Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (August 2017)
51 slides from Regions Financial's investor presentation, Aug 7, 2017
Slide 1: Investor Deck August - September, 2017
Investor Deck August - September, 2017 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 15-20 Balance Sheet 21-27 Credit 28-35 Capital and Liquidity 36-40 Long-term Targets and 2017 Expectations 41-43 Non-GAAP and Forward Looking Statements 44-50 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 – 206 Louisiana – 99 Arkansas – 77 Mississippi – 119 Florida – 320 Missouri – 55 Georgia – 120 North Carolina – 6 Illinois – 46 South Carolina – 25 Indiana – 51 Tennessee – 211 Iowa – 8 Texas –
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 6
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: Grow and Diversify Revenue
Grow and Diversify Revenue Leverage Ruc1o% 30" to grow customers and households and lees existing Lea Prudently grow non-interest Balance growth across Peete and businesses lesa listee Expense DENETSANaNE expense sav 1y 201: $400mi Criieus focus on efficiency oa effectiveness Generate positive opera
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 (RF) Net Interest Margin (Peer Median) 2Q16 3Q16 4Q16 1Q17 2Q17 $869 $856 $874 $881 $904 3.15% 3.06% 3.16% 3.25% 3.32% 3.01% 2.97% 3.04% 3.11% 3.22% • Net interest income
Slide 11: Interest rate risk exposure
Deposits 91% Borrowings 7% Other 2% IB Checking, Money Market & Savings 56% Non-Interest Bearing Checking 37% Time 7% Interest rate risk exposure (as of June 30, 2017) • Naturally asset sensitive balance sheet poised to benefit from rising interest rates • 48% of loans are floating rate, including l
Slide 12: Interest rate risk assumptions
Interest rate risk assumptions (as of June 30, 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 balanc
Slide 13: Deposit advantage
$57 $8 $28 $3 2Q16 3Q16 4Q16 1Q17 2Q17 18 18 18 19 19 17 $35 17 $35 18 $36 17 $36 17 $36 Interest Bearing Deposits by Customer Type(1) ($ in billions) Non-Interest Bearing Deposits by Customer Type(1) ($ in billions) Other Segment Deposit advantage Deposits by Customer Type(1) (Retail vs. Business)
Slide 14: Deposit composition and pricing
Deposit composition and pricing (as of June 30, 2017) • Regions' predominantly deposit funded balance sheet, which includes an attractive mix of low cost deposits, provides for a competitive funding advantage against the peer set ◦ 91% of liability funding is comprised of deposits, the highest in th
Slide 15: Fee Income and Efficiencies
Fee Income and Efficiencies 15
Slide 16: Non-interest income
Capital markets Mortgage income Other Wealth management income Card and ATM fees Service charges on deposit accounts Selected items 2Q16 3Q16 4Q16 1Q17 2Q17 38 42 31 32 38 46 46 43 41 40 68 78 59 56 60 103 107 103 109 108 99 105 103 104 104 166 166 173 168 $510 169 6 $526 55 $599 10 $522 6 $525 Crea
Slide 17: Fee revenue by Segment
Fee revenue by Segment Consumer $287 Wealth $109 Corporate $118 Diversified fee income Note: Excludes Other Segment information of $11mm in 2Q17 ($ in millions) 17 • Service charges are expected to increase through second half of 2017 consistent with growth in checking accounts and households • Card
Slide 18: Investing in fee income growth initiatives
Investing in fee income growth initiatives 18 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 19: Non-interest expenses
Non-interest expenses Prudently managing expenses 2Q16 3Q16 4Q16 1Q17 2Q17 889 912 877 872 899 26 $915 22 $934 22 $899 5 $877 10 $909 (1) Non-GAAP; see appendix for reconciliation ($ in millions) Selected Items(1)Adjusted Non-Interest Expense(1) 19 • Expenses increased $32 million or 4%; adjusted ex
Slide 20: Focus on efficiency remains firmly intact
Focus on efficiency remains firmly intact 20 Operational Efficiencies Branch and Real Estate Optimization Third-Party Discretionary and Other • Staffing levels decreased approximately 1,300 or 5% since 4Q15 • Universal Banker deployed in all branches allowing for the migration of non-cash transactio
Slide 21: Balance Sheet
Balance Sheet Ad REGIONS
Slide 22: Average loans and leases
Average loans and leases 2Q16 3Q16 4Q16 1Q17 2Q17 $82.0 $81.3 $80.6 $80.2 $80.1 Prudently managing loans ($ in billions) 22 • Average loan and lease balances remain relatively stable • Total new and renewed loan production increased 46% • Average consumer lending portfolio declined $87 million ◦ Con
Slide 23: Consumer lending
Consumer lending Mortgage $13.6 Indirect-Vehicles $2.1 Indirect-Vehicles Third-Party $1.6 Indirect-Other $1.0 Home Equity $10.5 Credit Card $1.2 Other $1.1 Average consumer loans ($ in billions) 23 • Consumer lending remained relatively flat ◦ Consumer production increased 22%, offset by the decisio
Slide 24: Average business loans
Average business loans Business lending ($ in billions) 24 • Business lending remained relatively stable with continued focus on improving risk-adjusted returns and reducing exposures ◦ Commercial lending production increased 53% over 1Q17 while line utilization increased 20bps and commitments for n
Slide 25: Average deposits by segment
