Regions Financial Corporation · NYSE:RF
Regions Financial — Q2 2016 Earnings Presentation
21 slides from Regions Financial's earnings presentation, Jul 19, 2016
Slide 1: 2nd Quarter Earnings Conference Call
2nd Quarter Earnings Conference Call July 19, 2016
Slide 2: 2nd quarter 2016 results
2nd quarter 2016 results Demonstrates we are successfully executing on our strategic plan • Generated positive operating leverage of 4%(2) on 2Q16 2Q15 Change an adjusted basis year-to-date ($ in millions, except per share data) • Achieved year-to-date adjusted efficiency ratio of Net Income(1) $259
Slide 3: Continued loan growth
Continued loan growth Average loan and lease balances Quarter-over-Quarter: $82.0 • Loan and lease balances up 1% $79.2 $80.6 $80.8 $81.5 • Consumer lending experienced another strong quarter with balances up 1% and 29.9 30.3 30.5 30.8 production up 20% 29.4 • As a result of softer pipelines, busine
Slide 4: Prudently managing deposits; strong growth in consumer
Prudently managing deposits; strong growth in consumer Average deposits by type Quarter-over-Quarter: $97.1 $97.2 $97.5 $97.8 $97.5 • Deposits down $253MM 8.2 8.1 7.8 7.4 7.3 Low-cost • Low-cost deposits down $223MM deposits • Consumer segment deposits increased 88.9 89.1 89.7 90.4 90.2 Time deposit
Slide 5: Net interest income and other financing income and net interest margin
Net interest income and other financing income and net interest margin Quarter-over-Quarter: • Net interest income and other financing income $883 (FTE) down $14MM or 2% $869 $855 $856 ◦ Recent long-term debt issuances, lower loan $839 fees, reduced dividends from trading assets and less favorable c
Slide 6: Non-interest income growth driven by revenue diversification initiatives
526 514 506 497 Non-interest income growth driven by revenue diversification initiatives Quarter-over-Quarter: $590 • Non-interest income increased 4%: adjusted non-interest income increased 2%(1) 96 $514 $526 $497 $506 6 Selected • Service charges increased 4% - reflecting the 12 (2) 13 Items(1) be
Slide 7: Expenses: Focused on what we can control in an uncertain environment
Expenses: Focused on what we can control in an uncertain environment Quarter-over-Quarter: $934 $895 $915 • Expenses increased $46MM or 5.3%; adjusted expenses 75 $873 $869 26 increased $46MM or 5.5%(1) 1 12 26 • Total salaries and benefits increased $5MM ◦ Market value adjustments increased $20MM a
Slide 8: Asset quality
Asset quality Net charge-offs and ratio NPLs and coverage ratio (1) $78 $68 $72 $993 $1,025 $60 $46 $751 $789 $782 0.38% 0.34% 0.35% 0.30% 149% 141% 141% 0.23% 116% 112% 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 ($ in millions) ($ in millions) Net Charge-Offs Net Charge-Offs ratio NPLs Cover
Slide 9: Industry leading capital and liquidity ratios
Industry leading capital and liquidity ratios • Returned $258MM to shareholders, including the Tier 1 capital ratio (1) repurchase of $179MM of common stock and $79MM in dividends 12.1% • Transitional basis Basel III Common Equity Tier 1 11.7% 11.7% 11.6% 11.6% ratio estimated at 10.9%(1), well abov
Slide 10: 2016 Expectations
2016 Expectations • Average loan growth of 3% - 5%(1); expect to track toward lower end of range • Average deposits relatively stable(1)(2) • Net interest income and other financing income up 2% - 4%; assuming no rate increases, expect to be at mid-point of range • Adjusted non-interest income up 4%
Slide 11: Appendix
Appendix Ma REGIONS 11
Slide 12: Energy lending overview
Energy lending overview Total energy As of 6/30/16 As of 3/31/16 • Total outstandings and Balances Balances commitments declined primarily Loan / Including Loan / Including due to paydowns and payoffs Lease Related % $ % Lease Related % $ % ($ in millions) Balances Commitments Utilization Criticized
Slide 13: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail OFS Portfolio Type As of # of Commentary • 51% shared national credit (SNC) loans 6/30/16 Clients* • 65% utilization rate compared to 69% Marine $457 9 Client selection is strong with ~61% of exposure tied to clients with contra
Slide 14: 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, $908 (Direct), $480 (Direct), $1,255 Secured, $289 Consumer Real Estate Secured, $918 Consumer Real Estate Secured, Investor Real $8.9B $1,112 $4.4B Estat
Slide 15: Loan balances by select states
Loan balances by select states Alabama Mississippi Commercial - Energy (Direct), $38 Commercial - Consumer Non-Real Estate Energy (Direct), Consumer Non-Real Estate $66 Secured, $339 Secured, $875 Consumer Real Consumer Real Estate Secured, $10.1B Commercial - Non- Energy, $5,283 Estate Secured, $3.
Slide 16: Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio
Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. Management uses this ratio to m
Slide 17: Non-GAAP reconciliation continued: YTD non-interest income, expense, efficiency ratio and operating leverage
Non-GAAP reconciliation continued: YTD Non- interest income, non-interest expense, efficiency ratio and operating leverage Six Months Ended June 30 ($ amounts in millions) 2016 2015 2016 vs. 2015 ADJUSTED EFFICIENCY AND OPERATING LEVERAGE RATIO, ADJUSTED NON-INTEREST INCOME/EXPENSE- CONTINUING OPERA
Slide 18: 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 19: Forward-looking statements
Forward-looking statements 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 historica
Slide 20: Forward-looking statements continued
Forward-looking statements continued • Any inaccurate or incomplete information provided to us by our customers or counterparties. • The risks and uncertainties related to our acquisition and integration of other companies. • Inability of our framework to manage risks associated with our business su
Slide 21: A REGIONS
A REGIONS