SECURITIES AND EXCHANGE COMMISSION

Form 10-Q





|[X]   |                                                                             | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|----- | --------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|      | For the quarterly period ended  September 30, 2003                         
|      | or                                                                         
|[   ] |                                                                             | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|      | For the transition period from ____________________to  ____________________





|Commission File Number: | 0-6159
|----------------------- | ------
|                        |       



|Regions Financial Corporation                         
|------------------------------------------------------
|                                                      
|(Exact name of registrant as specified in its charter)





|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 63-0589368                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer Identification Number)
|                                                               |  |                                     
|417 North 20th Street
Birmingham, Alabama                      |  | 35203                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip code)                          





|(205) 944-1300                                                                    
|----------------------------------------------------------------------------------
|                                                                                  
|(Registrant's telephone number, including area code)                              
|                                                                                  
|NOT APPLICABLE                                                                    
|                                                                                  
|(Former name, former address and former fiscal year, if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



| | [X] | Yes |  | [  ] | No
| | --- | --- |  | ---- | --

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



| | [X] | Yes |  | [  ] | No
| | --- | --- |  | ---- | --

The number of shares outstanding of each of the issuer's classes of common stock was 222,164,789 shares of common stock, par value $.625, outstanding as of October 31, 2003.







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|REGIONS FINANCIAL COPORATION
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|PART I.                     
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|Item 1.                     
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|Item 2.                     
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|Item 3.                     
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|Item 4.                     
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|PART II.                    
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|Item 6.                     
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|SIGNATURES                  
|                            



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Forward Looking Statements

This Quarterly Report on Form 10-Q, other periodic reports filed by Regions under the Securities Exchange Act of 1934, as amended, and any other written or oral statements made by or on behalf of Regions may include forward looking statements which reflect Regions' current views with respect to future events and financial performance.  Such forward-looking statements are made in good faith by Regions pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.  The forward-looking statements are based on current expectations and general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements.  These risks, uncertainties and other factors include, but are not limited to, those described below.

Some factors are specific to Regions, including:

- The cost and other effects of material contingencies, including litigation contingencies.

- Regions' ability to expand into new markets and to maintain profit margins in the face of pricing pressures.

- Regions' ability to keep pace with technological changes.

- Regions' ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by Regions' customers and potential customers.

- Regions' ability to effectively manage interest rate risk and other market risk, credit risk and operational risk.

- Regions' ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support Regions' business.

- Regions' ability to achieve the earnings expectations related to the businesses that were acquired or that may be acquired in the future, which in turn depends on a variety of factors, including:

- Regions' ability to achieve the anticipated cost savings and revenue enhancements with respect to the acquired operations;

- the assimilation of the acquired operations to Regions' corporate culture, including the ability to instill Regions' credit practices and efficient approach to the acquired operations; and

- the continued growth of the markets that the acquired entities serve, consistent with recent historical experience.

Other factors which may affect Regions apply to the financial services industry more generally, including:

- Further easing of restrictions on participants in the financial services industry, such as banks, securities brokers and dealers, investment companies and finance companies, may increase competitive pressures.

- Possible changes in interest rates may increase funding costs and reduce earning asset yields, thus reducing margins.

- Possible changes in general economic and business conditions in the United States and the South in general and in the communities Regions serves in particular may lead to a deterioration in credit quality, thereby increasing provisioning costs, or a reduced demand for credit, thereby reducing earning assets.

- The existence or exacerbation of general geopolitical instability and uncertainty, including the threat or occurrence of acts of terror or the occurrence or escalation of hostilities.

- Possible changes in trade, monetary and fiscal policies, laws, and regulations, and other activities of governments, agencies, and similar organizations, including changes in accounting standards, may have an adverse effect on business.

- Possible changes in consumer and business spending and saving habits could affect Regions' ability to increase assets and to attract deposits.

The words "believe," "expect," "anticipate," "project," and similar expressions signify forward-looking statements.  Readers are cautioned not to place undue reliance on any forward-looking statements made by or on behalf of Regions.  Any such statement speaks only as of the date the statement was made. Regions undertakes no obligation to update or revise any forward-looking statements.



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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)



|                                                | September 30, |  | December 31, |  | September 30,
|----------------------------------------------- | ------------- |  | ------------ |  | -------------
|ASSETS                                          | 2003          |  | 2002         |  | 2002         
|                                                |               |  |              |  |              
|Cash and due from banks                         | $ 1,262,979   |  | $ 1,577,536  |  | $ 1,220,392  
|Interest-bearing deposits in other banks        | 194,761       |  | 303,562      |  | 226,252      
|Securities held to maturity                     | 32,194        |  | 32,909       |  | 34,938       
|Securities available for sale                   | 9,117,752     |  | 8,961,691    |  | 8,938,255    
|Trading account assets                          | 776,332       |  | 785,992      |  | 890,089      
|Loans held for sale                             | 1,931,014     |  | 1,497,849    |  | 1,870,875    
|Federal funds sold and securities               |               |  |              |  |              
|purchased under agreements to resell            | 452,786       |  | 334,788      |  | 245,684      
|Margin receivables                              | 509,573       |  | 432,337      |  | 515,228      
|Loans                                           | 31,815,772    |  | 31,230,268   |  | 30,822,448   
|Unearned income                                 | (231,387)     |  | (244,494)    |  | (250,131)    
|                                                |               |  |              |  |              
|Loans, net of unearned income                   | 31,584,385    |  | 30,985,774   |  | 30,572,317   
|Allowance for loan losses                       | (456,040)     |  | (437,164)    |  | (435,798)    
|                                                |               |  |              |  |              
|Net loans                                       | 31,128,345    |  | 30,548,610   |  | 30,136,519   
|Premises and equipment                          | 626,188       |  | 638,031      |  | 642,376      
|Interest receivable                             | 193,573       |  | 242,088      |  | 230,397      
|Due from customers on acceptances               | 10,074        |  | 60,320       |  | 36,064       
|Other assets                                    | 2,558,644     |  | 2,523,127    |  | 2,406,427    
|                                                |               |  |              |  |              
|                                                | $48,794,215   |  | $47,938,840  |  | $47,393,496  
|                                                |               |  |              |  |              
|                                                |               |  |              |  |              
|                                                |               |  |              |  |              
|LIABILITIES AND STOCKHOLDERS' EQUITY            |               |  |              |  |              
|Deposits:                                       |               |  |              |  |              
|Non-interest-bearing                            | $  5,546,705  |  | $  5,147,689 |  | $  5,062,053 
|Interest-bearing                                | 27,070,230    |  | 27,778,512   |  | 27,112,736   
|                                                |               |  |              |  |              
|Total deposits                                  | 32,616,935    |  | 32,926,201   |  | 32,174,789   
|Borrowed Funds:                                 |               |  |              |  |              
|Short-term borrowings:                          |               |  |              |  |              
|Federal funds purchased and securities          |               |  |              |  |              
|sold under agreements to repurchase             | 3,542,312     |  | 2,203,261    |  | 2,551,283    
|Commercial paper                                | 13,750        |  | 17,250       |  | 24,750       
|Other short-term borrowings                     | 1,406,372     |  | 1,864,946    |  | 2,057,264    
|                                                |               |  |              |  |              
|Total short-term borrowings                     | 4,962,434     |  | 4,085,457    |  | 4,633,297    
|Long-term borrowings                            | 5,603,532     |  | 5,386,109    |  | 5,543,753    
|                                                |               |  |              |  |              
|Total borrowed funds                            | 10,565,966    |  | 9,471,566    |  | 10,177,050   
|Bank acceptances outstanding                    | 10,074        |  | 60,320       |  | 36,064       
|Other liabilities                               | 1,206,392     |  | 1,302,331    |  | 921,738      
|                                                |               |  |              |  |              
|Total liabilities                               | 44,399,367    |  | 43,760,418   |  | 43,309,641   
|Stockholders' Equity:                           |               |  |              |  |              
|Preferred stock, par value $1.00 a share:       |               |  |              |  |              
|Authorized 5,000,000 shares                     | -0-           |  | -0-          |  | -0-          
|Common stock, par value $.625 a share:          |               |  |              |  |              
|Authorized 500,000,000 shares,                  |               |  |              |  |              
|issued, including treasury stock,               |               |  |              |  |              
|223,035,174; 221,336,905; and                   |               |  |              |  |              
|231,698,090 shares, respectively                | 139,397       |  | 138,336      |  | 144,811      
|Surplus                                         | 975,939       |  | 936,958      |  | 1,284,365    
|Undivided profits                               | 3,236,285     |  | 2,952,657    |  | 2,860,604    
|Treasury stock, at cost 778,000; -0-;           |               |  |              |  |              
|and 10,221,700 shares, respectively             | (27,497)      |  | -0-          |  | (358,199)    
|Unearned restricted stock                       | (15,693)      |  | (13,620)     |  | (15,441)     
|Accumulated other comprehensive income          | 86,417        |  | 164,091      |  | 167,715      
|                                                |               |  |              |  |              
|Total Stockholders' Equity                      | 4,394,848     |  | 4,178,422    |  | 4,083,855    
|                                                |               |  |              |  |              
|                                                | $48,794,215   |  | $47,938,840  |  | $47,393,496  
|                                                |               |  |              |  |              
|                                                |               |  |              |  |              
|                                                |               |  |              |  |              
|See notes to consolidated financial statements. |               |  |              |  |              



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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)



|                                                                                  | Three Months Ended |  | Nine Months Ended
|--------------------------------------------------------------------------------- | ------------------ |  | -----------------
|                                                                                  | September 30,      |  | September 30,    
|                                                                                  |                    |  |                  
|                                                                                  | 2003               |  | 2002             
|                                                                                  |                    |  |                  
|Interest Income:                                                                  |                    |  |                  
|Interest and fees on loans                                                        | $417,210           |  | $502,923         
|Interest on securities:                                                           |                    |  |                  
|Taxable interest income                                                           | 79,326             |  | 104,479          
|Tax-exempt interest income                                                        | 5,972              |  | 7,053            
|                                                                                  |                    |  |                  
|Total Interest on Securities                                                      | 85,298             |  | 111,532          
|Interest on loans held for sale                                                   | 27,780             |  | 12,146           
|Interest on margin receivables                                                    | 4,004              |  | 4,951            
|Income on federal funds sold and securities 
purchased under agreements to resell | 859                |  | 2,530            
|Interest on time deposits in other banks                                          | 55                 |  | 120              
|Interest on trading account assets                                                | 5,715              |  | 6,492            
|                                                                                  |                    |  |                  
|Total Interest Income                                                             | 540,921            |  | 640,694          
|                                                                                  |                    |  |                  
|Interest Expense:                                                                 |                    |  |                  
|Interest on deposits                                                              | 93,384             |  | 162,493          
|Interest on short-term borrowings                                                 | 25,940             |  | 33,953           
|Interest on long-term borrowings                                                  | 52,721             |  | 64,103           
|                                                                                  |                    |  |                  
|Total Interest Expense                                                            | 172,045            |  | 260,549          
|                                                                                  |                    |  |                  
|Net Interest Income                                                               | 368,876            |  | 380,145          
|Provision for loan losses                                                         | 30,000             |  | 35,000           
|                                                                                  |                    |  |                  
|Net Interest Income After Provision for Loan Losses                               | 338,876            |  | 345,145          
|                                                                                  |                    |  |                  
|Non-Interest Income:                                                              |                    |  |                  
|Brokerage and investment banking                                                  | 140,257            |  | 123,294          
|Trust department income                                                           | 18,168             |  | 15,605           
|Service charges on deposit accounts                                               | 73,641             |  | 70,581           
|Mortgage servicing and origination fees                                           | 29,074             |  | 26,863           
|Securities gains (losses)                                                         | (37)               |  | 22,642           
|Other                                                                             | 86,572             |  | 67,696           
|                                                                                  |                    |  |                  
|Total Non-Interest Income                                                         | 347,675            |  | 326,681          
|                                                                                  |                    |  |                  
|Non-Interest Expense:                                                             |                    |  |                  
|Salaries and employee benefits                                                    | 281,666            |  | 258,264          
|Net occupancy expense                                                             | 26,869             |  | 25,093           
|Furniture and equipment expense                                                   | 20,160             |  | 22,862           
|Other                                                                             | 127,482            |  | 146,232          
|                                                                                  |                    |  |                  
|Total Non-Interest Expense                                                        | 456,177            |  | 452,451          
|                                                                                  |                    |  |                  
|Income Before Income Taxes                                                        | 230,374            |  | 219,375          
|Applicable income taxes                                                           | 65,652             |  | 62,896           
|                                                                                  |                    |  |                  
|Net Income                                                                        | $164,722           |  | $156,479         
|                                                                                  |                    |  |                  
|                                                                                  |                    |  |                  
|                                                                                  |                    |  |                  
|                                                                                  |                    |  |                  
|Average number of shares outstanding                                              | 222,528            |  | 221,282          
|Average number of shares outstanding-diluted                                      | 225,699            |  | 224,438          
|Per share:                                                                        |                    |  |                  
|Net income                                                                        | $0.74              |  | $0.71            
|Net income-diluted                                                                | $0.73              |  | $0.70            
|Cash dividends declared                                                           | $0.32              |  | $0.29            
|                                                                                  |                    |  |                  
|See notes to consolidated financial statements.                                   |                    |  |                  



