Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (March 2018)
47 slides from Regions Financial's investor presentation, March 2018
Slide 1: Investor Deck
Investor Deck February - March, 2018
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 15-21 Balance Sheet 22-28 Credit 29-31 Capital and Liquidity 32-36 Long-term Targets and 2017 Expectations 37-40 Non-GAAP and Forward Looking Statements 41-46 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 – 204 Louisiana – 98 • Corporate Banking Birmingham, Alabama • Business Capital Arkansas – 75 Mis
Slide 5: Strength of our markets
Strength of our markets Market Rank in Core States High Market Share, High Growth Markets 80% 80% of total deposits are in our core states Alabama - Mississippi - Florida Louisiana - Tennessee - Arkansas 5 Source: SNL Financial As of 6/30/2017 FDIC summary
Slide 6: Strength of our markets - our 15 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 light 58% vehicle production 50% Of non-durable goods manufacturing occurs is within our f
Slide 7: Regions receives top honors
Regions receives top honors 7
Slide 8: Strategic initiatives supporting Company priorities
Strategic initiatives supporting Company priorities Grow & Diversify Revenue Disciplined Expense Optimize & Effectively Management Deploy Regulatory Capital Leverage Simplify & Grow Leverage Simplify & Grow Leverage Simplify & Grow Leverage SM to Continuously focus on Attractive ROA and Risk grow cu
Slide 9: Net Interest Income and Asset Sensitivity
Net Interest Income and Asset Sensitivity 9
Slide 10: Increasing net interest income and net interest margin
Increasing net interest income(1) and net interest margin Adjusted net interest income(1)(2) and adjusted net interest margin(2) 4Q17 Results and Outlook ($ in millions) $930 • Adjusted net interest income(1)(2) (FTE) increased $921 $904 $9 million or 1%, and the adjusted net interest $881 margin(2)
Slide 11: Interest rate risk exposure
Interest rate risk exposure (as of December 31, 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 $124B 90% $108B Borrowings 20% including loan hedges(
Slide 12: Interest rate risk assumptions
Interest rate risk assumptions (as of December 31, 2017) Standard Interest Rate Risk Scenario Assumptions Assumption Sensitivity Analysis (3)(4) ($ in millions) 2018 Expectations: Adjusted net interest income and other financing income (non-FTE) growth of 3% - 5% (1) Growth expectations exclude the
Slide 13: Deposit advantage
Deposit advantage Expected to continue Deposits by Customer Type(1) 4Q17 vs. 3Q15 Change in Total Deposit Costs(2) (Retail vs. Business) Peer #1 2bps 4Q17, ($ in billions) Peer #2 3bps Private Institutional RF 6bps Wealth(3) Trust(3) Peer #3 8bps $8 $1 Peer #4 9bps Peer #5 11bps Peer #6 12bps Consum
Slide 14: Deposit composition and pricing
Deposit composition and pricing (as of December 31, 2017) Interest bearing deposit betas(1) Deposit funding composition(1)(2) Peer median = 86% Peer median = 19.2% Peer median = 3.0bps Peer median = 27% • Regions' predominantly deposit funded balance sheet, which includes an attractive mix of low co
Slide 15: Fee Income and Efficiencies
Fee Income and Efficiencies 15
Slide 16: Simplify and Grow: making it easier for customers to do business with us
Simplify and Grow: making it easier for customers to do business with us Why: • Industry undergoing a transformational change • Meeting customers' growing demand for an easier, faster, and more convenient way to conduct financial business How: • Remove internal silos and reduce friction • Simplify t
Slide 17: Simplify and Grow: a three year journey
Simplify and Grow A three year journey Customer Journeys Organization Revenue Growth Efficiency • Digitization Simplification • Faster launch of Improvements • Loan process • Spans and layers new initiatives • Robotics and • Account opening review • Advanced artificial • Streamline credit • Organiza
Slide 18: Well-positioned for non-interest income growth
Well-positioned for non-interest income growth Non-interest income 4Q17 Results and Outlook ($ in millions) • Non-interest income increased $40 million or 8%; $555 adjusted non-interest income increased $36 $522 $510 $525 $515 million or 7% 13 Mortgage 6 income ◦ Record quarter for capital markets i
Slide 19: Diversified fee income
Diversified fee income 2017 Fee revenue by Segment(1) Consumer ($ in millions) • Service charges are expected to increase in 2018 consistent with growth in checking accounts and households • Card and ATM fee growth is expected to continue consistent with growth in active cards and increased transact
Slide 20: Prudently managing expenses
Prudently managing expenses Non-interest expenses 4Q17 Results and Outlook ($ in millions) • Expenses increased $66 million or 7%; adjusted $952 expenses(1) increased $21 million or 2% 51 ◦ Salaries and Benefits increased $13 million $899 $909 $886 primarily due to higher production-based $877 10 in
Slide 21: Revenue and expense initiatives
Revenue and expense initiatives Leveraging 2017 successes to boost 2018 efficiency Non-Interest Income Initiatives Non-Interest Expense Initiatives Solid core account growth in 2017: Retail Network Strategy – 1.5% checking account growth – ~10% decline of branches last two years – 2% Now banking acc
Slide 22: Balance Sheet
Balance Sheet Ax REGIONS
Slide 23: Prudently managing loans
Prudently managing loans Transitioning to growth Average loans and leases 4Q17 Results ($ in billions) $80.6 $80.2 $80.1 $79.6 $79.5 • Average Consumer lending increased $40 million 31.5 31.2 31.1 31.3 31.4 ◦ Excluding third-party indirect-vehicle run-off, average Business Lending consumer loans inc
Slide 24: 4Q17 average loan composition
4Q17 average loan composition Average consumer loans Average business loans ($ in billions) ($ in billions) Mortgage $14.0 CRE Mortgage - OO Indirect-Vehicles $6.2 $2.2 CRE Construction - $31.4B Indirect-Vehicles $48.1B OO $0.3 Third-Party $1.2 Commercial and IRE - Mortgage $4.0 Other $1.2 Indirect-
Slide 25: 2018 loan outlook
2018 loan outlook Business lending Consumer lending • Momentum into 2018 as production and pipelines • Excluding indirect vehicle, 2017 growth improved 2H17 outperformed industry averages across most • Specialized lending groups expected to drive growth consumer categories - expect that to continue
Slide 26: Solid deposit mix
Solid deposit mix Average deposits by type 4Q17 Results and Outlook ($ in billions) Low-cost $98.5 $98.0 $97.5 $96.9 $97.1 deposits • Continued deliberate strategy to optimize 7.5 7.2 7.0 7.0 7.0 Time deposits deposit mix: + Other ◦ Average Wealth Management deposits decreased $106 million; strategi
Slide 27: Securities portfolio
Securities portfolio Securities Portfolio Composition(1) ($ in millions) • Portfolio is managed within the construct of the overall balance sheet and risk management process Other Credit Related 1% • Expected to perform well in a variety of economic Corporate Bonds 4% Agency/UST 1% environments Non-
Slide 28: Balance sheet optimization
Balance sheet optimization Historical Debt Profile ($ in billions) • Regions actively manages its debt 7.04% 6.94% profile in response to balance sheet 6.58% changes and growth dynamics 6.21% 6.14% 5.85% 5.89% • Actions include issuances and 5.42% tender offers for unsecured 4.79% 4.81% issuances as
Slide 29: Credit
Credit Ax REGIONS
Slide 30: Stable asset quality
Stable asset quality Net charge-offs and ratio NPLs and coverage ratio (1) ($ in millions) ($ in millions) $100 $83 $995 $1,004 $76 $823 $68 $63 $760 0.51% $650 0.41% 0.38% 0.34% 0.31% 144% 127% 137% 110% 106% 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 Net Charge-Offs Net Charge-Offs ratio NP
