M. List Underwood – Director of Investor Relations O. B. Grayson Hall, Jr. – Chairman, President and Chief Executive Officer David J. Turner Jr. – Chief Financial Officer, Senior Executive Vice President of the Company and the Bank John Asbury – Senior Executive Vice President, Head of Business Services Group C.

Matthew Lusco – Senior Executive Vice President and Chief Risk Officer Ellen Jones – Senior Executive Vice President, Chief Financial Officer-Business Operations and Support.

Kevin St. Pierre – Sanford C. Bernstein & Co., LLC Paul J. Miller – FBR Capital Markets & Co. Keith E. Murray – International Strategy & Investment Group LLC Eric Wasserstrom – SunTrust Robinson Humphrey, Inc. John Pancari – Evercore Partners, Inc. Kenneth M. Usdin – Jefferies LLC Betsy L. Graseck – Morgan Stanley & Co. LLC Ryan Nash – Goldman Sachs & Co.

Brian D Foran – Autonomous Research US LP Matthew H. Burnell – Wells Fargo Securities LLC Marty Lacey Mosby – Guggenheim Securities LLC Sameer Gokhale – Janney Montgomery Scott LLC Gaston F. Ceron – Morningstar Research Steven Tu Duong – RBC Capital Markets LLC Vivek Juneja – JPMorgan Securities LLC Christopher W. Marinac – FIG Partners LLC Matt D.

O'Connor – Deutsche Bank Securities, Inc. .

Good morning, and welcome to the Regions Financial Corporation's Quarterly Earnings Call. My name is Paula and I will be your operator for today's call. I would like to remind everyone that all participant phone lines have been placed on listen-only, at the end of the call there will be a question-and-answer session.

(Operator Instructions) I will now turn the call over to Mr. List Underwood to begin..

Thank you, operator and good morning everyone. We appreciate your participation this morning on our call. Our presenters today are Grayson Hall, our Chief Executive Officer; David Turner, our Chief Financial Officer. Other members of management are here and available to answer questions as appropriate.

Also, as part of our call today, we’ll be referencing a slide presentation that is available under the Investor Relations section of regions.com.

Finally, let me remind you that in this call, and potentially in the Q&A that follows, we may make forward-looking statements, which reflect our current views with respect to future events and financial performance. For further details, please reference our forward-looking statement that is located in the appendix of the presentation.

With that said, I will turn it over to Grayson..

Good morning, we appreciate your interest in Regions and participation in our first quarter 2014 earnings call. Today, we reported earnings of $311 million or $0.22 per diluted share, a solid start to 2014. During the quarter we grew loans, we grew deposits and we grew a number of quality households, all while effectively managing expenses.

On an ending basis, total loans increased $1.1 billion over the previous quarter and $1.7 billion over the first quarter of last year. Total review and reviewed loan production was up 2% year-over-year. Importantly, loan growth was more broad-based across our product lines and across our margins.

Business lending momentum continue, led by growth in commercial and industrial loans. After years of deliberately derisking investor real estate portfolio, we achieved linked quarter growth. On the consumer side, loans continue to be impacted by the residential mortgage market in the first quarter.

But were somewhat offset by the growing demand for automobile loans. In light of an improving, but still challenging economic backdrop, we remained focused on things that we can control such as provide a high quality customer service.

in that reward we were recently recognized by the Temkin Group, as a top rated bank in the 2014 National Customer Experience ranking, scoring 10 points ahead of the banking industry average.

Our team members work hard everyday listening to our customers, in understanding and meeting their needs, which ultimately will result in a greater customer loyalty. We divide our markets across 16 states into 19 different areas. And in this quarter, we achieved net checking account and credit card growth in all areas.

In addition, we grew quality households in all areas including consumer, business and wealth management. By adhering to our strategy reset Regions' three equity to serving our customers, we were also deepening customer relationships.

We want to be the first choice in our markets when it comes to beating customers financial needs, whether through quality customer service, superior competitive products or enhanced alternative delivery channels.

As part of our efforts we further improved efficiency and better serve our customers we continue to rationalize our delivery channels with recent focus on our branch channel. As you may recall, we consolidated a number of offices in the first quarter. While at the same time we invested in new technology and new service formats.

We continue to look for opportunities to improve the customer experience at our branches with innovations and technologies. By adapting our delivery channels to how our customers want to bank, we will be able to meet more their needs delivered better value and enhance loyalty.

We remained committed to continuously enhancing our risk management infrastructure. It is the important part of our culture and it is essential to the strength and stability of the organization. As such our asset quality continue to improve and our balance sheet is strengthening.

Our net charge-off ratio was 0.44% the lowest level since third quarter 2007. In addition our non-performing loans continue to decline. We’ve an ongoing and robust capital planning process that is designed to ensure the efficient use of capital while maintaining a long-term approach to capital allocation in distribution.

During the first quarter, we were pleased to receive no objection to our planned capital actions from the Federal Reserve. Our top priority capital deployment continued to be reinvesting our business to achieve organic growth followed by regional dividend payout and appropriate share repurchases.

At some point we may consider strategic opportunities consistent with the companies risk tolerance. To sum up, our first quarter’s results reflected a solid start to 2014. We obviously still have plenty of work to do and we continue to successfully execute our business plans to create long-term value for our shareholders.

With that I’ll turn the call over to David to discuss first quarter results in more detail.

David?.

Thank you, Grayson, and good morning, everyone. Since Grayson already covered kind of overall earnings, I’ll jump right into the details. So let’s start with loans. We achieved a solid quarter of growth with loans up $1.1 billion as any balances were $76 billion.

Loan growth continues to be driven by business lending, which increased 2% from the end of last quarter. A majority of this growth was attributable to commercial and industrial loans, which increased 4%. This was led by general industry with middle-market commercial lending across many of our market areas.

In addition, we also achieved growth by our specialized industry and asset-based lending teams. And, furthermore, our commercial line utilization increased 170 basis points and commitments from new loans increased 2% to $39 million.

Investor real estate loans increased $242 million from the end of the fourth quarter, which marks the first time we achieved growth in this portfolio in over four years and this portfolio has been declining as a result of our de-risking efforts.

This growth was primarily attributable to an increase in new home builder and multi-family projects, providing more opportunities to lend within the parameters of our risk appetite. And we expect modest growth in this portfolio over the remainder of this year.

Indirect dollar lending achieved another solid quarter of growth as we increased the average number of loans per dealer by 13%. Production increased 4% and loans increased $178 million or 6%. We expect this portfolio to grow as the demand for automobiles continues to rise and due to our efforts to increase pull-through rates from the dealers.

