Regions Financial Corporation · NYSE:RF
Regions Financial — BancAnalysts Association of Boston Fall Conference 2017
36 slides from Regions Financial's conference presentation, Nov 3, 2017
Slide 1: BancAnalysts Association of Boston Fall Conference
BancAnalysts Association of Boston Fall Conference November 3, 2017
Slide 2: Strategic initiatives
Grow and Diversify Revenue Leverage ‘«0Gy° to grow customers and households and deepen existing relationships Prudently grow non-interest income Balance growth across geographies and businesses Disciplined Expense Management Majority of $400mm in expense saves by 2018 Continuously focus on efficienc
Slide 3: 2017 YTD Results
(1) 2017 YTD Results Results reflect continued execution of our strategic plan Balance Sheet and Focused on the Profitability Capital Optimization Fundamentals • Net income(2) increased 7% • Remain committed to prudently • Plan to eliminate $400 million YTD growing loans while improving in expenses
Slide 4: Pre-tax pre-provision income
(1) Pre-tax pre-provision income 3Q17 Results and Outlook: • Pre-tax pre-provision income(1) $527 increased $29 million or 6% 3 compared to 2Q17; adjusted $500 $492 $498 pre-tax pre-provision income(1) 33 $476 (5) (4) increased $22 million or 4% (12) • Pre-tax pre-provision income(1) 524 increased $
Slide 5: Net interest income growth and improving net interest margin
Net interest income(1) growth and improving net interest margin Net interest income(1) and net interest margin 3Q17 Results and Outlook ($ in millions) $921 $904 • Net interest income(1) (FTE) increased $881 3.36% $17 million or 2%, and the net interest $874 3.32% $856 margin increased 4 bps compare
Slide 6: Building sustainable franchise value
Building sustainable franchise value Non-interest income 3Q17 Results and Outlook ($ in millions) $599 • Non-interest income decreased $10 55 million or 2% compared to 2Q17; $522 $525 $515 Adjusted non-interest income(1) $510 10 6 9 Capital markets decreased $13 million or 3% 166 Mortgage 3Q17 adjus
Slide 7: Prudently managing expenses
Prudently managing expenses Non-interest expenses 3Q17 Results and Outlook ($ in millions) • Non-interest expense decreased $23 million or $934 3% compared to 2Q17; adjusted non-interest $899 $909 expense(1) decreased $19 million or 2% 22 $886 $877 10 22 6 ◦ Salaries and benefits decreased $14 65.3%
Slide 8: Stable asset quality
Stable asset quality Net charge-offs and ratio NPLs and coverage ratio (1) ($ in millions) ($ in millions) $100 $1,078 $995 $1,004 $83 87 $76 773 694 $823 684 $760 69 $68 $54 50 48 556 513 0.51% 163% 48 123% 138% 135% 180% 0.41% 0.38% 0.34% 127% 137% 0.26% 104% 110% 106% 18 28 6 14 13 305 311 310 26
Slide 9: Prudently managing loans
Prudently managing loans Average loans and leases 3Q17 Results and Outlook ($ in billions) • Total new and renewed loan production $81.3 remained solid up 9% compared to 3Q16 $80.6 $80.2 $80.1 $79.6 including business lending production up 15%; however elevated loan payoffs and pay downs $31.1 $31.5
Slide 10: Optimizing deposit mix
Optimizing deposit mix Average deposits by type 3Q17 Results and Outlook ($ in billions) Low-cost $97.9 $98.5 $98.0 $97.5 $96.9 deposits • Average deposits decreased $626 7.4 7.5 7.2 7.0 7.0 Time deposits million compared to 2Q17 + Other • Strategic actions to reduce higher cost 90.5 91.0 90.8 90.5
Slide 11: Deposit advantage
Deposit advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 3Q17 ($ in billions) ($ in billions) ($ in billions) Private Institutional $63 $36 $36 $36 $37 $62 $62 $61 $60 Wealth* Trust* $35 $1 $8
Slide 12: Deposit composition and pricing
Deposit composition and pricing (as of September 30, 2017) Interest bearing deposit betas Deposit funding composition Peer median = 4.8bps Peer median = 86% Peer median = 15.5% Peer median = 26% • Regions' predominantly deposit funded balance sheet, which includes an attractive mix of low cost depos
Slide 13: Interest rate risk exposure
Interest rate risk exposure (as of September 30, 2017) Portfolio Compositions • Naturally asset sensitive balance sheet poised to benefit from rising interest rates Assets Other Liabilities 15% • 48% of loans are floating rate, Deposits including loan hedges(1) Securities $123B 92% $107B 21% • $31B
Slide 14: Interest rate risk assumptions
Interest rate risk assumptions (as of September 30, 2017) Standard Interest Rate Risk Scenario Assumptions Assumption Sensitivity Analysis (2)(3) ($ in millions) (1) Growth expectations exclude the impact of third-party indirect-vehicle portfolio 14 (2) Impacts of stresses to standard shock scenario
Slide 15: Strong capital levels
Strong capital levels Basel III Common Equity Tier 1 Ratio Capital Priorities Peer #1 12.2 Peer #2 11.5 RF 11.3 Peer #3 11.1 Peer #4 11.0 Peer #5 10.6 Peer #6 10.3 Peer #7 10.3 Peer #8 10.1 Peer #9 10.1 Peer #10 10.0 Peer #11 10.0 Peer #12 9.9 Peer #13 9.6 Peer #14 9.6 Note: Regions’ and peer CET1 r
Slide 16: Robust capital returns
Robust capital returns Capital Returned to Shareholders ($ in millions) $1,157 • Received no objection to $1,042 planned CCAR capital actions; $927 Board authorized share repurchase program up to $1.47 billion, and a 29% 839 increase in quarterly common 775 623 stock dividend $503 • Repurchased $500
Slide 17: Appendix, Non-GAAP and Forward Looking Statements