Slide 31: Significant improvement in asset quality
Significant improvement in asset quality Net Charge-Offs and NPLs(1) have significantly improved YoY Reduction in NPLs(1) to Total Loans $3,160 ($ in millions) Peer #1 57bps $682 RF 43bps Peer #2 41bps Peer #3 37bps Peer #4 28bps Peer #5 24bps Peer #6 18bps Peer #7 18bps Peer #8 14bps Peer #9 14bps
Slide 32: Capital and Liquidity
Capital and Liquidity Ax REGIONS
Slide 33: Solid liquidity
Solid liquidity Loan-to-deposit ratio(1) • Regions has a strong, core funded balance sheet resulting in a low loan- 82% 83% to-deposit ratio 81% 80% 81% • Future debt maturities are manageable and allow for efficient re-financing • Regions’ liquidity policy requires that the holding company maintain
Slide 34: Strong capital levels
Strong capital levels Basel III Common Equity Tier 1 Ratio(1) Capital Priorities Peer #1 12.1 Peer #2 11.6 RF 11.1 Peer #3 11.1 Peer #4 10.9 Peer #5 10.6 Peer #6 10.4 Peer #7 10.1 Peer #8 10.1 Peer #9 10.0 Peer #10 10.0 Peer #11 9.9 Peer #12 9.8 Peer #13 9.3 Peer #14 8.7 Note: Regions’ and peer CET1
Slide 35: Robust capital returns
Robust capital returns Capital Returned to Shareholders ($ in millions) • Remain committed to target CET1 ratio of 9.5% based on current $1,645 risk in our balance sheet • Received no objection to planned CCAR capital actions; Board $1,157 authorized share repurchase program up to $1.47 billion, and
Slide 36: Solid total shareholder returns
Solid total shareholder returns 1 Year 3 Year 5 Year Peer #1 37.2 Peer #1 121.0 Peer #1 200.3 Peer #2 28.2 RF 118.3 Peer #2 181.3 RF 27.8 Peer #2 113.6 Peer #3 177.7 Peer #3 23.4 Peer #3 95.2 RF 170.2 Peer #4 23.0 Peer #4 90.2 Peer #4 168.3 Peer #5 22.3 Peer #5 86.4 Peer #5 149.9 Peer #6 20.3 Peer #
Slide 37: Long-term Targets and 2018 Expectations
Long-term Targets and 2018 Expectations 37
Slide 38: 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 39: Long-term targets and 2018 expectations
Long-term targets and 2018 expectations 2018 Expectations • Adjusted ROATCE of 14 to 16%(1)(2) • Full-year average loans are expected to grow in the low single digits, excluding impact of third- party indirect-vehicle portfolio • Full-year average deposits are expected to grow in the low single digi
Slide 40: Long-term financial targets
Long-term financial targets 2016 - 2018 long-term Three Pillars of Execution 2017 Results 2016 Results expected results Adjusted EPS Adjusted EPS growth Adjusted EPS growth growth of 12-15% of 18.7% (CAGR)(1) of 17.1% (CAGR)(1) (CAGR)(1) Adjusted efficiency Adjusted efficiency Adjusted efficiency ra
Slide 41: Non-GAAP and Forward Looking Statements
Non-GAAP and Forward Looking Statements 41
Slide 42: Non-GAAP reconciliation: Total revenue, non-interest expense, net interest margin and efficiency ratio
Non-GAAP reconciliation: Total revenue, non-interest expense, net interest margin 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
Slide 43: Non-GAAP reconciliation continued: Total revenue, non-interest expense, net interest margin and efficiency ratio
Non-GAAP reconciliation continued: Total revenue, non- interest expense, net interest margin and efficiency ratio Year Ended December 31 ($ amounts in millions) 2017 2016 2017 vs. 2016 Non-interest expense (GAAP) I $ 3,624 $ 3,617 $ 7 0.2 % Adjustments: Contribution to Regions' charitable foundation
Slide 44: 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 45: 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 46: 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 success of our marketing efforts in attracting and retaining customers. •
Slide 47: Regions
A REGIONS
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