Regions Financial Corporation · NYSE:RF
Regions Financial — Investor Presentation (July 2018)
59 slides from Regions Financial's investor presentation, Jul 30, 2018
Slide 1: Investor Information July - September 2018
Exhibit 99.1 Investor Information July - September 2018
Slide 2: Table of contents
Table of contents Topic Page # Profile 3-10 Net Interest Income and Asset Sensitivity 11-16 Fee Income and Efficiencies 17-21 Balance Sheet 22-28 Credit 29-31 Innovation and Technology 32-37 Capital and Liquidity 38-42 Long-term Targets and 2018 Expectations 43-46 Governance and Social Responsibilit
Slide 3: Profile
PROFILE Ma REGIONS
Slide 4: Our banking franchise
Our banking franchise Regions aims to be the premier regional financial institution in America Ranked 16th nationally in total deposits(2) Line of business coverage Branch locations by state (1) Alabama – 204 Louisiana – 97 Birmingham, Alabama Arkansas – 75 Mississippi – 117 • Corporate Banking • Bu
Slide 5: Strength of our markets
Strength of our markets Market rank in core states(1) High market share(1) ($ in Billions) #2 #6 Top MSAs Deposits Market Rank Birmingham, AL $11.2 1 #2 #1 Nashville, TN $7.6 2 #5 Tampa, FL $5.1 4 Memphis, TN $4.2 2 #7 New Orleans, LA $3.1 4 80% Jackson, MS $3.0 2 Mobile, AL $2.3 1 Knoxville, TN $2.
Slide 6: Footprint positioning
Footprint positioning Characterized by high growth markets(1) ($ in Billions) ($ in Billions) '18-'23 Population Growth '18-'23 Population Growth Top MSAs Deposits Top MSAs Deposits 8.3% 7.7% Houston, TX $1.4 Dallas, TX $1.0 8.2% 7.7% Orlando, FL $1.8 Destin, FL $0.9 6.9% 7.5% Nashville, TN $7.6 Sar
Slide 7: Strength of our markets - our state footprint
Strength of our markets - our 15 state footprint Of all new jobs Of all US port trade 43% created in the US 61% tonnage(4) traveling since 2009 were through ports in our (1) in our footprint footprint Of all US light 58% vehicle production Of non-durable goods is within our 50% manufacturing occurs
Slide 8: Regions receives top honors
Regions receives top honors 8
Slide 9: Strategic priorities
Strategic priorities Ma REGIONS »
Slide 10: Strategic financial initiatives supporting company priorities
Strategic financial initiatives supporting company priorities ® 10
Slide 11: Net Interest Income and Asset Sensitivity
NET INTEREST INCOME AND ASSET SENSITIVITY 11
Slide 12: Increasing net interest income and net interest margin
Increasing net interest income(1) and net interest margin Net interest income(1) and net interest margin 2Q18 results and outlook ($ in millions) (1) $930 $938 • Net interest income (NII) (non-FTE) increased $920 $922 12 $17 million QoQ; net interest margin (NIM) +3 $904 23 13 926 23 6 bps to 3.49%
Slide 13: Interest rate sensitivity
Interest rate sensitivity (as of June 30, 2018) Portfolio compositions • Naturally asset sensitive balance sheet Assets Other Liabilities poised to benefit from rising interest 15% rates Securities Deposits • 47% of loans are floating rate, 20% $125B 88% $109B Borrowings including loan hedges(1) Loa
Slide 14: Interest rate scenario assumptions
Interest rate scenario assumptions (as of June 30, 2018) Standard interest rate risk scenario assumptions Baseline Scenario +100 bps Standard Shock Scenario +100bps parallel, instantaneous shock applied to Market Interest Rates Current implied forward rates current implied forward rates Full-year ad
Slide 15: Deposit advantage
Deposit advantage Expected to continue Average deposits by customer type 2Q18 vs. 3Q15 change in interest bearing deposit costs(1) (Retail vs. Business) RF 21bps 2Q18, ($ in billions) Peer #1 21bps Institutional Private Peer #2 28bps (3) (3) Wealth Services Peer #3 28bps $8 $1 Peer #4 28bps Peer #5
Slide 16: Deposit composition and pricing
Deposit composition and pricing (as of June 30, 2018) Interest-bearing deposit betas(1) Deposit funding composition(1)(2) 50% ) 8 Peer 7 1 45% 100% Q 92% 2 89% 89% 89% 89% 90% 90% - 86% 86% 90% 83% 83% 85% 85% 5 40% 82% 1 79% 80% Peer median = 86% Q 3 ( 35% Peer 13 a 70% Peer median = 12bps Peer t e
Slide 17: Fee Income and Efficiencies
FEE INCOME AND EFFICIENCIES 17
Slide 18: Well-positioned for non-interest income growth
Well-positioned for non-interest income growth Non-interest income 2Q18 results and outlook ($ in millions) • Non-interest income increased $5 million or 1% QoQ; adjusted non-interest income(1) increased $8 million or $516 $507 $512 $490 $482 2% impacted by: 10 4 1 6 9 • A record quarter in capital
Slide 19: Diversified fee income
Diversified fee income 2Q18 fee revenue by segment(1) Consumer ($ in millions) • Consumer fee income categories are an important and stable component of fee revenue and are expected to contribute to overall growth in 2018 • Service charges are expected to increase in 2018 consistent with growth in c
