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Annual Report 2013

Plain-text annual report

2013 YEAR IN REVIEW WHAT DIFFERENT LOOKS LIKE FINANCIAL HIGHLIGHTS (In millions, except per share data, branch outlets and ATMs) 2013 2012 2011 EARNINGS SUMMARY Income (loss) from continuing operations available to common shareholders Net income (loss) available to common shareholders Earnings (loss) per common share from continuing operations – diluted Earnings (loss) per common share – diluted $ 1,103 1,090 0.78 0.77 $ 1,050 991 0.76 0.71 $ (25) (429) (0.02) (0.34) BALANCE SHEET SUMMARY At year-end Loans, net of unearned income Assets Deposits Long-term debt Stockholders’ equity Average balances – Continuing Operations Loans, net of unearned income Assets Deposits Long-term debt Stockholders’ equity SELECTED RATIOS Tangible common stockholders’ equity to tangible assets (non-GAAP)* Allowance for loan losses as a percentage of loans, net of unearned income Allowance for credit losses as a percentage of loans, net of unearned income Adjusted efficiency ratio (non-GAAP)* Tier 1 Common (non-GAAP)* Tier 1 Capital OTHER INFORMATION Basic Weighted-average number of common shares outstanding Diluted Weighted-average number of common shares outstanding Total Branch Outlets ATMs *See Table 2 in Form 10-K for GAAP to non-GAAP reconciliations. $ 74,609 117,396 92,453 4,830 15,768 $ 73,995 121,347 95,474 5,861 15,499 $ 77,594 127,050 95,627 8,110 16,499 $ 74,924 117,805 92,646 5,206 15,502 $ 76,035 122,182 95,330 6,694 15,035 $ 80,673 126,719 95,671 11,240 15,350 9.24% 1.80 8.63% 2.59 6.58% 3.54 1.90 65.42 11.21 11.68 1,395 1,410 1,705 2,029 2.71 64.42 10.84 12.00 1,381 1,387 1,711 2,054 3.64 64.56 8.51 13.28 1,258 1,258 1,726 2,083 At Regions, progress is creating a new, better, different organization — one that puts the customer at the center of everything we do. Come see what different looks like... REGIONS 2013 YEAR IN REVIEW 1 IT’S PERSONAL Not every large bank succeeds in delivering the kind of personalized service required to grow a successful medical practice. Dissatisfied with the lack of individualized attention from her previous bank, Jacksonville Beach dermatologist Dr. Alison O. Moon sought better solutions from Regions – and hasn’t looked back. “Before I came to Regions I felt I wasn’t really valued as a customer. So when I met with Jessica Evans from Regions, I was pleasantly surprised. She was so friendly, accessible and personal, and it was a relief to have somebody who really listened. She looked over my situa- tion and came up with a proposal on how to restructure loans and improve our interest rate and terms,” said Dr. Moon. In 2003, Dr. Moon took a bold step when she established her own dermatology practice immediately after completing her residency with the Mayo Clinic. Since then, there’s been steady growth, adding physicians and staff and treating more than 26,000 patients to date. The practice is profitable and growing, and now Regions is her partner at every step. “Since that first meeting with Jessica, my relationship with Regions expanded quickly. The Regions team came up with really creative solutions to meet all my financial needs. They helped me restructure all my business and personal loans, which included refinancing my mortgage,” added Dr. Moon. “Our office uses the local Regions branch to make our daily deposits, and Angie Baxley has been fantastic whenever we have a ques- tion. To have a contact who is always available and who knows us is just so refreshing. It’s wonderful to have that kind of personal relationship for my business. It’s actually a little farther away than the other two banks I worked with in the past, but, I’ll tell you, it’s worth it. With Regions, it’s a completely personalized experience.” “I’m able to expand my medical practice because Regions took the time to understand my needs and put together innovative solutions that were just right for me.” Dr. Alison O. Moon First Coast Dermatology Associates Jacksonville Beach, Florida 2 REGIONS 2013 YEAR IN REVIEW 2 REGIONS 2013 YEAR IN REVIEW Charles A. Collat, Sr., Chairman Emeritus, with Nancy Collat Goedecke, Chairman and CEO Mayer Electric Supply Birmingham, Alabama “In so many different ways, Regions has helped our family achieve a goal I otherwise would never have realized. They’ve provided a wonderful opportunity for us to grow and be a part of the community, and that is so gratifying.” IT’S MULTI-DIMENSIONAL In 1930 when it all began, Mayer Electric Supply was simply a small family business in Birmingham. But it kept growing – year after year for 84 years. The firm’s expansion acceler- ated over the last three decades, shortly after Regions became Mayer’s indispensible partner. Regions provides a multi-dimensional array of business and individual financial services to the company and its leaders. The Mayer banking relationship exemplifies the strategy we call Regions360. It starts by identifying the full range of needs for every customer served. Regions360 deepens customer relationships by bringing diverse solutions and capabilities to each customer that are fully aligned with their unique needs. That approach resonates with Mayer chairman and CEO Nancy Goedecke. “We treasure our partnerships, and I know they mean a lot to Regions. The trust and respect we have for Regions and they have for us is very special.” Regions’ Cory Guillory coordinates the relationship. Mayer chief financial officer David Morgan describes Cory as “an excellent relationship manager. Whether it is with credit, treasury management or any of our other needs, Cory serves as quarterback and opens the door to the people who can help us grow our business for the future.” The visionary leadership of Charles Collat, who is Nancy’s father and now serves as chairman emeritus, began in the 1970s and was instrumental in building what has become an industry powerhouse. With annual sales totaling nearly $700 million, the company’s more than 1,000 employees meet the electrical supply and service needs of customers across eight Southeastern states and Texas. But Mayer’s impact doesn’t stop there. Mr. Collat and his family are among Birmingham’s most active philanthropists, including signature gifts to the University of Alabama – Birmingham. He notes, “Regions has helped our family achieve a goal I otherwise would never have realized. They’ve provided a wonderful opportunity for us to grow and be a part of the community, and that is so gratifying.” REGIONS 2013 YEAR IN REVIEW 3 “A financial relationship starts with trust and credibility. When you work in an area like the Gulf of Mexico and high-pressure situa- tions around the world, you’ve got to have a group of bankers who understand you. That’s what Regions brings to the table.” John Schiller Chairman and CEO, Energy XXI Houston, Texas IT’S SPECIALIZED How do you grow an energy company from startup to nearly 50,000 barrels a day equivalent – and do it in less than a decade? If you’re Houston-based Energy XXI, you move fast, and you partner with a financial institution with deep expertise in your industry. According to company chairman and CEO John Schiller, “When you work in an area like the Gulf of Mexico and high-pressure situa- tions around the world, you’ve got to have a group of bankers who understand you. One of the things Regions brings to the table is they have internal petroleum engineers, so they’re very familiar with looking at complex oil and gas reservoirs like ours. Because of that expertise, when we need Regions to step up, they’re there for us.” Regions has created specialized lending groups for several different industries that include energy, healthcare, technology, transpor- asset-based lending. These banking teams are comprised of specialists with deep expertise in their respective fields. That knowledge base is a key differentiator, helping create value for both partners in the relationship. Regions’ head of energy banking, Kelly Elmore, brings extensive industry experience to his role of managing the relationship with Energy XXI. Notes Schiller, “With Kelly and Regions, we have a team of seasoned bankers that has known us for a long time, and as we have grown, they have grown with us.” Kelly’s work helped improve management of Energy XXI’s line of credit, simplifying processing of payables and strengthening cash management. Adds Schiller, “We wire money a lot less frequently than we used to. That’s just one place where the specialized groups and what Regions does were able to come in and make tation, franchise restaurant, real estate corporate banking and us a better-run company.” 4 REGIONS 2013 YEAR IN REVIEW IT’S NEEDS-BASED A senior at the Savannah College of Art and Design, Michelle Moezam has big career plans – and Regions is by her side with a banking solution that’s right for her. “As a college student I have so many expenses – rent, food, gas, art supplies – and my single paycheck doesn’t always cover everything. My mom is always there to help out financially when I need it. With our Regions joint account she can monitor how much I’m spending – even tell me to quit eating out so much,” Michelle laughs. “And when I need a little help, it’s really easy for her to transfer funds.” Michelle’s smartphone is always nearby, and Regions’ mobile solutions make banking more convenient than ever. “I have the Regions app, and I use it to take photos of my checks which is really helpful. I can access the funds immediately, which is nice, and I don’t have to drive out to the bank.” For Michelle’s mom Soraia Kyker, an acclaimed Birmingham hair stylist and color specialist, their joint account pro- vides flexibility – and peace of mind. “She’s a great girl. I’m very proud of her and always want to be supportive,” says Soraia. “With the mobile app it’s really easy for me to check to see if her finances are okay, and if they’re not okay, I can transfer funds right from my phone.” Regions’ commitment to great customer service came in handy when Michelle’s debit card was stolen. Recalls Michelle, “I was so nervous I was shaking. But I called the Regions helpline, and they told me to stay calm, not to worry and everything would be taken care of. Regions was there for me when I needed them.” “Michelle’s in college 400 miles away, so I’m often checking to make sure her finances are okay. Our Regions joint account and the mobile app help me make sure her needs are being met. For a mom, that’s peace of mind.” Soraia Kyker with daughter Michelle Owner, SK Salon Birmingham, Alabama REGIONS 2013 YEAR IN REVIEW 5 IT’S CUSTOMIZED For more than 25 years, Tim Nichols has been living his dream as a successful Nashville songwriter. The co-creator of Tim McGraw’s “Live Like You Were Dying” and hits by Alan Jackson, Faith Hill, Trace Adkins and many other top artists, Tim says the thrill of creating a new hit today is just as enjoyable as ever. “I remember the first time I heard my song on the radio – it’s just an incredible feeling. And it’s still