Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (May 2018)
54 slides from Regions Financial's investor presentation, May 7, 2018
Slide 1: Investor Materials May - June, 2018
Exhibit 99.1 Investor Materials May - June, 2018
Slide 2: Table of contents
Table of contents Topic Page # Profile 3-9 Net Interest Income and Asset Sensitivity 10-15 Fee Income and Efficiencies 16-19 Balance Sheet 20-26 Credit 27-29 Innovation and Technology 30-35 Capital and Liquidity 36-40 Long-term Targets and 2017 Expectations 41-44 Governance and Social Responsibility
Slide 3: Profile
PROFILE Ma 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) Line of Business Coverage Branch Locations by State (1) Alabama – 204 Louisiana – 98 Corporate Banking Birmingham, Alabama • Arkansas – 75 Mississippi – 117 • Bu
Slide 5: Strength of our markets
Strength of our markets Market Rank in Core States(1) High Market Share(1), High Growth Markets #2 #6 #2 #1 #5 #7 80% 80% of total deposits are in our core states Alabama - Mississippi - Florida Louisiana - Tennessee - Arkansas Data as of 6/30/17; Source: SNL Financial (1) Market rank by state based
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 (1) in our footprint footprint Of all US light 58% vehicle production Of non-durable goods is within our 50% manufacturing occurs
Slide 7: Regions receives top honors
Regions receives top honors 7
Slide 8: Strategic priorities
Strategic priorities Ma REGIONS ;
Slide 9: Strategic initiatives supporting company priorities
Strategic initiatives supporting company priorities ® 9
Slide 10: Net Interest Income and Asset Sensitivity
NET INTEREST INCOME AND ASSET SENSITIVITY 10
Slide 11: Increasing net interest income and net interest margin
Increasing net interest income(1) and net interest margin Net interest income(1) and net interest margin 1Q18 Results and Outlook ($ in millions) (1) $930 • Net interest income (NII) (non-FTE) increased $920 $922 $8 million QoQ; net interest margin (NIM) +9 $904 23 13 (1)(2) 23 6 bps to 3.46%; adjus
Slide 12: Interest rate risk exposure (as of March 31, 2018)
Interest rate risk exposure (as of March 31, 2018) Portfolio Compositions • Naturally asset sensitive balance sheet Assets Other Liabilities poised to benefit from rising interest 15% rates Deposits • 47% of loans are floating rate, Securities $123B 91% 20% $107B Borrowings (1) Loans including loan
Slide 13: Interest rate risk assumptions (as of March 31, 2018)
Interest rate risk assumptions (as of March 31, 2018) Standard Interest Rate Risk Scenario Assumptions Assumption Sensitivity Analysis (3)(4) ($ in millions) (1) Growth expectations exclude the impact of third-party indirect-vehicle portfolio and sale of residential mortgage loans in 1Q18 (2) Growth
Slide 14: Deposit advantage expected to continue
Deposit advantage Expected to continue (2) Deposits by Customer Type(1) 1Q18 vs. 3Q15 Change in Interest Bearing Deposit Costs (Retail vs. Business) Peer #1 10bps 1Q18, ($ in billions) Peer #2 11bps Institutional Private RF 16bps (3) (3) Wealth Trust Peer #3 16bps $8 $1 Peer #4 21bps Peer #5 21bps P
Slide 15: Deposit composition and pricing
Deposit composition and pricing (as of March 31, 2018) Interest bearing deposit betas(1) Deposit funding composition(1)(2) Peer median = 85% Peer median = 6.0bps Peer Peer median = 18.5% Peer median = 26% • Regions' predominantly deposit funded balance sheet, which includes an attractive mix of low
Slide 16: Fee Income and Efficiencies
FEE INCOME AND EFFICIENCIES 16
Slide 17: Well-positioned for non-interest income growth
Well-positioned for non-interest income growth Non-interest income 1Q18 Results and Outlook ($ in millions) $516 $507 • Non-interest income decreased $9 million; $490 adjusted non-interest income(1) decreased $474 $482 10 4 $3 million QoQ 6 9 Wealth - invest services 171 171 ◦ Decline in capital mar
Slide 18: Diversified fee income
Diversified fee income 1Q18 Fee revenue by Segment(1) Consumer ($ in millions) • Consumer fee income categories are an important and stable component of fee revenue and are expected to contribute to overall growth in 2018 • Service charges are expected to increase in 2018 consistent with growth in c
Slide 19: Prudently managing expenses
Prudently managing expenses Non-interest expenses 1Q18 Results and Outlook ($ in millions) $920 • $884 Non-interest expense decreased $36 $875 51 (1) $843 $853 million; adjusted non-interest expense 10 22 decreased $7 million QoQ 5 6 61.9% 62.3% ◦ Decrease in Visa class B shares 60.8% 60.5% 60.5% ex
