782 $993 $1,025 149% 141% 141% 116% 112% Classified Loans Special Mention 2Q15 3Q15 4Q15 1Q16 2Q16 1,787 1,838 1,937 2,640 2,468 1,163 $2,950 1,416 $3,254 1,434 $3,371 985 $3,625 1,196 $3,664 2Q15 3Q15 4Q15 1Q16 2Q16 471 480 479 477 477 576 483 483 464 524 Net charge-offs and ratio NPLs and coverage ratio(1) Criticized and classified loans(2) (1) Excludes loans held for sale (2) Includes commercial and investor real estate loans only (3) The All Other category includes TDRs classified as held for sale for the following periods : $18MM in 2Q15, $14MM in 3Q15, $8MM in 4Q15, $8MM in 1Q16 and $8MM in 2Q16. $1,303$1,312 $1,404 357 349 341 Residential First Mortgage All Other (3) Home Equity ($ in millions) ($ in millions) ($ in millions) ($ in millions) $1,276 335 8 Troubled debt restructurings $1,325 324 Asset quality

 
Industry leading capital and liquidity ratios 2Q15 3Q15 4Q15 1Q16 2Q16 12.1% 11.7% 11.7% 11.6% 11.6% 2Q15 3Q15 4Q15 1Q16 2Q16 11.1% 10.8% 10.7% 10.7% 10.7% 2Q15 3Q15 4Q15 1Q16 2Q16 83% 83% 83% 83% 84% • Returned $258MM to shareholders, including the repurchase of $179MM of common stock and $79MM in dividends • Transitional basis Basel III Common Equity Tier 1 ratio estimated at 10.9%(1), well above current regulatory minimums • At period end, Regions was fully compliant with the final Liquidity Coverage Ratio rule • Successfully completed annual CCAR process and received no objection to planned capital actions (1) Current quarter ratios are estimated (2) Non-GAAP; see appendix for reconciliation (3) Based on ending balances 9 Tier 1 capital ratio(1) Common equity Tier 1 ratio – Fully phased-in pro-forma(1)(2) Loan-to-deposit ratio(3)

 
2016 Expectations • Average loan growth of 3% - 5%(1); expect to track toward lower end of range • Average deposits relatively stable(1)(2) • Net interest income and other financing income up 2% - 4%; assuming no rate increases, expect to be at mid-point of range • Adjusted non-interest income up 4% - 6% • Adjusted expenses flat to up modestly; full year efficiency ratio <63% • Adjusted operating leverage of 2% - 4% • Net charge-offs of 25 - 35 bps; continue to expect to be at top end of range Note: The reconciliation with respect to these forward-looking non-GAAP measures is expected to be consistent with the actual non-GAAP reconciliations included in the attached appendix. 10 (1) 4Q16 average balances relative to 4Q15 average balances (2) Accelerated planned reduction of certain deposits within Wealth Management and Corporate segments led to the change from previous guidance of 2%-4%. Within Wealth Management, certain customer trust deposits, collateralized by securities, were moved into other fee income producing customer investments.

 
Appendix 11

 
• Total outstandings and commitments declined primarily due to paydowns and payoffs • Allowance for loan and lease losses was 9.4% of direct energy balances at 6/30/16 vs 8.0% at 3/31/16 • No second lien exposure outstanding within the energy portfolio • Leveraged loans account for 14% of energy related balances; the majority are Midstream • Expectations for energy related charge-offs are $50-$75 million through the end of 2017 • Should oil prices average below $25 a barrel through the end of 2017, Regions could experience additional losses of $100 million • Utilization rate has remained between 40-60% since 1Q10 • 12% of direct energy loans are on non-accrual status Energy lending overview Total energy As of 6/30/16 As of 3/31/16 ($ in millions) Loan / Lease Balances Balances Including Related Commitments % Utilization $ Criticized % Criticized Loan / Lease Balances Balances Including Related Commitments % Utilization $ Criticized % Criticized Oilfield services and supply (OFS) $863 $1,332 65% $422 49% $984 $1,435 69% $461 47% Exploration and production (E&P) 805 1,434 56% 581 72% 956 1,653 58% 660 69% Midstream 519 1,082 48% 33 6% 545 1,042 52% 40 7% Downstream 76 347 22% 18 24% 87 378 23% — — Other 129 285 45% 24 19% 144 321 45% 39 27% Total direct 2,392 4,480 53% 1,078 45% 2,716 4,829 56% 1,200 44% Indirect 531 996 53% 96 18% 503 1,015 50% 59 12% Direct and indirect 2,923 5,476 53% 1,174 40% 3,219 5,844 55% 1,259 39% Operating leases 153 153 — 70 46% 159 159 — 72 45% Total energy $3,076 $5,629 55% $1,244 40% $3,378 $6,003 56% $1,331 39% Note: Securities portfolio contained ~$66MM of high quality, investment grade corporate bonds that are energy related at 6/30/16, down from ~$166MM at 3/31/16. A leveraged relationship is defined as senior cash flow leverage of 3x or total cash flow leverage of 4x except for Midstream Energy which is 6x total cash flow leverage. 12

