Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Day (February 2019)
25 slides from Regions Financial's investor day presentation, Feb 27, 2019
Slide 1: Investor Day 2019: Well positioned for evolving environment
EExhibit 99.7 Investor Day 2019 Well positioned for evolving environment David Turner | Chief Financial Officer
Slide 2: David Turner, Chief Financial Officer
David Turner Chief Financial Officer David Turner serves as Regions’ chief financial officer and is a member of the Regions Executive Leadership Team. Turner leads all finance operations, including financial systems, investor relations, corporate treasury, corporate tax, management planning and repo
Slide 3: Key takeaways
Key takeaways Financial update 1 Focused on RISK‐ADJUSTED RETURNS through the cycle CORE DEPOSIT FUNDING ADVANTAGE supports strong 2 liquidity position and natural asset sensitivity Continued ACTIVE ASSET LIABILITY MANAGEMENT to 3 ensure consistent sustainable long‐term performance Maintain STRONG C
Slide 4: Achieved all of our long-term targets
Achieved all of our long‐term targets Adjusted ROATCE (1) Adjusted Efficiency Ratio (1) Adj. Earnings per Share Growth(1)(2) 16.5% <60% 24% 16% 59.3% 14% 19% Excluding 15% Tax Reform 12% 2018 Target 2018 Results 2018 Target 2018 Results 2018 Target 2018 Results Range(3) Range Range ACHIEVED ACHIEVED
Slide 5: Successful execution of our strategic initiatives
Successful execution of our strategic initiatives Disciplined Expense Grow and Diversify Revenue Optimize and Deploy Capital Management Total Adj. Revenue (1) Adj. Efficiency Ratio (1) Total Capital Return $ in millions $5,745 64.1% 154% $5,114 +12% +61% ‐480 93% bps 59.3% 2015 2018 2015 2018 2015 2
Slide 6: Effectively managed through a challenging economic environment
Effectively managed through a challenging economic environment Sluggish Economic Growth Better, but still slow, GDP growth Faster growth in income / spending Regions increases expense reductions Regions retains asset sensitivity and Regions moderates asset sensitivity and from $300M to $400M continu
Slide 7: Asset liability management philosophy
Asset liability management philosophy Strategies protect net interest margin through the economic cycle Net Interest Margin Maintain Moderate Risk Profile 3.70% • Recently, supported asset sensitivity levels as 3.60% 3.50% economy and market rates improved 3.40% 3.30% • Neutralize sensitivity levels
Slide 8: Strong balance sheet position prepared for evolving environment
Strong balance sheet position prepared for evolving environment Balance sheet position Balance sheet sensitivity Earning Assets Liabilities • Balance sheet is naturally asset sensitive, supported by a large, stable deposit base • A portion of asset sensitivity is driven by future repricing of fixed
Slide 9: Solid deposit advantage
Solid deposit advantage 4Q18 Deposit Costs Deposit Advantage Deposit advantage is evidenced by less reactive liability costs cycle‐to‐date (inclusive of remixing) • Deposit stability predicated on: • Favorable mix of low cost products – 38% (1) Peer Median 0.64% non‐interest bearing deposits • Small
Slide 10: Deposit funding advantage drives strong liquidity position and lower reliance on unsecured debt
Deposit funding advantage drives strong liquidity position and lower reliance on unsecured debt Strong Liquidity Position Regulatory relief may provide added flexibility to optimize Wholesale funding profile remains well positioned to: the balance sheet... • Protect the competitive advantage in depo
Slide 11: Positioned to support 3.40% - 3.70% NIM range through 2021
Positioned to support 3.40% ‐ 3.70% NIM range through 2021 Assumptions on future interest rate environment Net Interest Margin Forecast Assumptions – Upper Range • Modest GDP growth and stable credit environment • Modest increases in market interest rates through 2021 • Fed funds between 2.75% and 3
Slide 12: Focus on risk-adjusted returns
Focus on risk‐adjusted returns Creating shareholder value by redeploying capital more effectively Capital Optimization Investments Mortgage Corporate/Commercial Mortgage Servicing Rights • Sold ~$1B in underperforming loans in • $77B of loan exposures have been • Over the last three years ~$16B in M
Slide 13: Well-integrated capital planning process
Well‐integrated capital planning process • Capital planning process is well‐integrated with other key risk management and strategic planning Capital Planning Framework processes • Working diligently to optimize capital for risk Capital profile Adequacy • Progress to date has contributed meaningfully
Slide 14: Strong capital positioned for flexible management in any environment
Strong capital positioned for flexible management in any environment (1) Strong Capital Position – CET1 • Opportunity for further near‐term optimization given balance sheet risk 10.9% profile Target 9.9% 9.5% • Capital targets calibrated using Management Buffer 0.5% internal scenario planning to bal
Slide 15: Creating sustained value for shareholders
Creating sustained value for shareholders Total implied shareholder return 9‐12% Implied Capital Shareholder Generation Return • Low single digit organic loan growth 1. Growth & • Focus on disciplined underwriting and appropriate Strategic 10% – 20% 3% –4% risk‐adjusted returns Investments • Conside
Slide 16: Key drivers for continuous improvement
Key drivers for continuous improvement Continued generation of positive operating leverage Revenue Initiatives MAKING Fully leverage data / analytics BANKING REVENUE GROWTH Technology deployment, AI, Robotics, Digitization EASIER Adding bankers to drive revenue growth Expense Initiatives Bra
Slide 17: Near term expectations and long-term targets
Near term expectations and long‐term targets 2019 Expectations Three Year Targets (2019‐2021) Category Full‐Year 2019 Category Expectation 2021 adjusted return on average Adjusted average loan growth Low single digits 18% ‐ 20% (from adjusted 2018 of $77,667 million) (1) tangible common equity (1) A
Slide 18: Key takeaways
Key takeaways Financial update 1 Focused on RISK‐ADJUSTED RETURNS through the cycle CORE DEPOSIT FUNDING ADVANTAGE supports strong 2 liquidity position and natural asset sensitivity Continued ACTIVE ASSET LIABILITY MANAGEMENT to 3 ensure consistent sustainable long‐term performance Maintain STRONG C
Slide 19: Appendix
Appendix INVESTOR DAY 2019 | Financial Update | 19
Slide 20: Forecast model assumptions
Forecast model assumptions Upper Range 2018 2019 2020 2021 Real GDP, annual % change 2.9% 2.6% 1%‐2% 2%‐3% 10 year U.S. Treasury Yield, average of daily figures 2.9% 2.8% 3.0% 3.0% Fed Funds Target ‐ Upper End, average of daily figures 1.9% 2.5% 2.8% 3.0% Baseline / Stable Yield Curve 2018 2019 2020
Slide 21: 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 22: Non-GAAP reconciliation: YTD return on average tangible stockholders' equity and earnings per share
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 23: Non-GAAP reconciliation: adjusted average loans
Non‐GAAP reconciliation: adjusted average loans Regions believes adjusting total average loans for the impacts of first quarter 2018 residential loan sale, run‐off of indirect‐vehicle portfolios and reclassification of purchasing card balances from other assets, provides a meaningful calculation of
Slide 24: Forward looking statements disclosure
Forward looking statements disclosure This presentation 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 not based on
Slide 25: Forward looking statements disclosure (continued)
Forward looking statements disclosure (continued) • Our ability to identify and address cyber‐security risks such as data security breaches, malware, “denial of service” attacks, “hacking” and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse