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Regions Financial Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed March 1, 2007
Period End
December 31, 2006
In the record · 2016–202610-K1210-Q328-K207

RF filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 207 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Mar ’20Mar ’20
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  3. FY2024 annual report10-K · Feb ’25Feb ’25

01—Abstract

Summary

Summary of the 10-K filed March 1, 2007. Cited figures are marked; the original filing is the authoritative source.

Regions Financial Corporation's Form 10-K for fiscal 2006, filed March 1, 2007, reports that the company completed its merger with AmSouth Bancorporation on November 4, 2006, which transformed its balance sheet.

At December 31, 2006, Regions reported total consolidated assets of approximately $143.4 billiona, deposits of approximately $101.2 billion and stockholders' equity of approximately $20.7 billion, compared with $84.8 billion of assets and $10.6 billion of equity at year-end 2005. Net income available to common shareholders was $1.35 billion, or $2.67 per diluted share, up from $1.00 billion ($2.15 per diluted share) in 2005. Excluding merger-related charges of $60.3 million after tax, diluted earnings per share were $2.79 in 2006, compared with $2.38 in 2005.

Net interest income rose to $3.35 billionb from $2.82 billion, and the net interest margin increased from 3.91 percent to 4.17 percent. The filing describes a company in integration mode. Management expects about $400 million in annual cost savings from the AmSouth merger, reaching the full run rate in the second quarter of 2008, and estimates roughly $700 million in one-time merger costs.

The company must divest 52 branches with approximately $2.8 billionc of deposits, expected to close in the first quarter of 2007. Management also said it expects some compression of the net interest margin in 2007 as the full-year effect of the AmSouth merger is reflected. Credit metrics remained sound in 2006: net charge-offs were 0.22 percent of average loans, the provision for loan losses fell to $142.5 million from $165.0 million, and non-performing assets declined to $379.1 million.

Management expects losses to increase modestly in 2007. Capital remained above regulatory requirements. The Tier 1 capital ratio was 8.07 percent and the total capital ratio was 11.54 percent at year-end 2006.

The board approved an additional repurchase authorization of 50 million shares in January 2007, and the quarterly dividend was raised to $0.36d per share from $0.35. The company also agreed on January 19, 2007 to sell its non-prime wholesale mortgage unit, EquiFirst Corporation, to Barclays Bank PLC for an estimated $225 million, with closing expected in the first half of 2007.

02—Key points

Key Highlights

  1. Total assets reached $143.4 billion at December 31, 2006, up from $84.8 billion a year earlier, driven primarily by the November 2006 AmSouth merger, which added approximately $57.8 billion of assets (including excess purchase price).
  2. Diluted EPS was $2.67 in 2006, up from $2.15 in 2005; excluding merger charges, diluted EPS was $2.79 versus $2.38 in 2005.
  3. Net interest income increased to $3.35 billion from $2.82 billion, and the net interest margin widened to 4.17 percent from 3.91 percent.
  4. Management targets $400 million in annual merger cost savings by the second quarter of 2008, against roughly $700 million of estimated one-time integration costs.
  5. Credit quality was stable: net charge-offs were 0.22 percent of average loans, and non-performing assets fell to $379.1 million.
  6. Tier 1 capital ratio was 8.07 percent and total capital ratio was 11.54 percent at year-end 2006, both above well-capitalized levels.
  7. The company agreed to sell EquiFirst to Barclays Bank PLC for an estimated $225 million and approved a new 50 million share repurchase authorization in January 2007.

03—Questions

Frequently Asked Questions

  1. How did the AmSouth merger change Regions' size and financial profile?

    The merger closed on November 4, 2006 and was accounted for as a purchase. Total assets grew to $143.4 billion from $84.8 billion, deposits to $101.2 billion from $60.4 billion, and stockholders' equity to $20.7 billion from $10.6 billion. The filing says the combination created a top 10 U.S. bank holding company. Because AmSouth's results were included only from November 2006, year-over-year comparisons are significantly affected.

  2. What integration savings and costs does management expect?

    Management estimates about $400 million of ongoing annual cost savings, with the full run rate expected near the end of integration in the second quarter of 2008. It estimates roughly $700 million of one-time merger-related costs, of which $88.7 million was expensed in 2006 and $185.4 million was included in excess purchase price at year-end. The integration also includes closing about 160 branches in close proximity to one another.

  3. What is the outlook for net interest margin and credit costs in 2007?

    Management said it anticipates some compression of the net interest margin in 2007 as the full-year impact of the AmSouth merger is reflected. For credit, it expects commercial loan losses to be broadly unchanged from 2006 under moderate economic growth, with higher losses possible from commodity prices, interest rate increases or slower growth. It expects net consumer loan losses to rise slightly above 2006 levels and says real estate construction losses will be higher than in recent periods.

  4. What capital return actions did Regions announce?

    In 2006 Regions repurchased 13.7 million shares for $490.4 million and paid $894.8 million in dividends, or $1.40 per share. In January 2007 the board approved an additional authorization to repurchase 50 million shares. In December 2006 the board raised the quarterly dividend three percent, from $0.35 to $0.36 per share.

04—Continue

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