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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY(AMOUNTS IN THOUSANDS) (UNAUDITED)

|                                                           |              |          |                   |                 |                           |                                        |           
|---------------------------------------------------------- | ------------ | -------- | ----------------- | --------------- | ------------------------- | -------------------------------------- | ----------
|                                                           | Common Stock | Surplus  | Undivided Profits | Treasury Stock  | Unearned
Restricted
Stock | Accumulated Other Comprehensive Income | Total     
|                                                           |              |          |                   |                 |                           |                                        |           
|BALANCE AT JANUARY 1, 2003                                 | $138,336     | $936,958 | $2,952,657        | $      -0-      | $(13,620)                 | $164,091                               | $4,178,422
|Comprehensive Income:                                      |              |          |                   |                 |                           |                                        |           
|Net income                                                 |              |          | 488,088           |                 |                           |                                        | 488,088   
|Unrealized loss on available for sale securities,          |              |          |                   |                 |                           |                                        |           
|net of reclassification adjustment                         |              |          |                   |                 |                           | (78,651)                               | (78,651)  
|Other comprehensive gain from derivatives                  |              |          |                   |                 |                           | 977                                    | 977       
|                                                           |              |          |                   |                 |                           |                                        |           
|Comprehensive income*                                      |              |          | 488,088           |                 |                           | (77,674)                               | 410,414   
|Cash dividends declared ($0.92 per common share)           |              |          | ( 204,460)        |                 |                           |                                        | (204,460) 
|Purchase of treasury stock                                 |              |          |                   | (27,497)        |                           |                                        | (27,497)  
|Common stock transactions:                                 |              |          |                   |                 |                           |                                        |           
|Stock options exercised                                    | 906          | 31,013   |                   |                 |                           |                                        | 31,919    
|Stock issued to employees under incentive plan             | 155          | 7,968    |                   |                 | (10,803)                  |                                        | (2,680)   
|Amortization of unearned restricted stock                  |              |          |                   |                 | 8,730                     |                                        | 8,730     
|                                                           |              |          |                   |                 |                           |                                        |           
|BALANCE AT SEPTEMBER 30, 2003                              | $139,397     | $975,939 | $3,236,285        | $      (27,497) | $(15,693)                 | $86,417                                | $4,394,848
|                                                           |              |          |                   |                 |                           |                                        |           
|                                                           |              |          |                   |                 |                           |                                        |           
|                                                           |              |          |                   |                 |                           |                                        |           
|                                                           |              |          |                   |                 |                           |                                        |           
|Disclosure of reclassification amount:                     |              |          |                   |                 |                           |                                        |           
|Unrealized holding losses on available for sale securities |              |          |                   |                 |                           |                                        |           
|arising during period, net of tax                          |              |          |                   |                 |                           | $     (60,304)                         |           
|Less: Reclassification adjustment, net of tax, for gains   |              |          |                   |                 |                           |                                        |           
|and losses realized  in net income                         |              |          |                   |                 |                           | 18,347                                 |           
|Unrealized holding gain on derivatives, net of tax         |              |          |                   |                 |                           | 1,707                                  |           
|Less: Reclassification adjustment, net of tax, for losses  |              |          |                   |                 |                           |                                        |           
|realized in net income                                     |              |          |                   |                 |                           | 730                                    |           
|                                                           |              |          |                   |                 |                           |                                        |           
|Comprehensive income                                       |              |          |                   |                 |                           | $  (77,674)                            |           
|                                                           |              |          |                   |                 |                           |                                        |           
|                                                           |              |          |                   |                 |                           |                                        |           
|                                                           |              |          |                   |                 |                           |                                        |           

*Comprehensive income for the nine months ended September 30, 2002 was $573.0 million.

*Comprehensive income for the three months ended September 30, 2003 was $110.5 million compared to $200.7 million for the three months ended September 30, 2002.

See notes to consolidated financial statements.



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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 	(DOLLAR AMOUNTS IN THOUSANDS) (UNAUDITED)

|                                                                             |                   |  |            
|---------------------------------------------------------------------------- | ----------------- |  | -----------
|                                                                             | Nine Months Ended |  |            
|                                                                             | September 30,     |  |            
|                                                                             |                   |  |            
|Operating Activities:                                                        | 2003              |  | 2002       
|                                                                             |                   |  |            
|Net income                                                                   | $   488,088       |  | $   463,668
|Adjustments to reconcile net cash provided by (used in) operating activities |                   |  |            
|Gain on securitization of loans held for sale                                | (6,830)           |  | -0-        
|Loss on early extinguishment of debt                                         | 20,580            |  | -0-        
|Depreciation and amortization of premises and equipment                      | 50,068            |  | 54,711     
|Provision for loan losses                                                    | 91,500            |  | 95,000     
|Net amortization of securities                                               | 20,637            |  | 19,491     
|Amortization of loans and other assets                                       | 64,227            |  | 48,194     
|Provision for impairment of mortgage servicing rights                        | (1,000)           |  | 19,725     
|Amortization of deposits and borrowings                                      | 714               |  | 708        
|Provision for losses on other real estate                                    | 2,532             |  | 1,060      
|Deferred income tax (benefit) expense                                        | (8,423)           |  | 25,212     
|Gain on sale of premises and equipment                                       | (52)              |  | (274)      
|Realized securities gains                                                    | (25,660)          |  | (26,426)   
|Decrease (increase) in trading account assets                                | 9,660             |  | (148,193)  
|(Increase) decrease in margin receivables                                    | (77,236)          |  | 8,713      
|Decrease in interest receivable                                              | 48,515            |  | 19,896     
|Increase in other assets                                                     | (101,061)         |  | (518,910)  
|Decrease in other liabilities                                                | (38,630)          |  | (58,216)   
|Other                                                                        | 6,048             |  | 7,892      
|                                                                             |                   |  |            
|Net Cash Provided By Operating Activities                                    | 543,677           |  | 12,251     
|                                                                             |                   |  |            
|Investing Activities:                                                        |                   |  |            
|Net increase in loans                                                        | (671,450)         |  | (711,528)  
|(Increase) decrease in loans held for sale                                   | (1,002,852)       |  | 119,318    
|Proceeds from securitization of loans held for sale                          | 576,517           |  | -0-        
|Proceeds from sale of securities available for sale                          | 338,848           |  | 607,345    
|Proceeds from maturity of securities held to maturity                        | 812               |  | 682        
|Proceeds from maturity of securities available for sale                      | 3,962,644         |  | 2,275,569  
|Purchases of securities held to maturity                                     | (251)             |  | (1,125)    
|Purchases of securities available for sale                                   | (4,578,934)       |  | (3,797,959)
|Net decrease in interest-bearing deposits in other banks                     | 108,801           |  | 445,690    
|Proceeds from sale of premises and equipment                                 | 9,782             |  | 3,000      
|Purchases of premises and equipment                                          | (47,955)          |  | (51,437)   
|Net decrease in customers' acceptance liability                              | 50,246            |  | 27,790     
|Acquisitions net of cash acquired                                            | -0-               |  | 62,125     
|                                                                             |                   |  |            
|Net Cash Used In Investing Activities                                        | (1,253,792)       |  | (1,020,530)
|                                                                             |                   |  |            
|Financing Activities:                                                        |                   |  |            
|Net (decrease) increase in deposits                                          | (309,980)         |  | 372,799    
|Net increase in short-term borrowings                                        | 876,977           |  | 530,637    
|Proceeds from long-term borrowings                                           | 611,870           |  | 848,896    
|Payments on long-term borrowings                                             | (415,027)         |  | (52,817)   
|Net increase in bank acceptance liability                                    | (50,246)          |  | (27,790)   
|Cash dividends                                                               | (204,460)         |  | (195,026)  
|Purchases of treasury stock                                                  | (27,497)          |  | (358,199)  
|Proceeds from exercise of stock options                                      | 31,919            |  | 23,714     
|                                                                             |                   |  |            
|Net Cash Provided By Financing Activities                                    | 513,556           |  | 1,142,214  
|                                                                             |                   |  |            
|(Decrease) Increase in Cash and Cash Equivalents                             | (196,559)         |  | 133,935    
|Cash and Cash Equivalents, Beginning of Period                               | 1,912,324         |  | 1,332,141  
|                                                                             |                   |  |            
|Cash and Cash Equivalents, End of Period                                     | $ 1,715,765       |  | $ 1,466,076
|                                                                             |                   |  |            
|                                                                             |                   |  |            
|                                                                             |                   |  |            
|                                                                             |                   |  |            
|See notes to consolidated financial statements.                              |                   |  |            



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003



NOTE A -- Basis of Presentation

The accounting and reporting policies of Regions Financial Corporation ("Regions" or the "Company"), conform with accounting principles generally accepted in the United States and with general financial services industry practices. Regions provides a full range of banking and bank-related services to individual and corporate customers through its subsidiaries and branch offices located primarily in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas.  The Company is subject to intense competition from other financial institutions and is also subject to the regulations of certain government agencies and undergoes periodic examinations by those regulatory authorities.

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions for Form 10-Q, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States. For a summary of significant accounting policies that have been consistently followed, see Note A to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K.  It is management's opinion that all adjustments, consisting of only normal and recurring items necessary for a fair presentation, have been included. Please refer to "Critical Accounting Policies" included in Management's Discussion and Analysis.

Certain amounts in prior periods have been reclassified to conform to the current period presentation.



NOTE B -- Stock-Based Compensation

Regions has stock option plans for certain key employees that provide for the granting of options to purchase up to 5,720,000 shares of Regions' common stock (excluding options assumed in connection with acquisitions). The terms of options granted are determined by the compensation committee of the Board of Directors; however, no options may be granted after ten years from the plans' adoption, and no options may be exercised beyond ten years from the date granted.  The option price per share of incentive stock options cannot be less than the fair market value of the common stock on the date of the grant; however, the option price of non-qualified options may be less than the fair market value of the common stock on the date of the grant.

Regions' long-term incentive plans provide for the granting of up to 35,000,000 shares of common stock in the form of stock options, stock appreciation rights, performance awards or restricted stock awards. The terms of stock options granted under the long-term incentive plans are generally subject to the same terms as options granted under Regions' stock option plans.



---



|                                               | Nine months ended
|---------------------------------------------- | -----------------
|                                               |                  
|                                               | September 30,    
|(dollar amounts in thousands)                  | 2003             
|                                               |                  
|                                               |                  
|Net income                                     | $488,088         
|Less:  Total stock-based compensation expense  |                  
|based on fair value method for all awards, net |                  
|of related tax effects                         | (6,785)          
|                                               |                  
|                                               |                  
|Pro forma net income                           | $481,303         
|                                               |                  
|                                               |                  
|                                               |                  
|                                               |                  
|Per share:                                     |                  
|Net income                                     | $2.20            
|Net income-diluted                             | 2.17             
|Pro forma net income                           | 2.17             
|Pro forma net income-diluted                   | 2.14             

The weighted average fair value of options granted during the nine months ended September 30, 2003 and 2002, was $4.53 and $4.74, respectively.  The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in 2003: expected dividend yield of 3.70%; expected option life of 5 years; expected volatility of 21.8%; and a risk-free interest rate of 2.8%.  The 2002 assumptions used in the model included: expected dividend yield of 3.38%; expected option life of 5 years; expected volatility of 22.0%; and a risk-free interest rate of 2.7%.

NOTE C -- Business Segment Information



Regions' segment information is presented based on Regions' primary segments of business.  Each segment is a strategic business unit that serves specific needs of Regions' customers. The Company's primary segment is community banking.  Community banking represents the Company's branch banking functions and has separate management that is responsible for the operation of that business unit.  In addition, Regions has designated as distinct reportable segments the activities of its treasury, mortgage banking, investment banking/brokerage/trust, and insurance divisions. The treasury division includes the Company's bond portfolio, mortgage lending portfolio, and other wholesale activities. Mortgage banking consists of origination and servicing functions of Regions' mortgage operations.  Investment banking includes trust activities and all brokerage and investment activities associated with Morgan Keegan. Insurance includes all business associated with commercial insurance, in addition to credit life products sold to consumer customers. The reportable segment designated "Other" includes activity of Regions' indirect consumer lending division and the parent company. Prior period amounts have been restated to reflect changes in methodology.



---

The accounting policies used by each reportable segment are the same as those discussed in Note A to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K.  The following table presents financial information for each reportable segment.

Nine months ended September 30, 2003



|                        | Total Banking     |            
|----------------------- | ----------------- | -----------
|                        |                   |            
|(in thousands)          | Community
Banking | Treasury   
|                        |                   |            
|Net interest income     | $859,374          | $ 199,137  
|Provision for loan loss | 85,758            | 2,566      
|Non-interest income     | 257,605           | 25,673     
|Non-interest expense    | 646,340           | 45,538     
|Income taxes            | 125,046           | 66,265     
|                        |                   |            
|                        |                   |            
|Net income              | $ 259,835         | $ 110,441  
|                        |                   |            
|                        |                   |            
|                        |                   |            
|                        |                   |            
|Average assets          | $26,399,660       | $14,833,990



|(in thousands)          | Investment Banking/
Brokerage/
Trust | Insurance  | Other        | Total
Company
|----------------------- | ------------------------------------ | ---------- | ------------ | -------------
|                        |                                      |            |              |              
|Net interest income     | $   16,626                           | $    1,615 | $ (23,438)   | $1,095,080   
|Provision for loan loss | -0-                                  | -0-        | 3,133        | 91,500       
|Non-interest income     | 486,573                              | 55,381     | (16,625)     | 1,067,388    
|Non-interest expense    | 403,657                              | 41,008     | 52,373       | 1,388,336    
|Income taxes            | 37,383                               | 5,598      | (76,138)     | 194,544      
|                        |                                      |            |              |              
|                        |                                      |            |              |              
|Net income              | $  62,159                            | $  10,390  | $   (19,431) | $488,088     
|                        |                                      |            |              |              
|                        |                                      |            |              |              
|                        |                                      |            |              |              
|                        |                                      |            |              |              
|Average assets          | $2,482,305                           | $122,154   | $2,975,181   | $48,411,353  



---

Nine months ended September 30, 2002



|                        | Total Banking     |            
|----------------------- | ----------------- | -----------
|                        |                   |            
|(in thousands)          | Community
Banking | Treasury   
|                        |                   |            
|Net interest income     | $874,389          | $ 224,673  
|Provision for loan loss | 88,892            | 2,189      
|Non-interest income     | 242,710           | 25,743     
|Non-interest expense    | 650,592           | 22,272     
|Income taxes            | 129,769           | 84,733     
|                        |                   |            
|                        |                   |            
|Net income              | $  247,846        | $ 141,222  
|                        |                   |            
|                        |                   |            
|                        |                   |            
|                        |                   |            
|Average assets          | $25,300,128       | $13,665,973



|(in thousands)          | Investment
Banking/
Brokerage/
Trust | Insurance  | Other      | Total
Company
|----------------------- | ------------------------------------ | ---------- | ---------- | -------------
|                        |                                      |            |            |              
|Net interest income     | $   17,979                           | $    1,879 | $(19,756)  | $1,125,022   
|Provision for loan loss | -0-                                  | -0-        | 3,904      | 95,000       
|Non-interest income     | 419,002                              | 46,185     | (3,163)    | 895,989      
|Non-interest expense    | 364,980                              | 33,648     | 50,120     | 1,275,884    
|Income taxes            | 26,651                               | 5,186      | (73,230)   | 186,459      
|                        |                                      |            |            |              
|                        |                                      |            |            |              
|Net income              | $ 45,350                             | $ 9,230    | $ (3,713)  | $463,668     
|                        |                                      |            |            |              
|                        |                                      |            |            |              
|                        |                                      |            |            |              
|                        |                                      |            |            |              
|Average assets          | $2,510,249                           | $106,713   | $3,080,810 | $45,594,068  



---

NOTE D -- Derivative Financial Instruments

Regions maintains positions in derivative financial instruments to manage interest rate risk, to facilitate asset/liability management strategies, and to manage other risk exposures.  The most common derivative instruments are forward rate agreements, interest rate swaps, and put and call options.  For those derivative contracts that qualify for special hedge accounting treatment, according to Statement of Financial Accounting Standards No. 133 (Statement 133), Regions designates the hedging instrument as either a cash flow or fair value hedge.  The accounting policies associated with derivative financial instruments are discussed further in Note A to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K.

Regions utilizes certain derivative instruments to hedge the variability of interest cash flows on debt instruments.  To the extent that the hedge of future cash flows is effective, changes in the fair value of the derivative are recognized as a component of other comprehensive income in stockholders' equity.  At September 30, 2003, Regions had reported a $4.0 million loss in other comprehensive income related to cash flow hedges.  The Company will amortize this loss into earnings in conjunction with the recognition of interest payments through 2011.  To the extent that the hedge of future cash flows is ineffective, changes in the fair value of the derivative are recognized in earnings as a component of other non-interest expense.  For the nine months ended September 30, 2003, there was no ineffectiveness recognized in other non-interest expense attributable to cash flow hedges.  No gains or losses were recognized in the first nine months of 2003 related to components of derivative instruments that were excluded from the assessment of hedge effectiveness.

Regions hedges the changes in the fair value of assets using forward contracts, which represent commitments to sell money market instruments at a future date at a specified price or yield.  The contracts are utilized by the Company to hedge interest rate risk positions associated with the origination of mortgage loans held for sale.  The Company is subject to the market risk associated with changes in the value of the underlying financial instrument, as well as the risk that the other party will fail to perform.  For the nine months ended September 30, 2003, Regions recognized a net hedging loss of $1.6 million associated with these hedging instruments.

Regions has also entered into interest rate swap agreements converting a portion of its fixed rate long-term debt to floating rate. The fair values of these derivative instruments are included in other assets on the statements of financial condition. For the nine months ended September 30, 2003, there was a $486,000 loss recorded in earnings due to hedge ineffectiveness. No gains or losses were recognized in the first nine months of 2003 related to components of derivative instruments that were excluded from the assessment of hedge effectiveness.

The Company also maintains a trading portfolio of interest rate swaps, option contracts and futures and forward commitments used to meet the needs of its customers.  The portfolio is used to generate trading profit and help clients manage interest rate risk. The Company is subject to the risk that a counterparty will fail to perform. The fair value of the trading portfolio at September 30, 2003, was $38.6 million.

Foreign currency contracts involve the exchange of one currency for another on a specified date and at a specified rate. These contracts are executed on behalf of the Company's customers and are used to manage fluctuations in foreign exchange rates. The notional amount of forward foreign exchange contracts totaled $8 million at  September 30, 2003 and $7 million at September 30, 2002. The Company is subject to the risk that a counterparty will fail to perform.



---

In the normal course of business, Regions' brokerage subsidiary enters into underwriting and forward and future commitments. At September 30, 2003, the contract amount of future contracts was $49 million to purchase and $136 million to sell U.S. Government and municipal securities. The brokerage subsidiary typically settles its position by entering into equal but opposite contracts and, as such, the contract amounts do not necessarily represent future cash requirements. Settlement of transactions relating to such commitments is not expected to have a material effect on the subsidiary's financial position. Transactions involving future settlement give rise to market risk, which represents the potential loss that can be caused by a change in the market value of a particular financial instrument. The exposure to market risk is determined by a number of factors, including size, composition and diversification of positions held, the absolute and relative levels of interest rates and market volatility.

Regions' derivative financial instruments are summarized as follows:



|                             | Other Than Trading Derivatives
|---------------------------- | ------------------------------
|                             |                               
|                             | As of September 30, 2003      
|                             |                               
|(dollar amounts in millions) | Notional Amount               
|                             |                               
|Asset hedges:                |                               
|Fair value hedges:           |                               
|Forward sale commitments     | $ 186                         
|                             |                               
|Total asset hedges           | $ 186                         
|                             |                               
|                             |                               
|                             |                               
|                             |                               
|Liability hedges:            |                               
|Fair value hedges:           |                               
|Interest rate swaps          | $3,438                        
|Interest rate options        | 750                           
|                             |                               
|Total liability hedges       | $4,188                        
|                             |                               
|                             |                               
|                             |                               



|                             | As of September 30, 2002
|---------------------------- | ------------------------
|                             |                         
|(dollar amounts in millions) | Notional Amount         
|                             |                         
|Asset hedges:                |                         
|Fair value hedges:           |                         
|Forward sale commitments     | $ 270                   
|                             |                         
|Total asset hedges           | $ 270                   
|                             |                         
|                             |                         
|                             |                         
|                             |                         
|Liability hedges:            |                         
|Fair value hedges:           |                         
|Interest rate swaps          | $3,938                  
|Interest rate options        | 1,400                   
|                             |                         
|Total liability hedges       | $5,338                  
|                             |                         
|                             |                         
|                             |                         



---

|                      | Derivative Financial Instruments
|--------------------- | --------------------------------
|                      | As of September 30,             
|                      |                                 
|                      | 2003                            
|                      |                                 
|                      | Contract or Notional Amount     
|                      |                                 
|                      | Other                           
|                      | Than                            
|(in millions)         | Trading                         
|                      |                                 
|                      |                                 
|Interest rate swaps   | $3,438                          
|Interest rate options | 750                             
|Futures and forward   |                                 
|commitments           | 186                             
|Foreign exchange      |                                 
|forwards              | -0-                             
|                      |                                 
|Total                 | $4,374                          
|                      |                                 
|                      |                                 
|                      |                                 

*Credit Risk Amount is defined as all positive exposures not collateralized with cash on deposit.  Any credit risk arising under option contracts is combined with swaps to reflect netting agreements.

The following table is a summary of Regions' derivative financial instruments as of June 30, 2003 and is presented for comparison purposes.

|                      | Derivative Financial Instruments
|--------------------- | --------------------------------
|                      | As of June 30,                  
|                      |                                 
|                      | 2003                            
|                      |                                 
|                      | Contract or Notional Amount     
|                      |                                 
|                      | Other                           
|                      | Than                            
|(in millions)         | Trading                         
|                      |                                 
|                      |                                 
|Interest rate swaps   | $3,488                          
|Interest rate options | 1,400                           
|Futures and forward   |                                 
|commitments           | 515                             
|Foreign exchange      |                                 
|forwards              | -0-                             
|                      |                                 
|Total                 | $5,403                          
|                      |                                 
|                      |                                 
|                      |                                 

*Credit Risk Amount is defined as all positive exposures not collateralized with cash on deposit.  Any credit risk arising under option contracts is combined with swaps to reflect netting agreements.





---

NOTE E -- Recent Accounting Pronouncements

On May 15, 2003, the FASB issued Statement of Financial Accounting Standards No. 150 , "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity"(Statement 150). Statement 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Statement 150 was effective for financial instruments entered into or modified after May 31, 2003, and otherwise became effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of Statement 150 did not have a material impact on financial position or results of operations for Regions.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB 51." This Interpretation addresses consolidation by business enterprises of variable interest entities (VIE). FIN 46 defines a VIE as one which has one or both of the following characteristics: (1) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional support from other parties, which is provided through other interests that will absorb some or all of the expected losses of the entity and/or (2) the equity investors lack one or more of the following essential characteristics of a controlling financial interest: (a) the direct or indirect ability to make decisions about the entity's activities through voting rights or similar rights, (b) the obligation to absorb the expected losses of the entity if they occur, which makes it possible for the entity to finance its activities, or (c) the right to receive the expected residual returns of the entity if they occur, which is the compensation for the risk of absorbing expected losses. FIN 46 excludes certain interests from its scope including transferors to qualifying special purpose entities subject to Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" and employee benefit plans subject to specific accounting requirements in existing FASB Statements. FIN 46 was effective immediately to VIEs created after January 31, 2003 and was initially scheduled to become effective in the interim period beginning after June 15, 2003 for VIEs an enterprise held prior to January 31, 2003. On October 9, 2003, the FASB issued FASB Staff Position No. FIN 46-6 (FSP 46-6). FSP 46-6 deferred the effective date for applying the provisions of FIN 46 for interests held by public entities in VIEs or potential VIEs created before February 1, 2003. The effective date of FIN 46 was deferred until the end of the first interim or annual period ending after December 15, 2003 or as of December 31, 2003 for Regions. Regions will adopt FIN 46 for entities created before February 1, 2003 on December 31, 2003. See Note F for discussion of the potential impact of FIN 46 on the Company.





---

NOTE F -- Variable Interest Entities

Regions will adopt FIN 46 for VIEs created prior to February 1, 2003 on December 31, 2003. The disclosures below provide the expected impact of adopting FIN 46 based on Regions' evaluation of FIN 46 and interpretive guidance issued to date.

Regions has identified four VIEs that are expected to be consolidated upon adoption of FIN 46. The four VIEs are non-registered investment partnerships in which one of Regions' affiliates serves as the general partner in addition to owning a portion of the limited partnership interests. Based on September 30, 2003 information, the consolidation of the four non-registered investment partnerships will increase other assets and other liabilities by approximately $23.8 million upon adoption. The consolidation will not have a material impact on net income. Regions' maximum exposure to loss as of September 30, 2003, was $17.2 million which includes $9.0 million in unfunded commitments to the partnerships.

Regions owns the common stock of two subsidiary business trusts, which have issued corporation-obligated manditorily redeemable preferred capital securities ("trust preferred securities"). One of the trusts issued $287.5 million in trust preferred securities in February 2001. The other trust issued $3.0 million in trust preferred securities and was acquired as part of a bank acquisition in November 2001. The trusts' only assets are junior subordinated debentures issued by Regions, which were acquired by the trusts using the proceeds from the issuance of the trust preferred securities and common stock. Currently, Regions consolidates the trusts and reports the trust preferred securities in long-term debt. Regions determined that it is not the primary beneficiary of the trusts and, accordingly, will have to deconsolidate the trusts upon adoption of FIN 46. Upon deconsolidation, the junior subordinated debentures will be included in long-term debt and Regions' equity interest in the business trusts will be included in other assets. The deconsolidation will result in a net increase in long-term debt and other assets of $9.0 million. The deconsolidation of the trusts will not materially impact net income. For regulatory reporting and capital adequacy purposes, the Federal Reserve Board has indicated that such preferred securities will continue to constitute Tier 1 capital until further notice.

Regions periodically invests in various limited partnerships that sponsor affordable housing projects utilizing the Low Income Housing Tax Credit pursuant to Section 42 of the Internal Revenue Code. The investments are funded through a combination of debt and equity with equity typically comprising 30% to 50% of the total partnership capital. Regions has concluded that these partnerships are VIEs, however, Regions is not the primary beneficiary of these partnerships and they are not consolidated. As of September 30, 2003, Regions' recorded investment in these limited partnerships was $142.7 million. Regions' maximum exposure to loss as of September 30, 2003 was $170.2 million, which includes $27.5 million in unfunded commitments to the partnerships.

Regions also invested in two grantor trusts during 2001 which are parties to leveraged lease financing transactions. The trusts have been determined to be VIEs. Regions' total investment in the trusts and maximum exposure to loss was $76.4 million as of September 30, 2003. FIN 46 will not impact Regions' current leveraged lease accounting for its investment in the trusts.

