Regions Bank 2008 Annual Report Download - page 5

credit-related costs tied to the turbulent
operating environment.
Regions’ deposit-gathering efforts were
successful due in large part to the new
LifeGreen® Checking and Savings products
introduced in July of 2008. We experienced
an increase in total customer deposits of
4% during the fourth quarter and are
encouraged by the momentum this product
is creating as we begin 2009.
Our non-performing assets and credit losses
certainly refl ect the challenging economic
conditions of 2008, but remain below industry
levels due to our consistent and prudent
underwriting. Non-performing assets, as a
percentage of total loans and repossessed assets,
were 1.76% at December 31, 2008, compared
to 0.90% a year earlier, while net charge-offs
increased to 1.59% of average loans, up from
0.29% in 2007. We recently intensifi ed our
efforts to dispose of non-performers, selling
or moving to held for sale approximately
$1 billion of these assets. These actions
helped drive a 27% fourth quarter versus
third quarter reduction in non-performing
loans, the largest component of non-
performing assets, to $1.1 billion at the end
of 2008. The aggressive action we took to
deal with non-performing assets in 2008
will put us in a stronger position once the
environment begins to improve.
We also made good progress in reducing
the number of stressed assets in our loan
portfolio. In fact, we reduced exposure to
these troubled assets by $3.1 billion in 2008.
Our overarching credit message remains
unchanged: we are focused on proactively
identifying problem assets and disposing of
them as judiciously as possible — while, at
the same time, making sure that reserve
levels remain appropriate.
In times like these, capital strength is
paramount. Last fall, the U.S. Treasury
invested in many fi nancial services
institutions to strengthen capital levels and
open up the credit markets. Participating
in the U.S. Treasury’s Capital Purchase
Program raised our Tier 1 capital ratio from
7.5% to 10.4% — $5 billion above the
“well-capitalized” regulatory minimums. We
fi nished the year with a tangible common
equity ratio of 5.2%, which puts us around
the median for our peer group. And, as the
Treasury and Congress intended, we are using
increased capital to strengthen our balance
sheet and to prudently lend. In fact, during the
fourth quarter, the government’s investment
supported our ability to commit $16.5 billion
in new and renewed loans and lines.
SERVING CUSTOMERS FROM A POSITION
OF STRENGTH AND STABILITY
While I am not satisfi ed with our 2008
results and understand our shareholders’
disappointment, we enter a new year with
a sense of confi dence that comes from
pursuing a clear purpose — to protect,
preserve and strengthen our capital, liquidity
and risk management.
Regions continues to be in the business
of making quality loans that meet high
standards for credit quality, full pricing
and depository relationships.
– MESSAGE FROM C. DOWD RITTER –
REGIONS 2008 10-K 3