As expected, credit card balances declined following a seasonally high fourth quarter. However, we achieved the highest level of sales for new credit cards, with sales up 14% in the first quarter. Also, we’ve recently expanded our offering of credit cards to non-Regions customers residing within our geographic markets.

Our home equity portfolio declined linked quarter as the pace of customer deleveraging within the home equity lines of credit was only partially offset by the new production in the home equity loan product. This fixed rate home equity loan product continues to grow and balances increased 5% over the previous quarter.

Looking ahead, based on what we know today and our economic forecast, we continue to expect 2014 loan growth to be in the 3% to 5% range. Let’s take a look at deposits.

Average deposits increased $874 million or 1% from the fourth quarter and deposit mix continues to improve than the first quarter as low-cost deposits increased to 90% of total average deposits. Deposit costs remain at a historical level of 12 basis points and total funding costs declined to 33 basis points in the first quarter.

We continue to expect 2014 deposit growth to be in 1% to 2% range. Let’s take a look at how it’s impacted our results. Net interest income on a fully taxable equivalent basis was $831 million, a decline of $15 million or 1.8% from the previous quarter.

The decline was attributable to fewer days in the quarter and the impact of the low interest rate environment on loan yields. However, the net interest margin remained steady from the previous quarter at 3.26%, largely reflecting the offsetting impacts of higher tax balances and declines in premium amortization in our investment portfolio.

We remain asset sensitive and would expect to benefit from increases to both short-term and long-term rates, primarily due to our adjustable rate loan portfolios. Further increases in long-term rates would continue to benefit the margin, but at a somewhat reduced pace given the prepayment and premium amortization have already slowed considerably.

Recently, declines in deposit costs, liability management actions and increases in long-term rates off their mid-2013 lows, have more than offset margin pressure due to a continued low rate environment. These offsets, however, will have a lessened impact going forward.

That said, with rates remaining at approximately their current level and with our expectation for balance sheet growth, we expect to maintain a relatively stable margin in 2014. Let’s move onto non-interest revenue. First quarter non-interest revenue was down $88 million from the previous quarter.

However, as a reminder, the fourth quarter included benefits of $56 million related to leveraged lease terminations and the sale of investments and low-income housing that were not repeated at the same magnitude in the first quarter.

Services charges were down 7% linked quarter and were driven by lower seasonal trends and continued changes in customer behavior. As expected, mortgage income was lower linked quarter as production was down 22% and the mix of new mortgages continued to be driven by new home purchases.

Capital markets income declined in the first quarter to $13 million and was primarily attributable to a slowdown in demand for customer derivatives and loan syndications, which were seasonally high in the fourth quarter. Our Wealth Management Group delivered strong results for the quarter.

Revenue was up 6% over the last quarter, led by higher investment services fees, higher insurance commissions and solid increases in investment management and trust income. We continue to add high quality wealth investors, financial consultants and insurance brokers to help, uncover and meet the needs of our clients. Let’s take a look at expenses.

Adjusted non-interest expenses totaled $846 million in the first quarter, down 4% linked quarter. The fourth quarter included a $58 million regulatory charge and $5 million of expense related to branch consolidations.

Additionally, as you’re all aware, last quarter we transferred $686 million of primarily accruing first lien residential mortgages classified as troubled debt restructurings to held for sale. We finalized to sell these loans during the first quarter and actual expenses were $35 million less than originally estimated.

Salaries and benefits declined $9 million or 2% linked quarter. In the first quarter payroll taxes were seasonably higher, but were more than offset by lower employee benefits and headcount. Staffing levels have declined from the end of last year due to branch consolidations and other efficiency initiatives.

Additionally, legal and professional fees declined $11 million or 24% from the previous quarter. And you may remember that last quarter we announced plans to consolidate 30 branches and incurred a $5 million related charge. An additional $6 million of expense was reported this quarter with respect to that effort related primarily to lease branches.

So overall, expenses remain a constant focus and internally receive a great deal of scrutiny. As a result, we continue to expect full year 2014 adjusted expenses to be lower than 2013 adjusted expenses. Let’s do on the asset quality, we continue to make good progress in the first quarter as all our credit metrics improved.

Net charge-offs totaled $82 million which represents 0.44% of average loans. This is the lowest net charge-off ratio, we have experienced since the third quarter of 2007. The provision for loan losses was $2 million or $80 million less than net charge-offs.

Our non-performing loans declined 1% linked-quarter and inflows of non-performing loans remain steady. At quarter end, our loan loss allowance to non-performing loans or coverage ratio was 118%.

Notably, criticized and classifieds loans continued to decline, with commercial and investor real estate criticized and classified loans down 1% from the fourth quarter. Additionally, total delinquencies decreased 9% linked-quarter. And based on what we know today, we expect favorable asset quality trends to continue.

However, at this point of the cycle, volatility in certain metrics can be expected. Let's take a look at our capital and liquidity. Our capital position remains strong as our estimated Tier 1 ratio at the end of the quarter stood at 11.9%. Our estimated Tier 1 common equity ratio was 11.4%, an increase of 20 basis points from the fourth quarter.

We estimate our fully phased-in Basel III common ratio Tier 1 ratio to be 10.8%, well above the minimum threshold. Liquidity at both the bank and holding company remains solid with a loan-to-deposit ratio of 81%.

And lastly, based on our understanding of the proposed rule, Regions remain well-positioned to be fully compliant with respect to the liquidity coverage ratio. As Grayson mentioned we were pleased with our overall CCAR results and a Federal Reserve having no objection to our plan of capital actions.

So in summary, we off to a good start in 2014, and importantly our first quarter results demonstrate that our focus on identifying and meeting more customer needs is generating steady and sustainable growth overtime.

Consistent with our Regions 360 approach, we believe that if we remain focused on our customers have an engaged work force and continue to make positive impact to our communities then ultimately we will drive long-term shareholder value. With that I’ll turn it back over to List for instructions on the Q&A portion of the call..

Thank you, David. We are ready to begin the Q&A session. In order to accommodate as many participants as possible this morning, I would ask that each caller please limit yourself to one primary question and one related follow-up question. Let’s open up the line now for questions..

(Operator Instructions) You have a question from the line of Kevin St. Pierre of Sanford C. Bernstein..

Good morning Kevin..

Good morning Grayson. And it would appear with your current loan growth guidance and the current dividend and the share repurchase that's been approved, that capital will continue to grow this year, beyond that 11% Basel III Tier 1 common. And it looks like your total payout ratio is going to be in the 55% to 60% range.

Do you anticipate if things go as planned, that you would get more aggressive with next year's CCAR? Or how should we think about that?.

Yes, Kevin this is David. So we put together our capital plan based on what we believe to be the right thing to do.

