Regions Financial Corporation · NYSE:RF
Regions Financial — Q3 2018 Earnings Presentation
23 slides from Regions Financial's earnings presentation, Oct 23, 2018
Slide 1: 3rd Quarter Earnings Conference Call
3rd Quarter Earnings Conference Call October 23, 2018
Slide 2: Solid Third Quarter 2018 Results
Solid Third Quarter 2018 Results Highlights 3Q18 YoY • Produced broad-based high quality loan Result Change(1) ($ in millions, except per share amounts) growth Net income from $354 20% continuing operations(2) • Continued benefit from asset sensitive balance sheet Earnings per share $0.32 28% • Deli
Slide 3: Managing for long-term performance
Managing for long-term performance Opportunities to drive growth and efficiencies Asset Sensitivity Capital Return Significant funding advantage Capital sufficient for organic driven by loyal and low-cost growth, strategic investments, & deposit base; accretive fixed- robust shareholder returns rate
Slide 4: Prudently growing loans
Prudently growing loans Average loans and leases Highlights ($ in billions) • Average loans grew 1% QoQ and 2% YoY; adjusted $81.0 average loans(1) grew 2% QoQ and 3% YoY $79.6 $80.0 1.6 0.9 0.8 • Broad-based loan growth; diminished headwinds 29.7 30.3 30.6 from portfolio reshaping efforts Business
Slide 5: Optimizing deposit mix
Optimizing deposit mix Average deposits by segment Highlights • Remain focused on low-cost consumer and ($ in billions) business service relationship deposits $96.9 $95.3 $93.9 3.0 1.4 1.4 • QoQ decline driven primarily by seasonality 9.3 8.5 8.2 and continued strategic reductions Consumer 27.6 27.2
Slide 6: Deposit advantage
Deposit advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 3Q18, ($ in billions) ($ in billions) ($ in billions) Private Institutional $37 $36 $35 $60 $59 $59 Wealth* Services* $7 $1 15 13 14 18
Slide 7: Increasing net interest income and net interest margin
Increasing net interest income(1) and net interest margin Highlights Net interest income(1) and Margin ($ in millions) • NII and NIM benefited from higher $955 rates partially offset by increased $938 13 $920 12 942 wholesale funding 23 926 897 3.50% • NII also benefited from average loan 3.36% 3.49
Slide 8: Well-positioned for non-interest income growth
Well-positioned for non-interest income growth Highlights Non-interest income • Service charges increase driven by account Change vs growth; YTD checking account growth of ($ in millions) 3Q18 2Q18 3Q17 1.4% Service charges $ 179 2.3 % 2.3 % • Other income included valuation Card and ATM 111 (0.9)%
Slide 9: Disciplined expense management
Disciplined expense management Highlights Non-interest expense ($ in millions) • NIE increased 1% QoQ driven by a $60M $922 $911 contribution to Regions Financial Corporation $853 35 69 Foundation; adjusted NIE(1) decreased 3% 6 60.8% 60.4% • Declines in most expense categories 58.1% • Salaries and
Slide 10: Asset quality remains stable
Asset quality remains stable Net charge-offs and ratio ($ in millions) NPLs and coverage ratio ($ in millions) $82 $76 $760 $62 30 29 $595 $539 18 0.38% 0.40% 0.32% 52 137% 141% 156% 47 44 53 3Q17 2Q18 3Q18 3Q17 2Q18 3Q18 Consumer net charge-offs Corporate net charge-offs NPLs - excluding LHFS Cover
Slide 11: Strong capital and liquidity ratios
Strong capital and liquidity ratios Tier 1 capital ratio(1) • Repurchased $581 million or 30.6 million shares of common stock through open market purchases 12.1% • Declared $148 million in dividends to common 11.8% shareholders 11.0% • Entered into ASR(4) agreement to repurchase an additional $700 m
Slide 12: 2018 expectations
2018 expectations • Adjusted ROATCE of approximately 16%(1)(2) • Full-year adjusted average loans are expected to grow in the low single digits(1) • Full-year average deposits are expected to remain relatively stable, excluding brokered and Wealth Institutional Services deposits(3) • Adjusted operat
Slide 13: Appendix
Appendix Mn REGIONS:
Slide 14: Selected items impacting earnings
Selected items impacting earnings Adjusted Items Quarter Ended • Contributed $60 million to ($ amounts in millions, except per share data) 9/30/2018 6/30/2018 9/30/2017 Pre-tax adjusted items: Regions Financial Corporation Branch consolidation, property and equipment charges $ (4) $ (1) $ (5) Founda
Slide 15: Pre-tax pre-provision income
(1) Pre-tax pre-provision income Highlights: Adjusted pre-tax pre-provision (1) income $604 $561 65 • Pre-tax pre-provision income(1) increased $523 34 $12 million or 2% compared to the prior (3) quarter and $13 million or 2% compared to the prior year 526 527 539 • Adjusted pre-tax pre-provision in
Slide 16: Non-GAAP reconciliation: adjusted average loans
Non-GAAP reconciliation: adjusted average loans Regions believes adjusting total average loans for the impact of the first quarter 2018 residential first mortgage loan sale and the indirect vehicles third-party exit portfolio, provides a meaningful calculation of loan growth rates and presents them
Slide 17: Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio
Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio The table below and on the following page present computations of the net interest margin; efficiency ratio, which is a measure of productivity, generally calculated as non-interest expense divided
Slide 18: Non-GAAP reconciliation: NII/NIM, non-interest income/expense - continued
Non-GAAP reconciliation: NII/NIM, non-interest income/ expense, operating leverage and efficiency ratio - continued Nine Months Ended September 30 ($ amounts in millions) 2018 2017 2018 vs. 2017 Non-interest expense (GAAP) M $ 2,717 $ 2,571 $ 146 5.7 % Adjustments: Contribution to Regions' charitabl
Slide 19: Non-GAAP reconciliation: Basel III common equity tier 1 ratio
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 20: Non-GAAP reconciliation: pre-tax pre-provision income
Non-GAAP reconciliation: pre-tax pre-provision income The Pre-Tax Pre-Provision Income (PPI) tables below present computations of pre-tax pre-provision income from continuing operations excluding certain adjustments (non-GAAP). Regions believes that the presentation of PPI and the exclusion of certa
Slide 21: 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 22: 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 risks and uncertainties related to our acquisition or divestiture of busi
Slide 23: Regions
A REGIONS A REGIONS: