Regions Financial Corporation · NYSE:RF
Regions Financial — Non-Deal Roadshow (November 2019)
64 slides from Regions Financial's roadshow presentation, Nov 5, 2019
Slide 1: Investor Information November - December 2019
Exhibit 99.1 Investor Information November - December 2019
Slide 2: Table of contents
Table of contents Topic Page # Profile and Strategy 3-10 Net Interest Income and Asset Sensitivity 11-18 Fee Income and Efficiencies 19-21 Balance Sheet 22-25 Credit 26-36 Technology & Continuous Improvement 37-45 Capital, Debt & Liquidity 46-51 Environmental, Social & Corporate Governance 52-54 App
Slide 3: Profile and Strategy
> NE ( nsistent Sustainable \ Long-term Performance PROFILE AND STRATEGY Ma REGIONS 3
Slide 4: Our banking franchise
Our banking franchise Ranked 16th in the U.S. in total deposits(1) Branch locations by state (2) Alabama – 192 Louisiana – 93 Birmingham, Alabama Line of business coverage Arkansas – 71 Mississippi – 115 Florida – 301 Missouri – 55 Georgia – 111 North Carolina – 7 Illinois – 43 South Carolina – 22 I
Slide 5: Business segments
Business segments Sept. YTD '19 Pre-tax Average loans(2) Average deposits(2) pre-provision income(1) 1% 2% 6% 8% 27% 39% 38% $1,979M $83B $94B 60% 55% 64% Consumer Corporate Wealth Management Other (1) Excludes the pre-tax pre-provision income (loss) from the Other Segment totaling $(190) million. (
Slide 6: Delivering consistent performance
Delivering consistent performance Interest Rate Proactive strategic hedging Sensitivity program Credit Risk Balance sheet de-risking & Framework optimization Capital Allocation Focused on risk-adjusted returns Improving Simplify & Grow, technology, Efficiency priority markets, and efficiency 6
Slide 7: Top market share plays a valuable role in the competitive landscape
Top market share plays a valuable role in the competitive landscape (1) Markets with top 5 market share • Ranked 16th in the U.S. in total deposits(1) • 87% of deposits in 7 states: Alabama, Tennessee, Florida, Louisiana, Mississippi, Georgia, Arkansas • Top 5 or better market share in ~70% of MSAs
Slide 8: Presence in strong growth markets
Presence in strong growth markets Population growth vs. peers(1) (2020-2025) More than 60% of top(2) MSAs are projected to grow faster than the U.S. national average Peer #1 4.9% Market Top MSAs Deposits Rank(2) '20-'25 Population Growth RF 3.4% Nashville, Tennessee $7.8 3 Peer #2 3.4% Tampa, Florid
Slide 9: Our footprint has significant economic advantages
Our footprint has significant economic advantages Jobs Population Footprint Retirees 42% of all new jobs 51% of all U.S. 35% of the U.S. GDP 6 of the top 10 states created in the US since population growth in generated in our where retirees are 2009 were in our last 10 years occurred footprint movin
Slide 10: Regions receives top honors
Regions receives top honors Regions Bank Named Top Customer Experience Leader Five Years Strong: Regions Bank Regions Bank Named 2018 Temkin Group Ranks in Large Retail Bank Again Named Gallup Great Javelin Trust in Banking Regions Bank Among Top Segments in Market Force Workplace Award Winner in Le
Slide 11: Net Interest Income and Asset Sensitivity
NET INTEREST INCOME AND ASSET SENSITIVITY 11
Slide 12: Focused on earnings stability
$956 $955 $950 956 955 950 Focused on earnings stability NII(1) and NIM NIM Performance vs Peers ($ in millions) 3.6 3.51% $955 $956 $950 3.5 3.46% 3.47% 3.44% 3.4 3.36% 3.3 3.25% 3.34% 3.34% 3.35% 3.47% 3.45% 3.44% 3.2 3.27% 3.24% RF 3.1 3.11% Peer Median2 3.0 2.9 6 7 7 7 7 8 8 8 8 9 9 9 3Q18 2Q19
Slide 13: Balance sheet profile (as of September 30, 2019)
Balance sheet profile (as of September 30, 2019) Portfolio compositions • Naturally asset sensitive balance sheet, supported by a large, stable deposit Assets Other Liabilities base 16% Deposits • Going forward, sensitivity to short-term Securities Borrowings 85% $112B 19% $128B 13% rates will be la
Slide 14: Proactive hedging strategy reduces sensitivity over time
Proactive hedging strategy reduces sensitivity over time Notional cash flow derivatives designated for hedging at 9/30/19(1) • Hedging strategy executed ($ in billions) between 1Q18 and 2Q19 $19.50 $19.50 $18.25 $18.50 $16.50 • Forward starting hedges began -2.6% $15.00 3Q19 with ~80% of total hedge
Slide 15: Deposit advantage expected to continue
Deposit advantage Expected to continue Avg stable retail deposits / total retail funding(1) Deposit costs(2) RF 49bps RF 77% Peer 1 50bps Peer 1 74% Peer 2 52bps Peer 2 68% Peer 3 57bps Peer 3 67% Peer 4 67bps Peer 4 63% Peer 5 71bps Peer 5 62% Peer 6 75bps Peer 6 59% Peer 7 76bps 56% Peer 8 77bps P
Slide 16: Deposit advantage leads to favorable pricing profile
Deposit advantage Leads to favorable pricing profile Interest-bearing deposit cost performance(1) Deposit costs - quarterly 1.4% Peer 13 Peer 3 1.3% Peer 9 0.53% Peer 10 Expect 1.2% 25%-30% beta in Peer 7 0.49% 4Q 1.1% Peer 6 Peer 1 Peer 12 1.0% 0.46% Peer 8 Median = 102bps Peer 5 Peer 14 Peer 4 0.9
Slide 17: Significant down-side market rate protection
Significant down-side market rate protection Securities and hedges(1) as % of earning assets(2) Change in AOCI / earning assets 2Q19 vs 4Q18(2) 50% 100% 40% 80% 30% Peer Median 26.0% 60% Peer Median 41bps 20% 40% 10% 20% basis points 0% 0% s s 1 2 3 4 5 6 7 8 9 -10% 0 1 2 3 3 2 4 7 9 1 5 8 6 -20% 2
Slide 18: Interest rate exposure of future business and long-term rates
Interest rate exposure of future business and long-term rates • The majority of Regions’ residual NII exposure to interest rates comes Fixed / float loan mix(1) from future business activities and cash-flow reinvestment; 2020 100% expectation: 80% • ~$9.5B fixed rate loan production 60% • ~$3.5B fix
Slide 19: Fee Income and Efficiencies
FEE INCOME AND EFFICIENCIES 19
Slide 20: Committed to positive operating leverage
Committed to positive operating leverage Adjusted total revenue(1) Non-interest expense ($ in millions) ($ in millions) $1,457 $1,455 $1,494 937 $922 942 942 $871 69 $861 4 6 3.47% 3.45% 58.3% 3.44% 57.4% 58.1% 853 857 865 515 513 557 3Q18 2Q19 3Q19 3Q18 2Q19 3Q19 (1) (1) (1) Adjusted non-interest e
Slide 21: Diversified non-interest revenue
Diversified non-interest revenue (1) Consumer 3Q19 fee revenue by segment • Consumer fee income categories are an important and stable ($ in millions) component of fee revenue and are expected to contribute to overall growth • Service charges are expected to increase consistent with growth in checki
Slide 22: Balance Sheet
> GENERATING Consistent Sustainable \ Long-term Performance BALANCE SHEET Mm REGIONS 2
Slide 23: Focus on risk-adjusted returns
Focus on risk-adjusted returns Capital Optimization Investments Mortgage Corporate/Commercial Mortgage Servicing Rights • Sold ~$1.3B of primarily under- • ~$102B of loan exposures • ~$17B in MSR bulk purchases since performing loans in recent years have been reviewed in depth beginning of 2016 by C
Slide 24: Balance sheet continues to reflect de-risking and optimization activities
Balance sheet continues to reflect de- risking and optimization activities Adjusted average loans and leases Average deposits by segment ($ in billions) ($ in billions) $93.9 $94.9 $94.0 $81.3 $80.7 1.4 1.5 1.3 $78.1 8.2 7.9 7.8 28.2 28.2 28.2 26.6 26.2 25.7 49.9 53.1 52.5 57.7 59.3 59.2 3Q18 2Q19 3
Slide 25: 3Q19 average loan composition
3Q19 average loan composition Average consumer loans Average business loans ($ in billions) ($ in billions) Mortgage $14.3 CRE Mortgage - OO $5.4 Indirect-Vehicles CRE Construction - $2.2 $30.5B Commercial and $52.5B OO $0.4 Industrial $40.2 IRE - Mortgage $4.9 Other $1.2 Indirect-Other $2.8 Credit
Slide 26: Credit