We laid down our priorities just like we’ve spoken about that a number of times of first, why do we use our capital to generate organic growth and to support our businesses, we believe that’s what capital was given to us for and the generation of new capital should be used for organic growth.

We also then want to get our dividend up some and more consistent with the peer group and you’ve seen a movement there. Our next priority is really use the capital in the business the smartest way we can and that includes transactions like growing portfolios. So we are acquiring a credit card portfolio.

We’ve looked at and continue to look at acquisition opportunities whether they be banks or non-banks when the market and the environments are right for that and when that does it, we don’t use our capital for those items, just to return to the shareholder. So that the capital then continue to pile up on the balance sheet..

:.

Kevin this is Grayson, I would characterize our capital plan as either aggressive or conservative.

We try to put together a plan that we believe is appropriate for the opportunities we see in the market to the extent that the economy outperforms our forecast or to the extent that some of the opportunities we believe that exist don’t prove that, and we accumulate more capital than we had anticipated then we’ll make a different, but also still an appropriate discussion for next year’s capital plan.

So as the economy matures and see what happens we adjust, but we are hopeful that we have some opportunities to deploy our capital effectively this year..

Thanks and just a related follow-up so, assuming at some point you are going to have some reasonable buffer over 7% to one common minimum so say 8%, 8.5%.

Do you anticipate a time when you are able, I don’t know if this is 2015, 2016 you are able to manage your capital ratios down with either a special dividend or some sort of payment total payout in excess of 100% or is this center, are we in a situation where you are growing or have to organically grow into those new ratios?.

No I think the capital planning process improves each and every year. We are working on our processes continuously improving the quality of our data, quality of our models, quality of our forecast and as we build confidence internally and confidence externally, I think the opportunities to deploy our capital more effectively will occur naturally.

We think we’ve made the appropriate call this year on our capital plan and as things mature we’ll adjust that call as appropriate. And I do think that to your point that things continue along the path our own, will continue to shrink that our capital position and be afforded opportunities to consider how we deploy that..

Great, thanks very much..

Your next question comes from Paul Miller of FBR..

Yes, thank you very much. On the loan growth, can you talk about, a little bit, what are you seeing from your customers? You talk very positively about continued loan growth.

But what areas are you seeing the most interest, and what are your customers telling you?.

Paul, let me sort of describe it this way I think, what’s different this quarter from last quarter is that we saw more diversity of loan demand of both from a product perspective and from a geographic perspective, I would still say that on the commercial side of our balance sheet, we are still seeing more demand in the upper-end of the middle-market and in large corporate lending.

There is still more demand there than elsewhere. The lower middle market and the small business customers still to a certain extent, still recovering. And the demand there is still softer than what you would hope at this part of the cycle. On the consumer side, the consumer has strengthened quite nicely over the last several quarters and deleveraged.

We see demand there in both as we mentioned in a moment ago in credit card and indirect auto lending and increases in home purchases in mortgage. We have seen a big shift in our mortgage production, production is down. The home purchase is actually up, we are probably at a mix of about 70% purchase and 30% refinance at this junction.

We are seeing that on the indirect auto side still a good growth. We are having obviously being much more discipline from a credit perspective in that space.

But still see opportunities there, the credit card we saw – we are offering a lot of new card accounts to customers, balances are seasonally a little low at this juncture, but we are pleased with the progress we are making. I think, when you look at the overall loan demand, we would still like to see the diversity of that demand improve further yet.

But I would say that it made a very strong progressive move in the past quarter. We are more pleased with how broad it is today than we were in the last time we spoke..

And a one quick follow-up on the auto side, you said, that you expect to increase the pull-through.

Do you think that area is getting very over competitive because you hear some banks saying that it could be getting over here?.

Well, I think clearly the growth in that market all of our teams and risk management when they see a particular product growing rapidly and risk management disciplines requiring to start looking at that particular product sector more closely.

There is a lot of participants in the auto lending space and you are seeing growth loan demand in there, particular category. I think you have as an individual institution, you have to decide what part of that markets you want to participate in.

We have drawn some pretty bright lines about we are re-participate, we believe we can do that and still show growth. And we are still very confident in the production replacing all our balance sheet..

Paul, this is David, I will add to that. One of things, we think about indirect is who we are doing business dealership that we are doing business with. Now we have today about 2,000 dealers that we do business with, normally 8,000 that are actually in our geographic marketplace. So only about 25% of those that we are banking in today.

I think that dealership election is very important for us and we are building the relationship that we need, the speed of action that we need and we feel very good about that credit..

Hey, thanks a lot guys..

Your next question comes from Keith Murray of ISI..

Good morning, Keith. .

Thanks, good morning guys. Now just touching on the fee line items for a second, if you look at the service charges on deposits were down 6% year-over-year. You guys talked you had pretty good growth in checking accounts, can you just talk about the dynamic that’s going on there on a year-over-year basis..

I will make a couple of comments, then ask David to come on as well. Clearly, what we are seeing is from a service charge perspective first quarter is typically seasonally soft, and as you compare against the same time last year, this year we are softer than last year.

We do believe part of that was weather related, but we also believe part of that is shifts and consumer behavior, the consumers in much better shape from a financial perspective than they were a year ago.

And we are seeing much more discipline on the part of the consumer in terms of how they manage their accounts, both from making sure they maintain balances necessary to overwrite any service charges amount that occur as well as discipline around over drawing those checking accounts.

And so we’re seeing a real marketed improvement in how customers are managing their checking accounts. That being said, we still – we still are encouraged by the number of new quality accounts that we are adding to our balance sheet. And believe that there is an opportunity for us to continue to grow that part of our business going forward..

Yes I think Grayson is right on the growing the number of customers, I think it is going to be important to us. As we look at our customer base, really want to build deep relationships with those customers, we offer advice guidance and education to these customers to help them with all of our banking products.

And we think we’ve seen a change in the customer behavior not only in the industry, a service charge down in industry, but we see at Regions as well, which we think is a good thing.

We think we have a good quality customer base, and we are looking to develop those new products, that will serve our existing customer base as well as new households that we are growing, so all-in-all we have seen a decline in place like overdraft fees, but looking to gain on the different service charges and different products that we offer..

Thanks.

I was just going to ask the follow-up along those lines on the deposit advance product, which you’d be willing to give us sort of a revenue number that you might be giving up and give us more color on the traction that you have seen articles in American Banker et cetera, you guys are making progress, adding any consumers from tiered pricing et cetera.

Just how much traction are you seeing there on the replacement type products?.

I think that clearly what you’ve seen is that we are transitioning away from that particular product and since the first of the year, we not being adding any new customers for that particular product. And we are seeing normal customer attrition out of that product over the next couple of quarters.

