Regions Bank 2008 Annual Report Download - page 43

treasury purposes (e.g. overnight funding sources), increased by 4.6 percent during 2008, driven largely by
higher certificate of deposit balances.
Table 2 “GAAP to Non-GAAP Reconciliation” presents computations of earnings and certain other
financial measures excluding discontinued operations, merger and goodwill impairment charges (“non-GAAP”).
Merger and goodwill impairment charges are included in financial results presented in accordance with generally
accepted accounting principles (“GAAP”). Regions believes the exclusion of merger and goodwill impairment
charges in expressing earnings and certain other financial measures, including “earnings per common share from
continuing operations, excluding merger and goodwill impairment charges” and “return on average tangible
equity, excluding discontinued operations, merger and goodwill impairment charges” provides a meaningful base
for period-to-period and company-to-company 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, because management
does not consider merger and goodwill impairment charges to be relevant to ongoing operating results.
Management and the Board of Directors utilize these non-GAAP financial measures for the following purposes:
• Preparation of Regions’ operating budgets
• Calculation of performance-based annual incentive bonuses for certain executives
• Calculation of performance-based multi-year incentive bonuses for certain executives
• Monthly financial performance reporting, including segment reporting
• Monthly close-out “flash” reporting of consolidated results (management only)
• Presentations to investors of Company performance
Regions believes that presenting these non-GAAP financial measures will permit investors to assess the
performance of the Company on the same basis as that applied by management and the Board of Directors.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are
not audited. To mitigate these limitations, Regions has policies in place to address expenses that qualify as
merger and goodwill impairment charges and procedures in place to approve and segregate merger and goodwill
impairment charges from other normal operating expenses to ensure that the Company’s operating results are
properly reflected for period-to-period comparisons. 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 merger and goodwill impairment charges does not represent the
amount that effectively accrues directly to stockholders (i.e., merger and goodwill impairment charges are a
reduction to earnings and stockholders’ equity).
See Table 2 “GAAP to Non-GAAP Reconciliation” below for computations of earnings and certain other
GAAP financial measures and the corresponding reconciliation to non-GAAP financial measures, which exclude
discontinued operations, merger and goodwill impairment charges for the periods presented.
33