NOTE G -- Borrowings

During the third quarter of 2003, Regions retired $350 million in short-term Federal Home Loan Bank advances and $300 million in long-term Federal Home Loan Bank advances resulting in a combined loss of $20.6 million recorded in non-interest expense.  Also, during the third quarter of 2003, Regions' banking subsidiary issued $400 million of senior bank notes due on December 16, 2006.



---



Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

The following discussion and financial information is presented to aid in understanding Regions Financial Corporation's ("Regions" or the "Company") financial position and results of operations. The emphasis of this discussion will be on the nine and three months ended September 30, 2003, as compared to the nine and three months ended September 30, 2002, and the three months ended June 30, 2003.

CORPORATE PROFILE

Regions' primary business is providing traditional commercial and retail banking services to customers throughout the South. Regions' banking affiliate, Regions Bank, operates as an Alabama state-chartered bank with branch offices in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas.

In addition to providing traditional commercial and retail banking services, Regions provides other financial services in the fields of investment banking, asset management, trust, mutual funds, securities brokerage, mortgage banking, insurance, leasing, and other specialty financing. Regions has no foreign banking operations, although it maintains an international department to assist customers with their foreign transactions. Regions provides investment banking and brokerage services from 146 offices of Morgan Keegan & Company, Inc. ("Morgan Keegan"), one of the largest investment firms based in the South. Regions' mortgage banking operations, Regions Mortgage and EquiFirst Corporation ("EquiFirst"), provide residential mortgage loan origination and servicing activities for customers. Regions Mortgage services approximately $16.0 billion in mortgage loans.  Regions provides full-line insurance brokerage services through Rebsamen Insurance, Inc., one of the 50 largest insurance brokers in the country.  Credit life insurance services for customers are provided through other Regions' affiliates.

The Company's principal market areas are located in the states of Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas. Morgan Keegan also operates offices in Illinois, Kentucky, Massachusetts, Mississippi, New York and Virginia, as well as Toronto, Canada.

THIRD QUARTER HIGHLIGHTS

Net income for the third quarter of 2003 totaled $164.7 million or $.73 per diluted share, compared to $156.5 million or $.70 per diluted share for the third quarter of 2002 and $164.8 million or $.73 per diluted share for the second quarter of 2003.

Regions' diversified business mix continued to produce a balanced revenue stream in the third quarter, with net interest income accounting for 51% of total revenue and non-interest income (excluding securities gains and losses) accounting for 49%. Brokerage and mortgage banking continued strong in the third quarter. Morgan Keegan's revenues and net income increased 11% and 27%, respectively, in the current quarter compared to the same period in 2002, resulting from Morgan Keegan producing the second best quarter in its history. Mortgage revenues increased 47% compared to the third quarter of 2002 as the mortgage operations posted record production of $2.8 billion in the third quarter compared to $1.7 billion in the third quarter of 2002.



---

In the third quarter of 2003, net interest income increased to $368.9 million compared to $366.3 million in the second quarter of 2003. The net interest margin was relatively stable at 3.44%, compared to 3.47% in the second quarter of 2003.

Regions' low cost deposits increased 8% in the third quarter of 2003, compared to the third quarter of 2002, and 2% annualized, compared to the second quarter of 2003.

The provision for loan losses in the third quarter of 2003 was $30 million compared to $35 million in the third quarter of 2002 and $30 million in the second quarter of 2003. The reserve for loan losses as a percent of loans, net of unearned income, was at 1.44% at September 30, 2003.

Net charge-offs totaled $30.6 million or 0.39% of average loans, annualized, in the third quarter of 2003, compared to 0.40% for the third quarter of 2002 and 0.29% in the second quarter of 2003. Two commercial loans accounted for $8.4 million or 11 basis points of net charge-offs in the third quarter of 2003. Year-to-date net charge-offs as a percent of average loans, annualized, were 0.31% in 2003 compared to 0.35% in 2002. On a linked-quarter basis, non-performing assets and loans past due 90 days decreased $2.2 million to $357.7 million at September 30, 2003. Non-accrual loans increased $27.0 million, other real estate increased $4.5 million, and renegotiated loans decreased $28.9 million compared to second quarter 2003 levels. Loans past due greater than 90 days decreased $4.8 million in the third quarter 2003, compared to the prior quarter.

Non-interest income, excluding securities gains and losses, increased $43.7 million over the third quarter of 2002 and decreased $14.6 million compared to the second quarter of 2003. Brokerage and investment banking revenues totaled $140.3 million in the third quarter of 2003, compared to $123.3 million in the third quarter of 2002 and $151.8 million in the second quarter of 2003. Regions' mortgage servicing and origination fees totaled $29.1 million in the third quarter 2003 compared to $26.9 million in the third quarter of 2002 and $31.8 million in the second quarter of 2003.

A recapture of $20.0 million of impairment charges on mortgage servicing rights was recorded in the third quarter of 2003 and is included as a reduction to non-interest expense. This recapture is due primarily to an increase in mortgage interest rates in the third quarter of 2003. Also included in non-interest expense was a $20.6 million loss on early extinguishment of debt due to the retirement of $650 million in Federal Home Loan Bank advances ($350 million classified as short-term and $300 million classified as long-term) in the third quarter of 2003.  Excluding these items and the impairment charges on mortgage servicing rights of $19.2 million recorded in the second quarter of 2003, non-interest expense decreased $9.2 million compared to the second quarter of 2003.  The decrease is due primarily to a $7.3 million decline in salaries and employee benefits due to lower commissions and incentive pay in Regions' brokerage operations.

CRITICAL ACCOUNTING POLICIES

In preparing financial information, management is required to make significant estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses for the periods shown.  The accounting principles followed by Regions and the methods of applying these principles conform with accounting principles generally accepted in the United States and general banking practices.  Estimates and assumptions most significant to Regions are related primarily to allowance for loan losses, intangibles, income taxes, securitizations and pensions and are summarized in the following discussion and the Notes to the Consolidated Financial Statements included under Item 8 of the Annual Report on Form 
10-K.



---

Management's determination of the adequacy of the allowance for loan losses, which is based on the factors and risk identification procedures discussed in the following pages, requires the use of judgments and estimates that may change in the future. Changes in the factors used by management to determine the adequacy of the allowance or the availability of new information could cause the allowance for loan losses to be increased or decreased in future periods. In addition, bank regulatory agencies, as part of their examination process, may require that additions be made to the allowance for loan losses based on their judgments and estimates.

Regions' excess purchase price (the amount in excess of book value of acquired institutions) is reviewed at least annually to ensure that there have been no events or circumstances resulting in an impairment of the recorded amount of excess purchase price. Adverse changes in the economic environment, operations of acquired business units, or other factors could result in a decline in projected fair values. If the estimated fair value is less than the carrying amount, a loss would be recognized to reduce the carrying amount to implied fair value.

For purposes of evaluating mortgage servicing impairment, Regions stratifies its mortgage servicing portfolio on the basis of certain risk characteristics including loan type and contractual note rate. Changes in interest rates, prepayment frequency or other factors could result in impairment of the servicing asset and a charge against earnings to reduce the recorded carrying amount.

Management's determination of the realization of the deferred tax asset is based upon management's judgment of various future events and uncertainties, including the timing and amount of future income earned by certain subsidiaries and the implementation of various tax plans to maximize realization of the deferred tax asset.  Management believes that the subsidiaries will generate sufficient operating earnings to realize the deferred tax benefits. Regions' recent consolidated federal income tax returns are open for examination. From time to time Regions engages in business plans that may also have an effect on its tax liabilities. While Regions has obtained the opinion of advisors that the tax aspects of these plans should prevail, examination of Regions' income tax returns or changes in tax law may impact these plans and resulting provisions for income taxes.

Management is required to make various assumptions in valuing its pension assets and liabilities. These assumptions include the expected rate of return on plan assets, the discount rate, and the rate of increase in future compensation levels. Changes to these assumptions could impact earnings in future periods. Regions takes into account the plan asset mix and expert opinions in determining the expected rate of return on plan assets. Regions considers the Moody's AA Corporate Bond yields and other market interest rates in setting the appropriate discount rate. In addition, Regions reviews expected inflationary and merit increases to compensation in determining the rate increase in future compensation levels.

During the first quarter of 2003 and the fourth quarter of 2002, Regions securitized automobile loans as a source of funding. Regions accounted for these transactions as sales in accordance with the guidance of Statement of Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". When selling this category of financial assets, estimates of future cash flows are an integral part of determining the gain or loss and subsequently evaluating any impairment of any retained interest, such as a servicing asset or residual interest. The most critical assumptions in estimating cash flows and related fair value include prepayment frequency, expected credit losses, and discount rate. Management reviews these assumptions on a quarterly basis and the assumptions are adjusted if deemed appropriate.

TOTAL ASSETS

Regions' total assets at September 30, 2003 were $48.8 billion -- an increase of 3% compared to September 30, 2002 and 2% compared to December 31, 2002. This growth was primarily the result of increases in securities, loans, and loans held for sale.



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LOANS AND ALLOWANCE FOR LOAN LOSSES

LOAN PORTFOLIO

Regions' primary investment is loans.  At September 30, 2003, loans represented 71% of Regions' earning assets.

The following table includes a distribution of Regions' loan portfolio.

|                                  |                    |  |                     |  |                   
|--------------------------------- | ------------------ |  | ------------------- |  | ------------------
|Loan Portfolio 
(period end data) |                    |  |                     |  |                   
|                                  |                    |  |                     |  |                   
|(in thousands)                    | Third Quarter
2003 |  | Fourth Quarter
2002 |  | Third Quarter
2002
|                                  |                    |  |                     |  |                   
|Commercial                        | $10,409,481        |  | $11,080,812         |  | $10,843,901       
|Residential mortgages             | 8,172,563          |  | 7,978,284           |  | 7,872,982         
|Other real estate loans           | 5,439,971          |  | 4,497,486           |  | 4,259,622         
|Construction                      | 3,371,931          |  | 3,603,820           |  | 3,663,580         
|Branch installment                | 1,414,299          |  | 1,632,443           |  | 1,674,325         
|Indirect installment              | 380,649            |  | 375,438             |  | 491,321           
|Consumer lines of credit          | 1,728,054          |  | 1,219,286           |  | 1,174,466         
|Student loans                     | 667,437            |  | 598,205             |  | 592,120           
|                                  |                    |  |                     |  |                   
|                                  | $31,584,385        |  | $30,985,774         |  | $30,572,317       
|                                  |                    |  |                     |  |                   
|                                  |                    |  |                     |  |                   
|                                  |                    |  |                     |  |                   

Total loans at September 30, 2003, increased 3% from September 30, 2002, and 2% over year-end 2002. The increase since September 30, 2002, was primarily due to growth in real estate loans and lines of credit, partially offset by a decline in commercial loans. The average yield on loans during the third quarter of 2003 was 5.41% compared to 6.52% during the third quarter of 2002, and 5.70% during the second quarter of 2003.  During the first nine months of 2003, the average yield on loans was 5.65% compared to 6.72% in 2002.

ALLOWANCE FOR LOAN LOSSES

Every loan carries some degree of credit risk.  This risk is reflected in the consolidated financial statements by the allowance for loan losses, the amount of loans charged off and the provision for loan losses charged to operating expense. It is Regions' policy that when a loss is identified, it is charged against the allowance for loan losses in the current period. The policy regarding recognition of losses requires immediate recognition of a loss if significant doubt exists as to principal repayment.

Regions' provision for loan losses is a reflection of actual losses experienced during the period and management's judgment as to the adequacy of the allowance for loan losses.  Some of the factors considered by management in determining the amount of the provision and resulting allowance include: (1) detailed reviews of individual loans; (2) gross and net loan charge-offs in the current period; (3) the current level of the allowance in relation to total loans and to historical loss levels; (4) past due and non-accruing loans; (5) collateral values of properties securing loans; (6) the composition of the loan portfolio (types of loans) and risk profiles; and (7) management's analysis of economic conditions and the resulting impact on Regions' loan portfolio.



---

If, as a result of Regions' loan review and evaluation procedures, it is determined that payment of interest on a loan is questionable, it is Regions' policy to reverse interest previously accrued on the loan against interest income. Interest on such loans is thereafter recorded on a "cash basis" and is included in earnings only when actually received in cash and when full payment of principal is no longer doubtful.

Although it is Regions' policy to immediately charge off as a loss all loan amounts judged to be uncollectible, historical experience indicates that certain losses exist in the loan portfolio that have not been specifically identified. To anticipate and provide for these unidentifiable losses, the allowance for loan losses is established by charging the provision for loan loss expense against current earnings.  No portion of the resulting allowance is in any way allocated or restricted to any individual loan or group of loans.  The entire allowance is available to absorb losses from any and all loans.

Regions' determination of its allowance for loan losses is based in accordance with Statement of Financial Accounting Standards Nos. 114 and 5.  In determining the amount of the allowance for loan losses, management uses information from its loan review process to stratify the loan portfolio into risk grades.  The higher-risk-graded loans in the portfolio are assigned estimated amounts of loss based on several factors, including current and historical loss experience of each higher-risk category, regulatory guidelines for losses in each higher-risk category andmanagement's judgment of economic conditions and the resulting impact on the higher-risk-graded loans.  All loans deemed to be impaired, which include non-accrual loans and loans past due 90 days or more, excluding loans to individuals, are evaluated individually. The vast majority of Regions' impaired loans are dependent upon collateral for repayment. For these loans, impairment is measured by evaluating collateral value as compared to the current investment in the loan. For all other loans, Regions compares the amount of estimated discounted cash flows to the investment in the loan. In the event a particular loan's collateral value is not sufficient to support the collection of the investment in the loan, a charge is immediately taken against the allowance for loan losses. The amount of the allowance for loan losses related to the higher-risk loans (including impaired loans) was approximately 68% at September 30, 2003, compared to 72% at December 31, 2002.

