Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (February 2018)
47 slides from Regions Financial's investor presentation, Feb 21, 2018
Slide 1: Investor Deck February - March, 2018
Investor Deck February - March, 2018 Exhibit 99.1
Slide 2: Table of contents
Table of contents Topic Page # Profile 3-8 Net Interest Income and Asset Sensitivity 9-14 Fee Income and Efficiencies 15-21 Balance Sheet 22-28 Credit 29-31 Capital and Liquidity 32-36 Long-term Targets and 2017 Expectations 37-40 Non-GAAP and Forward Looking Statements 41-46 2
Slide 3: Profile
Profile Ad REGIONS
Slide 4: Regions aims to be the premier regional financial institution in America
Regions aims to be the premier regional financial institution in America Line of Business Coverage Alabama – 204 Louisiana – 98 Arkansas – 75 Mississippi – 117 Florida – 314 Missouri – 56 Georgia – 117 North Carolina – 6 Illinois – 46 South Carolina – 24 Indiana – 50 Tennessee – 209 Iowa – 8 Texas –
Slide 5: Strength of our markets
Strength of our markets 5 Market Rank in Core States 80% of total deposits are in our core states Alabama - Mississippi - Florida Louisiana - Tennessee - Arkansas 80% High Market Share, High Growth Markets Source: SNL Financial As of 6/30/2017 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: Automotive News Light Vehicle Production by state for 2016 3. Source: U.S. Census Bureau 4. Based on Total Domestic Shipping Tonnage by state; U.S. Army Corp
Slide 7: Regions receives top honors
Regions receives top honors 7
Slide 8: Strategic initiatives supporting Company priorities
Grow & Diversify Revenue Disciplined Expense Management Optimize & Effectively Deploy Regulatory Capital Leverage Simplify & Grow Leverage SM to grow customers and households and deepen existing relationships Prudently grow non- interest income Leverage Simplify & Grow Attractive ROA and Risk Adjust
Slide 9: Net Interest Income and Asset Sensitivity
Net Interest Income and Asset Sensitivity 9
Slide 10: Adjusted net interest income and adjusted net interest margin
Adjusted net interest income(1)(2) and adjusted net interest margin(2) Increasing net interest income(1) and net interest margin Adjusted Net Interest Income and Other Financing Income (FTE) Adjusted Net Interest Margin (RF) Net Interest Margin (Peer Median) 4Q16 1Q17 2Q17 3Q17 4Q17 $874 $881 $904 $
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 December 31, 2017) • Naturally asset sensitive balance sheet poised to benefit from rising interest rates • 48% of loans are floating rate, includi
Slide 12: Assumption Sensitivity Analysis
12 Assumption Sensitivity Analysis (3)(4) ($ in millions) Standard Interest Rate Risk Scenario Assumptions Interest rate risk assumptions (as of December 31, 2017) (1) Growth expectations exclude the impact of third-party indirect-vehicle portfolio (2) Growth expectations exclude the impact of broke
Slide 13: Deposit advantage and deposits by customer type
Peer #1 Peer #2 RF Peer #3 Peer #4 Peer #5 Peer #6 Peer #7 Peer #8 Peer #9 Peer #10 Peer #11 Peer #12 Peer #13 Peer #14 2bps 3bps 6bps 8bps 9bps 11bps 12bps 14bps 14bps 14bps 17bps 20bps 21bps 22bps 27bps $57 $8 $28 $3 4Q17 vs. 3Q15 Change in Total Deposit Costs(2) Other Segment(3) Deposit advantage
Slide 14: Deposit composition and pricing
Deposit composition and pricing (as of December 31, 2017) • Regions' predominantly deposit funded balance sheet, which includes an attractive mix of low cost core deposits, provides for a competitive funding advantage against the peer set ◦ 90% of liability funding is comprised of deposits, the four
Slide 15: Fee Income and Efficiencies
Fee Income and Efficiencies 15
Slide 16: Simplify and Grow: making it easier for customers to do business with us
16 Simplify and Grow: making it easier for customers to do business with us Why: • Industry undergoing a transformational change • Meeting customers' growing demand for an easier, faster, and more convenient way to conduct financial business How: • Remove internal silos and reduce friction • Simplif
Slide 17: Simplify and Grow: a three year journey
17 Simplify and Grow A three year journey Customer Journeys • Digitization • Loan process • Account opening • Streamline credit process; more digital; faster response • Making Banking Easier Revenue Growth • Faster launch of new initiatives • Advanced analytics to drive next best customer offers • C
Slide 18: Non-interest income
Non-interest income Mortgage income Capital markets Other Wealth management income (2) Card and ATM fees Service charges on deposit accounts Selected items (1) 4Q16 1Q17 2Q17 3Q17 4Q17 43 41 40 32 36 31 32 38 35 56 59 56 60 53 63 103 109 108 108 110 103 104 104 103 106 173 168 $510 169 175 171 10 $5
Slide 19: Diversified fee income
Consumer $1,116 Wealth $450 Corporate $467 (1) Excludes Other Segment information of $72 million in 2017 2017 Fee revenue by Segment(1) Diversified fee income ($ in millions) 19 • Service charges are expected to increase in 2018 consistent with growth in checking accounts and households • Card and A
Slide 20: Non-interest expenses
Non-interest expenses Prudently managing expenses 4Q16 1Q17 2Q17 3Q17 4Q17 877 872 899 880 901 22 $899 5 $877 10 $909 6 $886 51 $952 63.2% 62.7% 63.2% 61.7% 61.1% (1) Non-GAAP; see appendix for reconciliation ($ in millions) Selected Items(1)Adjusted Non-Interest Expense(1) 20 • Expenses increased $
Slide 21: Retail network strategy and efficiency improvements
21 Retail Network Strategy – ~10% decline of branches last two years – 4% decline of square footage – Refinement of branch staffing model – Future branch consolidations planned Efficiency improvements – Optimized digital account openings – Universal digital loan applications – Imaging capabilities –
Slide 22: Balance Sheet
Balance Sheet Ad REGIONS
Slide 23: Average loans and leases
23 Average loans and leases Prudently managing loans Transitioning to growth ($ in billions) • Average Consumer lending increased $40 million ◦ Excluding third-party indirect-vehicle run-off, average consumer loans increased $223 million ◦ Solid growth in residential mortgage, indirect-other consume
Slide 24: 4Q17 average loan composition
4Q17 average loan composition Mortgage $14.0 Indirect-Vehicles $2.2 Indirect-Vehicles Third-Party $1.2 Indirect-Other $1.4 Home Equity $10.2 Credit Card $1.2 Other $1.2 Average consumer loans ($ in billions) 24 $31.4B Average business loans Commercial and industrial $35.7 CRE Mortgage - OO $6.2 CRE
Slide 25: 2018 loan outlook
25 • Excluding indirect vehicle, 2017 growth outperformed industry averages across most consumer categories - expect that to continue in 2018 • Historically outperform Mortgage Bankers Association (MBA) outlook on loan growth due to favorable purchase vs. refinance mix • Consumer credit card growth
Slide 26: Average deposits by segment and type
Average deposits by segment Consumer Bank Corporate Bank Wealth Management Other 4Q16 1Q17 2Q17 3Q17 4Q17 55.6 56.2 57.1 57.0 56.9 28.7 28.2 27.6 27.6 28.4 10.2 10.0 9.5 9.3 9.2 4.0 $98.5 3.6 $98.0 3.3 $97.5 3.0 $96.9 2.6 $97.1 Average deposits by type Solid deposit mix Low-cost deposits Time deposi
Slide 27: Securities portfolio
Securities portfolio 27 • Portfolio is managed within the construct of the overall balance sheet and risk management process • Expected to perform well in a variety of economic environments • Supportive of both regulatory and market liquidity objectives • Selective when purchasing MBS - choose loan
Slide 28: Historical Debt Profile
Historical Debt Profile Unsecured Secured (FHLB) Total Debt as a % of Assets 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 3.16 $3.16 2.31 3.06 3.06 3.55 4.15 3.50 3.50 3.50 3.50 4.50 4.50 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 3.85 $7.3
Slide 29: Credit
Credit Ad REGIONS
Slide 30: NPLs and coverage ratio