 
Energy lending - Oil Field Services and Exploration & Production detail Type As of6/30/16 # of Clients* Commentary Marine $457 9 Client selection is strong with ~61% of exposure tied to clients with contract protection through 2016. Expect some additional stress into 2017 as E&P companies focus on shorter cycle onshore projects. Integrated OFS 162 10 Average utilization is 37% indicating clients have liquidity to weather cycle. Compression 119 4 Linked to movement of natural gas; sector is stable and lower risk. Fluid Management 38 2 Remains a high risk sector. Pre-drilling / Drilling 72 2 Reduced capex spending of many E&P companies impacted current and future cash flows; however, Regions' larger borrowers remain liquid. Sand 15 1 Remains a high risk sector, although sand volumes have improved in recent weeks in certain basins. Total Oil Field Services (OFS) $863 28 Exploration and production (E&P) $805 29** Total OFS and E&P $1,668 • 51% shared national credit (SNC) loans • 65% utilization rate compared to 69% in 1Q16 • 89% Non-pass rated (criticized) loans paying as agreed E&P Portfolio *Represents the number of clients that comprise 75% of the loan balances outstanding. **Represents the number of clients that comprise 90% of the loan balances outstanding. OFS Portfolio 13 • Substantially complete with spring rederminations, which resulted in a 22% decline in customer borrowing bases to date • Majority of borrowing is senior secured • 94% shared national credit (SNC) loans • 56% utilization rate compared to 58% in 1Q16 • Essentially all non-pass rated (criticized) loans paying as agreed

 
Loan balances by select states Texas Louisiana Note: Intelligence from our customer assistance program (CAP) reveals no noticeable increase in assistance requests in these markets to date. Commercial - Non-Energy, $4,353 Investor Real Estate, $1,451 Consumer Real Estate Secured, $918 Consumer Non-Real Estate Secured, $908 Commercial - Energy (Direct), $1,255 Investor Real Estate Balances by City ($ in millions) Office Retail Multi-Family Single Family Other Total Houston $18 $61 $322 $89 $20 $510 Dallas 213 32 193 40 57 535 San Antonio — 26 68 46 45 185 Other 19 56 126 2 18 221 Total $250 $175 $709 $177 $140 $1,451 Investor Real Estate Balances by City ($ in millions) Office Retail Multi-Family Single Family Other Total Baton Rouge $43 $4 $26 $42 $21 $136 New Orleans 5 8 1 2 15 31 Other 3 36 23 2 17 81 Total $51 $48 $50 $46 $53 $248 Commercial - Non-Energy, $2,277 Investor Real Estate, $248 Consumer Real Estate Secured, $1,112 Consumer Non-Real Estate Secured, $289 Commercial - Energy (Direct), $480 14 $4.4B$8.9B

 
Loan balances by select states Alabama Mississippi Commercial - Non- Energy, $5,283 Investor Real Estate, $355 Consumer Real Estate Secured, $3,569 Consumer Non-Real Estate Secured, $875 Commercial - Energy (Direct), $38 Commercial - Non-Energy, $1,455 Investor Real Estate, $183 Consumer Real Estate Secured, $962 Consumer Non-Real Estate Secured, $339 Commercial - Energy (Direct), $66 15 $3.0B$10.1B Investor Real Estate Balances by City ($ in millions) Office Retail Multi-Family Single Family Other Total Birmingham $32 $40 $30 $15 $24 $141 Huntsville 49 16 6 9 3 83 Mobile / Baldwin County 2 17 3 3 15 40 Other 17 20 21 13 20 91 Total $100 $93 $60 $40 $62 $355 Investor Real Estate Balances by City ($ in millions) Office Retail Multi-Family Single Family Other Total North Mississippi — — — — $97 $97 Jackson / Other 5 2 41 1 4 53 Gulfport / Biloxi / Pascagoula 1 — 20 — 12 33 Total $6 $2 $61 $14 $113 $183

