Here's what I would do:
1. Create a formula to get the first three characters (I'll call this {@RegionNo}) -
Left({MyTable.MyField}, 3)
2. Create another formula to get the actual region:
Switch(
{@RegionNo} >= '110' and {@RegionNo} <= '269', 'West',
{@RegionNo} >= '310' and {@RegionNo} <= '489', 'South',
{@RegionNo} >= '25K' and {@RegionNo} >= '67K', 'Special',
true, 'Unknown')
Use this formula as your group.
3. Use the Left() function in a third formula to get just the first two characters for your display.
-Dell