NPLs and coverage ratio(1) Classified Special Mention 4Q16 1Q17 2Q17 3Q17 4Q17 2,406 2,395 2,118 2,021 1,449 1,206 $3,612 1,143 $3,538 1,162 $3,280 941 $2,962 1,007 $2,456 Net Charge-Offs Net Charge-Offs ratio 4Q16 1Q17 2Q17 3Q17 4Q17 $83 $100 $68 $76 $63 0.41% 0.51% 0.34% 0.38% 0.31% NPLs Coverage
Slide 31: Significant improvement in asset quality
31 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 4Q 17 $682 $63 $3,160 $650 Net Charge-Offs and NPLs(1) have significantly improved (1) Excludes loans held for sale Source: SNL Financial; Peers includes BBT, CFG, CMA, FHN, FIT
Slide 32: Capital and Liquidity
Capital and Liquidity Ad REGIONS
Slide 33: 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 34: Strong capital levels
Strong capital levels 34 Basel III Common Equity Tier 1 Ratio(1) Peer #1 Peer #2 RF Peer #3 Peer #4 Peer #5 Peer #6 Peer #7 Peer #8 Peer #9 Peer #10 Peer #11 Peer #12 Peer #13 Peer #14 12.1 11.6 11.1 11.1 10.9 10.6 10.4 10.1 10.1 10.0 10.0 9.9 9.8 9.3 8.7 Capital Priorities Note: Regions’ and peer C
Slide 35: Capital Returned to Shareholders
Capital Returned to Shareholders Dividends Share Repurchases 2014 2015 2016 2017 247 304 318 370 256 $503 623 $927 839 $1,157 1,275 $1,645 Robust capital returns (1) Includes fees associated with open market share repurchases.35 • Remain committed to target CET1 ratio of 9.5% based on current risk i
Slide 36: Solid total shareholder returns
Solid total shareholder returns Source: Bloomberg Note: Total shareholder return data as of 2/14/2018 Peers include BBT, CFG (Publicly traded as of 2015), CMA, FITB, HBAN, HBHC, KEY, MTB, PNC, SNV, STI, USB, FHN and ZION 36 1 Year Peer #1 Peer #2 RF Peer #3 Peer #4 Peer #5 Peer #6 Peer #7 Peer #8 Pe
Slide 37: Long-term Targets and 2018 Expectations
Long-term Targets and 2018 Expectations 37
Slide 38: Managing for long-term performance
38 Asset Sensitivity Significant funding advantage driven by low-cost deposit base, accretive fixed-rate reinvestments Stable Asset Quality Broad-based credit metric improvements, ample reserves for hurricane and energy losses Capital Return Capital sufficient for organic growth, strategic opportuni
Slide 39: Long-term targets and 2018 expectations
Long-term targets and 2018 expectations • Adjusted ROATCE of 14 to 16%(1)(2) • Full-year average loans are expected to grow in the low single digits, excluding impact of third- party indirect-vehicle portfolio • Full-year average deposits are expected to grow in the low single digits, excluding brok
Slide 40: Long-term financial targets
40 Long-term financial targets Three Pillars of Execution 2016 - 2018 long-term expected results 2017 Results 2016 Results Adjusted efficiency ratio of <60%(1) Adjusted ROATCE 14-16%(1)(2) Adjusted EPS growth of 12-15% (CAGR)(1) Adjusted ROATCE 9.9%(1) Adjusted efficiency ratio of 63.3%(1) Adjusted
Slide 41: Non-GAAP and Forward Looking Statements
Non-GAAP and Forward Looking Statements 41
Slide 42: Efficiency ratio computations (non-GAAP)
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 uses this ratio to monitor performance and believes this measure provides meaningful inf
Slide 43: Non-GAAP reconciliation: year ended December
NM - Not Meaningful 43 Year Ended December 31 ($ amounts in millions) 2017 2016 2017 vs. 2016 Non-interest expense (GAAP) I $ 3,624 $ 3,617 $ 7 0.2 % Adjustments: Contribution to Regions' charitable foundation associated with tax reform (40) — (40) NM Professional, legal and regulatory expenses — (3
Slide 44: Non-GAAP reconciliation: YTD return on average tangible equity and EPS
Non-GAAP reconciliation: 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 tangible commo
Slide 45: Forward-looking statements
Forward-looking statements 45 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 ar
Slide 46: Forward-looking statements continued
Forward-looking statements continued 46 • 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 47: A REGIONS
A REGIONS
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