We will be offering a number of different transitional alternatives to our customers. It’s a little early for us to give you the benefit number on what the revenue impact will be because we need to see how some of these transition strategies how effective they are.

We are hopeful that we can transition a number of these customers to more traditional credit based products, but that’s yet for us to prove..

Thank you..

Your next question comes from Eric Wasserstrom of SunTrust Robinson Humphrey..

Hi, Eric..

Thanks very much. Hi, good morning.

In terms of the credit experience, was there anything sort of interesting or unusual going on with respect to recoveries, particularly in the commercial space?.

Yes, nothing unusual that we see – we went into de-risk a lot of credit during the tough times and we sold some credit too. So the recovery opportunities are still clearly are there, but we are seeing some recoveries but nothing unusual has cropped up that we are seeing..

Yes. We actually look at the – put the recoveries on a year-over-year basis. Recoveries are relatively flat on a dollar basis and given our lower non-performing loan base, on a percentage basis recoveries are actually up to be broad-based amongst all of the category particularly in commercial is what we are seeing those recoveries coming fast. .

But nothing unusual this quarter on recovery is tracking about as we would have expected..

And then just my related follow-up just sort of steps back for a moment, if on a core earnings basis, we annualized the quarter to about $0.85 of earnings, but with virtually no provision presumably as that number moves back towards some sign of normalized range.

What offsets the impact of the higher credit loss experience range for the P&L?.

Well the increases that we see coming it’s a timing issue right. So we continue to have no higher reserve covers than our peers, so little more credit leverage left relative to peers. We see economic expansion coming at some point in time a higher rate environment at some time.

So that overall generally increases an economic activity will lift our NII and lift our NIR and execution on our Regions 360, which is a needs based program to bring the entire bank to our customer base.

Those are the main areas we see in terms of growing our revenues streams to mitigate what a normal provision would be, the amount at which we can’t tell you today because credit is going on the books today as still the most pristine credit, we looked at regions and in the industry over time.

So it’s really a timing issue that’s hard to tell you exactly how and what dollar amount offset would be..

So the credit quality continues to improve and continues to improve with a pace that generally outpaces our internal projections for that. So we’ve been pleased by that, encouraged by that, the portfolio as David said our loan portfolio today is a much stronger, much better diversified portfolio that we’ve had in the past.

To your point is that if you are showing no growth and that credit leverage goes away you got a huge – huge gap to fill, but you do have to recognize the growth on one hand we are trying to achieve and at the same time the expense management does once that we put in place to continue to try to drive towards a good earnings result as credit leverage dissipates..

Thanks very much..

Your next question comes from John Pancari of Evercore..

Good morning, John..

Good morning. On that three topic, can you just remind us what do you think is adequate long-term loan loss reserve ratio at Regions to the improving – much improved tech environment..

Yes, John, this is David. So it’s a great question, we try to – we have given a range before then we talked the reserve would be in that 1.5, 2 range clearly credit has been more pristine that are longer than we had originally anticipated when we put that out. I think we are 44 basis points worth of loss today. We see that range drifting south.

It’s hard to tag that is that total point on the low end. And I think our best guidance we can give you is we have a pretty good model that we feel comfortable with, and we got to let that model work each in every quarter. And it will be what it is. With that being said, if you look at the credit metrics, we see it going south of that range.

And where it ends up is your guess from there..

Only credit quality is going to drive that number and we stay focused on our methodologies, our process, modeling, credit losses, and we’ve got to make sure that those processes have a lot of rigor, lot of discipline around them. Unlike David it’s hard at this juncture to definitively tag where those ratios might eventually land..

Okay. All right and then separately, one of you can talk a little bit about the very modest decline in loan yields that we saw in the quarter.

But specifically, if you can give us some color on the new money yields, where you’re booking new loans at this point versus the current portfolio yields? And then separately how that comes into play in terms of your margin outlook for relatively stable margin, is that implied, do you expect loan yields to holding in there if not hit higher yield of, thanks..

Yes, John. Thanks, so as you mention we expect our margins to be relatively stable for the remainder of the year. And we define that as one or two points either side of the 326 we have today.

I’ll see a prolonged low interest rate environment puts more pressure on loans as old loans, higher priced or fixed rate loans mature, and new loans go on the books. And from a pricing standpoint clearly there is pressure on pricing in the loan portfolio in particular on the commercial side.

But we believe that pricing has been – we’re booking relatively stable there. You saw a slight decline in loan yields for us. Mixed changes with loans can’t make a difference where there is a consumer loan or commercial. And clearly we grew most of our loan growth that was in the commercial space. But those spread have been in the 225 to 250 range.

They are kind of holding in there, it’s being on the credit that you’re putting on the books. And so I think you should expect with the rate environment where we are right now. That you’ll see some modest impression on loan yields. We have had as you know deposit and liability management strategies to help offset the funding costs.

Now we are down to 33 basis points of funding. And so, all that’s been taken into account on the margin guidance that we gave you. With all that said, if the rate environment stays lower or longer than we expect we will have margin compression. Right now we still are confident enough to give you the guidance on a stable margin going forward for 2014..

Okay. Thank you..

Your next question comes from Ken Usdin of Jefferies..

Hey, Ken, good morning..

Hi, good morning, Grayson. Can I ask you guys a question about expenses and efficiency? This quarter was another good result for expenses that even included the FICA balance. So I’m wondering if you can help us understand how much was that elevated first quarter bump.

And then also, how you expect the trajectory of both dollars and/or even the efficiency ratio, as we go through the year..

Ken, so if you look at our efficiency ratio, our efficiency ratio actually ticked up just a bit in the quarter. I would tell you that’s more of a revenue side of the equation than the expense side, although we focus pretty intensely on expenses during the quarter.

That being said, I believe that as you think about the remainder of this year on the efficiency ratio, I mentioned it last quarter. We’re sticking with it. We believe the efficiency ratio will tick down from where it is today and we think it will finish in the year in the lower 60% range. So we had a lot of pluses and minuses.

We had incentives, we had pension, we had FICA. All that, Ken, is taken into account in terms of that go forward guidance, in terms of the lower 60% range for efficiency this year..

Okay. And as my follow-up on that, then, can you help us understand then approximately like what was at least a FICA balance? I would presume that tension was a helper. So I would presume that $846 million adjusted included that seasonal spike.

I’m just wondering if you could help us understand how much that would have been, and do we then presume that we trail off of that from here?.

I think in total if you look at dollars, it’d be in that $11 million to $12 million range for payroll..

Okay. Got it. Thanks, guys..

Okay..

Your next question will comes from the Betsy Graseck of Morgan Stanley. .

Good morning, Betsy..

