Regions Financial Corporation · NYSE:RF
Regions Financial — Q2 2018 Earnings Presentation
24 slides from Regions Financial's earnings presentation, Jul 20, 2018
Slide 1: 2nd Quarter Earnings Conference Call
2nd Quarter Earnings Conference Call July 20, 2018
Slide 2: Solid Second Quarter 2018 Results
Solid Second Quarter 2018 Results Highlights Year-Over- • Successfully completed CCAR process- 2Q18 Result Year Change capital plan received no objection Better/(Worse) ($ in millions) • Continued benefit from asset sensitive Net income from balance sheet continuing $362 21% operations(1) • Solid as
Slide 3: Managing for long-term performance
Managing for long-term performance Opportunities to drive growth and efficiencies Asset Sensitivity Capital Return Significant funding advantage Capital sufficient for organic driven by low-cost deposit growth, strategic opportunities, & base; accretive fixed-rate robust shareholder returns reinvest
Slide 4: Prudently growing loans
Prudently growing loans Average loans and leases Quarter-over-Quarter ($ in billions) • Reported average loans remained relatively unchanged; adjusted average loans(1) increased $382 million $80.1 $79.6 $79.5 $79.9 $80.0 1.9 1.7 1.5 1.2 1.0 ◦ Adjusted average consumer loans(1) increased $221 Adjuste
Slide 5: Optimizing deposit mix
Optimizing deposit mix Average deposits by type Quarter-over-Quarter ($ in billions) Low-cost deposits • Deliberate strategy to optimize deposit base; focused on $97.5 $96.9 $97.1 $95.4 $95.3 growing low-cost consumer and business services 7.0 Time deposits 7.0 7.0 6.8 6.7 + Other relationship depos
Slide 6: Deposit advantage
Deposit advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 2Q18, ($ in billions) ($ in billions) ($ in billions) Private Institutional $37 $37 Wealth* Services* $36 $35 $36 $61 $60 $60 $60 $59 $
Slide 7: Increasing net interest income and net interest margin
Increasing net interest income(1) and net interest margin Quarter-over-Quarter Net interest income(1) and net interest margin • Net interest income (NII)(1) up $17 million or 2%; net ($ in millions) $930 $938 interest margin (NIM) up 3 bps to 3.49% $920 $922 12 $904 23 23 13 926 ◦ NII and NIM benefi
Slide 8: Well-positioned for non-interest income growth
Well-positioned for non-interest income growth Quarter-over-Quarter • Non-interest income up $5 million or 1%; adjusted non-interest Non-interest income ($ in millions) income(1) up $8 million or 2% impacted by: ◦ Capital markets delivered a record quarter, up 14%; growth in M&A advisory fees and cu
Slide 9: Disciplined expense management
Disciplined expense management Quarter-over-Quarter • Non-interest expense up $27 million or 3%; adjusted non-interest Non-interest expense expense(1) up $14 million or 2% impacted by: ($ in millions) ◦ Increase in professional fees related to higher legal costs, and $920 $911 Visa class B shares ex
Slide 10: Broad-based asset quality improvement
Broad-based asset quality improvement Net charge-offs and ratio ($ in millions) NPLs and ($ in millions) coverage ratio(1) $84 $76 5 $68 $63 29 26 $62 23 $823 $760 10 18 $650 0.38% 0.42% $601 $595 0.34% 0.31% 0.32% 45 47 0.40% 44 127% 137% 144% 140% 141% 53 53 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17
Slide 11: Industry leading capital and liquidity ratios
Industry leading capital and liquidity ratios Tier 1 capital ratio(1) • Repurchased $235 million or 13 million shares of common stock in 2Q18, and declared $100 million in dividends to common shareholders 12.3% 12.1% 11.9% 11.9% 11.8% • At period-end, Regions was fully compliant with the Liquidity C
Slide 12: 2018 expectations
2018 expectations • Adjusted ROATCE of 14 to 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 grow in the low single digits, excluding brokered and Wealth Institutional Services deposits(3) • Adjusted operating
Slide 13: Appendix
Appendix Mn REGIONS:
Slide 14: Selected items impacting earnings
Selected items impacting earnings Adjusted Items Quarter Ended • Incurred $34 million in severance and ($ amounts in millions, except per share data) 6/30/2018 3/31/2018 6/30/2017 $1 million in branch consolidation Pre-tax adjusted items: expenses related to Simplify and Grow Branch consolidation, p
Slide 15: Pre-tax pre-provision income
(1) Pre-tax pre-provision income Adjusted pre-tax pre-provision (1) Quarter-over-Quarter income $550 $561 $544 • Pre-tax pre-provision income(1) decreased $523 18 34 47 $5 million or 1%; adjusted pre-tax pre- $501 (3) provision income(1) increased $11 million 4 or 2%, reflecting highest level in 10
Slide 16: Non-GAAP reconciliation: adjusted average loans
Non-GAAP reconciliation: adjusted average loans Regions believes adjusting total average loans for the impact of the first quarter 2018 residential first mortgage loan sale and the indirect vehicles third-party exit portfolio, provides a meaningful calculation of loan growth rates and presents them
Slide 17: Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio
Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio The table below and on the following page present computations of the net interest margin; efficiency ratio, which is a measure of productivity, generally calculated as non-interest expense divided
Slide 18: Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio - continued
Non-GAAP reconciliation: NII/NIM, non-interest income/ expense, operating leverage and efficiency ratio - continued Six Months Ended June 30 ($ amounts in millions) 2018 2017 2018 vs. 2017 Non-interest expense (GAAP) M $ 1,795 $ 1,718 $ 77 4.5 % Adjustments: Branch consolidation, property and equipm
Slide 19: Non-GAAP reconciliation: Adjusted net charge-off ratio
Non-GAAP reconciliation: Adjusted net charge-off ratio Select calculations for annualized net charge-offs as a percentage of average loans (GAAP) are presented in the table below. During the first quarter of 2018, Regions made the strategic decision to sell certain primarily performing troubled debt
Slide 20: Non-GAAP reconciliation: Basel III common equity tier 1 ratio – fully phased-in pro-forma
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 21: 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 22: 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 23: 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 bu
Slide 24: Regions
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