Regions Financial Corporation · NYSE:RF
Regions Financial — Q4 2016 Earnings Presentation
22 slides from Regions Financial's earnings presentation, Jan 20, 2017
Slide 1: 4th Quarter Earnings Conference Call
4th Quarter Earnings Conference Call January 20, 2017
Slide 2: 2016 Results
2016 Results 2016 2016 • Diligently executing strategic plan with focus on Expectations Results our strategic priorities Net interest • Grow and diversify revenue +2% to +3% income and other financing income 4% • Disciplined expense management • Effectively deploy capital Adjusted non- +6%
Slide 3: Prudently managing loans
Prudently managing loans Average loans and leases Quarter-over-Quarter: • Loan and lease balances down 1% $80.8 $81.5 $82.0 $81.3 $80.6 • Consumer lending experienced another solid quarter with balances up 1% • Business lending decreased 2% , impacted by continued focus on: ⦁ improving risk-adjusted
Slide 4: Deposits reflect solid growth
Deposits reflect solid growth Quarter-over-Quarter: Average deposits by type • Deposits increased $561 million • Low-cost deposits up $503 million • Consumer deposits increased 1% • Corporate deposits increased 2% • Wealth management deposits decreased 4% as a result of ongoing strategic reductions
Slide 5: Improving net interest income and other financing income and net interest margin
Improving net interest income and other financing income and net interest margin Quarter-over-Quarter: • Net interest income and other financing income (FTE) increased $18 million or 2%, and the net interest margin increased 10 basis points ⦁ Both margin and income benefited from higher interest rat
Slide 6: Non-interest income driven by revenue diversification initiatives
Non-interest income driven by revenue diversification initiatives Quarter-over-Quarter: $599 55 $522 • Non-interest income decreased $77 million $526 $514 $506 6 or 13% (2) 10 Selected Items(1) ⦁ Third quarter included $47 million of insurance proceeds, an $8 million Service leveraged lease terminat
Slide 7: Expenses: Remaining focused on what we can control
Expenses: Remaining focused on what we can control Quarter-over-Quarter: $915 $934 $899 • Expenses decreased $35 million or 4% $873 $869 ⦁ Fourth quarter included $17 million in branch 12 closure charges and $5 million of severance charges • Adjusted expenses decreased $35 million or 4%(1) ⦁ Total s
Slide 8: Asset quality
Asset quality Net charge-offs and ratio NPLs and coverage ratio (1) ($ in millions) ($ in millions) (3) Criticized and classified loans (2) • Provision for loan losses $35 million less than net charge-offs primarily attributable to a reduction in loans outstanding and overall net improvement in ener
Slide 9: Industry leading capital and liquidity ratios
Industry leading capital and liquidity ratios Tier 1 capital ratio (1) • Returned $1.2 billion to shareholders • Transitional basis Basel III Common Equity Tier 1 ratio estimated at 11.1%(1), well above current regulatory minimums • At period end, Regions was fully compliant with the final Liquidity
Slide 10: 2017 Expectations
2017 Expectations Assumptions Expectations • GDP growth of 2% to 2.5% • Full year average loan growth low single digits • Assumes market forward interest rate curve • Full year average deposits growth low single as of November 10, 2016 digits ⦁ Average Fed Funds of 81 bps • Net interest income and o
Slide 11: Appendix
Appendix Md REGIONS 11
Slide 12: Energy lending overview
Energy lending overview Total energy • Total outstandings and commitments declined primarily As of 12/31/16 As of 9/30/16 due to paydowns and payoffs Balances Balances • Allowance for loan and lease Loan / Including Loan / Including losses was 7.0% of direct energy Lease Related % $ % Lease Related
Slide 13: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail As of # of Type 12/31/16 ($ in millions) Clients* Commentary OFS Portfolio Marine $447 $9 Expect some additional stress into 2017 as contracts mature and E&P companies • 47% shared national credit (SNC) loans focus on shorter cy
Slide 14: Loan balances by select states
Loan balances by select states Texas Louisiana $8.5B $4.3B Investor Real Estate Balances by City Investor Real Estate Balances by City ($ in millions) ($ in millions) Multi- Single Multi- Single Office Retail Other Total Office Retail Other Total Family Family Family Family Baton Houston $32 $72 $22
Slide 15: Loan balances by select states
Loan balances by select states Alabama Mississippi $9.8B $3.1B Investor Real Estate Balances by City Investor Real Estate Balances by City ($ in millions) ($ in millions) Multi- Single Office Retail Other Total Multi- Single Family Family Office Retail Other Total Family Family Birmingham $15 $30 $5
Slide 16: Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio
Non-GAAP reconciliation: Non-interest income, non-interest expense and efficiency ratio The table below presents computations of the efficiency ratio (non-GAAP), which is a measure of productivity, generally calculated as non-interest expense divided by total revenue. Management uses this ratio to m
Slide 17: Non-GAAP reconciliation continued: YTD non-interest income, expense, efficiency ratio and operating leverage
Non-GAAP reconciliation continued: YTD Non- interest income, non-interest expense, efficiency ratio and operating leverage Year Ended December 31 ($ amounts in millions) 2016 2015 2016 vs. 2015 ADJUSTED EFFICIENCY, FEE INCOME AND OPERATING LEVERAGE RATIOS, ADJUSTED NON-INTEREST INCOME/EXPENSE- CONTI
Slide 18: 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 19: 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 20: 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 not based on historical info
Slide 21: Forward-looking statements continued
Forward-looking statements continued • Any inaccurate or incomplete information provided to us by our customers or counterparties. • The risks and uncertainties related to our acquisition and integration of other companies. • Inability of our framework to manage risks associated with our business su
Slide 22: Regions
A. REGIONS