In addition to establishing allowance levels for specifically identified higher-risk-graded loans, management determines allowance levels for all other loans in the portfolio for which historical experience indicates that certain losses exist.  These loans are categorized by loan type and assigned estimated amounts of loss based on several factors, including current and historical loss experience of each loan type and management's judgment of economic conditions and the resulting impact on each category of loans. The amount of the allowance for loan losses related to all other loans in the portfolio for which historical experience indicates that certain losses exist was approximately 32% of Regions' allowance for loan losses at September 30, 2003, compared to 28% at December 31, 2002. The amount of the allowance related to these loans is combined with the amount of the allowance related to the higher-risk-graded loans to evaluate the overall level of the allowance for loan losses.



---

Activity in the allowance for loans losses is summarized as follows:

|                                      | Nine Months Ended
|------------------------------------- | -----------------
|(dollar amounts in thousands)         | September 30,    
|                                      | 2003             
|                                      |                  
|Balance at beginning of period        | $437,164         
|Loans charged-off:                    |                  
|Commercial                            | 60,571           
|Real estate                           | 13,887           
|Installment                           | 28,086           
|                                      |                  
|Total                                 | 102,544          
|Recoveries:                           |                  
|Commercial                            | 9,325            
|Real estate                           | 4,471            
|Installment                           | 16,124           
|                                      |                  
|Total                                 | 29,920           
|Net loans charged off:                |                  
|Commercial                            | 51,246           
|Real estate                           | 9,416            
|Installment                           | 11,962           
|                                      |                  
|Total                                 | 72,624           
|Allowance of acquired banks           | -                
|Provision charged to expense          | 91,500           
|                                      |                  
|Balance at end of period              | $456,040         
|                                      |                  
|                                      |                  
|                                      |                  
|                                      |                  
|Average loans outstanding:            |                  
|Commercial                            | $10,819,960      
|Real estate                           | 15,158,478       
|Installment                           | 5,378,691        
|                                      |                  
|Total                                 | $31,357,129      
|                                      |                  
|                                      |                  
|                                      |                  
|Net charge-offs as percent of average |                  
|loans outstanding (annualized):       |                  
|Commercial                            | .63%             
|Real estate                           | .08%             
|Installment                           | .30%             
|                                      |                  
|Total                                 | .31%             
|                                      |                  
|                                      |                  
|                                      |                  



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NON-PERFORMING ASSETS

Non-performing assets are summarized as follows:

|(dollar amounts in thousands)         | September 30, |  | June 30, |  | December 31, |  | September 30,
|------------------------------------- | ------------- |  | -------- |  | ------------ |  | -------------
|                                      | 2003          |  | 2003     |  | 2002         |  | 2002         
|                                      |               |  |          |  |              |  |              
|Non-accruing loans                    | $268,764      |  | $241,789 |  | $226,470     |  | $248,345     
|Loans past due 90 days or more        | 31,075        |  | 35,894   |  | 38,499       |  | 42,167       
|Renegotiated loans                    | 931           |  | 29,803   |  | 32,280       |  | 33,085       
|Other real estate                     | 56,887        |  | 52,358   |  | 59,606       |  | 59,103       
|                                      |               |  |          |  |              |  |              
|Total                                 | $357,657      |  | $359,844 |  | $356,855     |  | $382,700     
|                                      |               |  |          |  |              |  |              
|                                      |               |  |          |  |              |  |              
|                                      |               |  |          |  |              |  |              
|                                      |               |  |          |  |              |  |              
|Non-performing assets as a percentage |               |  |          |  |              |  |              
|of loans and other real estate        | 1.13%         |  | 1.13%    |  | 1.15%        |  | 1.25%        

Non-accruing loans at September 30, 2003, increased $20.4 million over September 30, 2002 levels and $42.3 million over year-end 2002 levels. Compared to June 30, 2003, non-accrual loans increased $27.0 million. These increases are primarily related to commercial credits, including a shared national credit of $21.9 million that was reclassified from renegotiated to non-accrual in the third quarter and an agribusiness loan of $11.9 million that was added to non-accrual in the third quarter of 2003. At September 30, 2003, realestate loans comprised $114.2 million ($72.1 million in residential) of total non-accruing loans, with commercial loans accounting for $149.5 million and consumer loans accounting for $5.1 million. Loans past due 90 days or more decreased $11.1 million compared to September 30, 2002 and $7.4 million from year-end 2002 levels. Compared to June 30, 2003, loans past due 90 days or more decreased $4.8 million. Renegotiated loans decreased $32.2 million compared to September 30, 2002 and $31.3 million from year-end 2002 levels. Compared to June 30, 2003, renegotiated loans decreased $28.9 million.  These decreases are due primarily to the $21.9 million reclassification to non-accrual discussed above as well as charge-offs in the third quarter of 2003. Other real estate decreased $2.2 million from September 30, 2002 and $2.7 million since year-end 2002 levels. Compared to June 30, 2003, other real estate increased $4.5 million.



INTEREST BEARING DEPOSITS IN OTHER BANKS

Interest-bearing deposits in other banks are used primarily as temporary investments and generally have short-term maturities. At September 30, 2003 this category of earning asset totaled $194.8 million compared to $226.3 million at September 30, 2002, and $303.6 million at December 31, 2002, as maturities were not reinvested in this earning asset category.



---

SECURITIES

The following table shows the carrying values of securities as follows:

|(in thousands)                                   | September 30, |  | December 31, |  | September 30,
|------------------------------------------------ | ------------- |  | ------------ |  | -------------
|                                                 | 2003          |  | 2002         |  | 2002         
|                                                 |               |  |              |  |              
|Securities held to maturity:                     |               |  |              |  |              
|U.S. Treasury and Federal agency securities      | $30,680       |  | $30,571      |  | $31,758      
|Obligations of states and political subdivisions | 1,514         |  | 2,335        |  | 3,138        
|Other securities                                 | -             |  | 3            |  | 42           
|                                                 |               |  |              |  |              
|Total                                            | $32,194       |  | $32,909      |  | $34,938      
|                                                 |               |  |              |  |              
|                                                 |               |  |              |  |              
|                                                 |               |  |              |  |              
|Securities available for sale:                   |               |  |              |  |              
|U.S. Treasury and Federal agency securities      | $2,447,920    |  | $1,957,593   |  | $2,054,927   
|Obligations of states and political subdivisions | 475,786       |  | 543,798      |  | 556,015      
|Mortgage-backed securities                       | 5,884,771     |  | 6,147,946    |  | 6,042,319    
|Other securities                                 | 76,435        |  | 42,315       |  | 9,153        
|Equity securities                                | 232,840       |  | 270,039      |  | 275,841      
|                                                 |               |  |              |  |              
|Total                                            | $9,117,752    |  | $8,961,691   |  | $8,938,255   
|                                                 |               |  |              |  |              
|                                                 |               |  |              |  |              
|                                                 |               |  |              |  |              

Total securities at September 30, 2003, increased 2% from September 30, 2002 and year-end 2002 levels. Security balances have increased primarily through the purchase of agency securities to manage the Company's interest rate sensitivity and liquidity position.

LOANS HELD FOR SALE

Loans held for sale increased $60.1 million compared to September 30, 2002 and $433.2 million compared to year-end 2002. At September 30, 2003, there were approximately $1.3 billion in mortgage loans held for sale.  Regions securitized and sold approximately $800 million during the fourth quarter of 2002 and $570 million during the first quarter of 2003 of indirect consumer auto loans classified as loans held for sale. At September 30, 2003, there were approximately $595 million in indirect auto loans held for sale.

MARGIN RECEIVABLES

Margin receivables at September 30, 2003, totaled $509.6 million compared to $515.2 million at September 30, 2002, and $432.3 million at December 31, 2002. Margin receivables represent funds advanced to brokerage customers for the purchase of securities that are secured by certain marketable securities held in the customer's brokerage account. The risk of loss from these receivables is minimized by requiring that customers maintain marketable securities in the brokerage account which have a fair market value substantially in excess of the funds advanced to the customer. Fluctuations in these balances are caused by trends in general market conditions, volatility in equity retail products, and investor sentiment toward economic stability.

OTHER ASSETS

Other assets increased $152.2 million compared to September 30, 2002, and $35.5 million since year-end 2002.  These increases are due primarily to receivables related to increased production at Morgan Keegan.



---

LIQUIDITY

GENERAL

Liquidity is an important factor in the financial condition of Regions and affects Regions' ability to meet the borrowing needs and deposit withdrawal requirements of its customers. Assets, consisting principally of loans and securities, are funded by customer deposits, purchased funds, borrowed funds and stockholders' equity.

The securities portfolio is one of Regions' primary sources of liquidity. Maturities of securities provide a constant flow of funds available for cash needs. Maturities in the loan portfolio also provide a steady flow of funds. Additional funds are provided from payments on consumer loans and one-to-four family residential mortgage loans. Historically, Regions' high levels of earnings have also contributed to cash flow. In addition, liquidity needs can be met by the purchase of funds in state and national money markets. Regions' liquidity also continues to be enhanced by a relatively stable deposit base.

The loan to deposit ratio at September 30, 2003, was 96.83% compared to 95.02% at September 30, 2002 and 94.11% at December 31, 2002.

Regions filed a $1.5 billion universal shelf registration statement in November 2001 and a $1.0 billion universal shelf registration statement in January 2001. Under these registration statements, Regions issued $600 million of subordinated notes in May 2002, $500 million of subordinated notes in February 2001 and $288 million of trust preferred securities in February 2001. Consequently, $1.1 billion of various debt securities could be subsequently issued, at market rates, under these registration statements.

In addition, Regions Bank has the requisite agreements in place to issue and sell up to $5 billion of its bank notes to institutional investors through placement agents. As of September 30, 2003, there were $400 million bank notes outstanding under this program.

Morgan Keegan maintains certain lines of credit with unaffiliated banks to manage liquidity in the ordinary course of business.



Regions securitized and sold approximately $800 million in the fourth quarter of 2002 and $570 million in the first quarter of 2003 of indirect consumer auto loans, utilizing an additional funding source (see "LOANS HELD FOR SALE"). Securitizations provide additional flexibility to Regions in managing liquidity.



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RATINGS

The table below reflects the most recent debt ratings of Regions Financial Corporation and Regions Bank by Standard & Poor's Corporation, Moody's Investors Service and Fitch IBCA:

|                                   | S&P  | Moody's | Fitch
|---------------------------------- | ---- | ------- | -----
|                                   |      |         |      
|Regions Financial Corporation:     |      |         |      
|Subordinated notes                 | A-   | A2      | A    
|Trust preferred securities         | BBB+ | A2      | A    
|Regions Bank:                      |      |         |      
|Short-term certificates of deposit | A-1  | P-1     | F1+  
|Short-term debt                    | A-1  | P-1     | F1+  
|Long-term certificates of deposit  | A+   | Aa3     | AA-  
|Long-term debt                     | A+   | Aa3     | A+   

A security rating is not a recommendation to buy, sell or hold securities, and the ratings above are subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.

DEPOSITS

Regions competes with other banking and financial services companies for a share of the deposit market. Regions' ability to compete in the deposit market depends heavily on how effectively the Company meets customers' needs. Regions employs both traditional and non-traditional means to meet customers' needs and enhance competitiveness. The traditional means include providing well-designed products, providing a high level of customer service, providing attractive pricing and expanding the traditional branch network to provide convenient branch locations for customers throughout the South. Regions also employs non-traditional approaches to enhance its competitiveness.  These include providing centralized, high quality telephone banking services and alternative product delivery channels like Internet banking.

Total deposits at September 30, 2003, increased 1% from September 30, 2002, but declined 1% from year-end 2002 levels. Compared to September 30, 2002, non-interest bearing deposits, interest bearing checking, money market, and savings accounts increased $1.5 billion or 8%, but were offset by a $1.9 billion or 19% decline in retail certificates of deposit, due to management's effort to adjust the deposit mix to favor lower-cost community bank accounts and the maturity of $859 million in the second quarter of 2003 and $751 million in the third quarter of 2003 of high yield certificates of deposit. Wholesale deposits increased from September 30, 2002 levels, as rates on these deposits were more favorable compared to other funding sources.