Hi, good morning. Couple of questions; one on the loan growth. I know you gave the 3% to 5% guidance. And that seems like a relatively wide range as you’re sitting here, given what you saw into March and what you are booking right now.

Is there a reason why you can’t tighten that range a little bit from what you gave previously?.

I think as we look at it right now, we’ve given guidance on the 3% to 5%. Clearly we’re one quarter into the year. We think we had some encouraging group in the first quarter. Our pipelines are healthier today. We’ve seen some real optimism in the last, say, six weeks or so as some of the weather-related issues have dissipated.

I would say we’re not at the point yet that we feel comfortable with tightening up that forecast. Clearly as the year progresses we will gain confidence in that, but at this juncture we still believe the 3% to 5% range is appropriate..

Okay. And then, I’m just thinking about it in the context of how it impacts the NIM, in line with the prior question.

As you are looking out on the NIM, you talked a bit about the loan yield impact, but what about the cost of funds? Are there things you could do incrementally on that side, as well? You've got some high-cost debt outstanding, some sub-debt.

Is there anything that you could do there to lower the funding costs?.

Yes, Betsy, we continue to look at for opportunities when it’s economical to rationalize our funding side. You've seen the actions we’ve taken up to now on repaying some of our debt. The math really has to hold up for us, so we look at it everyday. We realize we have some expenses debt out there.

And so, it’s on our radar screen, but we do want to make sure that it’s economical when we do it and that’s probably been the biggest hold up there..

Okay.

And by economical, you're talking about impact of whatever swaps, hedges?.

We’re a reasonable payback, in terms of the cost that we’re going to incur the one-time charge to capital, in income statement and capital and how quickly does – that we get payback to that..

Okay.

In other words, not refinancing it, but just taking it down?.

We’re refinancing it cheaper (Multiple Speaker) or taking it out completely either way..

Either way. I mean there is still –the math is still the same..

Yes, okay. Thank you..

Your next question comes from Ryan Nash of Goldman Sachs..

Good morning, Ryan..

Good morning, Grayson. If I can ask two unrelated questions, first is, when I look at the capital market side, it was down over 50% in the quarter. And you did call out a slowdown in syndicated loan volumes and customer derivatives, post a strong 4Q. But even beyond that, it does look like the slowdown was beyond prior quarters.

So how should we think about the bounce back from here? Do you expect that we should run at a similar rate to the current quarter, or do you think we should move back towards the higher level we were running pre-4Q?.

I think at this juncture, when we look at this Ryan, we have a strong Q4 and we had a strong 4Q and then we had softness in the first quarter more softer than we had anticipated, but nice recovery in the latter part of the quarter. And we still are pretty optimistic about sort of where it goes from here.

That being said, I think, the biggest change we saw was how much broader loan demand was across markets and product. And in particular, we pivoted on investor commercial real estate, which has been a declining portfolio for a number of quarters and actually have some reasonable growth this quarter in that segment.

So I think that as you look out in upcoming quarters, we still believe that there's an opportunity for us to continue to grow our loan portfolio. Our goal is to do that in a diversified and prudent manner..

Ryan, I'll add on the, specific to the capital markets with regards to what was happening. If you go back to the fourth quarter, you’ll see a very different rate environment, one where the 10-year, there was increasing people were using derivatives a lot more than they did in the first quarter.

So the first quarter rates declined quite nicely and as that happened, people were not – were willing to run a little more interest rate risk than they would otherwise.

So I think all things being equal as we expect rates to continue to climb – the pace of which is uncertain that as that expectation of a rate increase is coming, you would expect clients the demand more the use of derivatives and therefore big driver of our capital market revenue, 0.4..

Got it. And then you did a nice job early on outlining how you think about capital allocation and capital return.

But if I could just dig a little bit deeper – Grayson, can you share your philosophy or priority, in terms of how you are thinking about your risk tolerance for strategic transactions? And what, in particular, is it that you are looking for? Is it improving density across certain MSAs, building out the wealth management channel? And you guys obviously haven't done a big deal since AmSouth.

Just be helpful if you could just refresh what are your parameters, in terms of return hurdles and risk parameters..

When you look at capital allocation it sort of what we are looking at in terms of growing the company. We are looking forward to diversify our strategy, it doesn’t place a huge debt on any portion of our capital, but it actually places incremental bids in different parts of our business.

You’ve seen us allocating not only capital, but resources to our wealth management sector to try to grow that sector out, try to create a more diversified revenue stream for the company. And but also create new revenue streams that we weren’t previously enjoying.

I also think we look at that philosophically the same way we’ve a number of markets that we are very dominant in, but we also have a number of markets where our franchise is limited, that we love to see overtime has garnered the ability to expand the density of our franchise in those markets.

I do think we are looking for incremental opportunities that add up to be material as opposed to looking for transformational kind of opportunities..

Thanks for taking my question..

Your next question comes from Brian Foran of Autonomous Research..

Good morning, Brian..

Hi, good morning. I wondered if I could come back to the loan yield question, and maybe come at it from the other side, which is on – if I look back two years ago, your loan yields were materially below the industry average, about 40 bps, at least on the way I measure it.

And if I look today, you are kind of in line – and especially over the past year. While there has been price compression, it's just – with every bucket except credit card, your price compression has been a lot less than the industry.

How much of that is conscious repricing efforts on your part? How much of that is the markets or the borrower mix shift? Or just why aren't you seeing the same magnitude of price compression on the lending side that’s some of your peers are?.

Well, I think, I’ll answer in a couple of ways. Then I’ll ask John Asbury, our Executive in charge of Business Services just sort of add to it. I would say when you look at our portfolio that generally going into the recession, we had more variable rate notes than we did fixed rate as relative to peers.

And I also think if you look at our portfolio on the consumer side, we had an equity line portfolio that was priced materially below peer.

And so as you look at it today, you are seeing on the consumer side generally speaking loans that are going on our portfolio were priced higher and loans that are maturing off from our portfolio, on the business side we had to make some very specific decisions about in which markets and which more products that we will compete both on price and structure.

We believe we’ve been rigorous and disciplined in that regard. But generally speaking, corporate balance sheets are in better shape. And so, corporations that we are providing banking product today can demand appropriate pricing, given the risk characteristics of their company, which have improved dramatically.

And so, I do think we feel pricing pressure in our markets. We see that and we are trying to compete against that by competing on value of relationship as opposed to competing on price. That doesn’t mean that we aren’t subject to pricing price.

But that does mean, and I think that going into the recession we didn’t have as much discipline around pricing as we should have. We think we’ve largely corrected that and we believe we’re in better place today in terms of what we’re adding on to our books. But I’ll ask John Asbury to speak to that..