> GENERATING \ Consistent Sustainable \ Long-term Performance CREDIT Ma REGIONS 6
Slide 27: Diversification through comprehensive concentration framework
Diversification through comprehensive concentration framework Industry Concentrations Geographic Concentrations • Risk Appetite driven approach • Market scorecards are product Concentration Risk Framework specific • Multi-tiered hierarchy e.g., Consumer vs. Investor Real Estate 9 sectors, 24 industr
Slide 28: Significant expansion of portfolio risk indicators
Significant expansion of portfolio risk indicators Portfolio Performance Metrics Early Warning Indicators Regions maintains a robust library of over 150 quantitative and qualitative Metrics are cascaded to ensure measures accountability and permit strategic allocation of risk capacity Capital Market
Slide 29: Asset quality performing as expected
Asset quality performing as expected Criticized business loans NPLs and coverage ratio ($ in millions) ($ in millions) $2,319 $539 $533 $2,029 $2,124 $462 840 1,048 1,158 188% 1,479 156% 160% 981 966 53 3Q18 2Q19 3Q19 3Q18 2Q19 3Q19 Classified Special Mention NPLs - excluding LHFS Coverage ratio Net
Slide 30: Leveraged portfolio
Leveraged portfolio (outstanding balances as of September 30, 2019) Leveraged Balances by Industry Regions Leveraged Lending Definition - $6.1B in balances • Commitments greater than $10M • Leverage exceeds 3x senior debt; 4x total debt 16% • Purpose test secondary to leverage test 24% • Includes in
Slide 31: SNC portfolio
SNC portfolio (outstanding balances as of September 30, 2019) Shared National Credit Balances by Industry 10% Portfolio Characteristics 9% • Diverse industry mix 46% $20.6B 8% 7% • 41% of balances are investment grade 7% • 25% of balances are leveraged 6% 7% • 25% of balances are sponsor backed • 4%
Slide 32: Energy lending
Energy lending • Leader in the energy lending business for over 50 years As of 9/30/19 • In 2019, growth in energy commitments has been % of essentially flat, although outstandings have grown as Total Outstanding Outstanding ($ in millions) Commitments Balances % Utilization $ Criticized Criticized
Slide 33: Restaurant lending
Restaurant lending • Team of bankers in place with specialization in this As of 9/30/19 industry 53 % of ($ in Total Outstanding % Outstanding millions) # of Clients* Commitments Balances Utilization $ Criticized Criticized • Consumer spending will continue to support this Quick 2,869 $1,476 $1,182
Slide 34: Commercial retail lending
Commercial retail lending • Approximately $350 million of outstanding balances across the REIT and IRE portfolios relate to shopping malls and outlet centers, As of 9/30/19 comprised of ~$200 million Class A and ~$150 million Class B/C % of • Portfolio exposure to REITs specializing in enclosed mall
Slide 35: Other portfolios
Other portfolios Manufacturing - Consumer Balances by Industry Transportation Balances by Industry As of 9/30/19 As of 9/30/19 % of % of Total Outstanding Outstanding Total Outstanding Outstanding ($ in millions) Commitments Balances % Utilization $ Criticized Criticized ($ in millions) Commitments
Slide 36: Consumer lending portfolio statistics
Consumer lending portfolio statistics Residential Mortgage Home Equity Portfolio Statistics • Avg. origination FICO 768 • Avg. origination FICO 756 • Current LTV 59% • Current LTV 46% • 95% owner occupied • Only $409M of resets through 2021 • 66% of portfolio is 1st lien • Avg. loan size $40,567 Con
Slide 37: Technology & Continuous Improvement
TECHNOLOGY & CONTINUOUS IMPROVEMENT 37
Slide 38: Focused technology strategy
Focused technology strategy Innovation Customer Experiences • Continue deployment of AI • Mobile-first thinking • Strategic investments and • Continued digitization of customer partnerships experiences • Talent acquisition • Making banking easier • Develop processes that enable continuous agility Co