incredible today. It never gets old.” At every step since that first hit, Regions wealth advisor Lisa Harless has been at Tim’s side, providing financial expertise and solutions. Tim also has a strong entrepreneurial streak, and the Regions relationship expanded as Tim pursued diverse new business interests. “The song- writing career has been great, but I started thinking about the next step. So nine years ago, a couple of partners and I formed a publishing company. We started with no songs and then last year alone we had six number-one hits, including two Grammy nominations. It’s been a great year, and Regions has been our partner. When we started the publishing company, we knew we would take that business to Regions as well.” When Tim and several partners acquired a beverage distributorship in Shreveport, Louisiana, Regions’ presence in the state meant the bank could provide banking services to that venture as well. For the multital- ented Tim Nichols, his interests don’t stop at songwriting and business – he’s also a committed philanthropist. “There is a preschool and therapy center for children with special needs in Franklin, Tennessee called High Hopes that I have been working with for the past 17 years. This school has my heart. The sign on the outside of the building says ‘High Hopes,’ but inside that building it’s this little miracle factory.” Tim appreciates a partner that can provide services that are fully customized to his needs. “The services that Regions provides are unique to my needs, whether they be personal or business or philanthropic. While the invest- ment world and retirement and savings can seem complicated, at the end of the day I still just want to do what I love, which is to write songs. Regions lets me do that.” “The investment world and retirement and savings can seem complicated. With Regions’ expertise on my side, I can focus on what I love most – which is writing songs.” 6 REGIONS 2013 YEAR IN REVIEW Tim Nichols Songwriter, Entrepreneur and Philanthropist Nashville, Tennessee IT’S COMMUNITY- FOCUSED Setting goals, making good choices and doing your homework – those are great guidelines, not only for high school success but also for making sound financial decisions throughout life. At Atlanta’s historic Booker T. Washington High School, Dr. Malaika Syphertt’s students in the Regions Financial Scholars program are gaining a wealth of personal finance knowledge through their engagement with the Regions-sponsored Financial Education program developed by EverFi. The online learning platform leverages leading-edge technology from EverFi like 3-D gaming, videos, avatars and social networking to bring complex financial concepts to life for the wired generation. Regions is proud to provide support for its deployment at high schools and colleges in eight states of Regions’ footprint. So far in the 2013–14 school year, more than 3,000 high school and university students have been certified in the Financial Education program. “The online program is extremely effective, and I use it to supplement my classroom instruction,” said Dr. Syphertt. “It’s good for differentiation and individualized work, and my students are constantly being assessed before they go on to the next module. It’s awesome because they can do it in class, they can do it at home, they can do it on their smartphones or electronic devices, and it is really exciting and they all love it.” Senior Kadeeja Taylor is one of the many Washington High students benefiting from the program. Kadeeja, who hopes to attend Emory University, observed, “My favorite topic was budgeting, because I know in college you don’t have an excess amount of money to spend. I think this will help me be able to budget and actually make it through college and not have to struggle.” Dr. Syphertt says it’s rewarding to know the benefits to these students can last a lifetime. “It’s very important that they understand financial terminology before they make mistakes like getting into bad debt or making bad financial decisions. They’re learning that they should start saving now and establishing themselves financially in terms of credit and savings. It’s just beautiful to see them grow and develop into successful citizens.” Dr. Malaika Syphertt, with student Elizabeth Ushi Teacher and 12th Grade Team Leader Booker T. Washington High School, Atlanta, Georgia “Financial literacy is very important for these students because they’re about to graduate and enter adulthood. The Financial Education program that Regions supports is extremely effective in providing them the information they need to be successful in life.” REGIONS 2013 YEAR IN REVIEW 7 CHAIRMAN’S LETTER GRAYSON HALL Chairman, President and Chief Executive Officer To our shareholders, associates, customers and communities: Regions Financial is a different organization today than it was several years ago — and the changes are all positive. We have simplified our business model and strengthened our business strategies. Yet, importantly, in every decision we make, the needs of our customers continue to drive what we do. Across the 16 states we serve, and in every segment of our business, our associates focus on the fundamentals of relationship banking, and their commitment to serving our 4 million customers made 2013 a pivotal year for Regions. I am proud of their accomplishments and am confident our team has established a solid foundation to support sustainable growth going forward. 