Regions Financial Corporation · NYSE:RF
Regions Financial — Q1 2016 Earnings Presentation
20 slides from Regions Financial's earnings presentation, Apr 15, 2016
Slide 1: 1st Quarter Earnings Conference Call
1st Quarter Earnings Conference Call April 15, 2016
Slide 2: A solid start to 2016
A solid start to 2016 Demonstrates we are successfully executing on our strategic plan First Quarter Highlights 1Q16 1Q15 Change ($ in millions, except per share data) • Results reflect growth in total revenue, lower adjusted expenses(2) and positive operating Net Income(1) $257 $218 18% leverage •
Slide 3: Loans and leases reflect solid growth
Loans and leases reflect solid growth Average loan and lease balances Quarter-over-Quarter: • Loan and lease balances up $750MM or 1% • Business lending balances increased 1%, $81.5 driven by Corporate Banking and Real Estate Banking $80.6 $80.8 • Consumer lending experienced another strong quarter
Slide 4: Average deposits experienced growth
Average deposits experienced growth Quarter-over-Quarter: $95.8 $97.1 $97.2 $97.5 $97.8 8.5 8.2 8.1 7.8 7.4 • Deposits up $262MM • Low-cost deposits up $712MM or 1% • Deposit costs steady at 11 basis points • Funding costs up 2 basis points to 28 88.9 89.1 89.7 90.4 basis points 87.3 Year-over-Year:
Slide 5: Increased net interest income and other financing income and net interest margin
Increased net interest income and other financing income and net interest margin Quarter-over-Quarter: • Adjusted net interest income and other financing $883 income (FTE) up $12MM or 1%(1) $856 $855 ◦ Primary drivers of increase were higher loan $832 $839 balances and increases in short-term intere
Slide 6: Non-interest income driven by growth in revenue diversification initiatives
514 506 497 Non-interest income driven470 by growth in revenue diversification initiatives Quarter-over-Quarter: $590 • Adjusted non-interest income increased 1%(1) driven by revenue diversification initiatives 96 $514 $506 $497 12 (2) Selected • Capital markets income increased $13MM or 46% $470 13
Slide 7: Disciplined non-interest expense management
Disciplined non-interest expense management Quarter-over-Quarter: • Total adjusted expenses declined $18MM or 2%(1) $934 • Total salaries and benefits decreased $3MM or $9MM $905 $895 $75 $1 $873 $869 on an adjusted basis $65 $12 $26 ◦ $12MM in severance expense in 1Q16 related to charges for staffi
Slide 8: Increases in NPLs and criticized and classified loans driven by risk rating migration in energy portfolio
Increases in NPLs and criticized and classified loans driven by risk rating migration in energy portfolio Net charge-offs and ratio NPLs and coverage ratio (1) $78 $68 $993 $54 $60 $46 $800 $751 $789 $782 0.38% 0.34% 0.28% 0.30% 137% 149% 141% 141% 116% 0.23% 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15
Slide 9: Industry leading capital and liquidity ratios
Industry leading capital and liquidity ratios Tier 1 capital ratio (1) • Returned $255MM to shareholders, including the repurchase of $175MM of common stock and $80MM in dividends 12.2% 12.1% 11.7% 11.7% 11.6% • Transitional basis Basel III Common Equity Tier 1 ratio estimated at 10.9%(1), well abov
Slide 10: 2016 Expectations
2016 Expectations • Average loan growth of 3% - 5% relative to 4Q15 average balances • Average deposit growth of 2% - 4% compared to 4Q15 average balances • Net interest income and other financing income up 2% - 4% • Adjusted non-interest income up 4% - 6% (1) • Adjusted expenses flat to up modestly
Slide 11: Appendix
Appendix Ma REGIONS 11
Slide 12: Energy lending overview
Energy lending overview As of 3/31/16 As of 12/31/15 Total energy • Total commitments declined; Balances Balances however, direct balances increased - Loan / Including Loan / Including Lease Related % $ % Lease Related % $ % driven primarily by higher utilization ($ in millions) Balances Commitments
Slide 13: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail Type As of 3/31/16 # of Clients* Commentary OFS Portfolio Marine $470 9 Shelf operators remain under stress. • 55% shared national credit (SNC) loans Additional stress is expected in 2016 as deepwater contracts mature and • 69%
Slide 14: Loan balances by select states
Loan balances by select states Texas Louisiana Investor Real Investor Real Estate, Estate, $258 $1,489 Consumer Real Estate Consumer Real Secured, Estate Secured, Commercial - $1,099 $861 Commercial - Non-Energy, $8.9B $4,323 $4.5B Non-Energy, $2,258 Consumer Non- Real Estate Consumer Non-Real Secur
Slide 15: Loan balances by select states
Loan balances by select states Alabama Mississippi Commercial - Energy (Direct), $54 Investor Real Estate, Consumer Real Estate Secured, Consumer Non-Real $370 $965 Investor Real Estate, Estate Secured, $856 $194 Commercial - Non- Energy, $5,470 $10.3B Consumer Non-Real Estate Secured, $3.1B $334 Co
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: 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 18: 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 19: 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. •
Slide 20: A REGIONS
A REGIONS