Grayson, you summed up very well. First thing I’d point to was your first point, which is we don’t run a large fixed-rate book. We’re about three-quarters variable rate. And so, we did not have to deal with run-off of higher-yielding fixed rates to the same degree as many of our peers did, we believe over the course of the past couple of years.

So that will be one issue. The second is, they’re same question. I mean we put pretty powerful disciplines in place in terms of – in sending and holding bankers accountable for pricing the loans. We did not have a price-driven strategy. That is how we choose to compete. So, yes, we need to be competitive. We use third-party benchmarking services.

We have a lot of mechanisms that cause the bankers to want to make sure that we’re paid appropriately for the extension of credit, and honestly I think those are the two big drivers from the business services perspective..

I’ll add two other things. If you’re referring to the brand in terms of how we compare to our peers; two things, one, the use of derivative interest rate swaps to hedge that risk that John just talked about in terms of the variable.

We say the price for not having those hedges in place, and that’s why our margin – and I forgot which caller had referred to our margin, had been lower for some period of time. So the maturing of the swap is more prevalent at some of our peers than it is for us. And so, as that gets unwound for them, you can see the margins working towards us.

The second big thing is purchase accounting and several of the peers who also works its way through the pipeline and while there’s still some more of that accretion, if you will, inuring to the benefit of the margin line for some, we didn’t have that.

So we had those two things, swaps and purchase accounting, are big drivers of why we don’t have that downward pressure as much as our peers do..

Thank you so much. That was a real thorough answer..

Your next question comes from Matt Burnell of Wells Fargo Securities..

Good morning, Matt..

Good morning, Grayson. Thanks for taking my question. Just two questions on the loan portfolio. First of all, you mentioned the utilization rate was up about 170 basis points. I don’t remember you saying what the ratio was at the end of the quarter.

And I’m curious if you would provide us sort of what you think your long-term target, or long-term average would be, and what benefit that might generate to net interest income?.

Yes, we'll get you the where, what, from, to, but, historically we have been over 50% in terms of utilization. And if I recall, we’re in that 45% range today in terms of utilization. So we still have room to go in terms of what it ultimately gets to. So I guess 45 minus 170 where we work, whatever that finance is..

Fair enough. And I guess just a bigger picture question for Grayson, I guess your consumer loans at this point are about 38% of total loans, those would come on, presuming there was normal levels of demand at higher rates than you would normally see for commercial loans.

How are you thinking about the dynamic over the next couple of years of growing the consumer loans and what benefit that might have to the margin over time and sort of how the portfolio ultimately balances out between consumer and commercial..

Yes, I mean I think that David and I have publicly stated a number of times we’d love to see, the mix of commercials to consumer loans more in that 50/50 range, since we have been saying that over the last three or four years it’s hardly moved..

Right..

Today the consumer portfolio is about 38% and that’s in spite of the fact that we reentered the dealer indirect business. And we repurchased back our credit card portfolio and reentered that business.

I do think we are encouraged by some of the progress we are making, quite frankly the loan demand in the consumer sector still is less than in the commercial segments. But we are still very much committed to grow on that consumer portfolio. We think that clearly the consumer has taken a much more disciplined approach to credit today.

And we think that’s a good thing. So do believe we have almost 4 million consumers would bank with us.

And we do believe that penetration into that book of credit products are still low relative to what we see in other peers, and we do believe over time, that we will be able to move the mix of consumer and commercial loans on our book, has just given in this market, with where loan demands at today, that’s become particularly challenging.

But we do believe over time that our efforts will prove to move that number directionally towards that 50-50 basis, but that’s going to take some time. And it’s going to take a stronger consumer driven market to do that..

Thanks for taking my question..

Your next question comes from Marty Mosby of Guggenheim..

Good morning Marty..

Good morning.

Wanted to ask you David, a little bit about the net interest margin and the two factors that we haven't talked about yet, which are the higher cash balances in liquid assets that you accumulated quietly finally over the last year, you've accumulated about $1 billion, which, in my calculation, is about 2 basis points on the margin that you kind of have in your back pocket, that you could use whenever you so deemed necessary.

So, how do you think about that, and what plans do you have to deploy some of that?.

Marty, you are right our cash balance, average cash balance did go up during the quarter, and there is a big driver that is our continued growth in deposits which we are always out there looking for good customer deposits. We realized that we need to put that cash, to work more efficiently which we will do.

We would like to be down in that, maybe just less than $2 billion range in terms of cash balances today, given that lack of a efficient functioning over night market. So you should not see us continuing to pile up cash at the Fed and continuing to see an increase that you did this past quarter..

And that’s a positive that you didn’t get this quarter that you forget in the future and the positive that you did get this quarter was the decline in premium amortization which although rates went lower, I guess cash flows and prepayments stayed low enough that you were able to reduce that amortization this quarter..

Yes, that amortization was helpful to us; it was a positive in terms of our net interest margin. The benefit that we see going forward us they are slowing of premium amortization is less and less. There is still some positives there.

So we just have to think efficiently how we put the cash to work, you spot on is just where do we put it, it’s the most meaningful to us.

We probably have loan growth and to fund loan growth appropriately priced, appropriate risk-weighted loan growth that’s what we are here for and if we can’t do that we put it in the investment portfolio while we weight. I think that’s the question about deleveraging, we look for opportunities there ourselves when the economics make sense.

So there are a couple of different places we can use the cash. We just have to find the most efficient needs of it..

And, Grayson, a big-picture question. When you're looking at the risk management practices that you're investing so heavily in, there's one thing which says you have to comply with all the regulatory requirements.

But what is going to make Regions different? How do you see the actual, tangible benefits of having better risk management? And all the things you're doing just being compliance, or we really making our risk management better?.

So, Marty it’s a great question and it’s one the entire industry is asking our sales, if it’s compliance for compliance sake I think you miss a great opportunity.

In this organization, we are trying to grow risk management all the way down to the front-line, making sure that our first line of defenses from risk standpoint are solid, our second lines are solid and third lines are solid. And we are driving a very strong cultural change to the company around risk management.

At the end of the day in investment, we are making a risk management has to make sense from a business perspective. It has to improve not only quality of our earnings, but the consistency of our earnings I think that we are trying to strike a healthy balance.

We are in the business and taking risk, but we are in the business to take improvement risk, and so I think that the question we ask ourselves everyday is not how we invest in risk, and compliance, and audit just for the sake of being in compliance, but really for how that we really change our company to make it a better company, to make it a company that is a better long-term investment to our share holders and a better long-term place for customers to bank and for our team members to be involved.

And I’ll just ask Matt Lusco. Matt’s our Chief Risk Officer right here I think it’s a great question Matt want to comment on it..