8 REGIONS 2013 YEAR IN REVIEW 8 REGIONS 2013 YEAR IN REVIEW By nearly every measure, our 2013 results were positive. We grew loans, households and accounts — many of these metrics for the first time in several years. Fifteen of our 17 businesses expanded. Credit quality improved markedly. We prudently managed expenses while making appropriate investments in technology and talent to support continued growth. And customer satisfaction continued to rise. With a business strategy built on a foundation of creating shared value for all of our stakeholder groups, we were able to deliver a solid profit by offering customers the financial products and services they need to help them reach their financial goals. Creating Shared Value — A Foundational Strategy Over one year ago, as Regions progressed through a recovery period, our Board and leadership team began to think carefully about a new foundational business strategy. The foundation that emerged from that process — creating shared value — calls for our actions to benefit all stakehold- ers. We firmly believe that the most powerful way to create long-term value for Regions’ shareholders and opportunity for our associates is to ensure that our customers and communities are prospering as well. We believe the sequence of the decision-making process is critical, which is why each choice we make begins with our customers. In 2013, we made continued progress in implementing the shared value strategy across the organization, which contributed in a meaningful way to our positive results during the year. Our approach requires us to think holistically about our customers’ full range of needs, and to match solutions to those needs in a manner that creates value for both participants in the relationship. Regions360: How We Create Shared Value Regions360 — which is a detailed, prescriptive approach that empowers our bankers to create deeper and broader relationships with our customers — exemplifies how we create shared value. We introduced this approach because we understand that every customer has unique needs and can benefit from our broad range of products and services. At the same time, the financial needs of our customers in our three segments, consumer, commercial and wealth, are diverse. For example, a young family with a checking account needs to invest for college and retirement. A commercial customer with a business loan needs to manage cash and receivables. A wealth client with a teenager in college needs joint checking with the flexibility to manage funds anywhere, anytime, via mobile. Taken as a whole across the 16 states we serve, these varying needs represent an important opportunity for sustainable growth in the years ahead. As part of the Regions360 introduction, we provide extensive training and tools so our associates are consistent in how they use the approach with each customer. This is a strategy that works from the inside out, with the customer in the center, and enables us to identify financial needs rel- evant to all aspects of their lives or business activities. Only after that work is completed do we match those needs with Regions solutions that are suitable for the customer and that provide the bank a fair value of exchange for the services we provide. While we are still in the process of implementing Regions360 across the full organization, we have already seen how impactful it can be in building value for both the bank and our customers. Growing Loans and Customer Relationships Our 2013 loan growth underscores the potential of Regions360. Last year, total new and renewed loan production increased $4.5 billion, or 8 percent, from the previous year. Business lending grew, led by our commercial and industrial portfolio, which increased $2.7 billion. Specialized expertise in attractive growth industries like energy and healthcare remains a positive differentiator for Regions. 0 9 0 , 1 $ 1 9 9 $ 2 1 0 2 3 1 0 2 ) 9 2 4 $ ( 1 1 0 2 Net Income* 354% Increase ($ in millions) % 1 1 3 . % 7 0 . 3 1 1 0 2 2 1 0 2 % 0 2 . 3 Net Interest Margin 3 13 bps 1 0 2 Increase *Net Income (loss) available to common shareholders. REGIONS 2013 YEAR IN REVIEW 9 Even as we work to create deeper relationships with existing customers, we also are committed to developing new relationships as well. In 2013, our associates found new ways to serve more consumers more effectively. A standout was indirect auto loans, which grew by 32 percent. That progress was the result of growth in our collaboration with dealers — now numbering more than 2,100 — and technology that accelerates loan processing for dealers and their car buyers. Our consumer credit card offering also proved attractive in the marketplace. The number of active Regions card users increased 7 percent over the prior year. These successes — and others — helped us grow the total number of customers and households served across the company in 2013. Positive Financial and Operational Performance Strong execution and effective expense management by our team contributed to positive financial results in 2013. Net income available to common shareholders increased 10 percent from the prior year to $1.09 billion. Diluted earnings per common share grew more than 8 percent, to $0.77 per share. Net interest margin expanded by 9 basis points, to 3.20 percent at year-end. Positive trends in our deposit mix resulted in a 15 basis point decline in deposit costs to a historically low level of 15 basis points in 2013. While we restored growth in loans and households in 2013, we kept a sharp focus