Regions Bank 2010 Annual Report Download - page 57

GENERAL
The following discussion and financial information is presented to aid in understanding Regions financial
position and results of operations. The emphasis of this discussion will be on the years 2010, 2009 and 2008; in
addition, financial information for prior years will also be presented when appropriate. Certain amounts in prior
year presentations have been reclassified to conform to the current year presentation, except as otherwise noted.
Regions’ profitability, like that of many other financial institutions, is dependent on its ability to generate
revenue from net interest income and non-interest income sources. Net interest income is the difference between
the interest income Regions receives on interest-earning assets, such as loans and securities, and the interest
expense Regions pays on interest-bearing liabilities, principally deposits and borrowings. Regions’ net interest
income is impacted by the size and mix of its balance sheet components and the interest rate spread between
interest earned on its assets and interest paid on its liabilities. Non-interest income includes fees from service
charges on deposit accounts, brokerage, investment banking, capital markets, and trust activities, mortgage
servicing and secondary marketing, insurance activities, and other customer services which Regions provides.
Results of operations are also affected by the provision for loan losses and non-interest expenses such as salaries
and employee benefits, occupancy, professional fees, FDIC insurance, other real estate owned and other
operating expenses, including income taxes. In 2010, Regions’ non-interest expense included a $200 million
regulatory charge related to Morgan Keegan & Company, Inc. (“Morgan Keegan”). In 2008, Regions’
non-interest expense included a non-cash $6.0 billion goodwill impairment charge.
Economic conditions, competition, new legislation and related rules impacting regulation of the financial
services industry and the monetary and fiscal policies of the Federal government significantly affect financial
institutions, including Regions. Lending and deposit activities and fee income generation are influenced by levels
of business spending and investment, consumer income, consumer spending and savings, capital market
activities, and competition among financial institutions, as well as customer preferences, interest rate conditions
and prevailing market rates on competing products in Regions’ market areas.
Regions’ business strategy has been and continues to be focused on providing a competitive mix of products
and services, delivering quality customer service and maintaining a branch distribution network with offices in
convenient locations.
Acquisitions
The acquisitions of banks and other financial services companies have historically contributed significantly
to Regions’ growth. The acquisitions of other financial services companies have also allowed Regions to better
diversify its revenue stream and to offer additional products and services to its customers. From time to time,
Regions evaluates potential bank and non-bank acquisition candidates.
In February, 2009, Regions acquired from the Federal Deposit Insurance Corporation (“FDIC”)
approximately $285 million in deposits from a failed bank headquartered in Henry County, Georgia. Under the
terms of the agreement with the FDIC, Regions assumed operations of the bank’s four branches and provides
banking services to its former customers.
In September, 2008, Regions acquired from the FDIC approximately $900 million of deposits, primarily
time deposits, from a failed bank headquartered in Alpharetta, Georgia. Under the terms of the agreement with
the FDIC, Regions assumed operations of the bank’s four branches and provides banking services to its former
customers.
On January 1, 2008, Regions Insurance Group, Inc., a subsidiary of Regions Financial Corporation, acquired
certain assets of Barksdale Bonding and Insurance, Inc., a multi-line insurance agency headquartered in Jackson,
Mississippi. In addition, in December 2008, Morgan Keegan acquired Revolution Partners, LLC, a Boston-based
investment banking boutique specializing in mergers and acquisitions and private capital advisory services for
the technology industry.
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