Appendix, Non-GAAP and Forward Looking Statements 17
Slide 18: 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 – 205 Louisiana – 99 • Corporate Banking Birmingham, Alabama • Business Capital Arkansas – 77 Mis
Slide 19: Strength of our markets
Strength of our markets Market Share Rank in Core States Market Share in Top Markets Regions Branches Regions Insurance Group 80% 80% of total deposits are in our core states Alabama - Mississippi - Florida Louisiana - Tennessee - Arkansas 19 Source: SNL Financial As of 6/30/2017 FDIC summary
Slide 20: Selected items impacting earnings
Selected items impacting earnings Quarter Ended • Incurred $5 million of 3Q17 expenses ($ amounts in millions, except per share data) 9/30/2017 6/30/2017 9/30/2016 associated with branch consolidations and Pre-tax adjusted items: transfer of land held for future branch sites to held for sale Branch
Slide 21: 2017 expectations
2017 expectations • Excluding the impact of the third-party indirect-vehicle portfolio, full year average loans are expected to be down slightly compared to the prior year • Full year average deposits are expected to be relatively stable with the prior year • Net interest income and other financing
Slide 22: Executing on our strategy
Executing on our strategy 22 Note: The reconciliation with respect to forward-looking non-GAAP measures is expected to be consistent with the actual non-GAAP reconciliations included in the attached appendix. (1) Non-GAAP; see appendix for reconciliation
Slide 23: Commercial retail lending overview
Commercial retail lending overview Total retail • Approximately $200 million of outstanding balances across the REIT and IRE portfolios relate to shopping malls • Portfolio exposure to REITs specializing in enclosed malls consists of a As of 9/30/17 small number of credits, all of which are investme
Slide 24: Energy lending overview
Energy lending overview Total energy As of 9/30/17 As of 6/30/17 • Total outstandings and commitments Total Total declined primarily due to paydowns Commitments Commitments and payoffs Loan / Including Loan / Including Lease Outstanding % $ % Lease Outstanding % $ % ($ in millions) Balances Balances
Slide 25: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail Type As of 9/30/17 # of Clients* Commentary OFS Portfolio ($ in millions) Marine $324 7 Sector remains under stress and will likely • 39% shared national credit (SNC) loans remain under stress in 2018. Contract coverage totals 5
Slide 26: Loan balances by select states
Loan balances by select states As of September 30, 2017 Texas Louisiana Consumer Non-Real Estate Commercial - Energy Commercial - Energy Consumer Non-Real Estate Secured, $1,013 (Direct), $1,043 (Direct), $378 Secured, $292 Consumer Real Consumer Real Estate Estate Secured, Secured, $1,163 $1,145 $8
Slide 27: Loan balances by select states (continued)
Loan balances by select states (continued) As of September 30, 2017 Alabama Mississippi Commercial- Energy Commercial - Consumer Non-Real Estate (Direct), $18 Energy (Direct), Consumer Non-Real Estate Secured, $807 $26 Secured, $356 Commercial - Consumer Real Estate Secured, $9.5B Commercial - Non-
Slide 28: Loan balances by select states (continued)
Loan balances by select states (continued) As of September 30, 2017 Florida Investor Real Estate Commercial- Energy (Direct), $0 ($ in millions) Consumer Non-Real Estate Multi- Single Secured, $1,360 Office Retail Other Total Family Family Commercial - Non- Miami-Fort Lauderdale Energy, $5,583 CBSA/
Slide 29: Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio
Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. Management uses this ratio to m
Slide 30: Non-GAAP reconciliation continued: Non-interest income, non-interest expense and efficiency ratio
Non-GAAP reconciliation continued: Non-interest income, non-interest expense and efficiency ratio Nine Months Ended September 30 ($ amounts in millions) 2017 2016 2017 vs. 2016 ADJUSTED EFFICIENCY, FEE INCOME AND OPERATING LEVERAGE RATIOS, ADJUSTED NON-INTEREST INCOME/ EXPENSE- CONTINUING OPERATIONS
Slide 31: Non-GAAP reconciliation: pre-tax pre-provision income
Non-GAAP reconciliation: pre-tax pre-provision income Pre-Tax Pre-Provision Income ("PPI") and Adjusted PPI (non-GAAP) The Pre-Tax Pre-Provision Income table below presents computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions belie
Slide 32: Non-GAAP reconciliation: Adjusted allowance for loan losses to non-performing loans
Non-GAAP reconciliation: Adjusted allowance for loan losses to non-performing loans, excluding loans held for sale The table below presents computations of the adjusted allowance for loan losses to non-performing loans, excluding loans held for sale ratio (non-GAAP), generally calculated as adjusted
Slide 33: Non-GAAP reconciliation: YTD return on average tangible equity and EPS
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 34: Forward-looking statements
Forward-looking statements This presentation may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The terms “Regions,” the “Company,” “we,” “us” and “our” mean Regions Financial Corporation, a Delaware corporation, and its subsidiaries when or wh
Slide 35: 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. • P
Slide 36: Regions
A REGIONS
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