on controlling expenses and driving greater efficiency across the organization. Each year since 2009 we have consistently reduced full-year adjusted expenses*, and we extended that strong record in 2013, while we also made appropriate investments in new customer-facing, revenue-generating positions and took necessary steps to strengthen our compliance organization. Asset quality is another vital measure of our financial health. In 2013 we achieved broad-based improvement in every metric, including a 31 percent decline in net charge-offs and a 36 percent decline in total nonperforming loans. As we work to continue driving loan growth going forward, we are guided by a mandate that risk management is a fundamental requirement throughout each of our 17 businesses. Our training and internal communication make clear that it is a responsibility shared by every associate everywhere we do business. Regions’ capital position also remains strong as our Tier 1 common ratio* was 11.2 percent, an increase of 40 basis points from one year ago. The company’s liquidity position remained solid as we concluded 2013 with a loan-to-deposit ratio of 81 percent. Driving Innovation with a Personal Touch We are focused on offering customers flexible options that allow them to bank how they want, when they want, in whatever manner they find most convenient. Technological innovation is transforming the delivery of financial services, adding both efficiency and convenience. In 2013, we continued to enhance our digital solutions, including our remote capture deposit product for mobile banking cus- tomers. The growth in our mobile banking channel has been nothing short of extraordinary, and in the not-too- distant future we expect mobile transaction volumes to surpass that of the Internet channel. As we invest to expand our digital capabilities, we remain firm in our belief that banking remains, at its core, a people- based business. It is clear that our 1,705 branches remain a source of Regions’ strength and provide a competitive advantage in the marketplace. Eighty-one percent of our sales originate in the branch and 64 percent of our % 9 4 0 . Deposit Costs % 2 1 1 . % 8 . 0 1 % 5 . 8 Tier 1 Common Ratio* . % 0 3 %0 5 1 0 . 1 1 0 2 2 1 0 2 3 1 0 2 34 bps Improvement 1 1 0 2 2 1 0 2 3 1 0 2 270 bps Increase *See Table 2 in Form 10-K for GAAP to non-GAAP reconciliations. 10 REGIONS 2013 YEAR IN REVIEW customers visit one at least once a month. These metrics underscore the continued relevance of a physical point of presence in the communities we serve. It is appropriate that we periodically evaluate our branch channel and rationalize those assets as necessary, and that work continued in 2013. Efforts are also underway to evaluate ways to make our branches more efficient by leveraging new technology and process improvement. Our focus on product innovation and creating shared value also underpin Now Banking, a suite of solutions aligned with the needs of nontraditional, underserved customers. Customers who lack traditional banking relationships often encounter high fees and inadequate service. To address that need, we developed Now Banking to offer nontraditional customers simple, affordable solutions. Product options include a reloadable debit card, check cashing, electronic bill payment and money transfer services. Customer response has been strong; in 2013 we grew Now Banking households by 26 percent. Our associates will work to expand relationships with our Now Banking customers as their needs and circumstances evolve into more traditional banking products. The people-based nature of our business also means that the quality of each customer’s experience is very important if we are to successfully execute Regions360 and build new customer relationships. Each year our research studies conducted by the Gallup Organization measure our success and identify areas for improvement. Making positive change requires not only assessment but also accountability. Our leaders work closely with their direct reports to drive continuous improvement. I am pleased with the great progress our team has made in raising our service quality and personal loyalty measures. Ensuring that every interaction with every Regions customer is positive and responsive will remain an important priority as we move forward. Creating Shared Value in our Communities We understand that Regions can only be as strong as the communities we serve. That’s why we have a strong culture of community engagement. Our approach to creating shared value in the communities we serve is an extension of that culture, and it directs us to act in ways that build prosperity and opportunity in all the geographic areas we touch. Whether providing necessary capital for affordable housing in an underserved community, offering expertise and support to expand the capacity of a nonprofit charity or leveraging the tremendous human capital of our 24,000-plus associates through volunteerism, Regions is strengthening its commitment to build community value. As a financial institution, we also embrace the opportunity to help consumers make better-informed decisions about their financial futures. We recognize that there are two parts to that equation. As a provider of financial services, we have the responsibility to make our solutions simple and straightforward. And consumers need clear, objective information about the options available in the financial marketplace in order to make smart financial decisions. To help strengthen