Abstract
Based on the company’s Code of Ethics, Regions Financial Corporation strive to conduct business in accordance to the highest moral standards. The company’s values which is to make life better for customers, associates and communities served as the foundation to their success. This can be recognized by the company’s objective to build a stronger customer relationship through a modified approach in serving customers based on respect and integrity. Regions Financial Corporation is also working its way to create shared economic value by producing products and services that can achieve customer’s financial success. Despite of its financial crisis, Regions commitment to support various enterprises has helped the community’s economic growth. The company has extended its support to various enterprises such as the Karns Volunteer Fire Department in Knoxville, Tenn., financial support for T&D Farms in Mississippi for the success of its farming business which generated jobs for the community, and the expansion of facilities in Oakhurst Medical Center in Atlanta which allowed the hospital to serve more patients. In addition, Regions has supported various charitable institutions and provided volunteers from its associates through community service activities. This endeavor of helping the community achieve their financial goals and aspirations has made a remarkable impact on the company which made Regions proud of its success.
Keywords: Code of Ethics, values, commitment, respect, integrity
Regions Financial Corporation (Regions Bank) is a full-service provider of consumer and commercial banking trust, securities brokerage, mortgage and insurance products and services. The company has branches in 16 states all over the South, Midwest and Texas with its corporate office in Birmingham. With $121 billion in assets, it operates 1,700 banking offices and 2,000ATMs. In 1971, the first multibank holding company in Alabama was formed and was named First Alabama Bancshares Inc. The company began its operations in 40 banking locations in Birmingham, Huntsville and Montgomery with total assets of $543 million. It was renamed later in 1994 as Regions Financial Corporation. The company became a top 15 U.S. bank when it merged with Union Planters Corp in Memphis in 2004 then climb up to top 10 upon merging with AmSouth Bancorporation on November 2, 2006 then later became one of America’s largest companies under Fortune 500 listings. Aside from traditional banking, Regions Bank also provides a wide range of financial products and services through wealth management, mortgage banking and insurance. The company created Regions Insurance Group which offers all lines of personal and commercial insurance. It became one of the largest bank-owned insurance brokers in the United States with $113 million in annual revenues. Regions Mortgage is also one of the nation’s top mortgage loan providers that offer residential mortgage products and services through its lending channels.
Mission and Vision
The company’s mission and vision is to make life better for associates, customers and the community by upholding its values and utilizing all of the different available resources. The company has a fresh and unique culture that is flexible to adapt to business changes, customers, communities, their workforce and the leading institutions as the primary shareholders. The company’s effective formula in developing various resources and their principles of doing what is right, putting people first, reaching higher, focusing on customers and enjoying life are the strategic approaches that created strong and consistent shareholder value which gave them a continued success in the market.
Five Forces of Competition
Although the strategies of coping with competition vary among industries, the basic methods of profitability are the same. Identifying the industry’s structure will shape its competitiveness and profitability. By implementing these five competitive forces, the company can evaluate its profitability status and set its framework in managing competition:
The degree of rivalry varies among firms which are based on its capacity to gain advantage over their competitors. To achieve this advantage, a company can raise or lower their prices, improve their product features through technological innovations and using effective channels of distribution. Rivalry for market leadership intensifies when companies compete for the same customers with the same services or products forcing a company to struggle in achieving a good market share. In the banking industry, the pressure of competition increases among the existing fully-fledged banks due to the increasing numbers of banks all over the U.S. Regions can improve its revenues through market expansion and product enhancement.
Threat of substitutes
A substitute product from an outside industry is a threat to the product’s demand particularly when price differs. Since customers have more choices, the price flexibility of a product is greatly affected. In terms of banking service, the trend of sending money thru legitimate couriers instead of transferring money thru the bank is a possible threat to Regions’ profitability and competitiveness.
Buyers’ Bargaining Power
The buying process of a product from a certain industry is influenced by the strong power of buyers. The buyer can demand on the price in a market where there are more suppliers than the buyers. In the banking business, with so many banks offering to provide services, customers would prefer to do business with banks that offers low interest rates for loans. For years, Regions’ revenue growth has suffered due to low interest rates on mortgage loans.
Suppliers’ Bargaining Power
This applies to the relationship between the industry and the company that supplies raw materials for the products. Suppliers can sell raw materials at a high price to increase profits which can affect the producing industry. Since banking is a service oriented business, this force does not have any impact in terms of competition.
Barriers to Entry/Threat of New Entrants
Aside from the existing rivals, the possibility of new firms entering the industry affects competition. Some industries can restrain additional rivals from entering the market due to their capacity to protect their high levels of profitability in the market. When profits increase, there is also an increase of rivals entering the market which results in the decrease of profits in the existing industry. In terms of banking, a rising number of financial institutions in the country which have the potential of turning into banks can add pressure to the competition. Regions’ strategy to keep loan interests at low level is one way of creating a barrier that can eliminate the entry of new firms while maintaining its level of profits.
