Regions Bank 2008 Annual Report Download - page 58

Salaries and Employee Benefits
Total salaries and employee benefits decreased $115.9 million, or 5 percent, in 2008. Included in total
salaries and employee benefits are merger charges totaling $133.4 million in 2008 and $158.6 million in 2007.
The year-over-year decrease in salaries and employee benefits cost is the result of ongoing merger-related and
other personnel-related efficiencies, evidenced by reductions in headcount. At December 31, 2008, Regions had
30,784 employees compared to 33,161 at December 31, 2007. Lower incentives driven by a deteriorating
business environment in 2008 were also a factor.
Regions provides employees who meet established employment requirements with a benefits package that
includes 401(k), pension, and medical, life and disability insurance plans. New enrollment in the Regions pension
plan ended effective December 31, 2000. New enrollment in the legacy AmSouth pension plan ended effective
with the merger date, November 4, 2006. Former AmSouth employees enrolled as of November 4, 2006 continue
to be active in the plan, but no additional participants will be added. Effective September 30, 2007, the two
pension plans merged into one plan. Regions’ 401(k) plan includes a company match of eligible employee
contributions. At December 31, 2008, this match totaled 100 percent of the eligible employee contribution (up to
six percent of compensation). See Note 19 “Pension and Other Employee Benefit Plans” to the consolidated
financial statements for further details.
There are various incentive plans in place in many of Regions’ lines of business that are tied to the
performance levels of employees. At Morgan Keegan, commissions and incentives are a key component of
compensation, which is typical in the brokerage and investment banking industry. In general, incentives are used
to reward employees for selling products and services, for productivity improvements and for achievement of
corporate financial goals. These achievements are determined through a review of profitability versus risk
management. Regions’ long-term incentive plan provides for the granting of stock options, restricted stock,
restricted stock units and performance shares. See Note 18 “Share-Based Payments” to the consolidated financial
statements for further information.
Net Occupancy Expense
Net occupancy expense includes rents, depreciation and amortization, utilities, maintenance, insurance,
taxes, and other expenses of premises occupied by Regions and its affiliates. Occupancy expense increased $28.4
million, or 7 percent, in 2008 due primarily to new branches opened and rising price levels. Included in net
occupancy expense were merger charges of $3.3 million in 2008 and $33.8 million in 2007, reflecting costs to
vacate leases due to the merger.
Furniture and Equipment Expense
Furniture and equipment expense increased $33.2 million to $334.5 million in 2008. This increase is due
primarily to the increased depreciation and maintenance expense associated with capital additions, including new
branches opened in 2007 and 2008. Included in furniture and equipment expense were merger charges of $5.0
million in 2008 and $4.9 million in 2007.
Professional Fees
Professional fees are comprised of amounts related to legal, consulting and other professional fees.
Professional fees increased $62.2 million to $214.2 million in 2008. Included in professional fees during 2008
and 2007 were $7.4 million and $34.6 million, respectively, of merger-related charges. The 2008 increase is
primarily due to higher legal expenses incurred at Morgan Keegan.
Amortization of Core Deposit Intangibles
The premium paid for core deposits in an acquisition is considered to be an intangible asset that is amortized
on an accelerated basis over its useful life. As a result, amortization of core deposit intangibles decreased 14
percent to $134.1 million in 2008 compared to $155.3 million in 2007.
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