Slide 39: Significant spending on new technology initiatives
Significant spending on new technology initiatives 2019 technology investment Strong technology Investments (11% of 2018 revenue) in place continue Cybersecurity & risk management • Single branch platform • AI and Robotics • New SEI wealth platform • Voice New technology 10% • New nCino commercial •
Slide 40: Delivering AI solutions to better serve customers and improve efficiency
Delivering AI solutions to better serve customers and improve efficiency ROSIE REGGIE Regions Optimal Solutions Intelligence Contact Center Virtual Banker Engine ROSIE looks at more than Providing bankers Handles select customer calls 350GBs of data to deliver a personalized Answers bankers' questio
Slide 41: Rapid digital adoption continues
Rapid digital adoption continues Usage Growth Enhancements 2.7M Active Digital Users 24% increase YTD in checking Digital Application & 4-5% annual growth; ~5x the rate of accounts opened through digital Fulfillment new customer growth • Pre-filled/ 59% of personalized mortgage apps of all customer
Slide 42: Simplify & Grow: a continuous improvement journey
Simplify & Grow: a continuous improvement journey 2018 - 2019 YTD successes Making Banking Easier • Completed 16 of 67 Simplify & Grow Revenue Growth initiatives Efficiency Improvements • Completed organizational simplification including spans and layers improvements • ~2.6M calls handled by AI virt
Slide 43: Continuous improvement initiatives delivering solid results
Continuous improvement initiatives delivering solid results Simplify & Grow initiative tracker Simplify & Grow expense initiatives Initiatives Total Initiatives to be number of complete completed initiatives Revenue 3 23 26 All others Already Organizational efficiency, effectiveness & simplification
Slide 44: Continuous improvement
Continuous improvement Full time equivalent employees(1) Declining square footage 21,714 13.7M 12.4M 19,969 19,549 11.6M 53 2017 2018 3Q19 2017 2019E 2021E rd Cumulative 3 party spend reduction • Reduced management positions ~17% in 2018; additional staffing reductions expected 2019 - 2021 2018 2019
Slide 45: Optimizing the branch network
Optimizing the branch network Cumulative branch consolidations & Over the last five years de novos • Between 2014 and 2018, consolidated 284 Consolidations branches while opening 33 branches De Novos 53 Forward strategies • Further reduce branch count ~25 by 2021 with ~100 closures(1) and ~75 de nov
Slide 46: Capital, Debt & Liquidity
CAPITAL, DEBT & LIQUIDITY Ma REGIONS 46
Slide 47: Capital targets framework
Capital targets framework • Capital targets calibrated using internal scenario planning • Strong capital position provides flexibility to manage effectively in any environment Strong Capital Position – CET1 A Macro Stresses • Stress informed quantitative buffer is calibrated using Regions' internall
Slide 48: Prudently managing and optimizing capital
Prudently managing and optimizing capital Capital priorities Organic growth Dividend per common53 share $0.46 $0.435 Dividends $0.23 2015 2018 2019 YTD Strategic investments Share repurchases 48
Slide 49: Balance sheet optimization
Balance sheet optimization Historical debt profile(1) Unsecured debt as a % of assets(2) ($ in billions) Peer median 9.0% 11.7% Peer #1 .8% 11.3% 11.3% 10.6% Peer #2 3.2% 9.1% 11.2% $14.6 $14.6 RF 4.8% $14.1 $14.5 9.0 8.5 $13.5 6.5% 8.5 8.4 Peer #3 5.4% 7.4 $11.4 Peer #4 6.2% 6.6 Peer #5 7.6% $8.0 2
Slide 50: Regions unsecured debt and credit ratings profile
Regions unsecured debt and credit ratings profile Debt maturity profile(1) Select credit ratings ($ in millions) $3,000 Moody's S&P Fitch Regions Financial 1,900 Corporation Senior Unsecured Debt Baa2 BBB+ BBB+ $1,000 $1,000 Subordinated Debt Baa2 BBB BBB $800 500 Regions Bank 1,100 1,000 1,000 $100
