Regions Financial Corporation · NYSE:RF
Regions Financial — Q4 2018 Earnings Presentation
23 slides from Regions Financial's earnings presentation, Jan 18, 2019
Slide 1: 4th Quarter Earnings Conference Call
4th Quarter Earnings Conference Call January 18, 2019
Slide 2: Solid 2018 Results
Solid 2018 Results Highlights FY 2018 YoY • Produced highest pre-tax, pre-provision ($ in millions, except per share amounts) Result Change income(2) in over a decade • Grew loans, revenues, households, and Net income(1) $1,504 28% Wealth relationships Earnings per share $1.36 39% • Delivered positi
Slide 3: Prudently growing loans
Prudently growing loans Average loans and leases Highlights ($ in billions) • Average loans grew 1% QoQ and 3% YoY; adjusted average loans(1) grew 1% QoQ and 4% YoY $79.5 $81.0 $81.9 1.4 0.8 0.7 • Broad-based loan growth across business and 30.6 30.8 consumer 29.9 Business loans • All three areas wi
Slide 4: Optimizing deposit mix
Optimizing deposit mix Average deposits by segment Highlights ($ in billions) • Average deposits declined less than 1% QoQ $97.1 and 4% YoY 2.6 $93.9 $93.2 1.4 1.5 9.2 8.2 8.0 • Ending balances increased $1.2B QoQ; 28.4 26.6 26.3 Consumer Bank growth in interest-bearing checking, money Corporate mar
Slide 5: Deposit advantage
Deposit advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 4Q18 ($ in billions) ($ in billions) ($ in billions) Private $37 $35 $35 $60 $59 Wealth* Institutional $58 Services* $7 $1 14 14 14 18
Slide 6: Increasing net interest income and net interest margin
Increasing net interest income(1) and net interest margin Highlights Net interest income(1) and Margin ($ in millions) • Reported and adjusted(2) NII(1) $971 increased 2% QoQ and 6% YOY; NIM $955 13 $930 13 958 increased 5 bps QoQ to 3.55% and 16 942 23 3.55% 6 bps YoY adjusted(2) 901 3.50% (1) 3.39
Slide 7: Well-positioned for non-interest income growth
Well-positioned for non-interest income growth Highlights Non-interest income Change vs • Service charges growth driven by continued ($ in millions) account growth 4Q18 3Q18 4Q17 • Capital markets growth attributable to higher loan Service charges $ 185 3.4 % 8.2 % syndication income, fees generated
Slide 8: Disciplined expense management
Disciplined expense management Highlights Non-interest expense • Non-interest expense decreased 7% QoQ ($ in millions) • Adjusted non-interest expense(1) decreased 1% $920 $922 QoQ; reduction in salaries & benefits, professional 51 69 $853 fees and FDIC assessments, partially offset by an 60.5% 10 i
Slide 9: Asset quality performing as expected
Asset quality performing as expected Criticized business loans NPLs and coverage ratio ($ in millions) ($ in millions) $2,456 $2,029 $650 $1,922 $539 1,007 $496 1,048 939 144% 156% 169% 1,449 981 53 983 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 Classified Special mention NPLs - excluding LHFS Coverage ratio Net
Slide 10: Strong capital and liquidity position
Strong capital and liquidity position Tier 1 capital ratio(1) • Repurchased $370 million or 22 million shares of common stock through open market purchases 11.9% • Declared $144 million in dividends to common 11.0% shareholders 10.7% • ASR(4) settlement resulted in additional delivery of 8.75 millio
Slide 11: 2018 results and 2019 expectations
2018 results and 2019 expectations 2018 Scorecard 2019 Selected Expectations FY 2018 FY 2018 Target Results Category FY 2019 Expectations Adjusted Average Low Single Low single digit growth Loans(1) Digits 2.2% Adjusted Net Average Loans(3) Charge-Offs consistent40-60 with bps GDP forecast Relativel
Slide 12: Appendix
Appendix Am REGIONS ::
Slide 13: Selected items impacting earnings
Selected items impacting earnings Quarter Ended Adjusted Items ($ amounts in millions, except per share data) 12/31/2018 9/30/2018 12/31/2017 Pre-tax adjusted items: • Incurred $7 million in severance Branch consolidation, property and equipment charges $ (3) $ (4) $ (9) and $3 million in branch Sal
Slide 14: Non-GAAP reconciliation: adjusted average loans
Non-GAAP reconciliation: adjusted average loans Regions believes adjusting total average loans for the impact of the first quarter 2018 residential first mortgage loan sale and the indirect vehicles third-party exit portfolio, provides a meaningful calculation of loan growth rates and presents them
Slide 15: Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio
Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio The table below and on the following page present computations of the net interest margin; efficiency ratio, which is a measure of productivity, generally calculated as non-interest expense divided
Slide 16: Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio - continued
Non-GAAP reconciliation: NII/NIM, non-interest income/ expense, operating leverage and efficiency ratio - continued Year Ended December 31 ($ amounts in millions) 2018 2017 2018 vs. 2017 Non-interest expense (GAAP) M $ 3,570 $ 3,491 $ 79 2.3 % Adjustments: Contribution to the Regions Financial Corpo
Slide 17: Non-GAAP reconciliation: Basel III common equity tier 1 ratio – fully phased-in pro-forma
Non-GAAP reconciliation: Basel III common equity tier 1 ratio – fully phased-in pro-forma The calculation of the fully phased-in pro-forma "Common equity Tier 1" (CET1) is based on Regions’ understanding of the Final Basel III requirements. For Regions, the Basel III framework became effective on a
Slide 18: Non-GAAP reconciliation: pre-tax pre-provision income
Non-GAAP reconciliation: pre-tax pre-provision income The Pre-Tax Pre-Provision Income (PPI) tables below present computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the presentation of PPI and the exclusion of certa
Slide 19: Non-GAAP reconciliation: pre-tax pre-provision income (continued)
Non-GAAP reconciliation: pre-tax pre-provision income (continued) Year Ended ($ amounts in millions) 12/31/2018 12/31/2017 2018 vs. 2017 Net income from continuing operations available to common shareholders (GAAP) $ 1,504 $ 1,177 $ 327 27.8 % Preferred dividends (GAAP) 64 64 — —% Income tax expense
Slide 20: Non-GAAP reconciliation: Adjusted Net Charge-offs and Ratios
Non-GAAP reconciliation: Adjusted Net Charge- offs and Ratios Adjusted Net Charge-offs and Ratios (non-GAAP) Select calculations for annualized net charge-offs as a percentage of average loans (GAAP) are presented in the table below. During the first quarter of 2018, Regions made the strategic decis
Slide 21: Forward-looking statements
Forward-looking statements Forward-Looking Statements This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions’ current views with respect to future events and financial performance. Forward-looking statements are n
Slide 22: Forward-looking statements (continued)
Forward-looking statements (continued) • Our ability to execute on our strategic and operational plans, including our ability to fully realize the financial and non-financial benefits relating to our strategic initiatives. • The risks and uncertainties related to our acquisition or divestiture of bu
Slide 23: Regions
A REGIONS A REGIONS: