Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (May 2017)
50 slides from Regions Financial's investor presentation, May 23, 2017
Slide 1: 2Q17 Investor Deck May - June, 2017
2Q17 Investor Deck May - June, 2017 Exhibit 99.1
Slide 2: Table of Contents
Table of Contents Topic Page # Profile 3-8 Net Interest Income and Asset Sensitivity 9-13 Fee Income and Efficiencies 14-19 Balance Sheet 20-26 Credit 27-34 Capital and Liquidity 35-39 Long-term Targets and 2017 Expectations 40-42 Non-GAAP and FLS 43-49 2
Slide 3: Profile
Profile Ad REGIONS
Slide 4: Regions Banking Franchise
Regions Banking Franchise (1) Full Service branches as of 03/31/2017 (2) Source: SNL Financial as of 6/30/2016 Regions aims to be the premier regional financial institution in America 4
Slide 5: Strength of our Markets
Strength of our Markets 5 Market Rank in Core States 78% of total deposits are in our core states Alabama - Mississippi - Florida Louisiana - Tennessee - Arkansas 78% High Market Share, High Growth Markets Source: SNL Financial As of 6/30/2016 FDIC summary
Slide 6: Strength of our Markets - our state footprint
Strength of our Markets - our 15 state footprint 6 1. Source: Bureau of Labor Statistics through March 2017; Data pulled May 2, 20172. Source: Auto Alliance; Data ; Data pulled May 2, 2017 3. Source: Automotive News Light Vehicle Production by state for 2016 4. Source: Based on Total Domestic Shippi
Slide 7: Regions Receives Top Honors
Regions Receives Top Honors 7
Slide 8: Strategic Initiatives
rategic Initiatives Grow and Diversify Revenue © Leverage RrcioGjo %™ to customers and househo * Prudent © Balance Effectively Deploy Capital Disciplined organic growtt Return appropriate a to shareholder: Use strategic investments to leverage our. fanmeucure and enhance revenue diversification Ma R
Slide 9: Net Interest Income and Asset Sensitivity
Net Interest Income and Asset Sensitivity 9
Slide 10: Improving net interest income and net interest margin
Improving net interest income(1) and net interest margin Net Interest Income and Other Financing Income (FTE) Net Interest Margin 1Q16 2Q16 3Q16 4Q16 1Q17 $883 $869 $856 $874 $881 3.19% 3.15% 3.06% 3.16% 3.25% • Net interest income(1) (FTE) increased $7 million or 1%, and the net interest margin inc
Slide 11: Interest Rate Risk Exposure
Deposits 90% Borrowings 8% Other 2% IB Checking, Money Market & Savings 56% Non-Interest Bearing Checking 37% Time 7% Interest Rate Risk Exposure (as of March 31, 2017) • Naturally asset sensitive balance sheet poised to benefit from rising interest rates • 45% of loans are floating rate, including
Slide 12: Interest Rate Risk Assumptions
Interest Rate Risk Assumptions (as of March 31, 2017) Standard Interest Rate Risk Scenario Assumptions 12 1. Growth expectations exclude the impact of third-party indirect-vehicle portfolio 2. Impacts of stresses to standard shock scenario are applied independently; not cumulative 3. Including balan
Slide 13: Deposits by Customer Type
Interest Bearing Deposits by Customer Type(1) ($ in billions) Non-Interest Bearing Deposits by Customer Type(1) ($ in billions) 1Q16 2Q16 3Q16 4Q16 1Q17 17 18 18 18 18 17 $34 17 $35 17 $35 17 $35 17 $35 $56 $8 $28 $4 Other Segment Deposit Advantage Deposits by Customer Type(1) (Retail vs. Business)
Slide 14: Fee Income and Efficiencies
Fee Income and Efficiencies 14
Slide 15: Creating sustainable franchise value
Creating sustainable franchise value (1) Non-GAAP; see appendix for reconciliation ($ in millions) 15 Non-interest income Capital markets Mortgage income Other Wealth management income Card and ATM fees Service charges on deposit accounts Selected items 1Q16 2Q16 3Q16 4Q16 1Q17 41 38 42 31 32 38 46
Slide 16: Diversified fee income
Diversified fee income Note: Excludes Other Segment information of $10mm in 1Q17 ($ in millions) 16 Fee revenue by Segment • Seasonally lower 1Q17 service charges are expected to increase throughout 2017 consistent with growth in checking accounts and households • Card and ATM fee growth is expected
Slide 17: Investing in Fee Income Growth Initiatives
Investing in Fee Income Growth Initiatives 17 2015-2016 † GreenSky † Fundation † CMBS Origination † Regions.com powered by Avant † Mortgage Servicing Rights Acquisitions † Financial Consultants † Retail Bankers † Insurance lift-outs and acquisitions † M&A Advisory • BlackArch Acquisition † Multi-fam
Slide 18: Prudently managing expenses
Prudently managing expenses 1Q16 2Q16 3Q16 4Q16 1Q17 843 889 912 877 872 26 26 22 22 5 1,754 (1) Non-GAAP; see appendix for reconciliation ($ in millions) Selected Items(1)Adjusted Non-Interest Expense(1) $869 $915 18 $934 26 $899 $877 Non-interest expenses 5 • Expenses decreased $22 million or 2%;
Slide 19: Focus on Efficiency Remains Firmly Intact
Focus on Efficiency Remains Firmly Intact 19 Operational Efficiencies Branch and Real Estate Optimization Third-Party Discretionary and Other • Staffing levels decreased more than 1,200 or 5% in 2016 • Universal Banker deployed in all branches allowing for the migration of non-cash transactions away
Slide 20: Balance Sheet
Balance Sheet Ad REGIONS
Slide 21: Prudently managing loans
Average loans and leases 1Q16 2Q16 3Q16 4Q16 1Q17 $81.5 $82.0 $81.3 $80.6 $80.2 Prudently managing loans ($ in billions) 21 • Average Consumer and Business loans declined during 1Q17 • Consumer lending was impacted by exit of third-party indirect- vehicle portfolio and sale of affordable housing mor
Slide 22: Average consumer loans
Mortgage $13.5 Indirect-Vehicles $2.1 Indirect-Vehicles Third-Party $1.8 Indirect-Other $0.9 Home Equity $10.6 Credit Card $1.2 Other $1.1 Consumer Lending Average consumer loans ($ in billions) 22 • Consumer lending decreased 1% in 1Q17 ◦ Impacted by exit of third-party indirect- vehicle portfolio
Slide 23: Business Lending
Average business loans Business Lending ($ in billions) 23 • Business lending remained relatively stable in 1Q17 with continued focus on improving risk- adjusted returns and reducing exposures ◦ Direct energy and multi-family loans decreased $240 million ◦ Optimism has yet to materialize into meanin
Slide 24: Solid Deposit Mix
Average deposits by type Solid Deposit Mix Low-cost deposits Time deposits + Other 1Q16 2Q16 3Q16 4Q16 1Q17 90.4 90.2 90.5 91.0 90.8 7.4 $97.8 7.3 $97.5 7.4 $97.9 7.5 $98.5 7.2 $98.0 ($ in billions) 24 ($ in billions) Average deposits by segment Consumer Bank Corporate Bank Wealth Management Other 1
Slide 25: Securities Portfolio
Securities Portfolio 25 • Portfolio is managed within the construct of the overall balance sheet and risk management process • Well constructed and expected to perform well in a variety of economic environments • Supportive of both regulatory and market liquidity objectives • Selective when purchasi
Slide 26: Historical Debt Profile
Historical Debt Profile Unsecured Secured (FHLB) Total Debt as a % of Assets 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 3.16 3.16 2.31 3.06 3.06 3.55 4.15 3.50 3.50 3.50 3.00 5.31 4.25 7.31 5.25 8.31 4.25 7.80 4.75 8.90 2.50 6.00 4.25 7.75 2.50 6.00 2.58% 4.35% 5.85% 6.58% 6.20% 7.04% 4.79% 6.14%
Slide 27: Credit
Credit Ad REGIONS
Slide 28: Stable asset quality
Criticized (Direct Energy) Criticized (Non-Energy) 1Q16 2Q16 3Q16 4Q16 1Q17 1,200 1,078 1,024 971 867 2,425 $3,625 2,586 $3,664 2,718 $3,742 2,641 $3,612 2,671 $3,538 Net Charge-Offs (Direct Energy) Net Charge-Offs (Non-Energy) Net Charge-Offs ratio 1Q16 2Q16 3Q16 4Q16 1Q17 $17 $6 $14 $13 $68 $68 $5
Slide 29: Significant Improvement in Asset Quality
29 Significant Improvement in Asset Quality Net Charge-Offs Non-Performing Loans 4Q 10 4Q 11 4Q 12 4Q 13 4Q 14 4Q 15 4Q 16 $682 $100 $3,160 $1,004 Net Charge-Offs and NPLs have significantly improved 1Q1 7
Slide 30: Retail portfolio overview
• REIT portfolio consists of a small number of credits, all of which are investment grade • IRE portfolio is widely distributed; largest tenants typically include 'basic needs' anchors • Approximately $250 million of outstanding balances across the REIT and IRE portfolios relate to shopping malls •
Slide 31: Energy lending overview
• Total outstandings and commitments declined primarily due to paydowns and payoffs • Allowance for loan and lease losses was 6.1% of direct energy balances at 3/31/17 vs 7.0% at 12/31/16 • No second lien exposure outstanding within the energy portfolio • Leveraged loans account for 22% of energy re