---

The following table presents the average rates paid on deposits by category for the nine months ended September 30, 2003 and 2002:

|                                            | Average Rates Paid
|------------------------------------------- | ------------------
|                                            |                   
|                                            | September 30,     
|                                            | 2003              
|                                            |                   
|Interest-bearing transaction accounts       | 1.00%             
|Savings accounts                            | 0.27              
|Money market savings accounts               | 0.73              
|Certificates of deposit of $100,000 or more | 2.69              
|Other interest-bearing deposits             | 2.88              
|Total interest-bearing deposits             | 1.71%             

The following table presents the average amounts of deposits outstanding by category for the nine months ended September 30, 2003 and 2002:

|                                            | Average Amounts Outstanding    
|------------------------------------------- | -------------------------------
|                                            |                                
|                                            | Nine months ended September 30,
|(in thousands)                              | 2003                           
|                                            |                                
|                                            |                                
|Non-interest-bearing demand deposits        | $ 5,251,993                    
|                                            |                                
|Interest-bearing transaction accounts       | 2,151,774                      
|Savings accounts                            | 1,428,296                      
|Money market savings accounts               | 10,644,990                     
|Certificates of deposit of $100,000 or more | 3,253,511                      
|Other interest-bearing deposits             | 9,322,247                      
|                                            |                                
|Total interest-bearing deposits             | 26,800,818                     
|                                            |                                
|Total deposits                              | $32,052,811                    
|                                            |                                
|                                            |                                
|                                            |                                
|                                            |                                

BORROWINGS

Following is a summary of short-term borrowings:

|(in thousands)                          | September 30, |  | December 31, |  | September 30,
|--------------------------------------- | ------------- |  | ------------ |  | -------------
|                                        | 2003          |  | 2002         |  | 2002         
|                                        |               |  |              |  |              
|Federal funds purchased                 | $1,453,004    |  | $1,180,368   |  | $1,613,997   
|Securities sold under agreements        |               |  |              |  |              
|to repurchase                           | 2,089,308     |  | 1,022,893    |  | 937,286      
|Federal Home Loan Bank structured notes | 500,000       |  | 850,000      |  | 1,100,000    
|Notes payable to unaffiliated banks     | 89,000        |  | 56,009       |  | 162,600      
|Commercial paper                        | 13,750        |  | 17,250       |  | 24,750       
|Due to brokerage customers              | 500,803       |  | 651,078      |  | 580,442      
|Broker margin calls                     | 82,179        |  | 111,321      |  | 97,584       
|Short sale liability                    | 234,390       |  | 196,538      |  | 116,638      
|                                        |               |  |              |  |              
|                                        |               |  |              |  |              
|Total                                   | $4,962,434    |  | $4,085,457   |  | $4,633,297   
|                                        |               |  |              |  |              
|                                        |               |  |              |  |              
|                                        |               |  |              |  |              



---

Net federal funds purchased and security repurchase agreements totaled $3.1 billion at September 30, 2003, compared to $2.3 billion at September 30, 2002, and $1.9 billion at year-end 2002. The level of federal funds and security repurchase agreements can fluctuate significantly on a day-to-day basis, depending on funding needs and which sources of funds are used to satisfy those needs.  During the first nine months of 2003, net funds purchased averaged $2.8 billion compared to $1.5 billion for the same period in 2002. Other short-term borrowings and commercial paper decreased $662 million since September 30, 2002, and $462 million since year-end 2002 due primarily to the extinguishment of Federal Home Loan Bank advances. In the third quarter of 2003, Regions retired $350 million in short-term Federal Home Loan Bank advances resulting in a $11.5 million loss on early extinguishment of debt (see "NON-INTEREST EXPENSE" and "OTHER EXPENSES").

Long-term borrowings are summarized as follows:

|(in thousands)                          | September 30, |  | December 31, |  | September 30,
|--------------------------------------- | ------------- |  | ------------ |  | -------------
|                                        | 2003          |  | 2002         |  | 2002         
|                                        |               |  |              |  |              
|6 3/8% subordinated notes               | $   600,000   |  | $    600,000 |  | $   600,000  
|7.80% subordinated notes                | -0-           |  | -0-          |  | 75,000       
|7.00% subordinated notes                | 500,000       |  | 500,000      |  | 500,000      
|7.75% subordinated notes                | 100,000       |  | 100,000      |  | 100,000      
|Senior bank notes                       | 400,000       |  | -0-          |  | -0-          
|Federal Home Loan Bank structured notes | 3,285,000     |  | 3,585,000    |  | 3,585,000    
|Federal Home Loan Bank advances         | 219,901       |  | 97,553       |  | 186,658      
|Trust preferred securities              | 291,758       |  | 291,792      |  | 291,804      
|Industrial development revenue bonds    | 2,000         |  | 2,200        |  | 2,200        
|Mark-to-market on hedged long-term debt | 147,478       |  | 151,265      |  | 144,603      
|Other long-term debt                    | 57,395        |  | 58,299       |  | 58,488       
|                                        |               |  |              |  |              
|Total                                   | $5,603,532    |  | $5,386,109   |  | $5,543,753   
|                                        |               |  |              |  |              
|                                        |               |  |              |  |              
|                                        |               |  |              |  |              
|                                        |               |  |              |  |              

Long-term borrowings have increased $59.8 million since September 30, 2002 and $217.4 million since year-end 2002. These increases are due primarily to the third quarter 2003 issuance of $400 million of senior bank notes, due December 15, 2006, partially offset by the extinguishment of Federal Home Loan Bank advances. In the third quarter, Regions retired $300 million in long-term Federal Home Loan Bank advances resulting in a $9.1 million loss on early extinguishment of debt (see "NON-INTEREST EXPENSE" and "OTHER EXPENSES").

OTHER LIABILITIES

Other liabilities increased $284.7 million compared to September 30, 2002, but declined $95.9 million since year-end 2002. Areas of increase since September 30, 2002, include payables related to increased production at Morgan Keegan and payables to the trustee of the securitizations in the first quarter of 2003 and fourth quarter of 2002.

STOCKHOLDERS' EQUITY

Stockholders' equity was $4.4 billion at September 30, 2003, an increase of 8% over September 30, 2002, and a 5% increase since year-end 2002. During the third quarter of 2003, Regions repurchased 778,000 shares in connection with its common stock repurchase program.  Accumulated other comprehensive income totaled $86.4 million at September 30, 2003, compared to $167.7 million at September 30, 2002, and $164.1 million at year-end 2002.  Regions' ratio of equity to total assets was 9.01% at September 30, 2003, compared to 8.62% at September 30, 2002 and 8.72% at December 31, 2002.



---

Regions and its subsidiaries are required to comply with capital adequacy standards established by banking regulatory agencies.  Currently, there are two basic measures of capital adequacy: a risk-based measure and a leverage measure.

The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in credit risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and interest rate risk, and to minimize disincentives for holding liquid assets.  Assets and off-balance sheet items are assigned to broad risk categories, each with specified risk-weighting factors.  The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.  Banking organizations that are considered to have excessive interest rate risk exposure are required to maintain higher levels of capital.

The minimum standard for the ratio of total capital to risk-weighted assets is 8%.  At least 50% of that capital level must consist of common equity, undivided profits and non-cumulative perpetual preferred stock, less goodwill and certain other intangibles ("Tier 1 capital").  The remainder ("Tier 2 capital") may consist of a limited amount of other preferred stock, mandatory convertible securities, subordinated debt, and a limited amount of the allowance for loan losses.  The sum of Tier 1 capital and Tier 2 capital is "total risk-based capital."

The banking regulatory agencies also have adopted regulations that supplement the risk-based guidelines to include a minimum ratio of 3% of Tier 1 capital to average assets less goodwill (the "leverage ratio").  Depending upon the risk profile of the institution and other factors, the regulatory agencies may require a leverage ratio of 1% to 2% above the minimum 3% level.

The following chart summarizes the applicable bank regulatory capital requirements. Regions' capital ratios at September 30, 2003 and 2002, substantially exceeded all regulatory requirements.

|                                                    |             | Well        |            |           
|--------------------------------------------------- | ----------- | ----------- | ---------- | ----------
|                                                    | Minimum     | Capitalized | Regions at | Regions at
|                                                    | Regulatory  | Regulatory  | Sept. 30,  | Sept. 30, 
|                                                    | Requirement | Requirement | 2003       | 2002      
|                                                    |             |             |            |           
|Tier 1 capital to risk-adjusted assets              | 4.00%       | 6.00%       | 9.44%      | 8.58%     
|Total risk-based capital to 
  risk-adjusted assets | 8.00        | 10.00       | 14.21      | 13.36     
|Tier 1 leverage ratio                               | 3.00        | 5.00        | 7.37       | 6.82      



OPERATING RESULTS

Net income for the nine months ended September 30, 2003, totaled $488.1 million or $2.17 per diluted share, a 7% increase (on a per share diluted basis) over the same period in 2002. Net income for the third quarter of 2003 totaled $164.7 million or $0.73 per diluted share, a 5.3% increase over third quarter 2002 net income of $156.5 million or $0.70 per diluted share. For the second quarter of 2003, net income totaled $164.8 million or $0.73 per diluted share. Annualized return on stockholders' equity for the nine months ended September 30, 2003, was 15.18% compared to 15.35% for the same period in 2002. Annualized return on assets for the first nine months of 2003 was 1.35% compared to 1.36% for the first nine months of 2002.



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NET INTEREST INCOME

The following table presents a summary of net interest income for the quarters ended September 30, 2003, June 30, 2003, and September 30, 2002.

|(dollar amounts in thousands)            | September 30, |  | June 30, |  | September 30,
|---------------------------------------- | ------------- |  | -------- |  | -------------
|                                         | 2003          |  | 2003     |  | 2002         
|                                         |               |  |          |  |              
|                                         |               |  |          |  |              
|Interest income                          | $540,921      |  | $561,946 |  | $640,694     
|Interest expense                         | 172,045       |  | 195,645  |  | 260,549      
|                                         |               |  |          |  |              
|Net interest income                      | 368,876       |  | 366,301  |  | 380,145      
|                                         |               |  |          |  |              
|Tax equivalent adjustment                | 16,477        |  | 16,450   |  | 17,523       
|                                         |               |  |          |  |              
|Net interest income (taxable equivalent) | $385,353      |  | $382,751 |  | $397,668     
|                                         |               |  |          |  |              
|                                         |               |  |          |  |              
|                                         |               |  |          |  |              
|                                         |               |  |          |  |              
|                                         |               |  |          |  |              
|Net interest margin                      | 3.44%         |  | 3.47%    |  | 3.70%        

Net interest income (taxable equivalent basis) for the first nine months of 2003 decreased $33.5 million, or 3%, compared to the same period in 2002. The decline in net interest income is due to continued compression in the net interest margin due to lower interest rates, partially offset by increases in earning assets. The net yield on interest-earning assets (taxable equivalent basis) was 3.47% in the first nine months of 2003 compared to 3.78% during the same period in 2002.

For the third quarter of 2003, net interest income (taxable equivalent basis) decreased $12.3 million or 3% compared to the third quarter of 2002. Again, this decrease is the result of the reduced interest margin due to lower interest rates, partially offset by increases in earning assets.  The net yield on interest earning assets (taxable equivalent basis) was 3.44% in the third quarter of 2003 compared to 3.70% during the third quarter of 2002.  The yield on interest earning assets declined 116 basis points in the third quarter of 2003, while the rate on interest bearing liabilities declined 101 basis points, compared to the third quarter of 2002.

Compared to the second quarter of 2003, net interest income (taxable equivalent basis) increased $2.6 million or 3% annualized, due to a slight increase in earning assets and the additional maturity of $751 million of high yield certificates of deposit during the third quarter of 2003, which was replaced with lower cost funding.  The net yield on interest earning assets (taxable equivalent basis) was 3.44% in the third quarter of 2003 compared to 3.47% in the second quarter of 2003.  The yield on interest earning assets declined 27 basis points, while the rate on interest bearing liabilities declined 28 basis points, compared to the prior quarter.



---

Analysis of Changes in Net Interest Income

|                                           | Nine months ended September 30,
|------------------------------------------ | -------------------------------
|                                           |                                
|(in thousands)                             | 2003 over 2002                 
|                                           |                                
|                                           | Volume                         
|                                           |                                
|Increase (decrease) in:                    |                                
|Interest income on:                        |                                
|Loans                                      | $18,788                        
|Federal funds sold                         | 381                            
|Taxable securities                         | 35,674                         
|Non-taxable securities                     | (3,402)                        
|Other earning assets                       | 39,002                         
|                                           |                                
|Total                                      | 90,443                         
|Interest expense on:                       |                                
|Savings deposits                           | (12)                           
|Other interest-bearing deposits            | 12,044                         
|Borrowed funds                             | 40,530                         
|                                           |                                
|Total                                      | 52,562                         
|                                           |                                
|Increase (decrease) in net interest income | $37,881                        
|                                           |                                
|                                           |                                
|                                           |                                
|                                           |                                

Note: The change in interest due to both rate and volume has been allocated to change due to volume and change due to rate in proportion to the absolute dollar amounts of the change in each.



---

MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, commodity prices, equity prices, or the credit quality of debt securities.

The overall level of market risk taking activity within Regions has recently reached the minimum threshold level as determined by the Federal Reserve Bank which will require future compliance with the 1996 market risk amendment to the Basel Capital Accord. As such, Regions is in process of implementing the protocols and processes necessary to meet the market risk measurement and risk management objectives of the Accord.

INTEREST RATE SENSITIVITY

Regions' primary market risk is interest rate risk, including uncertainty with respect to absolute interest rate levels as well as uncertainty with respect to relative interest rate levels which impact both the shape and the slope of the various yield curves affecting the financial products and services that the Company offers. To quantify this risk, Regions measures the change in its net interest income in various interest rate scenarios as compared to a base case scenario. Net interest income sensitivity (as measured over 12 months) is a useful short-term indicator of Regions' interest rate risk.



Sensitivity Measurement. Financial simulation models are Regions' primary tools used to measure interest rate exposure. Using a wide range of hypothetical deterministic and stochastic simulations, these tools provide management with extensive information on the potential impact to net interest income caused by changes in interest rates.

These models are structured to simulate cash flows and accrual characteristics of the many products both on and off Regions' balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve, and about the changing composition of the balance sheet that result from both strategic plans and from customer behavior. Among the assumptions are expectations of balance sheet growth and composition, the pricing and maturity characteristics of existing business and the characteristics of future business. Interest rate related risks are expressly considered, such as pricing spreads, the lag time in pricing administered rate accounts, prepayments and other option risks. Regions considers these factors, as well as the degree of certainty or uncertainty surrounding their future behavior.

Off-balance sheet items are used in hedging the values of selected assets and liabilities from changes in interest rates. The effect of these hedges is included in the simulations of net interest income.