Hey, Marty I’ll add to that, over the last six months the loan was $59.2 billion and that’s really just more fine, really don’t consider operational loss and consulting costs will back our lost revenues from opportunity costs. That’s an incredible number compared to net charge-offs in the industry, it’s only $20.7 billion.

You really do have – have to have an infrastructure to manage that. We got an initiative and Regions if we talked a little bit about in the annual report this year called Regions ROA, which stands for Risk, Ownership, and Awareness and that really is ensuring that we are building out strong partnership between first and second line of defense.

And Grayson said, not compliance for the sake of compliance is to ensure that we are getting the maximum benefit out of all of our processes. We are identifying some internal costs of non-compliance. We want to track down the information is really measured, so we figure it is really a comprehensive quality insurance initiative..

Thank you, Marty..

Thank you..

Your next question comes from Sameer Gokhale of Janney Capital..

Good morning Sameer..

Thanks, good morning. I just had a couple of questions. So the first one was, you provided some good commentary around loan growth being somewhat broad-based. And I was just curious in terms of your loan commitments, it looks like last quarter they increased by $500 million.

And if I'm doing my math correctly, it looks like this quarter, loan commitments grew by $750 million to $800 million. And I was curious if that increase in loan commitments this quarter, and indeed the loan commitment themselves –$750 million to $800 million.

If you could speak to the mix of those commitments, where are you seeing, perhaps, increased demand? I know you had some growth, finally, in industrial real estate. Is that a significant chunk of the loan commitments this quarter? Or any other specific areas you might point to, as far as the loan commitments go..

Thanks, good morning. I just had a couple of questions. So the first one was, you provided some good commentary around loan growth being somewhat broad-based. And I was just curious in terms of your loan commitments, it looks like last quarter they increased by $500 million.

And if I'm doing my math correctly, it looks like this quarter, loan commitments grew by $750 million to $800 million. And I was curious if that increase in loan commitments this quarter, and indeed the loan commitment themselves –$750 million to $800 million.

If you could speak to the mix of those commitments, where are you seeing, perhaps, increased demand? I know you had some growth, finally, in industrial real estate. Is that a significant chunk of the loan commitments this quarter? Or any other specific areas you might point to, as far as the loan commitments go..

I think as you look at – you look to loan growth this quarter, while it was the first quarter is a long time, we say a net growth on investor commercial real estate.

The good news on net growth was that, while still multifamily is that largest single product out of that production, we did see strong production on the other parts or other categories of commercial real estate, which about 40% of our production is in multi-family, 60% of our production was elsewhere scattered between single family industrial office and retail.

Retail still continues to be sort of a smallest part of that production but if there was more growth there than we’ve seen in previous quarter. I think when you look at the commercial industrial; we really see that growth in a lot of our specialty lending groups in particular energy and healthcare.

And if you look across markets, the markets in Texas and South Louisiana are growth completely strong but also we had pretty decent growth in Georgia and in north-central Alabama. And of course Florida, while Florida, probably at the most challenging coming through the rescission.

We’re seeing some really positive signs coming out of certain markets in that part of our franchise.

John Asbury you like to add that?.

Again there is some more growth in commercial continues to be strong for us pretty well diversified.

One thing I like to see this quarter is that kind of general industries geography based commercial effort was actually the single largest driver of commercial loan growth which is good and so we still had very good performance on the specialty lending areas but it’s nice to see more of a broad based general industries, you already spoke of the geographic areas from where they came.

No question we’ve been increasing commitments on the real estate side, to your point pretty well diversified, not just our product title, we are seeing, improving diversification, but also we are seeing improvement in diversification of where we are financing of this products on the real estate side as well. So that good to see that coming on line..

Okay, thank you. And then just here in terms of the auto business, you talked earlier about dealer penetration. And you mentioned that you are in 25% of the dealers that are really in your footprint, so there's an opportunity out there.

Do you have a metric? How high do you think that 25% could go in the next 12 months, like some sort of target? And in terms of the average loans per dealer, I think in 2013 the average loans per dealer grew by more than 50%. And I think you referenced, in Q1, that increase was more like 13%.

So is that kind of the run rate we should expect over the course of this year as well, as far as average loans per dealer? Just to get a sense for a couple of metrics there, and how you're thinking about the next 12 months. Thank you..

Okay, thank you. And then just here in terms of the auto business, you talked earlier about dealer penetration. And you mentioned that you are in 25% of the dealers that are really in your footprint, so there's an opportunity out there.

Do you have a metric? How high do you think that 25% could go in the next 12 months, like some sort of target? And in terms of the average loans per dealer, I think in 2013 the average loans per dealer grew by more than 50%. And I think you referenced, in Q1, that increase was more like 13%.

So is that kind of the run rate we should expect over the course of this year as well, as far as average loans per dealer? Just to get a sense for a couple of metrics there, and how you're thinking about the next 12 months. Thank you..

So as we think about indirect, you are right. With 25% of the dealers in our geography, we are looking while we have 6,000, obviously if we go at, and we really want to be particular with the dealers that we do business with. So our strategy now is less about increasing that number as it is penetration of our existing dealers.

You referenced the increase in the number of deals per dealer per month increasing we have done it one. So the average was one deal, per dealer per month, and that is up quite nicely. The reason it was only one is, remember we reentered the indirect market you have t come back and build the relationship that takes time.

And as we’ve proven ourselves and proven our technology and our service to our dealers, we see penetration increasing at the existing 2,000 dealers that we have today versus growing that number.

And we do that by the service and we do that by the speed of answering that we get back to the customer, which is driven by enhancements of the technology that can help us that determine an underwriting decision much quicker than manual intervention. So that’s really the strategy going forward. .

Yes, I mean our goal is not to have, we are not going to measure necessarily the numbers of dealers that we have signed up, but the quality of those relationships, and we want to sell deeper into those relationships and how more meaningful banking relationship with them.

And so what you should expect to see this year is more transactions or per dealer basis and less emphasis on just rolling numbers dealing..

Okay, great thank you..

Okay, great thank you..

Your next question comes from Gaston Ceron of MorningStar Equity..

Hi, good morning..

Good morning Gaston..

Hi, just wanted to go back to expenses for a second. Just two quick things; one is on occupancy.

So, with the number of branches coming down, how should we think about that line going forward?.

So occupancy is one of our top three costs, that we continue to look at and you are right to point out that a lot of our occupancy cost is in our branch infrastructure. We have right at 1,700 branches. We continue to evaluate all of those we consolidated 30 auctions last quarter, equated that in this quarter.

