Regions Financial Corporation · NYSE:RF
Regions Financial — Q1 2018 Earnings Presentation
23 slides from Regions Financial's earnings presentation, Apr 20, 2018
Slide 1: 1st Quarter Earnings Conference Call
1st Quarter Earnings Conference Call April 20, 2018
Slide 2: Solid First Quarter 2018 Results
Solid First Quarter 2018 Results Results Commentary • Delivered positive operating leverage Year-Over- 1Q18 Result Year • Solid asset quality with broad-based Change ($ in millions) improvements in credit metrics Net income from • Continued to benefit from asset sensitive continuing $398 44% operati
Slide 3: Managing for long-term performance
Managing for long-term performance Opportunities to drive growth and efficiencies Asset Sensitivity Capital Return Significant funding advantage Capital sufficient for organic driven by low-cost deposit growth, strategic opportunities, base, accretive fixed-rate robust shareholder returns reinvestme
Slide 4: Prudently managing loans
Prudently managing loans Transitioning to growth Average loans and leases Quarter-over-Quarter ($ in billions) • Reported average loans increased modestly; adjusted $80.2 $80.1 $79.6 $79.5 $79.9 average loans(1) increased $620 million 2.1 1.9 1.7 1.5 1.2 ◦ Adjusted average consumer loans(1) increase
Slide 5: Optimizing deposit mix
Optimizing deposit mix Average deposits by type Quarter-over-Quarter ($ in billions) Low-cost deposits • Average deposits decreased $1.6 billion $98.0 $97.5 $96.9 $97.1 $95.4 7.2 7.0 7.0 Time deposits ◦ Consumer deposits increased $225 million 7.0 6.8 + Other ◦ Seasonal decline in corporate deposits
Slide 6: Deposit advantage
Deposit advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) ($ in billions) ($ in billions) ($ in billions) Private Institutional $37 $37 $62 Services* $36 $36 $35 $61 $60 $60 $60 Wealth* $1 $8 1
Slide 7: Increasing net interest income and net interest margin
Increasing net interest income(1) and net interest margin Quarter-over-Quarter Net interest income(1) and net interest margin ($ in millions) • Net interest income (NII)(1) increased $8 million; net $930 interest margin (NIM) +9 bps to 3.46%; adjusted NII $920 $922 (1)(2) $904 23 13 increased $2 mil
Slide 8: Well-positioned for non-interest income growth
Well-positioned for non-interest income growth Quarter-over-Quarter Non-interest income • Non-interest income decreased $9 million; adjusted ($ in millions) non-interest income(1) decreased $3 million $516 $507 ◦ Decline in capital markets and card & ATM fees $490 $474 $482 10 4 partially offset by
Slide 9: Disciplined expense management
Disciplined expense management Quarter-over-Quarter • Non-interest expense decreased $36 million; adjusted non- Non-interest expense ($ in millions) interest expense(1) decreased $7 million $920 ◦ Decrease in Visa class B shares expense and FDIC $875 $884 $853 51 assessments, partially offset modest
Slide 10: Improving asset quality
Improving asset quality Net charge-offs and ratio ($ in millions) NPLs and ($ in millions) coverage ratio (1) $100 $1,004 $84 $76 $823 $760 0.51% $68 $63 $5 $650 $601 0.38% 0.42% 0.34% 0.31% 0.40% 137% 144% 140% 127% 106% 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Net charge-offs Net charge-o
Slide 11: Industry leading capital and liquidity ratios
Industry leading capital and liquidity ratios Tier 1 capital ratio(1) • Repurchased $235 million or 12.5 million shares of common stock in 1Q18, and declared $101 million in 12.3% dividends to common shareholders 12.1% 12.1% 11.9% 11.9% • Basel III common equity tier 1 ratio estimated at 11.1%(1); F
Slide 12: 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 13: Appendix
Appendix Mn REGIONS:
Slide 14: Selected items impacting earnings
Selected items impacting earnings • Incurred $15 million in severance and $3 million in branch consolidation expenses Quarter Ended related to Simplify and Grow initiative ($ amounts in millions, except per share data) 3/31/2018 12/31/2017 3/31/2017 Pre-tax adjusted items: • Sold $254 million of res
Slide 15: Pre-tax pre-provision income
(1) Pre-tax pre-provision income Adjusted pre-tax pre-provision (1) Quarter-over-Quarter income $550 $544 • Pre-tax pre-provision income(1) increased $523 18 47 $35 million or 7%; adjusted pre-tax pre- $495 $501 (3) provision income(1) increased $6 million, 5 4 reflecting highest level since 3Q08 •
Slide 16: 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 17: 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 18: Non-GAAP reconciliation: Adjusted net charge-off ratio
Non-GAAP reconciliation: Adjusted net charge-off ratio 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 decision to sell certain primarily performing troubled debt
Slide 19: 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 20: 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 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: