Regions Financial Corporation · NYSE:RF
Regions Financial — Q2 2017 Earnings Presentation
24 slides from Regions Financial's earnings presentation, Jul 21, 2017
Slide 1: 2nd Quarter Earnings Conference Call
2nd Quarter Earnings Conference Call July 21, 2017
Slide 2: 2nd quarter 2017
2nd quarter 2017 Results reflect continued execution of our strategic plan Balance Sheet and Focused on the Profitability Capital Optimization Fundamentals • Net Income(1) increased 18% • Received no objection to • Grew checking accounts, over 2Q16 planned capital actions. Board households, credit c
Slide 3: Prudently managing loans
Prudently managing loans Quarter-over-Quarter: Average loans and leases • Average loan and lease balances remain relatively stable ($ in billions) • Total new and renewed loan production increased 46% • Average consumer lending portfolio declined $87 million $82.0 $81.3 $80.6 $80.2 $80.1 ◦ Absent th
Slide 4: Solid Deposit Mix
Solid Deposit Mix Average deposits by type Quarter-over-Quarter: ($ in billions) Low-cost deposits • Average deposits decreased $478 million $97.5 $97.9 $98.5 $97.9 $97.5 • Average Consumer deposits increased $890 million or 2%, 7.3 7.4 7.5 7.1 7.0 Time deposits reflecting the strength of the retail
Slide 5: Deposit Advantage
Deposit Advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 2Q17, ($ in billions) ($ in billions) ($ in billions) Private Institutional $36 $36 $36 $62 $63 $62 $62 $61 Wealth* Trust* $35 $35 $1 $
Slide 6: Improving net interest income and net interest margin
Improving net interest income(1) and net interest margin Quarter-over-Quarter: Net interest income(1) and net interest margin • Net interest income(1) (FTE) increased $23 million or 3%, and the net interest margin increased 7 bps ($ in millions) $904 ◦ Both margin and income benefited from higher $8
Slide 7: Growing and diversifying revenue
Growing and diversifying revenue Quarter-over-Quarter: • Non-interest income increased $15 million or 3%; includes Non-interest income ($ in millions) the recognition of a $5 million deferred gain associated with the sale of affordable housing residential mortgage loans in $599 4Q16 (which is adjust
Slide 8: Prudently managing expenses
Prudently managing expenses Quarter-over-Quarter: • Expenses increased $32 million or 4%; adjusted expenses(1) Non-interest expenses increased $27 million or 3% ($ in millions) ◦ Salaries and Benefits increased $19 million and included full quarter impact of merit increases and $10 $934 5 million pe
Slide 9: Stable asset quality
Stable asset quality Net charge-offs and ratio NPLs and coverage ratio(1) ($ in millions) $100 ($ in millions) $1,025 $1,078 $83 87 $995 $1,004 $72 745 773 $823 69 $68 684 694 55 $54 0.51% 50 556 124% 123% 138% 135% 163% 48 0.34% 112% 127% 0.41% 104% 110% 106% 0.35% 0.26% 18 280 305 311 310 267 17 6
Slide 10: Industry leading capital and liquidity ratios
Industry leading capital and liquidity ratios Tier 1 capital ratio(1) • No objection to 2017 CCAR capital plan; $1.47 billion in share repurchases and proposed 29% increase in 12% 12.1% 12.2% quarterly common stock dividend to $0.09 11.7% 11.9% • Returned 70% of earnings to shareholders through divi
Slide 11: 2017 Expectations
2017 Expectations • Excluding the impact of the third-party indirect-vehicle portfolio, full-year average loans are expected to be flat to slightly down compared to the prior year* • Full year average deposits are expected to be relatively stable with the prior year* • Net interest income and other
Slide 12: Appendix
Appendix Ar REGIONS 12
Slide 13: Selected Items Impacting Earnings
Selected Items Impacting Earnings Quarter Ended • Incurred $7 million of branch ($ amounts in millions, except per share data) 6/30/2017 3/31/2017 6/30/2016 consolidation charges in 2Q17 primarily associated with the consolidation of 22 Pre-tax adjusted items: additional branches expected to close i
Slide 14: Commercial retail lending overview
Commercial retail lending overview Total retail • Approximately $250 million of outstanding balances across the REIT and IRE portfolios relate to shopping malls • Portfolio exposure to REIT's specializing in enclosed malls consists of a small number of credits, all of which are investment grade As o
Slide 15: Energy lending overview
Energy lending overview As of 6/30/17 As of 3/31/17 Total energy Total Total Commitments Commitments • Total outstandings and commitments Loan / Including Loan / Including declined primarily due to paydowns Lease Outstanding % $ % Lease Outstanding % $ % ($ in millions) Balances Balances Utilization
Slide 16: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail Type As of 6/30/17 # of Clients* Commentary OFS Portfolio ($ in millions) Marine $395 8 Sector remains under stress. Approximately • 47% shared national credit (SNC) loans 45% of marine outstandings are under contract for remain
Slide 17: Loan balances by select states
Loan balances by select states Texas Louisiana Consumer Non-Real Estate Commercial - Energy Commercial - Energy Consumer Non-Real Estate Secured, $987 (Direct), $417 (Direct), $1,037 Secured, $295 Consumer Real Estate Consumer Real Secured, $1,121 Estate Secured, $1,137 $8.7B $4.1B Investor Real Est
Slide 18: Loan balances by select states
Loan balances by select states Alabama Mississippi Commercial- Energy Commercial - Consumer Non-Real Estate (Direct), $11 Energy (Direct), Consumer Non-Real Estate Secured, $822 $38 Secured, $347 Commercial - Consumer Real Estate Secured, $9.8B Commercial - Non- Energy, $5,069 Consumer Real Estate S
Slide 19: 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 20: Non-GAAP reconciliation continued: Adjusted allowance for loan losses to non-performing loans
Non-GAAP reconciliation continued: 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 a
Slide 21: 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 22: Forward-looking statements
Forward-looking statements The following list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions “Forward-Looking Statements” and “Risk Factors" of Regions' Annual Report on Form 10-K for the year
Slide 23: Forward-looking statements continued
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
Slide 24: A REGIONS
A REGIONS