Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (September 2017)
51 slides from Regions Financial's investor presentation, September 2017
Slide 1: Investor Deck
Exhibit 99.1 Investor Deck August - September, 2017
Slide 2: Table of contents
Table of contents Topic Page # Profile 3-8 Net Interest Income and Asset Sensitivity 9-14 Fee Income and Efficiencies 15-20 Balance Sheet 21-27 Credit 28-35 Capital and Liquidity 36-40 Long-term Targets and 2017 Expectations 41-43 Non-GAAP and Forward Looking Statements 44-50 2
Slide 3: Profile
Profile Ax REGIONS
Slide 4: Our banking franchise
Our banking franchise Regions aims to be the premier regional financial institution in America Ranked 16th Nationally in Total Deposits(2) Branch Locations by State (1) Line of Business Coverage Alabama – 206 Louisiana – 99 • Corporate Banking Birmingham, Alabama • Business Capital Arkansas – 77 Mis
Slide 5: Strength of our markets
Strength of our markets Market Rank in Core States High Market Share, High Growth Markets 78% 6 78% of total deposits are in our core states Alabama - Mississippi - Florida Louisiana - Tennessee - Arkansas 5 Source: SNL Financial As of 6/30/2016 FDIC summary
Slide 6: Strength of our markets - our state footprint
Strength of our markets - our 15 state footprint Of all new jobs Of all US port trade 43% created in the US 61% tonnage(4) traveling since 2009 were through ports in our in our footprint(1) footprint Of all US 44% automotive 50% Of non-durable goods manufacturing occurs employment is in our footprin
Slide 7: Regions receives top honors
Regions receives top honors 7
Slide 8: Strategic initiatives
Grow and Diversify Revenue Leverage RecioXs 360° to grow customers and households and deepen existing relationships Prudently grow non-interest income Balance growth across geographies and businesses Disciplined Expense Management $400mm in expense saves by 2019 Continuously focus on efficiency and
Slide 9: Net Interest Income and Asset Sensitivity
Net Interest Income and Asset Sensitivity 9
Slide 10: Improving net interest income and net interest margin
Improving net interest income(1) and net interest margin Net interest income(1) and net interest margin 2Q17 Results and Outlook ($ in millions) $904 • Net interest income(1) (FTE) increased $23 million $881 or 3%, and the net interest margin increased 7 bps $869 $874 $856 3.32% ◦ Both margin and in
Slide 11: Interest rate risk exposure
Interest rate risk exposure (as of June 30, 2017) Portfolio Compositions • Naturally asset sensitive balance sheet Assets Other Liabilities poised to benefit from rising interest 16% rates Deposits • 48% of loans are floating rate, Securities $125B 91% $108B 20% Borrowings including loan hedges(1) L
Slide 12: Interest rate risk assumptions
Interest rate risk assumptions (as of June 30, 2017) Standard Interest Rate Risk Scenario Assumptions Assumption Sensitivity Analysis (2)(3) ($ in millions) 1. Growth expectations exclude the impact of third-party indirect-vehicle portfolio 12 2. Impacts of stresses to standard shock scenario are ap
Slide 13: Deposit advantage
Deposit advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 2Q17, ($ in billions) ($ in billions) ($ in billions) Private Institutional $63 $36 $36 $36 $62 $62 $62 $61 Wealth* Trust* $35 $35 $1 $
Slide 14: Deposit composition and pricing
Deposit composition and pricing (as of June 30, 2017) Interest bearing deposit betas Deposit funding composition Peer median = 4.5bps Peer median = 86% Peer median = 14.2% Peer median = 26% • Regions' predominantly deposit funded balance sheet, which includes an attractive mix of low cost deposits,
Slide 15: Fee Income and Efficiencies
Fee Income and Efficiencies 15
Slide 16: Creating sustainable franchise value
Creating sustainable franchise value Non-interest income 2Q17 Results and Outlook ($ in millions) • Non-interest income increased $15 million or 3%; $599 includes the recognition of a $5 million deferred gain 55 associated with the sale of affordable housing $526 $522 $525 residential mortgage loans
Slide 17: Diversified fee income
Diversified fee income Fee revenue by Segment Consumer ($ in millions) • Service charges are expected to increase through second half of 2017 consistent with growth in checking accounts and households • Card and ATM fee growth is expected to continue consistent with growth in active cards and increa
Slide 18: Investing in fee income growth initiatives