And so there are ways to tighten that up some I would not accept dramatic changes in our occupancy as a result of that, but we’ll continue to chip away at that line item. A lot of that cost of occupancy is fixed cost; depreciation on places that we have, leases or whatever.

So the ability to drastically move that without exceeding leases and taking a one-time charge is less for us, but we continue to look at that closely..

Okay. Great, that’s very helpful. And then, lastly on expenses. You really kind of held the line here on salaries and benefits, in looking at the five-quarter trend.

How should we think about that line, assuming that eventually you move into a higher revenue environment? I mean how much sort of pent-up pressure is there for increases and things like that?.

Well, there are some of the salary and benefits that are tied to revenue. So as revenue increases you should except to see an increase in salary and benefits to pay for that revenue. We are down in headcount through the first quarter. Some of that is just timing related.

But we focused on making sure we rationalize our total head count, which we will do over time this year. There were some benefits that we received through our pension accounting during the year. And so, you’ll see that continue to play out through 2014.

Our commitment, as we stated that front, was really to ensure that we’re shooting for generating positive operating leverage. And so, we are as concerned about the increases in salaries and benefits or any other expense line. As long as the revenue generation is there to take care of what ever increase that we have.

So there is some variability with those expense levels tied to revenue..

Great. Thanks for the color..

Your next question comes from Gerard Cassidy of RBC Capital Markets..

Hi. This is actually Steve Duong in for Gerard. Thanks for taking our call. Just a quick question. Regarding your loan portfolio, your commercial real estate mortgage owner-occupied, that continues to decline.

Is that still part of the de-risking of your portfolio or is there more that we can take from there?.

No, that’s really not part of de-risking. If you look at the owner-occupied real estate, it really performs pretty close correlation to the C&I portfolio in general. And so, it – but what you’re seeing there is just a continued maturity of those notes in the pace of still what’s soft demand for that particular product.

I think as sort of economic courage returns on the part of some of our business customers, you’ll see that improve, but right now that is still a softer part of our lending segments..

Great.

So we should – as the environment improves, we should expect that to eventually reverse course, I take it?.

That’s correct..

Okay, great. Well, I appreciate. That's all for us. Thank you. .

Your next question comes from Vivek Juneja of JPMorgan..

Good morning..

Hi. Thanks. Couple of quick questions. Pardon me if I missed this one in the call.

Your consumer advanced product, what is the dollar amount of outstanding in the yields on those loans?.

I think we haven’t disclosed our total outstandings, or revenue, I should say generated from Ready Advance. And the reason for it is we’re in the process transitioning out of that into different product that we are testing as we speak.

And we want to make sure we give you investors the best information on what that revenue change if any will be as a result of those new products that we are transitioning into. That will take for 2014 to transition. And so if we get more clarity on that, we will be happy to share that with you..

And clearly there is going to be a revenue adjustment. We are working through what that means for us and what our transition plans are. We have not been adding customers to this product since the first of the year. We are seeing just normal attrition in that customer base.

And within that product, our transition strategies are either yet to be proven out and as we did a little more maturity around that transition process, we will be able to give you a little more clarity on what we think the impact will be..

Okay. One more question.

LCR – ultimately to get to – I know you don't need to get to 100% right now, but ultimately to get to that – will you need to shift the mix of securities a little bit towards more of the level 1? Or where do you stand, especially if you bring the cash that you've got sitting at the Fed now?.

We are trying to address that a little bit in the prepared comments that we relieved based on the rules today. And our interpretation of those rules, we will be compliant with LCR when it’s implemented. So relative to others, we don’t have a lot of changes in terms of portfolio.

Changes that will affect us that being said we need to continue to see how it rules change over time. And we will make corrections. But based on what we see today you shouldn’t see a big change in our portfolio later..

Okay, great thank you..

Your next question comes from Christopher Marinac of FIG partners..

Thanks guys. Grayson, you'd mentioned earlier in the call about the smaller markets you have, and the interest in trying to expand over time. I was curious if any of these small markets are popping up today, as pockets of good loan growth and opportunity that in terms of what you are already realizing..

We have all different kinds of markets in our 16 state to impress. Each market offers a different competitive advantage or different opportunity I should say for us. So some of the smaller markets we have products and services that should make the customer base.

And many other small markets the stability of deposits is really important to go back to questions asked earlier, what happens when rates increase and economic activity starts occurring and deposit become all more important as your funding source.

And perhaps today we’ll count on the small markets where we have some really dense small markets that we think are really beneficial to us. That being said we have markets where we’ve tried to get that density that we need or to get our products set sold through the market. If that can’t happen, then we will consolidate like you’ve seen us do.

And we'll look to continue to rationalize our footprint over time as a result that we can’t get the revenue streams that we desire from them. .

Great, David. Thanks for the color here..

Your final question comes from the line of Matt O’Connor of Deutsche Bank..

Good morning..

Hey David, it’s afternoon.

I realize the credit card book is only about $1 billion, but what's the thought process for offering credit card to non-customers?.

Matt, if you recall, we – it’s not been that long ago that we repurchased our credit card book and then it took a few quarters to yet that book converted over to our systems and to get processes in place.

And so, we really have been focused since that time on really penetrating our book of business and today about 14% of our customers have our credit card. We’d love to see that come up to more corporate level where you see some of our peer groups in the 20% to 25% range. We’ve been doing that and doing that more effectively each and every quarter.

We’ve seen most recently some numbers where we obviously are getting much more proficient and selling into the financial needs of our customers and offering that product. We have been also trying to determine how best to grow the number of customers that bank with regions.

And so, within our footprint we elected the sort of cash to market to see if there is a way to use our credit card product offering to attract new customers into our offices. We’re already in that process.

There’s no intention on our part to be a heavy solicitation bank in terms of card, but very targeted, very selective in markets that we dominate where we have strong brand name recognition. We’re trying to extreme it to see whether we can really drive some customer traffic into our branch offices for new accounts..

Okay. That makes sense. And then just as we think out over the next few years, I want to say, at one point you thought the card portfolio could get up to a $2 billion handle.

Is that correct or is that the thought process in terms of how big it could get over time?.

Your math is just as good as mine. We’re at 14% penetration. If we can get into that 20% to 25% participation rate, we ought to be able to double size that portfolio. But more importantly is that we can offer our customers a more full financial relationship, because all of our customers are going to carry one or more credit cards.

We’d love for one of those to be ours. And our goal is to be able to manage that customer relationship, which we think gives us a better chance of creating more customer loyalty, better retention rate long-term for that customer base. .

Okay. Thank you very much..

Thank you. I think that ends our questions and we appreciate your interest and your time today on this conference call. And we look forward to speaking to you next quarter. Thank you..

Thank you. This concludes today’s conference call. You may now disconnect..