The primary objectives of asset/liability management at Regions are balance sheet coordination and the management of interest rate risk in achieving reasonable and stable net interest income throughout various interest rate cycles. A standard set of alternate interest rate scenarios is compared to the results of the base case scenario to determine the extent of potential fluctuations and to establish exposure limits. The standard set of interest rate scenarios includes the traditional instantaneous parallel rate shifts of plus and minus 100 and 200 basis points. In addition, Regions includes simulations of gradual interest rate movements that may more realistically mimic potential interest rate movements. Gradual scenarios could include curve steepening, flattening, and parallel movements of various magnitudes phased in over a 6-month period.



---

Exposure to Interest Rate Movements.  Based on the foregoing discussion, management has estimated the potential effect of shifts in interest rates on net interest income. As of September 30, 2003, Regions maintains a slightly asset sensitive position to gradual rate shifts of plus or minus 100 and 200 basis points. The following table demonstrates the expected effect that a gradual (over six months beginning at September 30, 2003) parallel interest rate shift would have on Regions' annual net interest income. Results of the same analysis for the comparable period for 2002 are presented for comparison purposes.

|Gradual           |  | September 30, 2003            |              | September 30, 2002
|----------------- |  | ----------------------------- | ------------ | ------------------
|                  |  |                               |              |                   
|                  |  | $ Change in                   | % Change in  |                   
|Change in         |  | Net Interest                  | Net Interest |                   
|Interest Rates    |  | Income                        | Income       |                   
|                  |  |                               |              |                   
|(in basis points) |  | (dollar amounts in thousands)
|+200              |  | $19,000                       | 1.3%         |                   
|+100              |  | 9,000                         | 0.6          |                   
|-100              |  | (13,000)                      | (0.9)        |                   
|-200              |  | (46,000)                      | (3.1)        |                   

As of September 30, 2003, Regions maintains a slightly asset sensitive position to instantaneous rate shifts of plus or minus 100 and 200 basis points.  The following table demonstrates the expected effect that an instantaneous parallel rate shift would have on Regions' annual net interest income.  Results of the same analysis for the comparable period of 2002 are presented for comparison purposes.

|Instantaneous     |  | September 30, 2003            |              | September 30, 2002
|----------------- |  | ----------------------------- | ------------ | ------------------
|                  |  |                               |              |                   
|                  |  | $ Change in                   | % Change in  |                   
|Change in         |  | Net Interest                  | Net Interest |                   
|Interest Rates    |  | Income                        | Income       |                   
|                  |  |                               |              |                   
|(in basis points) |  | (dollar amounts in thousands)
|+200              |  | $ 42,000                      | 2.8%         |                   
|+100              |  | 21,000                        | 1.5          |                   
|-100              |  | (25,000)                      | (1.7)        |                   
|-200              |  | (85,000)                      | (5.7)        |                   



DERIVATIVES

Regions uses financial derivative instruments for management of interest rate sensitivity. The Asset and Liability Committee in its oversight role for the management of interest rate sensitivity approves the use of derivatives in balance sheet hedging strategies. The most common derivatives the Company employs are interest rate swaps, interest rate options, forward sale commitments, and interest rate and foreign exchange forward contracts.

Interest rate swaps are contractual agreements typically entered into to exchange fixed for variable streams of interest payments. The notional principal is not exchanged but is used as a reference for the size of the interest payments. Interest rate options are contracts that allow the buyer to purchase or sell a financial instrument at a pre-determined price and time. Forward sale commitments are contractual obligations to sell money market instruments at a future date for an already agreed upon price. Foreign exchange forwards are contractual agreements to receive or deliver a foreign currency at an agreed upon future date and price.



---

Regions has made use of interest rate swaps and interest rate options to convert a portion of its fixed-rate funding position to a variable rate. Regions also uses derivatives to manage interest rate and pricing risk associated with its mortgage origination business. Futures contracts and forward sales commitments are used to protect the value of the loan pipeline from changes in interest rates. In the period of time that elapses between the origination and sale of mortgage loans, changes in interest rates have the potential to cause a decline in the value of the loans in this held for sale portfolio. Futures and forward sale commitment positions are used to protect the Company from the risk of such adverse changes. The change in value of the hedging contracts is expected to be highly effective in offsetting the change in value of specific assets and liabilities over the life of the hedge relationship.

Regions also uses derivatives to meet the needs of its customers.  Interest rate swaps, interest rate options, futures and forward commitments and foreign exchange forwards are the most common derivatives sold to customers. Positions with similar characteristics are used to offset the market risk and minimize income statement volatility associated with this portfolio. Those instruments, which are used to service customers, are entered into the trading account, with changes in value recorded in the income statement.

BROKERAGE AND MARKET MAKING ACTIVITY

Morgan Keegan's business activities expose it to market risk, including its securities inventory positions and securities held for investment.

Morgan Keegan trades for its own account in corporate and tax-exempt securities and U.S. government, agency and guaranteed securities. Most of these transactions are entered into to facilitate the execution of customers' orders to buy or sell these securities. In addition, it trades certain equity securities in order to "make a market" in these securities. Morgan Keegan's trading activities require the commitment of capital. All principal transactions place the subsidiary's capital at risk. Profits and losses are dependent upon the skills of employees and market fluctuations. In some cases, in order to hedge the risks of carrying inventory, Morgan Keegan enters into a low level of activity involving U.S. Treasury note futures.

Morgan Keegan, as part of its normal brokerage activities, assumes short positions on securities. The establishment of short positions exposes Morgan Keegan to off-balance sheet risk in the event that prices increase, as it may be obligated to cover such positions at a loss.  Morgan Keegan manages its exposure to these instruments by entering into offsetting or other positions in a variety of financial instruments.

Morgan Keegan will occasionally hedge a portion of its long proprietary inventory position through the use of short positions in financial future contracts, which are included in securities sold, not yet purchased at market value. At September 30, 2003, Morgan Keegan had no outstanding futures contracts. The contract amounts do not necessarily represent future cash requirements.

In the normal course of business, Morgan Keegan enters into underwriting and forward and future commitments. At September 30, 2003, the contract amounts of futures contracts were $49 million to purchase and $136 million to sell U.S. Government and municipal securities.Morgan Keegan typically settles its position by entering into equal but opposite contracts and, as such, the contract amounts do not necessarily represent future cash requirements. Settlement of the transactions relating to such commitments is not expected to have a material effect on Regions' consolidated financial position. Transactions involving future settlement give rise to market risk, which represents the potential loss that can be caused by a change in the market value of a particular financial instrument. Regions' exposure to market risk is determined by a number of factors, including the size, composition and diversification of positions held, the absolute and relative levels of interest rates, and market volatility.



---

Interest rate risk at Morgan Keegan arises from the exposure of holding interest-sensitive financial instruments such as government, corporate and municipal bonds and certain preferred equities. Morgan Keegan manages its exposure to interest rate risk by setting and monitoring limits and, where feasible, hedging with offsetting positions in securities with similar interest rate risk characteristics.  Securities inventories are marked to market, and accordingly there are no unrecorded gains or losses in value. While a significant portion of the securities inventories have contractual maturities in excess of five years, these inventories, on average, turn over in excess of twelve times per year. Accordingly, the exposure to interest rate risk inherent in Morgan Keegan's securities inventories is less than that of similar financial instruments held by firms in other industries.  Morgan Keegan's equity securities inventories are exposed to risk of loss in the event of unfavorable price movements. The equity securities inventories are marked to market and there are no unrecorded gains or losses.

Morgan Keegan is also subject to credit risk arising from non-performance by trading counterparties, customers, and issuers of debt securities owned. This risk is managed by imposing and monitoring position limits, monitoring trading counterparties, reviewing security concentrations, holding and marking to market collateral and conducting business through clearing organizations that guarantee performance.  Morgan Keegan regularly participates as an agent in the trading of some derivative securities for its customers; however, this activity does not involve Morgan Keegan acquiring a position or commitment in these products and this trading is not a significant portion of Morgan Keegan's business.  Morgan Keegan does not participate in the trading of derivative securities that have off-balance sheet risk.

PROVISION FOR LOAN LOSSES

The provision for loan losses was $91.5 million or .39% (annualized) of average loans in the nine months ended September 30, 2003, compared to $95.0 million or .41% (annualized) of average loans in the same period of 2002. For the third and second quarters of 2003, the provision for loan losses was $30.0 million or .38% (annualized) of average loans compared to $35.0 million or .44% (annualized) of average loans in the third quarter of 2002. The provision for loan losses recorded in the first nine months and third quarter of 2003 was based on management's assessment of inherent losses associated with the loan portfolio and management's evaluation of current and future economic conditions (see "ALLOWANCE FOR LOAN LOSSES").

NON-INTEREST INCOME

The following table presents a summary of non-interest income for the quarters ended September 30, 2003, June 30, 2003, and September 30, 2002.

|                                        | September 30, |  | June 30, |  | September 30,
|--------------------------------------- | ------------- |  | -------- |  | -------------
|(in thousands)                          | 2003          |  | 2003     |  | 2002         
|                                        |               |  |          |  |              
|                                        |               |  |          |  |              
|Brokerage and investment banking        | $140,257      |  | $151,811 |  | $123,294     
|Trust department income                 | 18,168        |  | 16,850   |  | 15,605       
|Service charges on deposit accounts     | 73,641        |  | 72,205   |  | 70,581       
|Mortgage servicing and origination fees | 29,074        |  | 31,757   |  | 26,863       
|Securities (losses) gains               | (37)          |  | 15,799   |  | 22,642       
|Insurance premiums and commissions      | 19,048        |  | 17,654   |  | 17,736       
|Gain on sale of mortgage loans          | 35,438        |  | 37,211   |  | 23,164       
|Derivative income                       | 4,208         |  | 8,016    |  | 3,662        
|Other                                   | 27,878        |  | 26,821   |  | 23,134       
|                                        |               |  |          |  |              
|                                        |               |  |          |  |              
|Total non-interest income               | $347,675      |  | $378,124 |  | $326,681     
|                                        |               |  |          |  |              
|                                        |               |  |          |  |              
|                                        |               |  |          |  |              



---

Total non-interest income (excluding securities transactions) increased $172.2 million or 20% in the first nine months of 2003 compared to the same period of 2002 due to increases in all categories of non-interest income. On a quarterly basis, total non-interest income (excluding securities transactions) increased $43.7 million or 14% compared to the third quarter of 2002, due primarily to increased production in the brokerage and mortgage operations. Compared to the second quarter of 2003, non-interest income (excluding securities transactions) decreased $14.6 million.

BROKERAGE AND INVESTMENT BANKING

Brokerage and investment banking income reflected an increase of $57.7 million in the first nine months of 2003 compared to the same period in 2002 due to growth in the fixed income markets and private client business. In the third quarter of 2003, brokerage and investment banking income increased $17.0 million over the third quarter of 2002 due to increased activity in the equity capital markets and private client business. Compared to the second quarter of 2003, brokerage and investment banking income declined $11.6 million due primarily to slowing fixed-income markets in the third quarter of 2003 compared to record activity in the second quarter.

The following table shows the breakout of revenue by division contributed by Morgan Keegan for the three months ended September 30, 2003 and June 30, 2003, and the nine months ended September 30, 2003 and 2002.

|                                       |                |                              |                        |                  |                    
|-------------------------------------- | -------------- | ---------------------------- | ---------------------- | ---------------- | -------------------
|Morgan Keegan                          |                |                              |                        |                  |                    
|Breakout of Revenue by Division        |                |                              |                        |                  |                    
|                                       |                |                              |                        |                  |                    
|(dollar amounts in thousands)          | Private
Client | Fixed-income Capital Markets | Equity Capital Markets | Regions MK
Trust | Investment Advisory
|                                       |                |                              |                        |                  |                    
|Three months ended
September 30, 2003: |                |                              |                        |                  |                    
|$ amount of revenue                    | $52,616        | $58,624                      | $18,749                | $15,541          | $17,814            
|% of gross revenue                     | 30.1%          | 33.5%                        | 10.7%                  | 8.9%             | 10.2%              
|                                       |                |                              |                        |                  |                    
|Three months ended
June 30, 2003:      |                |                              |                        |                  |                    
|$ amount of revenue                    | $51,369        | $77,348                      | $14,798                | $14,707          | $15,734            
|% of gross revenue                     | 27.3%          | 41.2%                        | 7.9%                   | 7.8%             | 8.4%               
|                                       |                |                              |                        |                  |                    
|Nine months ended
September 30, 2003:  |                |                              |                        |                  |                    
|$ amount of revenue                    | $144,705       | $201,518                     | $43,220                | $45,406          | $48,350            
|% of gross revenue                     | 27.7%          | 38.6%                        | 8.3%                   | 8.7%             | 9.3%               
|                                       |                |                              |                        |                  |                    
|Nine months ended
September 30, 2002:  |                |                              |                        |                  |                    
|$ amount of revenue                    | $129,330       | $157,108                     | $42,120                | $48,172          | $38,729            
|% of gross revenue                     | 28.2%          | 34.2%                        | 9.2%                   | 10.5%            | 8.4%               



---

The following table shows the components of revenue contributed by Morgan Keegan for the three months ended September 30, 2003, June 30, 2003, and September 30, 2002.

