Regions Financial Corporation · NYSE:RF
Regions Financial — Q1 2019 Earnings Presentation
21 slides from Regions Financial's earnings presentation, Apr 18, 2019
Slide 1: 1st Quarter Earnings Conference Call
1st Quarter Earnings Conference Call April 18, 2019
Slide 2: First quarter 2019 highlights
First quarter 2019 highlights Net income(1) • Delivered strong YoY results $378 Million – Solid revenue growth – Effective expense management Earnings per share – Generated 3.8%(2)(3)adjusted $0.37 positive operating leverage – Broad-based loan growth Total revenue growth(2)(3) – Stable asset qualit
Slide 3: Growing loans and deposits
Growing loans and deposits Average loans and leases Average deposits by segment ($ in billions) ($ in billions) $81.9 $83.7 $95.4 $93.2 $94.2 $79.9 2.9 1.7 1.5 1.4 2.9 3.3 8.9 8.0 7.9 28.3 28.4 Consumer 27.8 Adjusted 27.7 26.3 26.9 business Bank loans (1) Corporate Adjusted Bank consumer loans (1) W
Slide 4: Deposit advantage
Deposit advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 1Q19 ($ in billions) ($ in billions) ($ in billions) Private Wealth* Institutional $35 $35 $34 $60 $58 $60 Services* $7 $1 14 14 15 16
Slide 5: Growing total revenue
Growing total revenue Adjusted total revenue(1) Non-interest income ($ in millions) $1,412 $1,439 $1,449 ($ in millions) Change vs 3.55% 3.53% 1Q19 4Q18 1Q18 3.46% 958 948 Service charges $ 175 (5.4)% 2.3 % 909 Card and ATM fees 109 (1.8)% 4.8 % Wealth management income 76 (1.3)% 1.3 % 503 481 501 C
Slide 6: Disciplined expense management
Disciplined expense management QoQ highlights Non-interest expense ($ in millions) • Non-interest expense increased 1% on a reported and adjusted(1) basis QoQ; decreased 3% on a reported basis and 1% on an adjusted(1) basis YoY $884 $853 $860 22 8 • Salaries and benefits increased 2% due to 10 seaso
Slide 7: Asset quality performing in-line with expectations
Asset quality performing in-line with expectations Criticized business loans NPLs and coverage ratio ($ in millions) ($ in millions) $601 $2,223 $2,119 $496 $523 $1,922 925 1,063 939 169% 163% 1,298 140% 983 53 1,056 1Q18 4Q18 1Q19 1Q18 4Q18 1Q19 Classified Special mention NPLs - excluding LHFS Cove
Slide 8: Strong capital and liquidity position
Strong capital and liquidity position Tier 1 capital ratio(1) • Repurchased $190M or 12.2M shares of common stock through open market purchases 11.9% • Declared $142M in dividends to common shareholders 10.7% 10.6% • Submitted planned capital actions to Federal Reserve; provides path to CET1 target
Slide 9: Near-term and long-term expectations
Near-term and long-term expectations 2019 Expectations Three-Year Expectations (2019-2021) FY 2019 Category Expectations Category Expectation Adjusted average loan growth Low single digits 2021 adjusted return on average 18% - 20% (from adjusted 2018 of $77,667 million)(1) tangible common equity(1)
Slide 10: Appendix
> GENERATING Long-term Performance Appendix \ Consistent Sustainable Ma REGIONS 10
Slide 11: Portfolios of interest
Portfolios of interest (outstanding balances as of March 31, 2019) Leveraged(1) balances by industry SNC balances by industry Information 17% Manufacturing Manufacturing 10% 16% Financial Restaurant & Services 10% Accommodations 10% 17% 22% 12% 10% Energy 9% Professional 44% Retail 8% 6% $5.8B (2)(3
Slide 12: Non-GAAP information
Non-GAAP information This document contains non-GAAP financial measures, which exclude certain items management does not consider indicative of the Company’s on-going financial performance. Management believes that the exclusion of these items provides a meaningful base for period- to-period compari
Slide 13: Non-GAAP items impacting earnings
Non-GAAP items impacting earnings Adjusted Items Quarter Ended • 1Q19 items include charges associated (amounts in millions, except per share data) 3/31/2019 12/31/2018 3/31/2018 with the company's continued focus on increasing organizational efficiency and Non-GAAP adjusted items impacting earnings
Slide 14: Non-GAAP reconciliation: adjusted average loans
Non-GAAP reconciliation: adjusted average loans Average Balances ($ amounts in millions) 1Q19 4Q18 1Q18 1Q19 vs. 4Q18 1Q19 vs. 1Q18 Commercial and industrial $ 39,999 $ 38,111 $ 36,464 $ 1,888 5.0 % $ 3,535 9.7 % Add: Purchasing card balances (1) — 252 208 (252) (100.0)% (208) (100.0)% Adjusted comm
Slide 15: 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 Quarter Ended ($ amounts in millions) 3/31/2019 12/31/2018 3/31/2018 1Q19 vs. 4Q18 1Q19 vs. 1Q18 Non-interest expense (GAAP) A $ 860 $ 853 $ 884 $ 7 0.8 % $ (24) (2.7)% Adjustments: Contribution t
Slide 16: Non-GAAP reconciliation: Pre-tax pre-provision income (PPI)
Non-GAAP reconciliation: Pre-tax pre-provision income (PPI) Quarter Ended ($ amounts in millions) 3/31/2019 12/31/2018 3/31/2018 1Q19 vs. 4Q18 1Q19 vs. 1Q18 Net income from continuing operations available to common shareholders (GAAP) $ 378 $ 390 $ 398 $ (12) (3.1)% $ (20) (5.0)% Preferred dividends
Slide 17: Non-GAAP reconciliation: adjusted net charge-offs and ratios
Non-GAAP reconciliation: adjusted net charge-offs and ratios Quarter Ended ($ amounts in millions) 3/31/2019 12/31/2018 3/31/2018 Residential first mortgage net charge-offs (GAAP) A $ — $ 1 $ 7 Less: Net charge-offs associated with TDR sale — — 5 Adjusted residential first mortgage net charge-offs (
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 As of and for Quarter Ended ($ amounts in millions) 3/31/2019 12/31/2018 3/31/2018 Basel III Common Equity Tier 1 Ratio—Fully Phased-In Pro-Forma (1) Stockholder's equity (GAAP) $ 15,512 $ 15,090 $ 15,866 Non-q
Slide 19: 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 20: Forward-looking statements (continued)
Forward-looking statements (continued) • The success of our marketing efforts in attracting and retaining customers. • Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes i
Slide 21: Regions
A REGIONS Am REGIONS: