Regions Financial Corporation · NYSE:RF
Regions Financial — Barclays Global Financial Services Conference 2019
20 slides from Regions Financial's conference presentation, Sep 10, 2019
Slide 1: Barclay's Global Financial Services Conference
Barclay's Global Financial Services Conference September 10, 2019
Slide 2: Regions is well-positioned for the changing environment
Regions is well-positioned for the changing environment Strategic shift in 2017 • Anticipated changing dynamics: • Slowing economy • Declining interest rates • Normalizing credit costs • Optimization of capital levels • Our response: • Simplify & Grow continuous improvement process • Strategic hedgi
Slide 3: Successful execution of strategic plan drives growth
Successful execution of strategic plan drives growth Businesses continue to grow • Total revenue increased 5% • Expenses relatively flat • 2Q19 consumer checking accounts grew • Generated operating leverage of +5% 1.3% YoY • Efficiency ratio improved ~300 bps • 2Q19 consumer households increased Con
Slide 4: Simplify and Grow: a continuous improvement journey
Simplify and Grow: a continuous improvement journey 2018 - 2019 YTD successes • Completed 13 of 62 Simplify and Grow Making Banking Easier initiatives Revenue Growth • Completed organizational simplification Efficiency Improvements including spans and layers improvements • ~2.5M calls handled by AI
Slide 5: Significant spending on new technology initiatives
Significant spending on new technology initiatives 2019 technology investment Strong technology Investments (11% of 2018 revenue) in place continue Cybersecurity & risk management • Single branch platform • AI and Robotics • New SEI wealth platform • Voice New technology • New nCino commercial • Mob
Slide 6: Focus on risk-adjusted returns
Focus on risk-adjusted returns Capital Optimization Investments Mortgage Corporate/Commercial Mortgage Servicing Rights • Sold ~$1.3B of primarily under- • ~$95B of loan exposures • Over the last three years ~$16B in MSR bulk performing loans in recent years have been reviewed in depth purchases by
Slide 7: Deposit advantage
Deposit advantage Avg stable retail deposits / total retail funding(1) Deposit characteristics provide a funding advantage RF 77% Peer #1 74% • Retail deposits represent 69% of total deposits Peer #2 68% Peer #3 67% • Highest proportion of stable retail deposits Peer #4 63% among peers that disclose
Slide 8: Deposit advantage (continued)
Deposit advantage (continued) Total deposit costs(1) 2019 total deposit costs Peer #14 100 bps Peer #13 99 bps 0.54 Deposit costs 0.53 Peer #12 98 bps 0.52 peaked in May Peer #11 88 bps Peer #10 86 bps 0.48 Peer #9 82 bps 0.49 Peer #8 78 bps Peer #7 76 bps 0.43 Peer #6 74 bps Peer #5 68 bps ay pt n
Slide 9: Proactive hedging strategy reduces sensitivity over time
Proactive hedging strategy reduces sensitivity over time Notional cash flow derivatives designated for hedging(1) and gradual -100bps shock vs. 6/30/2019 • Comprehensive hedging strategy market forwards commenced 1Q18; program now ($ in billions) $19.50 -3.0% $18.25 $18.50 largely complete $16.50 $1
Slide 10: Significant down-side market rate protection
Significant down-side market rate protection Securities & hedges(1) as a % of Change in AOCI/earnings assets: 2Q19 vs 4Q18 (2) earning assets(2) 50% 100 40% 80 Peer Median 26.0% % of Assets 30% 60 Peer Median 41bps Bps 20% 40 10% 20 0% 0 -10% -20 Peer 12 Peer 3 Peer 2 Peer 4 Peer 11 Peer 7 Peer 9 Pe
Slide 11: Focused on earnings stability through the cycle
Focused on earnings stability through the cycle NII(1) and NIM -100bps parallel, gradual rate shock ($ in millions) (12 month NII change as of 6/30/2019) $938 $961 $956 RF RF Peer (current) (w/hedges) Median (4) 3.53% 3.49% 3.45% ~ -1% 2Q18 1Q19 2Q19 -2.5% -3% • Based on 8/30/2019 market forward rat
Slide 12: Balance sheet profile
Balance sheet profile (as of June 30, 2019) • Naturally asset sensitive balance sheet, Portfolio compositions supported by a large, stable deposit base Assets Other Liabilities 16% • Going forward, sensitivity levels are expected to stabilize Deposits Securities 19% $128B 86% $111B Borrowings 12% ◦
Slide 13: Current loan reinvestment exposure in-line with peers (excluding hedging)
Current loan reinvestment exposure in-line with peers (excluding hedging) 100% 33% 80% 45% 48% 49% 50% 53% 53% 54% 57% 59% 61% 63% 66% 60% Peer median 47% fixed 93% 40% 67% 55% 52% 51% 50% 47% 47% 46% 43% 20% 41% 39% 37% 34% 7% 0% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 RF Peer 9 Pee
Slide 14: Securities portfolio
Securities portfolio (as of June 30, 2019) • Portfolio is managed within the construct of the overall balance sheet and risk management process Securities portfolio composition(1) • Expected to perform well in a variety of economic environments • Supports regulatory and market/liquidity objectives C
Slide 15: Diversification through comprehensive concentration framework
Diversification through comprehensive concentration framework Industry Concentrations Geographic Concentrations • Risk Appetite driven approach • Market scorecards are product Concentration Risk Framework • Multi-tiered hierarchy specific e.g., Consumer vs. Investor Real Estate 9 sectors, 24 industr
Slide 16: Select portfolios
Select portfolios (outstanding balances as of June 30, 2019) Leveraged(1) balances by industry SNC balances by industry Information 18% Financial Manufacturing Services 10% 14% Energy 10% Professional 10% 18% Services 12% 23% Manufacturing 10% 9% Restaurant & Accommodations Wholesale 7% 6% $5.8B (2)
Slide 17: Evolving near-term expectations
Evolving near-term expectations 2019 Expectations Category FY 2019 Expectations Adjusted average loan growth Low to mid-single digits (from adjusted 2018 of $77,667 million)(1) Adjusted total revenue growth ~2% (from adjusted 2018 of $5,745 million)(1)(2) Adjusted non-interest expense Stable to down
Slide 18: 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. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, f
Slide 19: Forward-looking statements continued
Forward-looking statements continued • The success of our marketing efforts in attracting and retaining customers. • Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes in
Slide 20: Generating Consistent Sustainable Long-term Performance
> GENERATING Consistent Sustainable \ Long-term Performance A REGIONS Ma REGIONS 20
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