Investing in fee income growth initiatives 2015-2016 2017-2018 • GreenSky • Additional point-of-sale opportunities • Fundation • Expansion of mortgage home loan direct channel • CMBS origination • Additional mortgage servicing rights • Regions.com powered by Avant acquisitions • Mortgage servicing r
Slide 19: Prudently managing expenses
Prudently managing expenses Non-interest expenses 2Q17 Results and Outlook ($ in millions) • Expenses increased $32 million or 4%; adjusted $934 expenses(1) increased $27 million or 3% $915 $909 22 $899 ◦ Salaries and Benefits increased $19 million and 26 $877 10 included full quarter impact of meri
Slide 20: Focus on efficiency remains firmly intact
Focus on efficiency remains firmly intact Operational Branch and Real Estate Third-Party Efficiencies Optimization Discretionary and Other • Staffing levels decreased • Total square footage has declined • Renegotiation or cancellation of approximately 1,300 or 5% since by over 5% since 4Q15 third pa
Slide 21: Balance Sheet
Balance Sheet Ax REGIONS
Slide 22: Prudently managing loans
Prudently managing loans Average loans and leases 2Q17 Results and Outlook ($ in billions) • Average loan and lease balances remain relatively stable $82.0 • Total new and renewed loan production increased 46% $81.3 • Average consumer lending portfolio declined $87 million ◦ Continued to experience
Slide 23: Consumer lending
Consumer lending Average consumer loans 2Q17 Results and Outlook ($ in billions) • Consumer lending remained relatively flat Mortgage $13.6 ◦ Consumer production increased 22%, offset by the decision to exit a third-party arrangement within the indirect-vehicle portfolio Indirect-Vehicles $2.1 ▪ Exc
Slide 24: Business lending
Business lending Average business loans 2Q17 Results and Outlook ($ in billions) • Business lending remained relatively stable with continued focus on improving risk-adjusted returns and CRE Mortgage - OO reducing exposures $6.6 ◦ Commercial lending production increased 53% over 1Q17 while line util
Slide 25: Solid deposit mix
Solid deposit mix Average deposits by type 2Q17 Results and Outlook ($ in billions) Low-cost • Average deposits decreased $478 million $97.5 $97.9 $98.5 $98.0 $97.5 deposits • Average Consumer deposits increased $890 7.3 7.4 7.5 7.2 7.0 Time deposits million or 2%, reflecting the strength of the ret
Slide 26: Securities portfolio
Securities portfolio Securities Portfolio Composition(1) ($ in millions) • Portfolio is managed within the construct of the overall balance sheet and risk management process Other Credit Related 1% • Well constructed and expected to perform well in a Corporate Bonds 5% Agency/UST 1% variety of econo
Slide 27: Balance sheet optimization
Balance sheet optimization Historical Debt Profile ($ in billions) • Regions actively manages its debt 7.04% profile in response to balance 6.58% sheet changes and growth 6.21% 6.14% 5.85% 5.89% dynamics • Actions include tender offers for 4.79% 4.81% unsecured issuances as well as $8.90 4.35% $8.31
Slide 28: Credit
Credit Ax REGIONS
Slide 29: Stable asset quality
Stable asset quality Net charge-offs and ratio NPLs and coverage ratio (1) ($ in millions) ($ in millions) $100 $1,078 $1,025 $995 $1,004 $83 87 773 $72 $68 745 684 694 $823 69 55 $54 50 556 48 0.51% 138% 135% 163% 124% 123% 0.41% 0.35% 0.34% 127% 0.26% 112% 104% 110% 106% 17 14 13 18 311 310 6 280
Slide 30: Significant improvement in asset quality
Significant improvement in asset quality Net Charge-Offs and NPLs have significantly improved $3,160 $682 $823 $68 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 2Q17 Net Charge-Offs Non-Performing Loans 30
Slide 31: Commercial retail lending overview
Commercial retail lending overview Total retail • Approximately $250 million of outstanding balances across the REIT and IRE portfolios relate to shopping malls As of 6/30/17 • Portfolio exposure to REIT's specializing in enclosed malls consists of a small number of credits, all of which are investm
Slide 32: Energy lending overview
Energy lending overview Total energy As of 6/30/17 As of 3/31/17 Total Total • Total outstandings and commitments Commitments Commitments declined primarily due to paydowns and Loan / Including Loan / Including Lease Outstanding % $ % Lease Outstanding % $ % payoffs ($ in millions) Balances Balances
Slide 33: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail Type As of 6/30/17 # of Clients* Commentary OFS Portfolio ($ in millions) Marine $395 8 Sector remains under stress. Approximately • 47% shared national credit (SNC) loans 45% of marine outstandings are under contract for remain
Slide 34: Loan balances by select states
Loan balances by select states Texas Louisiana Consumer Non-Real Estate Commercial - Energy Commercial - Energy Consumer Non-Real Estate Secured, $987 (Direct), $417 (Direct), $1,037 Secured, $295 Consumer Real Estate Consumer Real Secured, $1,121 Estate Secured, $1,137 $8.7B $4.1B Investor Real Est
Slide 35: Loan balances by select states
Loan balances by select states Alabama Mississippi Commercial- Energy Commercial - Consumer Non-Real Estate (Direct), $11 Energy (Direct), Consumer Non-Real Estate Secured, $822 $38 Secured, $347 Commercial - Consumer Real Estate Secured, $9.8B Commercial - Non- Energy, $5,069 Consumer Real Estate S
Slide 36: Capital and Liquidity
Capital and Liquidity Ax REGIONS
Slide 37: Solid liquidity
Solid liquidity Loan-to-deposit ratio(1) • Regions has a strong, core funded balance sheet resulting in a low loan- 84% 82% 82% 81% 80% to-deposit ratio • Future debt maturities are manageable and allow for efficient re-financing • Regions’ liquidity policy requires that the holding company maintain
Slide 38: Strong capital levels
Strong capital levels Basel III Common Equity Tier 1 Ratio Capital Priorities Peer #1 12.3 RF 11.5 Peer #2 11.5 Peer #3 11.2 Peer #4 10.8 Peer #5 10.6 Peer #6 10.3 Peer #7 10.3 Peer #8 10.0 Peer #9 10.0 Peer #10 10.0 Peer #11 9.9 Peer #12 9.8 Peer #13 9.7 Peer #14 9.5 Note: Regions’ CET1 ratio is es
Slide 39: Robust capital returns
Robust capital returns Capital Returned to Shareholders ($ in millions) • Remain committed to target $1,157 CET1 ratio of 9.5 percent based on current risk in our $927 balance sheet • Target dividend payout ratio 839 between 30 and 40 percent 623 over time $503 $437 • Sufficient capital to support 2
Slide 40: Solid total shareholder returns
Solid total shareholder returns 1 Year 3 Year 5 Year RF 68.2 Peer #1 94.6 Peer #1 240.4 Peer #1 67.0 Peer #2 70.3 Peer #2 161.9 Peer #2 65.3 Peer #3 64.4 Peer #3 159.2 Peer #3 63.2 Peer #4 64.3 Peer #4 148.2 Peer #4 59.6 Peer #5 60.0 Peer #5 143.4 Peer #5 59.0 RF 59.6 Peer #6 143.4 Peer #6 56.8 Peer
Slide 41: Long-term Targets and 2017 Expectations
Long-term Targets and 2017 Expectations 41
Slide 42: 2017 expectations
2017 expectations • Excluding the impact of the third-party indirect-vehicle portfolio, full-year average loans are expected to be flat to slightly down compared to the prior year* • Full year average deposits are expected to be relatively stable with the prior year* • Net interest income and other
Slide 43: Executing on our strategy
Executing on our strategy 43 Note: The reconciliation with respect to forward-looking non-GAAP measures is expected to be consistent with the actual non-GAAP reconciliations included in the attached appendix. (1) Non-GAAP; see appendix for reconciliation
Slide 44: Non-GAAP and Forward Looking Statements
Non-GAAP and Forward Looking Statements 44
Slide 45: Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio
Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. Management uses this ratio to m
Slide 46: Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio
Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. Management uses this ratio to m
Slide 47: Non-GAAP reconciliation: Adjusted allowance for loan losses to non-performing loans
Non-GAAP reconciliation: Adjusted allowance for loan losses to non-performing loans, excluding loans held for sale The table below presents computations of the adjusted allowance for loan losses to non-performing loans, excluding loans held for sale ratio (non-GAAP), generally calculated as adjusted
Slide 48: Non-GAAP reconciliation: YTD return on average tangible stockholders' equity and EPS
Non-GAAP reconciliation: YTD return on average tangible stockholders' equity and earnings per common share from continuing operations The tables below present computations of "adjusted net income from continuing operations available to common shareholders," "adjusted return on average tangible commo
Slide 49: Forward-looking statements
Forward-looking statements This presentation may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The terms “Regions,” the “Company,” “we,” “us” and “our” mean Regions Financial Corporation, a Delaware corporation, and its subsidiaries when or wh
Slide 50: Forward-looking statements continued
Forward-looking statements continued • Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits, which could adversely affect our net income. • Our ability to recruit and retain talented and experienced pers
Slide 51: Regions
A REGIONS
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