that understanding, we support financial literacy and consumer education programs — especially those that reach young people. In 2013 our efforts reached over 3,000 students and 370,000 customers — work that builds community value in a very important way. Building the Best Team — The Key to Our Continued Success We look to the future with confidence that Regions has the right purpose, mission and strategy to continue to build long-term value for our shareholders and all our stakeholders. Our strategy is a simple one, focused on back-to-basics banking and effective execution — by a strong team — is the key to achieving continued success. We are well on the way toward fulfilling our objective to build one of the best teams in the industry. Associate engagement has increased significantly, and we are working hard to raise it further still. Today, we are attracting some of the brightest, most capable talent in our field to the organization. Our strong team is getting stronger. Perhaps most importantly, my conversations with associates reveal a tangible excitement and a new pride about this company’s commitment to creating shared value and how it supports a sustainable future for ourselves and for the others we touch. Their enthusiasm and dedication will continue to fuel our positive momentum to building a very unique and successful organization. I am grateful to each of them, to our Board of Directors, to our partners and suppliers and, importantly, to our customers and to our shareholders, for their ongoing confidence and support. Sincerely, Grayson Hall Chairman, President and Chief Executive Officer March 11, 2014 REGIONS 2013 YEAR IN REVIEW 11 A STRATEGY FOR SUSTAINABLE GROWTH Roundtable Q&A with: David Turner, Chief Financial Officer John Owen, Head of Business Groups Matt Lusco, Chief Risk Officer Three senior leaders and members of the Executive Council discuss Regions’ most important strategic priorities and initiatives underway to drive growth and create value. Q: Regions360 is expected to drive growth in deposits, loans and other services. How big is its potential? What makes this initiative unique? JOHN OWEN: It is very meaningful and can benefit us for many years to come. The most attractive opportunity to grow our business is to broaden and deepen the customer relationships we already have. Cross-selling has existed in our industry for a long time, but traditionally it has been product-based — a bank identifies a profitable product, then puts a lot of sales effort behind it. Regions360 departs from that model because it is needs-based rather than product- based. It is a very prescriptive, detailed process in which our bankers use specialized tools to fully assess a customer’s financial needs. Only then do we seek to match our products with those needs. As we increase the number of solutions, we begin to build a true 360 relationship. 12 REGIONS 2013 YEAR IN REVIEW Three senior leaders and members of the Executive Council discuss Regions’ most important strategic priorities and initiatives underway to drive growth and create value. Q: For any bank, growth prospects are often closely tied to overall economic conditions in the markets you serve. What’s your outlook for the markets you serve? DAVID TURNER: Although it is difficult to predict when we will see truly robust levels of economic growth, Regions is well-positioned in the Southeast where recent economic growth has been above the national average and is likely to remain so. In addition, we are focused on other growth markets in the Midwest and Texas. About 90 percent of the communities in which we operate experienced population growth over the last few years. Overall, we think their long-term economic prospects are very positive. Moreover, we have a strong market position in our core markets where we held a 9 percent share of the weighted-average deposits in 2013, placing us third in market share among all banks. That means we have the critical mass to compete and win in markets with good growth potential. Q: One of your strategic priorities has been to strengthen risk management across the organization. How would you assess your progress? MATT LUSCO: We’ve made great strides, but our work is far from complete. There have been substantial investments to add compliance and risk-management professionals, yet it doesn’t end there. John and I are joint sponsors of an initiative called Risk Ownership and Awareness – or Regions ROA. It is a new way to elevate issues and com- municate internally that risk management is not only everyone’s responsibility, but a strategic priority for our future. ROA will help drive cultural change across every function and department. Whether you are thinking about credit risk or com- pliance risk or operational risk, all our associates have a role to play in managing and mitigating risks. Best-in-class risk management is an integral part of our strategy to grow in a sustainable manner. REGIONS 2013 YEAR IN REVIEW 13 Q: Q: Q: More consumers are banking through alternative channels like Internet and mobile. What’s your approach? JOHN OWEN: Our strategy is to offer our customers diverse options that enable them to bank how they want, when they want. So we are leveraging innovation to provide them more choices. A great example is remote deposit capture via mobile device. Many other banks offer that service, but what makes ours unique is the customer gets to choose: Do they want their funds to show up in two days, tonight or do they want them