Strengths, Weaknesses, Opportunities and Threats (SWOT)
Every organization creates a specific structure in line with its resources and capabilities. To calculate the changing trends and facilitate the decision-making process of the company, it is vital to identify its strengths, weaknesses, opportunities and threats. The following are the SWOT analysis of Regions Financing Corporation:
Strengths
Weaknesses
A decrease of 56% on non- interest income due to the restriction fees on debit card transactions and lower investment securities gains. In 2008, Regions was granted $3.5 billion Troubled Asset Relief Program (TARP) funding to cover its $5.6 billion losses. The stress test required the company to raise capital but Regions was not capable of raising such capital forcing the company to sell some of its shares and assets. Regions is focusing on its business-lending sector, however the success on this venture will depend on the country’s economic standing. With the present economic meltdown, this could pose a serious downfall for the company.
Opportunities
Financial standing may increase on Regions plan to focus its revenues from commercial and industrial banking services. With Regions low interest rates, customers will consider applying more loans which could increase the growth in its loans sector.
Threats
The European crisis could add more damage to the crawling US economy and high unemployment rate which could add more injuries to the banking and financial crisis.
Company Strategy
The strategy of Regions’ growth plan is its major focus to improve customer service through a program called Regions 360. This program is a process of providing guidance and advice to address customer’s needs by evaluating their financial standing and their goals. This venture would lead to company’s drive for increased performance of employees on their selling skills and referral chances on all of their business lines. Regions will be conducting comprehensive trainings on new techniques and technological innovations. Despite of the company’s financial success, it needs to focus on maintaining its long-term revenue growth and expanding the framework of it loans sector. Regions revenue growth will have the opportunity to benefit from increased mortgage loan production, credit card business and wealth management service. To minimize its failures and mistakes from the past, Regions’ objective is to focus on eliminating bad loans by maintaining the quality of its loan portfolio.
Levels and Types of Strategies
Corporate- level strategy
The top management of Regions Financing has to initiate a move to provide a framework for the growth of the company. To increase its financial standing, the company should find new methods and develop new projects for effective operation.
Business-level strategy
Intensive Strategies
Communication Plan
Target Audience
Message should reach to all customers, associates, communities and shareholders of Regions Financial Corporation
Strategy
The goal is to focus on modifying the loan portfolio by evaluating its operation to identify the most effective marketing techniques through technology enhancements for competitive advantage and profitability in the market. Introduce new techniques of selling and referral options by conducting training and seminars for employees with the help of advanced technology to improve their selling capabilities. Modify the customer service system by creating a more personal and friendly approach in understanding customer’s goals and addressing their needs.
Possible Difficulties
For years, Regions Financial Corporation has suffered a decrease on revenue due to low interest rates which will continue to affect the net interest margin on loans. Despite of the difficult environment, Regions is determined to embrace these changes.
Projected Effectiveness
Through technological innovations, improvements on market and product development will ensure success and profitability. In addition, enhancements on customer service can boost market penetration.
Closing Statements
With the increased market in housing, mortgage loan will be a great source of revenue. Solidifying and keeping the quality loan structure will ensure growth and profitability.
Corporate Governance
In conducting business, the company’s board of directors and executive management team are committed to comply with the laws and regulations to provide guidance for sound-decision making and accountability. To protect its corporate culture, Regions is committed to nurture an environment of transparency and promote its core values by doing what is right based on the company’s code of ethics. These values have earned them the trust and confidence of their customers, associates, shareholders and communities. The following are two corporate governance mechanisms that Regions used in controlling managerial actions:
Risk Committee Charter
In order for the management to effectively operate the company, the Board of Directors appointed the Risk Committee to review and approve the board’s risk limits and to assist in the company’s control on governance procedures. The committee is also responsible in managing legal risk, liquidity risk, credit risk, market risk, regulatory risk, compliance risk, operational risk and emerging risk.
Code of Ethics for Senior Financial Officers
This Code of Ethics is applicable to the Chief Executive Officer (CEO), Chief Financial Officer and the Principal Accounting Officer and Controller. The senior financial officers are responsible in filing fair and accurate periodic reports to the Securities and Exchange Commission (SEC). In case of violations on this code, the Board of Directors will determine proper actions to be taken.
Effectiveness of Leadership
References:
Cole, A. (January 6, 2013), Regions Growth Strategy: A look at its 360 Plan. Birmingham Business Journal. Retrieved from
http://www.bizjournals.com/birmingham/blog/2012/12/regions-growth-strategy-a-look-at-its.html
Company Filings EDGAR database ( March14, 2012), U.S. Securities and Exchange Commission, Retrieved from
http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001071803&owner=exclude&count=40
Corporate Governance, (2013). Regions. Retrieved from http://ir.regions.com/governance.cfm
Datta, S. (February 23, 2012), Regions Financial: Strengths, Weaknesses, Opportunities and Threats. The Motley Fool. Retrieved from
http://www.fool.com/investing/general/2012/02/23/regions-financial-strengths-weaknesses-opportunit.aspx
Porter, M., (January, 2008), The Five Competitive Forces That Shape Strategy. Harvard Business Review. Retrieved from
http://hbr.org/2008/01/the-five-competitive-forces-that-shape- strategy/ar/1
Who We Are, (2013). Regions. Retrieved from
http://www.regions.com/about_regions/careers_who_we_are.rf