Slide 32: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail Type As of3/31/17 # of Clients* Commentary Marine $414 8 Sector remains under stress. Approximately 45% of marine outstandings are under contract for remainder of 2017. Integrated OFS 117 8 Improving conditions for companies ser
Slide 33: Loan balances by select states - Texas and Louisiana
Commercial - Non-Energy, $2,191 Investor Real Estate, $217 Consumer Real Estate Secured, $1,117 Consumer Non-Real Estate Secured, $289 Commercial - Energy (Direct), $437 Loan balances by select states Texas Louisiana Note: Intelligence from our customer assistance program (CAP) reveals no noticeable
Slide 34: Loan balances by select states - Alabama and Mississippi
Loan balances by select states Alabama Mississippi Commercial - Non- Energy, $4,870 Investor Real Estate, $290 Consumer Real Estate Secured, $3,585 Consumer Non-Real Estate Secured, $833 Commercial - Non-Energy, $1,539 Investor Real Estate, $133 Consumer Real Estate Secured, $942 Consumer Non-Real E
Slide 35: Capital and Liquidity
Capital and Liquidity Ad REGIONS
Slide 36: Solid Liquidity
Solid Liquidity • Regions has a strong, core funded balance sheet resulting in a low loan- to-deposit ratio • Future debt maturities are manageable and allow for efficient re-financing • Regions’ liquidity policy requires that the holding company maintain at least 18 months coverage of maturities, d
Slide 37: Strong Capital Levels
Strong Capital Levels Note: Regions’ CET1 ratio is estimated at 3/31/17. Peer financial data as of 3/31/17 includes BBT, CFG, CMA, FHN, FITB, HBAN, HBHC, KEY, MTB, PNC, SNV, STI, USB and ZION. Source: SNL Financial. 37 Basel III Common Equity Tier 1 Ratio Peer #1 Peer #2 RF Peer #3 Peer #4 Peer #5 P
Slide 38: Capital Returned to Shareholders
Capital Returned to Shareholders Dividends Share Repurchases 2014 2015 2016 03/31/17 247 304 318 78 256 $503 623 $927 839 $1,157 150 $228 Robust Capital Returns (1) Includes fees associated with open market share repurchases.38 • Remain committed to target CET1 ratio of 9.5 percent based on current
Slide 39: Solid Total Shareholder Returns
Solid Total Shareholder Returns Source: Bloomberg Note: Total shareholder return data as of 3/31/2017 Peers include BBT, CFG (Publicly traded as of 2015), CMA, FITB, HBAN, HBHC, KEY, MTB, PNC, SNV, STI, USB, FHN and ZION 39 1 Year Peer #1 RF Peer #2 Peer #3 Peer #4 Peer #5 Peer #6 Peer #7 Peer #8 Pe
Slide 40: Long-term Targets and 2017 Expectations
Long-term Targets and 2017 Expectations 40
Slide 41: 2017 Expectations
2017 Expectations 41 Assumptions Expectations • GDP growth of 2% to 2.5% • Assumes market forward interest rate curve as of March 28, 2017 ◦ Average Fed Funds of 1.06% ◦ Average 10-year Treasury of 2.48% • Expected declines in indirect vehicle loans • On track to exceed branch consolidation target o
Slide 42: Executing on our Strategy
Executing on our Strategy 42 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 43: Non-GAAP and FLS
Non-GAAP and FLS Ad REGIONS
Slide 44: Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio
Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio NM - Not Meaningful 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
Slide 45: Adjusted allowance for loan losses to non-performing loans
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 allowance for loan losses divided by adjusted total non-accrual loans, excluding loans held for sale. The allowanc
Slide 46: 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 (1) Current quarter amounts and the resulting ratio are estimated. (2) Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III on a fully
Slide 47: Non-GAAP reconciliation continued: return on tangible equity and EPS
Non-GAAP reconciliation continued: 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 tang
Slide 48: 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 49: Forward-looking statements (continued)
• The costs, including possibly incurring fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party,
Slide 50: Regions
A REGIONS