to post to the account right this minute? If you can wait, that service is essentially free, if it’s right away you pay for that option. We are finding that giving customers choices is impactful and a real differ- entiator for us. “Building the best team” is another key objective for Regions. How would you assess your progress? MATT LUSCO: One of the things all of us are excited about is the ability to attract some of the brightest minds in our industry. We see that success across all functions and specialties, from compliance to information technology to wealth management and consumer banking. We are becoming an employer of choice, and we are also making a substantial investment in training and leadership development for our existing associates. Attracting the best talent and strengthening the capabilities of current team members will con- tribute greatly to executing our growth strategy. How do you make sure that your growth investments are prudent ones? DAVID TURNER: We like to say that expense control is a culture, not a campaign. Driving increased efficiency is a priority we work on every day. We evaluate all of our operations to seek ways that process improvement and tech- nology can help us be more productive and reduce costs. However, we are also willing to invest prudently when we see the opportunity to generate growth. For example, last year we added more than 100 wealth professionals, and in 2014 those positions will generate a healthy profit for the bank. Those are the types of invest- ments that will help us continue to meet our growth objectives. REGIONS’ STRATEGIC PLAN – FIVE STRATEGIC PRIORITIES GUIDING BUSINESS DECISIONS Focus on the Customer Build the Best Team Strengthen Financial Performance Enhance Risk Management Manage Performance 14 REGIONS 2013 YEAR IN REVIEW EXECUTIVE MANAGEMENT O.B. Grayson Hall, Jr. Chairman, President and Chief Executive Officer Executive Council and Operating Committee David B. Edmonds Senior Executive Vice President Chief Administrative Officer Executive Council and Operating Committee David J. Turner, Jr. Senior Executive Vice President Chief Financial Officer Executive Council and Operating Committee Fournier J. “Boots” Gale, III Senior Executive Vice President General Counsel and Corporate Secretary Executive Council and Operating Committee C. Matthew Lusco Senior Executive Vice President Chief Risk Officer Executive Council and Operating Committee John B. Owen Senior Executive Vice President Head of Business Groups Executive Council and Operating Committee John Asbury Senior Executive Vice President Head of Business Services Group Operating Committee Brett D. Couch Senior Executive Vice President East Region President Operating Committee Barb Godin Senior Executive Vice President Chief Credit Officer Operating Committee C. Keith Herron Senior Executive Vice President Strategic Planning and Execution Operating Committee Ellen Jones Senior Executive Vice President Chief Financial Officer for Business Operations and Support Operating Committee BOARD OF DIRECTORS George W. Bryan Chief Executive Officer Old Waverly Properties, LLC Carolyn H. Byrd Chairman and Chief Executive Officer GlobalTech Financial, LLC David J. Cooper, Sr. Vice Chairman Cooper/T. Smith Corporation Don DeFosset Former Chairman, President and Chief Executive Officer Walter Industries, Inc. Eric C. Fast Former Chief Executive Officer Crane Co. O.B. Grayson Hall, Jr. Chairman, President and Chief Executive Officer Regions Financial Corporation John D. Johns Chairman, President and Chief Executive Officer Protective Life Corporation James R. Malone Managing Partner Qorval LLC Ruth Ann Marshall Former President — The Americas MasterCard International, Inc. Susan W. Matlock President and Chief Executive Officer Innovation Depot David R. Keenan Senior Executive Vice President Director of Human Resources Operating Committee Scott M. Peters Senior Executive Vice President Head of Consumer Services Group Operating Committee William D. Ritter Senior Executive Vice President Head of Wealth Management Group Operating Committee Cynthia M. Rogers Senior Executive Vice President Operations and Technology Group Operating Committee Ronald G. Smith Senior Executive Vice President Mid-America Region President Operating Committee John M. Turner, Jr. Senior Executive Vice President South Region President Operating Committee John E. Maupin, Jr. President Morehouse School of Medicine Charles D. McCrary Lead Independent Director, Regions Board of Directors Chairman of the Board Alabama Power Company John R. Roberts Managing Partner (Retired) Mid-South Region Arthur Andersen LLP Lee J. Styslinger III Chairman and Chief Executive Officer Altec, Inc. REGIONS 2013 YEAR IN REVIEW 15 FORWARD-LOOKING STATEMENTS This 2013 Year in Review, periodic reports filed by Regions Financial Corporation under the Securities Exchange Act of 1934, as amended, and any other written or oral statements made by us or on our behalf may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The terms “Regions,” “the Company,” “we,” “us” and “our” mean Regions Financial Corporation, a Delaware corporation and its subsidiaries, when appropriate. The words “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar expressions often signify forward-looking statements. 