|                                       |                                    |                                   |                                   |                             |                             
|-------------------------------------- | ---------------------------------- | --------------------------------- | --------------------------------- | --------------------------- | ----------------------------
|Morgan Keegan
Summary Income Statement |                                    |                                   |                                   |                             |                             
|                                       |                                    |                                   |                                   |                             |                             
|(dollar amounts in thousands)          | Three months 
ended
Sept. 30, 2003 | Three months 
ended
June 30, 2003 | Three months
ended
Sept. 30, 2002 | % Change from
June 30, 2003 | % Change from
Sept. 30, 2002
|                                       |                                    |                                   |                                   |                             |                             
|Revenues:                              |                                    |                                   |                                   |                             |                             
|Commissions                            | $43,782                            | $40,022                           | $36,357                           | 9.4%                        | 20.4%                       
|Principal transaction                  | 60,669                             | 72,208                            | 58,881                            | (16.0)                      | 3.0                         
|Investment banking                     | 23,378                             | 28,933                            | 16,138                            | (19.2)                      | 44.9                        
|Interest                               | 10,799                             | 12,385                            | 13,606                            | (12.8)                      | (20.6)                      
|Trust fees and services                | 15,541                             | 14,707                            | 16,025                            | 5.7                         | (3.0)                       
|Investment advisory                    | 17,405                             | 14,778                            | 13,142                            | 17.8                        | 32.4                        
|Other                                  | 3,285                              | 4,927                             | 2,892                             | (33.3)                      | 13.6                        
|                                       |                                    |                                   |                                   |                             |                             
|Total revenues                         | 174,859                            | 187,960                           | 157,041                           | (7.0)                       | 11.3                        
|                                       |                                    |                                   |                                   |                             |                             
|Expenses:                              |                                    |                                   |                                   |                             |                             
|Interest expense                       | 5,622                              | 6,344                             | 7,275                             | (11.4)                      | (22.7)                      
|Non-interest expense                   | 134,507                            | 142,924                           | 122,683                           | (5.9)                       | 9.6                         
|                                       |                                    |                                   |                                   |                             |                             
|Total expenses                         | 140,129                            | 149,268                           | 129,958                           | (6.1)                       | 7.8                         
|                                       |                                    |                                   |                                   |                             |                             
|                                       |                                    |                                   |                                   |                             |                             
|Income before income 
   taxes         | 34,730                             | 38,692                            | 27,083                            | (10.2)                      | 28.2                        
|                                       |                                    |                                   |                                   |                             |                             
|Income taxes                           | 13,045                             | 14,652                            | 10,059                            | (11.0)                      | 29.7                        
|                                       |                                    |                                   |                                   |                             |                             
|                                       |                                    |                                   |                                   |                             |                             
|Net income                             | $21,685                            | $24,040                           | $17,024                           | (9.8)%                      | 27.4%                       
|                                       |                                    |                                   |                                   |                             |                             
|                                       |                                    |                                   |                                   |                             |                             
|                                       |                                    |                                   |                                   |                             |                             



TRUST INCOME

Trust department income for the nine months ended September 30, 2003, increased $5.0 million or 10.5% compared to the same period of 2002.  Third quarter 2003 trust department income increased $2.6 million or 16.4% over the third quarter of 2002 and $1.3 million or 7.8% over second quarter of 2003 due primarily to better performance in the financial markets and increases in trust assets.



---

SERVICE CHARGES ON DEPOSIT ACCOUNTS

Service charges on deposit accounts increased $10.0 million or 5% in the first nine months of 2003 over same period in 2002 due to management's continued focus on fee collection efforts. For the third quarter of 2003, service charges on deposit accounts increased $3.1 million over the third quarter of 2002 and $1.4 million over the second quarter of 2003.

MORTGAGE SERVICING AND ORIGINATION FEES

The primary source of this category of income is Regions' mortgage banking affiliates, Regions Mortgage and EquiFirst. Regions Mortgage's primary business and source of income is the origination and servicing of conforming mortgage loans for long-term investors. EquiFirst typically originates non-conforming mortgage loans which are sold to third-party investors with servicing released. Net gains and losses related to the sale of mortgage loans are included in other non-interest income.

For the nine months ended September 30, 2003, mortgage servicing and origination fees increased $14.2 million or 19% compared to the same period of 2002 due to the significant mortgage activity resulting from the historically low interest rate environment over the past twelve months. On a quarterly basis, mortgage servicing and origination fees increased $2.2 million or 8% over the third quarter of 2002 due to significant increases in production. Compared to the second quarter of 2003, mortgage servicing and origination fees decreased $2.7 million or 8% due to lower servicing fees and a less profitable mix in production. Single-family mortgage production was $2.8 billion in the third quarter of 2003, compared to $1.7 billion in the third quarter of 2002 and $2.5 billion in the second quarter of 2003. The mortgage company's servicing portfolio totaled $16.0 billion at September 30, 2003, compared to $17.7 billion at September 30, 2002, and $16.6 billion at June 30, 2003.

A summary of mortgage servicing rights, which are included in other assets in the consolidated statements of condition, is presented as follows.  The balances shown represent the original amounts capitalized, less accumulated amortization and valuation adjustments, for the right to service mortgage loans that are owned by other investors.  The carrying values of mortgage servicing rights are affected by various factors, including prepayments of the underlying mortgages.  A significant change in prepayments of mortgages in the servicing portfolio could result in significant changes in the valuation adjustments.

|                                                                | Nine Months Ended
|--------------------------------------------------------------- | -----------------
|(dollar amounts in thousands)                                   | September 30,    
|                                                                | 2003             
|                                                                |                  
|Balance at beginning of year                                    | $147,487         
|Additions                                                       | 49,288           
|Amortization                                                    | (33,373)         
|                                                                |                  
|                                                                | 163,402          
|Valuation adjustment                                            | (39,500)         
|                                                                |                  
|Balance at end of period                                        | $123,902         
|                                                                |                  
|                                                                |                  
|                                                                |                  
|                                                                |                  
|Mortgage servicing asset as a percent of servicing
   portfolio | 0.77%            
|                                                                |                  
|                                                                |                  



---

SECURITIES GAINS

Securities gains for the nine months ended September 30, 2003, totaled $25.7 million compared to $26.4 million for the same period of 2002.  Regions holds Agency securities as a means to hedge mortgage servicing impairment resulting from declining interest rates.  Securities losses totaled $37,000 in the third quarter of 2003. Securities gains totaled $22.6 million in the third quarter of 2002 and $15.8 million in the second quarter of 2003.

OTHER INCOME

The components of other income consist mainly of fees and commissions, insurance premiums, customer derivative fees and gains related to the sale of mortgage loans. Other non-interest income for the nine months ended September 30, 2003, increased $85.3 million over the same period of 2002 due primarily to strong performance by Regions' insurance operations, higher gains resulting from mortgage banking activities, and increased customer derivative fees.  In the third quarter of 2003, other income increased $18.9 million over the third quarter of 2002 due primarily to higher gains resulting from mortgage banking activities and higher insurance premiums.  Compared to the second quarter of 2003, other income decreased $3.1 million due to lower customer derivative fees and lower gains resulting from mortgage banking activities, partially offset by higher insurance premiums and commissions.

NON-INTEREST EXPENSE

The following table presents a summary of non-interest expense for the quarters ended September 30, 2003, June 30, 2003, and September 30, 2002.

|(in thousands)                       | September 30, |  | June 30, |  | September 30,
|------------------------------------ | ------------- |  | -------- |  | -------------
|                                     | 2003          |  | 2003     |  | 2002         
|                                     |               |  |          |  |              
|                                     |               |  |          |  |              
|Salaries and employee benefits       | $281,666      |  | $288,937 |  | $258,264     
|Net occupancy expense                | 26,869        |  | 25,518   |  | 25,093       
|Furniture and equipment expense      | 20,160        |  | 20,501   |  | 22,862       
|Impairment (recapture) of MSRs       | (20,000)      |  | 19,190   |  | 19,725       
|Loss on early extinguishment of debt | 20,580        |  | -0-      |  | -0-          
|Other                                | 126,902       |  | 129,839  |  | 126,507      
|                                     |               |  |          |  |              
|                                     |               |  |          |  |              
|Total non-interest expense           | $456,177      |  | $483,985 |  | $452,451     
|                                     |               |  |          |  |              
|                                     |               |  |          |  |              
|                                     |               |  |          |  |              

Total non-interest expense increased $112.5 million or 9% in the first nine months of 2003 compared to the same period in 2002 due primarily to increased salaries and employee benefits resulting from higher commission and incentive pay in the brokerage and mortgage banking operations. Third quarter 2003 non-interest expense increased $3.7 million compared to the third quarter of 2002 due again to increased salaries and benefits. This increase was also impacted by the $19.7 million impairment charge on mortgage servicing rights booked in the third quarter of 2002. Compared to the second quarter of 2003, non-interest expense decreased $27.8 million due primarily to a decline in incentive pay in the brokerage operations and from the effect of mortgage servicing rights and loss on early extinguishment of debt as discussed in the following sentences. An impairment charge on mortgage servicing rights of $19.2 million was booked in the second quarter of 2003. In the third quarter of 2003, $20.0 million of impairment recapture on mortgage servicing rights was recorded as a result of changes in interest rates and a slowdown in prepayment speeds. Also during the third quarter of 2003, Regions chose to pay off $650 million of Federal Home Loan Bank advances early, resulting in a $20.6 million loss on the early extinguishment of debt.



---

SALARIES AND EMPLOYEE BENEFITS



Salaries and employee benefits were up $97.3 million or 13% in the nine months ended September 30, 2003, compared to the same period in 2002, due to higher incentive costs associated with Morgan Keegan and mortgage banking, increased pension costs, and normal merit increases. In the third quarter of 2003, salaries and employee benefits increased $23.4 million  compared to the third quarter of 2002 due again to higher commission and incentive pay in the brokerage and mortgage banking operations which corresponds with increases in revenues in those areas in the same periods. Compared to the second quarter of 2003, salaries and employee benefits decreased $7.3 million due primarily to a decline in incentive pay in the brokerage operations. As of September 30, 2003, Regions had 15,969 full-time equivalent employees.

NET OCCUPANCY EXPENSE

Net occupancy expense includes rents, depreciation and amortization, utilities, maintenance, insurance, taxes and other expenses of premises occupied by Regions and its affiliates. Regions' affiliates operate banking offices in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, and Texas.

Net occupancy expense increased $6.5 million or 9% in the nine months ended September 30, 2003, over the same period of 2002 due to expenses related to new and acquired branch offices. Net occupancy expense in the third quarter of 2003 increased $1.8 million over the third quarter of 2002 and $1.4 million over the second quarter of 2003

FURNITURE AND EQUIPMENT EXPENSE

Furniture and equipment expense during the nine months ended September 30, 2003, decreased $7.2 million compared to the same period in 2002 due primarily to lower expenses related to computer equipment. In the third quarter of 2003, furniture and equipment expense decreased $2.7 million compared to the third quarter of 2002 and remained  relatively flat compared to the second quarter of 2003.

OTHER EXPENSES

The significant components of other expense include other non-credit losses, amortization and impairment of mortgage servicing rights and computer and other outside services. Other non-interest expense increased $15.8 million or 4% in the first nine months of 2003 compared to the same period in 2002 due primarily to a $11.5 million increase in amortization of mortgage servicing rights. Other non-interest expense in the third quarter of 2003 decreased $18.8 million compared to the third quarter of 2002 and $21.5 million compared to the second quarter of 2003. A $19.7 million and $19.2 million impairment charge on mortgage servicing rights was booked in the third quarter of 2002 and the second quarter of 2003, respectively. In the third quarter of 2003, $20.0 million of impairment on mortgage servicing rights was recaptured, due to an increase in mortgage interest rates, but was offset by a $20.6 million loss on the early extinguishment of $650 million of Federal Home Loan Bank advances.

APPLICABLE INCOME TAXES

Income tax expense for the nine months and quarter ended September 30, 2003, increased $8.1 million and $2.8 million, respectively, compared to the same periods in 2002 due to higher levels of taxable income. Regions effective tax rates for the first nine months of 2003 and 2002 were 28.5% and 28.7%, respectively.



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Regions' consolidated federal income tax returns, for the years 1998-2002, are open for examination. From time to time Regions engages in business plans that may also have an effect on its tax liabilities. While Regions has obtained the opinion of advisors that the tax aspects of these plans should prevail, examination of Regions' income tax returns or changes in tax law may impact the tax benefits of these plans. Regions believes adequate provisions for income tax have been recorded for all years open for review.



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Item 3.	Qualitative and Quantitative Disclosures about Market Risk

Reference is made to pages 32 through 35 'Market Risk' included in Management's Discussion and Analysis.



Item 4.  Controls and Procedures

Based on an evaluation, as of the end of the period covered by this Form 10-Q, under the supervision and with the participation of Regions' management, including its Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer have concluded that Regions' disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective. As of the end of the period covered by this report, there have been no significant changes in Regions' internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Regions' internal control over financial reporting.



PART II.  OTHER INFORMATION

Item 6.	Exhibits and Reports on Form 8-K

1. Exhibits:



|Exhibit No. | Description                                                                                                            
|----------- | -----------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                        
|31.1        | Certification of chief executive officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                    
|            |                                                                                                                        
|31.2        | Certification of chief financial officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.                    
|            |                                                                                                                        
|32          | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





No reports on Form 8-K were filed during the third quarter of 2003.

However, a report on Form 8-K, dated July 17, 2003, was furnished, under item 9 in connection with the Registrant's results of operations for the six months and quarter ended June 30, 2003.

A report on Form 8-K, dated September 10, 2003, was furnished, under item 9 in connection with the Registrant's presentation in New York, New York, discussing current prospects for the company.



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by undersigned thereunto duly authorized.



Regions Financial Corporation

DATE:  November 13, 2003

/s/ Ronald C. Jackson                          Ronald C. Jackson
Senior Vice President and Comptroller
(Chief Accounting Officer and
  Duly Authorized Officer)