Slide 20: Balance Sheet
BALANCE SHEET Ma REGIONS »
Slide 21: Prudently managing loans
Prudently managing loans Transitioning to growth Average loans and leases 1Q18 Results ($ in billions) $80.2 $80.1 $79.6 $79.5 $79.9 2.1 1.9 1.7 1.5 1.2 • Reported average loans increased modestly; Adjusted total (1) loans (1) adjusted average loans increased $620 78.1 78.2 77.9 78.0 78.7 Adjustment
Slide 22: Average loan composition
Average loan composition Average consumer loans(1) Average business loans(1) ($ in billions) ($ in billions) Mortgage $14.0 CRE Mortgage - OO Indirect-Vehicles $6.1 $2.2 CRE Construction - $31.3B Indirect-Vehicles OO $0.3 Third-Party $1.1 Commercial and $48.6B IRE - Mortgage $3.9 Other $1.2 Indirect
Slide 23: Solid deposit mix
Solid deposit mix Average deposits by type 1Q18 Results and Outlook ($ in billions) Low-cost • Average deposits decreased $1.6 billion deposits $98.0 $97.5 $96.9 $97.1 $95.4 QoQ 7.2 7.0 7.0 7.0 6.8 Time deposits + Other ◦ Consumer deposits increased $225 million 90.8 90.5 89.9 90.1 88.6 ◦ Seasonal d
Slide 24: Securities portfolio
Securities portfolio • Portfolio is managed within the construct of (1) the overall balance sheet and risk Securities Portfolio Composition management process • Expected to perform well in a variety of economic environments Corporate Bonds 5% Agency/UST 1% • Supportive of both regulatory and market
Slide 25: Balance sheet optimization
Balance sheet optimization Historical Debt Profile • Regions actively manages its debt profile in response to balance ($ in billions) sheet changes and growth 7.04% 6.94% 6.58% 6.45% dynamics 6.21% 6.14% 5.85% 5.89% • Regions' relatively modest 5.42% wholesale funding footprint 4.79% 4.81% $8.90 pos
Slide 26: Regions Unsecured Debt and Credit Ratings Profile
Regions Unsecured Debt and Credit Ratings Profile Debt Maturity Profile Select Credit Ratings ($ in millions) $2,000 Moody's S&P Fitch 900 $1,351 Regions Financial Corporation 500 $1,000 $800 Senior Unsecured Debt Baa2 BBB+ BBB+ 500 1,100 750 1,000 Subordinated Debt Baa2 BBB BBB $150 $100 300 Region
Slide 27: Credit
CREDIT Mn REGIONS =
Slide 28: Stable asset quality
Stable asset quality Net charge-offs and ratio NPLs and coverage ratio(1) ($ in millions) ($ in millions) $100 $1,004 $84 $823 $760 0.51% $76 5 $68 $650 $601 $63 0.42% 0.38% 0.34% 0.31% 137% 144% 0.40% 127% 140% 106% 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Net charge-offs Net charge-offs r
Slide 29: Significant improvement in asset quality
Significant improvement in asset quality (1) Net Charge-Offs and NPLs have YoY Reduction in NPLs(1)(2) to Total Loans significantly improved ($ in millions) $3,160 RF 51bps Peer #1 51bps $682 Peer #2 42bps Peer #3 28bps Peer #4 22bps Peer #5 19bps Peer #6 17bps Peer #7 11bps Peer #8 8bps $601 Peer #
Slide 30: Innovation & Technology
INNOVATION & TECHNOLOGY Ma REGIONS »
Slide 31: Simplify and Grow: making it easier for customers and associates
Simplify and Grow: making it easier for customers and associates Goal: • Achieve sustainable, long-term growth • Deliver a great customer experience at every touch point: digital and in-person • Become more efficient and effective across the enterprise • Appeal to the next generation of customer Why
Slide 32: Simplify and Grow: a three year journey
Simplify and Grow A three year journey Making Banking Easier Organization Simplification • Digitization • Organizational structure review • Loan process • Spans and layers review • Account opening • Streamline committees and decision • Streamline credit process; more making digital; faster response
Slide 33: Simplify and Grow Progress Update
Simplify and Grow Progress Update Initial Efficiency and Revenue Review Accomplishments • Announced organizational changes to Through the initial review streamline structure 30% opportunities identified ◦ 1Q18 FTE down 3% YoY represent ~70% expense savings and ~30% revenue • Entered into an agreemen
Slide 34: Making banking easier for our customers through digitization
Making banking easier for our customers through digitization Biometric and mobile based ZELLE® (expanded P2P solution) interactions across channels with differentiation Partnering with Digital Eco System Mobile-friendly applications for Strategic partnerships with FinTech deposit accounts and credit
Slide 35: All efforts focused on customer journeys
All efforts focused on CUTOMER JOURNEYS Modern execution approach with 25% IT in Agile and DevOps Automation Artificial Intelligence • Rolled out pre-approved consumer • Cognitive capabilities in the loan offers within online banking contact center improving as well as eSignature capabilities custom
Slide 36: Capital & Liquidity
CAPITAL & LIQUIDITY Ma 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- to-deposit ratio 82% 81% 83% 82% 80% • 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(1) Capital Priorities Peer #1 12.2 Peer #2 12.0 Peer #3 11.2 RF 11.1 Peer #4 10.8 Peer #5 10.6 Peer #6 10.5 Peer #7 10.2 Peer #8 10.2 Peer #9 10.1 Peer #10 10.0 Peer #11 9.9 Peer #12 9.6 Peer #13 9.0 Peer #14 9.0 (1) Current quarter ratio is
Slide 39: Robust capital returns
Robust capital returns Capital Returned to Shareholders • Remain committed to target CET1 ($ in millions) $1,645 ratio of 9.5% based on current risk in our balance sheet • Repurchased $235 million or 12.5 million shares of common stock $1,157 in 1Q18, and declared $101 million in dividends to common
Slide 40: Solid total shareholder returns
Solid total shareholder returns 1 Year(1) 3 Year(1) 5 Year(1) Peer #1 35.8 Peer #1 106.6 Peer #1 194.3 Peer #2 33.4 RF 100.9 Peer #2 172.7 RF 33.3 Peer #2 98.0 Peer #3 148.8 Peer #3 31.1 Peer #3 97.7 Peer #4 138.3 Peer #4 23.9 Peer #4 85.1 RF 137.7 Peer #5 22.2 Peer #5 71.6 Peer #5 125.5 Peer #6 21.
Slide 41: Long-term Targets & 2018 Expectations
LONG-TERM TARGETS & 2018 EXPECTATIONS 41
Slide 42: Managing for long-term performance
Managing for long-term performance Opportunities to drive growth and efficiencies Asset Sensitivity Capital Return Significant funding advantage Capital sufficient for organic driven by low-cost deposit growth, strategic opportunities, base, accretive fixed-rate robust shareholder returns reinvestme
Slide 43: 2018 expectations
2018 expectations • Adjusted ROATCE of 14 to 16%(1)(2) • Full-year adjusted average loans are expected to grow in the low single digits(1) • Full-year average deposits are expected to grow in the low single digits, excluding brokered and Wealth Institutional Services deposits(3) • Adjusted operating
Slide 44: Long-term financial targets
Long-term financial targets Strategic Initiatives 2016 - 2018 long-term financial targets Adjusted EPS growth of 12-14% (CAGR)(1) Adjusted efficiency ratio of <60%(1) Adjusted ROATCE 14-16%(1)(2) (1) Non-GAAP; the reconciliation with respect to forward-looking non-GAAP measures is expected to be con
Slide 45: Corporate Governance & Corporate Social Responsibility
CORPORATE GOVERNANCE & CORPORATE SOCIAL RESPONSIBILITY 45
Slide 46: Corporate Governance
Corporate Governance The company understands that good governance is the Engagement foundation of sustainable business and good decision making is • We take a long-term view of how we create value, and necessary for creating shareholder value over the long term. we take a similar approach to corpora
Slide 47: Corporate Social Responsibility
Corporate Social Responsibility Communities Associates • Commitment to community development • Invest in our associates Invested $2.96 billion Increased entry-level wage to $15 per hour • Support our communities • Engage our associates Contributed $40 million to the Regions Received Gallup Great Wor
Slide 48: Non-GAAP & Forward Looking Statements
NON-GAAP & FORWARD LOOKING STATEMENTS 48
Slide 49: Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio
Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio The table below and on the following page present computations of the net interest margin; efficiency ratio, which is a measure of productivity, generally calculated as non-interest expense divided
Slide 50: Non-GAAP reconciliation continued
Non-GAAP reconciliation continued: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio Year Ended December 31 ($ amounts in millions) 2017 2016 2017 vs. 2016 Non-interest expense (GAAP) M $ 3,491 $ 3,483 $ 8 0.2 % Adjustments: Contribution to Regions' charitable foundation
Slide 51: 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 52: 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 53: 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 busi
Slide 54: Regions
A REGIONS Ma REGIONS «