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 expec- tations 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: (1) 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, high unemployment rates and over- all slowdowns in economic growth. (2) Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations. (3) The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook. (4) Possible changes in market interest rates. (5) 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. (6) Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans. (7) Changes in the speed of loan pre- payments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses. (8) Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities. (9) 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. (10) Loss of customer checking and savings account deposits as customers pursue other, higher-yield invest- ments. (11) Our ability to develop and gain acceptance from current and prospective customers for new products and services in a timely manner. (12) Changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies. (13) Our ability to obtain regulatory approval (as part of the CCAR process or otherwise) to take certain capital 16 REGIONS 2013 YEAR IN REVIEW actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current or future programs, or issue or redeem preferred stock or other regulatory capital instruments. (14) Our ability to comply with applicable capital and liquidity requirements (including the finalized Basel III capital standards), including our ability to generate capital internally or raise capital on favorable terms. (15) The costs and other 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 is a party. (16) Any decrease in the maximum permissible interchange fee that an issuer may receive for electronic debit transactions, or the expansion of options for merchants to use multiple unaffiliated payment networks for each transaction. (17) 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. (18) Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits. (19) Any inaccurate or incomplete information provided to us by our customers or counterparties. (20) Inability of our framework to manage risks associated with our business, including operational risk and credit risk, to mitigate all risk or loss to us. (21) The inability of our internal disclosure controls and procedures to prevent or detect all errors or fraudulent acts. (22) The effects of geopolitical instability, including wars (whether declared or undeclared), conflicts and terrorist attacks. (23) The effects of man-made and natural disasters, including floods, droughts, tornadoes and hurricanes. (24) Our ability to keep pace with technological changes, including our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft. (25) Possible downgrades in our credit ratings or outlook. (26) The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally. (27) The effects of the failure of any component of our business infrastructure which is provided by a third party. (28) Our ability to receive dividends from our subsidiaries. (29) Changes in accounting policies or pro- cedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. (30) The effects of any damage to our reputation resulting from developments related to any of the items identified above; and other factors described in more detail under “Forward Looking Statements” and “Item 1A. Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 21, 2014 for the year ended December 31, 2013. This filing is available on our website at http://ir.regions.com/financials.cfm. 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. WHAT A DIFFERENCE A DAY MAKES Wherever we live there are compelling human needs and great organizations that address those needs. That's why Regions empowers its associates to improve their communities in the way that means the most to them. Now in its seventh year, What a Difference a Day Makes offers every Regions associate a chance to spend one paid workday a year volunteering in the community. Thousands of associates took part in 2013, boosting a wide array of nonprofits, schools and community organizations throughout the Regions footprint. REGIONS 2013 YEAR IN REVIEW 17 FORM 10-K Our 2013 Annual Report on Form 10-K (“10-K”) also serves as our 2013 Annual Report to Stockholders. Please note that our 2013 Year in Review does not include, and is not intended as a substitute for, the information contained in our 10-K. For complete financial statements, including notes and management’s discussion and analysis of financial condition and results of operations, please refer to our 10-K filed with the Securities and Exchange Commission, which can be found at ir.regions.com/financials.cfm. REGIONS FINANCIAL CORPORATION 1900 Fifth Avenue North Birmingham, AL 35203 Phone: 1-800-734-4667 STOCK LISTING Regions common stock is traded on the NYSE under the symbol RF. CORPORATE WEBSITE For more information, please visit www.regions.com ANNUAL MEETING The 2014 Annual Meeting of Stockholders of Regions Financial Corporation will be held on Thursday, April 24, 2014 at 9:00 A.M., CDT, in the Upper Lobby Auditorium of Regions Bank, 1901 Sixth Avenue North, Birmingham, AL 35203. TRANSFER AGENT and REGISTRAR Computershare Post Office Box 30170 Providence, RI 02940-3069 Telephone: 1-800-446-2617 for current stockholders 1-800-922-3468 for non-stockholders requesting enrollment materials for dividend reinvestment and stock purchase plan Hearing Impaired: 1-800-952-9245 Shareholder Website: www.computershare.com/investor Shareholder Online Inquiries: https://www-us.computershare.com/investor/contact 

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