Regions Financial Corporation · NYSE:RF
Regions Financial — Q1 2017 Earnings Presentation
22 slides from Regions Financial's earnings presentation, Apr 18, 2017
Slide 1: 1st Quarter Earnings Conference Call
Exhibit 99.3 1st Quarter Earnings Conference Call April 18, 2017
Slide 2: 1st quarter 2017
1st quarter 2017 Results reflect a solid start Balance Sheet Focused on the Profitability Optimization Fundamentals • Net Income(1) increased 8% • Average loan balances • Grew checking accounts, over 1Q16 decreased 1.6% year-over- households, credit cards and • EPS increased 15% over year as growth
Slide 3: Prudently managing loans
Prudently managing loans Quarter-over-Quarter: Average loans and leases • Loan and lease balances decreased 1% ($ in billions) • Consumer lending decreased 1% $81.5 $82.0 $81.3 $80.6 $80.2 ◦ Impacted by exit of third-party indirect-vehicle portfolio and sale of affordable housing mortgage loans in 4
Slide 4: Solid Deposit Mix
Solid Deposit Mix Average deposits by type Quarter-over-Quarter: ($ in billions) Low-cost deposits • Deposits decreased $530 million $97.8 $97.5 $97.9 $98.5 $98.0 • Consumer deposits increased 1% 7.4 7.3 7.4 7.5 7.2 Time deposits + Other • Corporate deposits decreased 2% driven by seasonality • Weal
Slide 5: Deposit Advantage
Deposit Advantage Deposits by Customer Type(1) Non-Interest Bearing Deposits Interest Bearing Deposits (Retail vs. Business) by Customer Type(1) by Customer Type(1) 1Q17, ($ in billions) ($ in billions) ($ in billions) Private Institutional $36 $64 $62 $63 $63 $62 Wealth* Trust* $34 $35 $35 $35 $2 $
Slide 6: Improving net interest income and net interest margin
Improving net interest income(1) and net interest margin Quarter-over-Quarter: Net interest income(1) and net interest margin • Net interest income(1) (FTE) increased $7 million or 1%, ($ in millions) and the net interest margin increased 9 basis points ◦ Both margin and income benefited from higher
Slide 7: Creating sustainable franchise value
Creating sustainable franchise value Quarter-over-Quarter: Non-interest income ($ in millions) • Non-interest income decreased $12 million or 2%; adjusted non-interest income(1) decreased $599 $2 million 55 ◦ Wealth management income increased 6% $526 $522 $506 $510 ◦ Card and ATM income increased 1
Slide 8: Prudently managing expenses
Prudently managing expenses Quarter-over-Quarter: Non-interest expenses • Expenses decreased $22 million or 2%; adjusted ($ in millions) expenses(1) decreased $5 million or 1% $934 ◦ Salaries and Benefits increased 1% as seasonal 26 $915 5 increases in payroll taxes were partially offset 22 $899 $86
Slide 9: Stable asset quality
Stable asset quality Net charge-offs and ratio NPLs and coverage ratio (1) ($ in millions) $100 ($ in millions) $83 $69 $87 $1,078 $68 $68 $72 $55 $87 $993 $1,025 $995 $1,004 $69 $68 $55 $54 $48 0.51% 0.41% 0.35% $48 132% 124% 123% 138% 135% 0.34% $17 0.26% $6 $6 $14 $13 116% 112% 110% 104% 106% 1Q1
Slide 10: Industry leading capital and liquidity ratios
Industry leading capital and liquidity ratios Tier 1 capital ratio(1) • Returned 80% of earnings to shareholders through 11.9% 12.0% 12.1% dividends and share repurchases 11.6% 11.7% • Transitional basis Basel III Common Equity Tier 1 ratio estimated at 11.3%(1), well above current regulatory minimu
Slide 11: 2017 Expectations
2017 Expectations Assumptions Expectations • GDP growth of 2% to 2.5% • Excluding the impact of the third-party indirect- vehicle portfolio, full-year average loans are • Assumes market forward interest rate curve as expected to be flat to slightly down compared to the of March 28, 2017 prior year*
Slide 12: Appendix
Appendix Ar REGIONS 12
Slide 13: Energy lending overview
Energy lending overview Total energy As of 3/31/17 As of 12/31/16 • Total outstandings and commitments declined primarily due to paydowns and Balances Balances payoffs Loan / Including Loan / Including Lease Related % $ % Lease Related % $ % • Allowance for loan and lease losses was ($ in millions)
Slide 14: Energy lending - Oil Field Services and Exploration & Production detail
Energy lending - Oil Field Services and Exploration & Production detail Type As of 3/31/17 # of Clients* Commentary OFS Portfolio ($ in millions) Marine $414 8 Sector remains under stress. Approximately • 46% shared national credit (SNC) loans 45% of marine outstandings are under contract for remain
Slide 15: Loan balances by select states
Loan balances by select states Texas Louisiana Consumer Non-Real Estate Commercial - Energy Commercial - Energy Consumer Non-Real Estate Secured, $949 (Direct), $437 (Direct), $1,019 Secured, $289 Consumer Real Estate Consumer Real Secured, $1,054 Estate Secured, $1,117 $8.6B $4.3B Investor Real Est
Slide 16: Loan balances by select states
Loan balances by select states Alabama Mississippi Commercial- Energy Commercial - Consumer Non-Real Estate (Direct), $10 Energy (Direct), Consumer Non-Real Estate Secured, $833 $41 Secured, $334 Consumer Real Estate Secured, $9.6B Commercial - Non- Energy, $4,870 Consumer Real Estate Secured, $3.0B
Slide 17: 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 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
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 The following list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions “Forward-Looking Statements” and “Risk Factors" of Regions' Annual Report on Form 10-K for the year
Slide 21: Forward-looking statements continued
Forward-looking statements continued • The costs, including possibly incurring fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or
Slide 22: Regions
A REGIONS