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: Credit Risk Management positioned for the future
Exhibit 99.6 Investor Day 2019 Credit Risk Management positioned for the future Barb Godin | Deputy Chief Risk Officer & Chief Credit Officer
Slide 2: Barb Godin, Deputy Chief Risk Officer and Chief Credit Officer
Barb Godin Deputy Chief Risk Officer and Chief Credit Officer Barb Godin is the Deputy Chief Risk Officer and Chief Credit Officer and is a member of the Executive Leadership Team. She reports to the Chief Risk Officer, and is responsible for the overall direction of the bank’s risk management with
Slide 3: Key takeaways: Credit Risk Management
Key takeaways Credit Risk Management Investments continue into improved credit risk management INFRASTRUCTURE (people, process, 1 data & analytics) Better INTEGRATED CREDIT RISK MANAGEMENT FRAMEWORK supporting prudent lending 2 philosophy ACTIVELY MANAGING current and future credit 3 concerns INVEST
Slide 4: Understanding the credit risk we take is paramount
Understanding the credit risk we take is paramount Credit risk management is continuously improving and evolving Credit Risk Concentration Limit Management Management Early Warning / Key Risk Indicators Proactive Loss Mitigation Strategies Risk / Return Analysis Drives Capital Allocation Enhanced Da
Slide 5: Enhancing credit risk foundation
Enhancing credit risk foundation Past Present People & Processes • Seasoned industry experts • Collaborative credit risk teams (industry • Stand alone risk systems and tools specialists, data scientists and modelers) • Decentralized underwriting • Creation of credit products organization ‐ better al
Slide 6: Integrated Credit Risk Management Framework
Integrated Credit Risk Management Framework INVESTOR DAY 2019 | Credit Risk | 6
Slide 7: Integrating credit risk management frameworks leads to greater risk intelligence
Integrating credit risk management frameworks leads to greater risk intelligence RISK / REWARD CREDIT RISK APPETITE SCORECARD PORTFOLIO PERFORMANCE AND EARLY WARNING INDICATORS COMPREHENSIVE CONCENTRATION RISK MANAGEMENT FRAMEWORK PROACTIVE LOSS MITIGATION STRATEGIES Infrastructure Investment | Inte
Slide 8: Diversification through comprehensive concentration framework
Diversification through comprehensive concentration framework Industry Concentrations Geographic Concentrations Concentration Risk Framework • Risk appetite driven approach • Market scorecards are product • Multi‐tiered hierarchy specific e.g., Consumer vs. Investor real estate 9 sectors, 24 industr
Slide 9: Case study: Concentration early warning signals drove active management of multi-family exposures
Case study: Concentration early warning signals drove active management of multi‐family exposures Multi‐family loan balances Actions taken ($ in billions) • Reductions (2010‐2012) due to overall investor real 5.0 1 estate de‐risking strategy 4.2 2• Real Estate Banking (REITs) formed 2011; originatio
Slide 10: Integrated risk framework and active portfolio management result in a stable, diversified portfolio
Integrated risk framework and active portfolio management result in a stable, diversified portfolio Wholesale Consumer Primarily home Migration improvement towards term loans to super Granular, 13% product 4%4% diversified prime 7% portfolio borrowers 35% 12% 10% 45% High quality, $51.7B $31.5B prim
Slide 11: Significant expansion of portfolio risk indicators
Significant expansion of portfolio risk indicators Portfolio Performance Metrics Early Warning Indicators Material increase in monitoring Leading macroeconomic variables drive advanced early warning indicators metrics; from 10 pre‐crisis to over Consumer Corporate Retail Housing 100 today Corporate
Slide 12: Comprehensive risk / return evaluation drives capital allocation strategies
Comprehensive risk / return evaluation drives capital allocation strategies Credit Risk Profitability/Expertise • Comprehensive evaluation of credit risk – • Focus on relationships that drive shared expected losses, economic capital, value regulatory capital • Investments in human capital where we •
Slide 13: Comprehensive suite of tools support credit risk framework
Comprehensive suite of tools support credit risk framework and drive overall credit risk appetite Concentration Framework Credit Risk Risk / Reward Early Warning Appetite Scorecard Indicators Loss Mitigation Tools Infrastructure Investment | Integrated Framework | Active Portfolio Management INVESTO
Slide 14: Active Credit Portfolio Management
Active Credit Portfolio Management INVESTOR DAY 2019 | Credit Risk | 14
Slide 15: Actively managing credit concerns
Generating consistent Actively managing credit concerns sustainable long‐ term performance Leveraged Lending Energy Investor Real EstateConsumer Unsecured Consumer Real Estate Infrastructure Investment | Integrated Framework | Active Portfolio Management INVESTOR DAY 2019 | Credit Risk | 15
Slide 16: Leveraged Lending
Leveraged Lending Sound practices and tight controls with good returns Regions’ Leveraged Lending Definition ‐ $5.5B in balances Balances by Industry(2) • Commitments greater than $10M • Leverage exceeds 3x senior debt; 4x total debt Information 17% • Purpose test secondary to leverage test Manufact
Slide 17: Energy
Energy An important part of our markets; strong internal expertise Rebalanced Portfolio(1) % of Energy Portfolio Balances • Leader in the Energy lending business for over 50 9% 8% 8% 9% 9% 8% 8% 7% 17% years 21% 28% 28% 40% 51% • Experienced team of engineers and specialists support 36% 33% 37% 46%
Slide 18: Investor Real Estate
Investor Real Estate Reduced exposure while focusing on risk adjusted returns Historical Balances(1) • Focus on upper end of the market and well $23 $24 ($ in billions) $22 capitalized clients • Shift in focus from merchant builders to $16 owner/investors $11 • Shifting mix from construction to perm
Slide 19: Consumer real estate
Generating Consumer real estate consistent sustainable long‐ Manage to a higher credit profile term performance Residential Mortgage Home Equity Portfolio Statistics • 2018 YE balances $14.3B • 2018 YE balances $9.3B • Avg. origination FICO 766 • Avg. origination FICO 760 • Current LTV 59% • Current
Slide 20: Consumer unsecured
Consumer unsecured Focus on prime portfolios Consumer Credit Card Consumer Third‐Party Lending Other Consumer Unsecured Portfolio Statistics • Avg. origination FICO 778 • Avg. origination FICO 770 • Avg. origination FICO 741 • Avg. new line $6,100 • Avg. new line $15,800 • Avg. new loan $8,600 • Yie
Slide 21: Our Credit Risk Management Principles
Our Credit Risk Management Principles Components of proactive Credit Risk Management Strong Credit Risk Culture Diversified Portfolio Client Selection Analytically Informed Decisions Managing Through the Cycle Infrastructure Investment | Integrated Framework | Active Portfolio Management INVESTOR DA
Slide 22: Key takeaways: Credit Risk Management
Key takeaways Credit Risk Management Investments continue into improved credit risk management INFRASTRUCTURE (people, process, 1 data & analytics) Better INTEGRATED CREDIT RISK MANAGEMENT FRAMEWORK supporting prudent lending 2 philosophy ACTIVELY MANAGING current and future credit 3 concerns Net Ch
Slide 23: Appendix
Appendix INVESTOR DAY 2019 | Credit Risk | 23
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