 
Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio NM - Not Meaningful (1) Regions recorded $3 million, $50 million and $100 million of contingent legal and regulatory accruals during the second quarter of 2016, the second quarter of 2015, and the fourth quarter of 2014, respectively, related to previously disclosed matters. The fourth quarter of 2014 accruals were settled in the second quarter of 2015 for $2 million less than originally estimated and a corresponding recovery was recognized. (2) Excluding $23 million of FDIC insurance assessment adjustments to prior assessments recorded in the third quarter of 2015, the adjusted efficiency ratio would have been 65.0%. (3) During the fourth quarter of 2015, Regions corrected the accounting for certain leases, for which Regions is the lessor. These leases had been previously classified as capital leases but were subsequently determined to be operating leases. The aggregate impact of this adjustment lowered net interest income and other financing income $15 million. Excluding the negative impact of the $15 million, the adjusted efficiency ratio would have been 62.7%. 16 Quarter Ended ($ amounts in millions) 6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015 2Q16 vs. 1Q16 2Q16 vs. 2Q15 ADJUSTED EFFICIENCY RATIO, ADJUSTED NON-INTEREST INCOME/ EXPENSE- CONTINUING OPERATIONS Non-interest expense (GAAP) A $ 915 $ 869 $ 873 $ 895 $ 934 $ 46 5.3 % $ (19) (2.0)% Adjustments: Professional, legal and regulatory expenses(1) (3) — — — (48) (3) NM 45 (93.8)% Branch consolidation, property and equipment charges(1) (22) (14) (6) (1) (27) (8) 57.1 % 5 (18.5)% Salary and employee benefits—severance charges (1) (12) (6) — — 11 (91.7)% (1) NM Adjusted non-interest expense (non-GAAP) B $ 889 $ 843 $ 861 $ 894 $ 859 $ 46 5.5 % $ 30 3.5 % Net interest income and other financing income (GAAP) $ 848 $ 862 $ 836 $ 836 $ 820 $ (14) (1.6)% $ 28 3.4 % Taxable-equivalent adjustment 21 21 20 19 19 — NM 2 10.5 % Net interest income and other financing income, taxable-equivalent basis C $ 869 $ 883 $ 856 $ 855 $ 839 $ (14) (1.6)% $ 30 3.6 % Non-interest income (GAAP) D $ 526 $ 506 $ 514 $ 497 $ 590 $ 20 4.0 % $ (64) (10.8)% Adjustments: Securities (gains) losses, net (6) 5 (11) (7) (6) (11) (220.0)% — NM Insurance proceeds(1) — (3) (1) — (90) 3 (100.0)% 90 (100.0)% Leveraged lease termination gains, net — — — (6) — — NM — NM Adjusted non-interest income (non-GAAP) E $ 520 $ 508 $ 502 $ 484 $ 494 $ 12 2.4 % $ 26 5.3 % Total revenue, taxable-equivalent basis C+D=F $ 1,395 $ 1,389 $ 1,370 $ 1,352 $ 1,429 $ 6 0.4 % $ (34) (2.4)% Adjusted total revenue, taxable-equivalent basis (non-GAAP) C+E=G $ 1,389 $ 1,391 $ 1,358 $ 1,339 $ 1,333 $ (2) (0.1)% $ 56 4.2 % Efficiency ratio (GAAP) A/F 65.6% 62.5% 63.7% 66.2% 65.4% Adjusted efficiency ratio (non-GAAP)(2)(3) B/G 64.0% 60.6% 63.4% 66.8% 64.5% The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. Management uses this ratio to monitor performance and believes this measure provides meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest expense (non- GAAP), which is the numerator for the efficiency ratio. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the fee income ratio. Net interest income and other financing income on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the efficiency ratio. Regions believes that the exclusion of these adjustments provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. The table on the following page presents a computation of the operating leverage ratio (non-GAAP) which is the period to period percentage change in adjusted total revenue on a taxable-equivalent basis (non-GAAP) less the percentage change in adjusted non-interest expense (non-GAAP). Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.