Average deposits by segment Consumer Bank Corporate Bank Wealth Management Other 2Q16 3Q16 4Q16 1Q17 2Q17 54.7 55.2 55.6 56.2 57.1 27.6 28.3 28.7 28.2 27.6 11.3 10.6 10.2 10.0 9.5 3.9 $97.5 3.8 $97.9 4.0 $98.5 3.6 $98.0 3.3 $97.5 Average deposits by type Solid deposit mix Low-cost deposits Time depo
Slide 26: Securities portfolio
Securities portfolio 26 • 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 27: 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 3.16 $3.16 2.31 3.06 3.06 3.55 4.15 3.50 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 3.85 $7.35 2.58% 4.35% 5.85%
Slide 28: Credit
Credit Ad REGIONS
Slide 29: Stable asset quality
NPLs and coverage ratio(1) Criticized (Direct Energy) Criticized (Non-Energy) 2Q16 3Q16 4Q16 1Q17 2Q17 1,078 1,024 971 867 755 2,586 $3,664 2,718 $3,742 2,641 $3,612 2,671 $3,538 2,525 $3,280 Net Charge-Offs (Direct Energy) Net Charge-Offs (Non-Energy) Net Charge-Offs ratio 2Q16 3Q16 4Q16 1Q17 2Q17
Slide 30: Significant improvement in asset quality
30 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 $68 $3,160 $823 Net Charge-Offs and NPLs have significantly improved 2Q1 7
Slide 31: Retail and shopping mall exposure
• 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 • IRE portfolio is widely distributed, largest tenan
Slide 32: Energy lending overview
• Total outstandings and commitments declined primarily due to paydowns and payoffs • Allowance for loan and lease losses was 6.9% of direct energy balances at 6/30/17 vs 6.1% at 3/31/17 • No second lien exposure outstanding within the energy portfolio • Leveraged loans account for 22% of energy rel
Slide 33: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail Type As of6/30/17 # of Clients* Commentary Marine $395 8 Sector remains under stress. Approximately 45% of marine outstandings are under contract for remainder of 2017. Integrated OFS 92 6 Improving conditions for companies serv
Slide 34: Loan balances by select states - Texas and Louisiana
Commercial - Non-Energy, $2,177 Investor Real Estate, $123 Consumer Real Estate Secured, $1,137 Consumer Non-Real Estate Secured, $295 Commercial - Energy (Direct), $417 Loan balances by select states Texas Louisiana Note: Intelligence from our customer assistance program (CAP) reveals no noticeable
Slide 35: Loan balances by select states - Alabama and Mississippi
Loan balances by select states Alabama Mississippi Commercial - Non- Energy, $5,069 Investor Real Estate, $275 Consumer Real Estate Secured, $3,586 Consumer Non-Real Estate Secured, $822 Commercial - Non-Energy, $1,445 Investor Real Estate, $130 Consumer Real Estate Secured, $932 Consumer Non-Real E
Slide 36: Capital and Liquidity
Capital and Liquidity Ad REGIONS
Slide 37: 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 38: Strong capital levels
Strong capital levels Note: Regions’ CET1 ratio is estimated at 6/30/17. Peer financial data as of 6/30/17 includes BBT, CFG, CMA, FHN, FITB, HBAN, HBHC, KEY, MTB, PNC, SNV, STI, USB and ZION. Source: SNL Financial. 38 Basel III Common Equity Tier 1 Ratio Peer #1 RF Peer #2 Peer #3 Peer #4 Peer #5 P
Slide 39: Capital Returned to Shareholders
Capital Returned to Shareholders Dividends Share Repurchases 2014 2015 2016 6/30/17 YTD 247 304 318 162 256 $503 623 $927 839 $1,157 275 $437 Robust capital returns (1) Includes fees associated with open market share repurchases.39 • Remain committed to target CET1 ratio of 9.5 percent based on curr
Slide 40: Solid total shareholder returns
Solid total shareholder returns Source: Bloomberg Note: Total shareholder return data as of 8/3/2017 Peers include BBT, CFG (Publicly traded as of 2015), CMA, FITB, HBAN, HBHC, KEY, MTB, PNC, SNV, STI, USB, FHN and ZION 40 1 Year RF Peer #1 Peer #2 Peer #3 Peer #4 Peer #5 Peer #6 Peer #7 Peer #8 Pee
Slide 41: Long-term Targets and 2017 Expectations
Long-term Targets and 2017 Expectations 41
Slide 42: 2017 expectations
2017 expectations 42 • 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 oth
Slide 43: Executing on our strategy
Executing on our strategy 43 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 44: Non-GAAP and Forward Looking Statements
Non-GAAP and Forward Looking Statements 44
Slide 45: 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 46: 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 47: 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 48: Non-GAAP reconciliation: YTD return on average tangible stockholders' 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 49: Forward-looking statements
Forward-looking statements This presentation may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The terms “Regions,” the “Company,” “we,” “us” and “our” mean Regions Financial Corporation, a Delaware corporation, and its subsidiaries when or wh
Slide 50: Forward-looking statements risk factors
• Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits, which could adversely affect our net income. • Our ability to recruit and retain talented and experienced personnel to assist in the development, m
Slide 51: Regions
A REGIONS
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