Slide 51: Liquidity risk management
Liquidity risk management Liquidity Risk Management Liquidity Position Funding • Liquidity profile is well positioned to support overall • Cash flow company objectives including providing flexibility to projections manage deposit costs through volatile economic • Liquidity sources • Contingency envi
Slide 52: Environmental, Social & Corporate Governance
ENVIRONMENTAL, SOCIAL & CORPORATE GOVERNANCE 52
Slide 53: Corporate governance
Corporate governance The Company understands that good corporate governance is Corporate governance engagement the foundation of sustainable business, and good decision • We take a long-term view of how we create value, and we take making is necessary for creating shareholder value over the a simila
Slide 54: Environmental & social highlights
Environmental & social highlights(1) ASSOCIATES 12 weeks 5% $15/hour Continued to invest in the Expanded parental leave plan to Increased the 401(k) Plan Raised the entry-level wage to development of our associates provide 12 weeks of fully paid matching contribution from 4% $15 an hour, while also
Slide 55: Appendix
> GENERATING Consistent Sustainable \ Long-term Performance APPENDIX Mm REGIONS 55
Slide 56: Footprint economic advantages source references
Footprint economic advantages source references Fact Source Bureau of Labor Statistics. "Employment, Hours, and Earnings from the Current Employment Statistics Survey." Databases, Tables & Calculators by Subject, 18 Feb. 2019, data.bls.gov/ Job Growth timeseries/CES0000000001. Accessed 18 Feb. 2019.
Slide 57: LIBOR transition
LIBOR transition Four pillars of execution ◦ Regions completed a comprehensive LIBOR Impact Assessment in 1H 2019 ◦ Using the results of the assessment, we have mobilized a company-wide initiative to transition to alternative rate(s) by YE 2021 Core Products & Corporate Strategy & Legacy Contracts C
Slide 58: Non-GAAP information
Non-GAAP information This document contains non-GAAP financial measures, which exclude certain items management does not consider indicative of the Company’s on-going financial performance. Management believes that the exclusion of these items provides a meaningful base for period- to-period compari
Slide 59: Non-GAAP items impacting earnings
Non-GAAP items impacting earnings Adjusted Items Quarter Ended • 3Q19 items include charges (amounts in millions, except per share data) 9/30/2019 6/30/2019 9/30/2018 associated with ongoing efficiency Non-GAAP adjusted items impacting earnings from continuing operations: efforts, including refineme
Slide 60: Non-GAAP reconciliation: NII, non-interest income/expense, operating leverage and efficiency ratio
Non-GAAP reconciliation: NII, non-interest income/expense, operating leverage and efficiency ratio Quarter Ended ($ amounts in millions) 9/30/2019 6/30/2019 9/30/2018 3Q19 vs. 2Q19 3Q19 vs. 3Q18 Non-interest expense (GAAP) A $ 871 $ 861 $ 922 $ 10 1.2 % $ (51) (5.5)% Adjustments: $ — Contribution to
Slide 61: Non-GAAP reconciliation: adjusted average loans
Non-GAAP reconciliation: adjusted average loans Average Balances ($ amounts in millions) 3Q19 2Q19 3Q18 3Q19 vs. 2Q19 3Q19 vs. 3Q18 Commercial and industrial $ 40,200 $ 40,707 $ 37,410 $ (507) (1.2)% $ 2,790 7.5 % Add: Purchasing card balances (1) — — 239 — NM (239) (100.0)% Adjusted commercial and
Slide 62: Forward-looking statements
Forward-looking statements This presentation may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results or ot
Slide 63: Forward-looking statements continued
Forward-looking statements continued • 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 in laws and regulations in effect from time to time. • Fraud or misconduct by our
Slide 64: GENERATING
> GENERATING Consistent Sustainable \ Long-term Performance A REGIONS Ma REGIONS 64
Regions Financial — Non-Deal Roadshow (November 2019) on 6ix