 
Non-GAAP reconciliation continued: YTD Non- interest income, non-interest expense, efficiency ratio and operating leverage Six Months Ended June 30 ($ amounts in millions) 2016 2015 2016 vs. 2015 ADJUSTED EFFICIENCY AND OPERATING LEVERAGE RATIO, ADJUSTED NON-INTEREST INCOME/EXPENSE- CONTINUING OPERATIONS Non-interest expense (GAAP) A $ 1,784 $ 1,839 $ (55) (3.0)% Adjustments: Professional, legal and regulatory expenses(1) (3) (48) 45 (93.8)% Branch consolidation, property and equipment charges(1) (36) (49) 13 (26.5)% Loss on early extinguishment of debt — (43) 43 (100.0)% Salary and employee benefits—severance charges (13) — (13) NM Adjusted non-interest expense (non-GAAP) B $ 1,732 $ 1,699 $ 33 1.9 % Net interest income and other financing income (GAAP) $ 1,710 $ 1,635 $ 75 4.6 % Taxable-equivalent adjustment 42 36 6 16.7 % Net interest income and other financing income, taxable-equivalent basis C $ 1,752 $ 1,671 $ 81 4.8 % Non-interest income (GAAP) D $ 1,032 $ 1,060 $ (28) (2.6)% Adjustments: Securities gains, net (1) (11) 10 (90.9)% Insurance proceeds(1) (3) (90) 87 (96.7)% Leveraged lease termination gains, net — (2) 2 (100.0)% Adjusted non-interest income (non-GAAP) E $ 1,028 $ 957 $ 71 7.4 % Total revenue, taxable-equivalent basis C+D=F $ 2,784 $ 2,731 $ 53 1.9 % Adjusted total revenue, taxable-equivalent basis (non-GAAP) C+E=G $ 2,780 $ 2,628 $ 152 5.8 % Operating leverage ratio (GAAP) F-A 4.9 % Adjusted operating leverage ratio (non-GAAP) G-B 3.9 % Efficiency ratio (GAAP) A/F 64.1% 67.4% Adjusted efficiency ratio (non-GAAP) B/G 62.3% 64.7% (1) See page 7 of 2Q16 Financial Supplement for additional detail on these adjustments. 17

 
Non-GAAP reconciliation: Basel III common equity Tier 1 ratio – fully phased-in pro-forma (1) Current quarter amounts and the resulting ratio are estimated. (2) Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III on a fully phased-in basis. The amount included above is a reasonable approximation, based on our understanding of the requirements. As of and for Quarter Ended 18 The calculation of the fully phased-in pro-forma "Common equity Tier 1" (CET1) is based on Regions’ understanding of the Final Basel III requirements. For Regions, the Basel III framework became effective on a phased-in approach starting in 2015 with full implementation beginning in 2019. The calculation provided below includes estimated pro-forma amounts for the ratio on a fully phased-in basis. Regions’ current understanding of the final framework includes certain assumptions, including the Company’s interpretation of the requirements, and informal feedback received through the regulatory process. Regions’ understanding of the framework is evolving and will likely change as analysis and discussions with regulators continue. Because Regions is not currently subject to the fully-phased in capital rules, this pro-forma measure is considered to be a non-GAAP financial measure, and other entities may calculate it differently from Regions’ disclosed calculation.   A company's regulatory capital is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a company’s balance sheet assets and credit equivalent amounts of off-balance sheet items are assigned to broad risk categories. The aggregated dollar amount in each category is then multiplied by the prescribed risk-weighted percentage. The resulting weighted values from each of the categories are added together and this sum is the risk-weighted assets total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Common equity Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the common equity Tier 1 capital ratio. The amounts disclosed as risk-weighted assets are calculated consistent with banking regulatory requirements on a fully phased-in basis.   Since analysts and banking regulators may assess Regions’ capital adequacy using the fully phased-in Basel III framework, we believe that it is useful to provide investors the ability to assess Regions’ capital adequacy on this same basis. ($ amounts in millions) 6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015 Basel III Common Equity Tier 1 Ratio—Fully Phased-In Pro-Forma(1) Stockholder's equity (GAAP) $ 17,385 $ 17,211 $ 16,844 $ 16,952 $ 16,899 Non-qualifying goodwill and intangibles (4,946) (4,947) (4,958) (4,913) (4,902) Adjustments, including all components of accumulated other comprehensive income, disallowed deferred tax assets, threshold deductions and other adjustments (227) (64) 286 41 183 Preferred stock (GAAP) (820) (820) (820) (836) (852) Basel III common equity Tier 1—Fully Phased-In Pro-Forma (non-GAAP) A $ 11,392 $ 11,380 $ 11,352 $ 11,244 $ 11,328 Basel III risk-weighted assets—Fully Phased-In Pro-Forma (non-GAAP)(2) B $ 106,314 $ 106,227 $ 106,188 $ 104,645 $ 102,479 Basel III common equity Tier 1 ratio—Fully Phased-In Pro-Forma (non-GAAP) A/B 10.7% 10.7 % 10.7 % 10.8 % 11.1 %

 
Forward-looking statements This presentation may include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions’ 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. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. 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. These risks, uncertainties and other factors include, but are not limited to, those described below: 19 • Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, unemployment rates and potential reductions of economic growth, which may adversely affect our lending and other businesses and our financial results and conditions. • Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations, which could have a material adverse effect on our earnings. • The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook, which could result in risks to us and general economic conditions that we are not able to predict. • Possible changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital and liquidity. • Any impairment of our goodwill or other intangibles, or any adjustment of valuation allowances on our deferred tax assets due to adverse changes in the economic environment, declining operations of the reporting unit, or other factors. • Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans. • Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses where our allowance for loan losses may not be adequate to cover our eventual losses. • Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities. • Our ability to effectively compete with other financial services companies, some of whom possess greater financial resources than we do and are subject to different regulatory standards than we are. • Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments, which could increase our funding costs. • Our inability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner could have a negative impact on our revenue. • The effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or any of our subsidiaries. • Changes in laws and regulations affecting our businesses, such as the Dodd-Frank Act and other legislation and regulations relating to bank products and services, as well as changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses. • Our ability to obtain a regulatory non-objection (as part of the CCAR) process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or redeem preferred stock or other regulatory capital instruments, may impact our ability to return capital to stockholders and market perceptions of us. • Our ability to comply with stress testing and capital planning requirements (as part of the CCAR process or otherwise) may continue to require a significant investment of our managerial resources due to the importance and intensity of such tests and requirements. • Our ability to comply with applicable capital and liquidity requirements (including, among other things, the Basel III capital standards and the LCR rule), including our ability to generate capital internally or raise capital on favorable terms, and if we fail to meet requirements, our financial condition could be negatively impacted. • The Basel III framework calls for additional risk-based capital surcharges for globally systemically important banks. Although we are not subject to such surcharges, it is possible that in the future we may become subject to similar surcharges. • The costs, including possibly incurring fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party, and which may adversely affect our results. • Our ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support our business. • Our ability to execute on our strategic and operational plans, including our ability to fully realize the financial and non-financial benefits relating to our strategic initiatives. • The success of our marketing efforts in attracting and retaining customers. • Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits, which could adversely affect our net income. • Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes in laws and regulations in effect from time to time. • Fraud or misconduct by our customers, employees or business partners.

 
Forward-looking statements continued The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions “Forward-Looking Statements” and “Risk Factors" of Regions' Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission. The words “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can,” and similar expressions often signify forward-looking statements. You should not place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no obligation to update or revise any forward-looking statements that are made from time to time. 20 • Any inaccurate or incomplete information provided to us by our customers or counterparties. • The risks and uncertainties related to our acquisition and integration of other companies. • Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers, which could, among other things, result in a breach of operating or security systems as a result of a cyber attack or similar act. • The inability of our internal disclosure controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts. • The effects of geopolitical instability, including wars, conflicts and terrorist attacks and the potential impact, directly or indirectly, on our businesses. • The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes, and environmental damage, which may negatively affect our operations and/or our loan portfolios and increase our cost of conducting business. • Changes in commodity market prices and conditions could adversely affect the cash flows of our borrowers operating in industries that are impacted by changes in commodity prices (including businesses indirectly impacted by commodities prices such as businesses that transport commodities or manufacture equipment used in the production of commodities), which could impair their ability to service any loans outstanding to them and/or reduce demand for loans in those industries. • Our inability to keep pace with technological changes could result in losing business to competitors. • Our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information; increased costs; losses; or adverse effects to our reputation. • Our ability to realize our efficiency ratio target as part of our expense management initiatives. • Significant disruption of, or loss of public confidence in, the Internet and services and devices used to access the Internet could affect the ability of our customers to access their accounts and conduct banking transactions. • Possible downgrades in our credit ratings or outlook could increase the costs of funding from capital markets. • The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally could require us to change certain business practices, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses. • The effects of the failure of any component of our business infrastructure provided by a third party could disrupt our businesses; result in the disclosure of and/or misuse of confidential information or proprietary information; increase our costs; negatively affect our reputation; and cause losses. • Our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay dividends to stockholders. • Changes in accounting policies or procedures as may be required by the FASB or other regulatory agencies could materially affect how we report our financial results. • Other risks identified from time to time in reports that we file with the SEC. • The effects of any damage to our reputation resulting from developments related to any of the items identified above.

 
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