Slide 20: Disciplined expense management
Disciplined expense management Non-interest expense 2Q18 results and outlook ($ in millions) $920 $911 • Non-interest expense increased $27 million or $875 $884 (1) $853 51 35 3% QoQ; adjusted non-interest expense 10 22 increased $14 million or 2% impacted by: 6 62.3% • Increase in professional fees
Slide 21: Pre-tax pre-provision income
(1) Pre-tax pre-provision income 2Q18 results and outlook Adjusted pre-tax pre-provision income(1) $550 $561 (1) $544 • Pre-tax pre-provision income $523 34 47 18 decreased $5 million or 1% QoQ; $501 (3) adjusted pre-tax pre-provision 4 income(1) increased $11 million or 2%, reflecting highest level
Slide 22: Balance Sheet
BALANCE SHEET Ma REGIONS «=
Slide 23: Prudently managing loans: transitioning to growth
Prudently managing loans Transitioning to growth Average loans and leases 2Q18 results and outlook ($ in billions) $80.1 $79.6 $79.5 $79.9 $80.0 • Reported average loans remained relatively (1) 1.9 1.7 1.5 1.2 1.0 unchanged QoQ; adjusted average loans Adjusted total loans (1) increased $382 million
Slide 24: Average loan composition
Average loan composition Average consumer loans(1) Average business loans(1) ($ in billions) ($ in billions) Mortgage $14.0 CRE Mortgage - OO Indirect-Vehicles $6.0 $2.4 CRE Construction - $31.2B Indirect-Vehicles Commercial and $48.8B OO $0.3 Third-Party $0.9 Industrial $36.9 IRE - Mortgage $3.7 Ot
Slide 25: Optimizing deposit mix
Optimizing deposit mix Average deposits by type 2Q18 results and outlook ($ in billions) Low-cost • Deliberate strategy to optimize deposit base; deposits $97.5 $96.9 $97.1 $95.4 $95.3 focused on growing low-cost consumer and 7.0 7.0 7.0 6.8 6.7 Time deposits + Other business services relationship d
Slide 26: Securities portfolio
Securities portfolio • Portfolio is managed within the construct of (1) the overall balance sheet and risk Securities portfolio composition management process • Expected to perform well in a variety of economic environments Corporate Bonds 5% Agency/UST 1% • Supportive of both regulatory and market
Slide 27: Balance sheet optimization
Balance sheet optimization Historical debt profile • Regions actively manages its debt ($ in billions) profile in response to balance sheet 9.11% changes and growth dynamics • Regions' relatively modest wholesale $11.35 7.05% 6.97% funding footprint positions Regions 6.59% 6.51% 6.55 well to utilize
Slide 28: Regions unsecured debt and credit ratings profile
Regions unsecured debt and credit ratings profile Debt maturity profile Select credit ratings ($ in millions) $2,000 Moody's S&P Fitch 900 Regions Financial Corporation $1,000 $800 $750 Senior Unsecured Debt Baa2 BBB+ BBB+ 500 1,100 1,000 Subordinated Debt Baa2 BBB BBB 750 $150 $100 300 Regions Bank
Slide 29: Credit
CREDIT Ma REGIONS »
Slide 30: Broad-based asset quality improvement
Broad-based asset quality improvement Net charge-offs and ratio NPLs and coverage ratio(1) ($ in millions) $84 ($ in millions) $76 5 $68 $63 29 26 $62 $823 23 $760 10 18 0.38% 0.42% $650 $601 $595 0.34% 0.31% 0.32% 45 47 0.40% 44 137% 144% 53 53 127% 140% 141% 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17
Slide 31: Enhanced risk management led to significant improvement in asset quality
Enhanced risk management led to significant improvement in asset quality (1) Net charge-offs and NPLs have YoY improvement in NPLs(1)(2) to total loans significantly improved ($ in millions) Peer #1 49bps Peer #2 39bps $3,160 RF 29bps $682 Peer #3 20bps Peer #4 19bps Peer #5 19bps Peer #6 18bps Peer
Slide 32: Innovation & Technology
INNOVATION & TECHNOLOGY Ma REGIONS «
Slide 33: Simplify and Grow: making it easier for customers and associates
Simplify and Grow: making it easier for customers and associates Goal: • Achieve sustainable, long-term growth • Deliver a great customer experience at every touch point: digital and in-person • Become more efficient and effective across the enterprise • Appeal to the next generation of customer Why
Slide 34: Simplify and Grow: a continuous journey
Simplify and Grow A continuous journey Making banking easier Organization simplification • Digitization • Organizational structure review • Loan process • Spans and layers review • Account opening • Streamline committees and decision • Streamline credit process; more making digital; faster response
Slide 35: Simplify and Grow: progress update
Simplify and Grow: progress update Initial efficiency and revenue review ~ 40 initiatives underway aimed at.... Through the initial review making banking easier 30% opportunities identified represent ~70% expense growing revenue savings and ~30% revenue 70% growth opportunities improving efficiencie
Slide 36: Making banking easier for our customers through digitization
Making banking easier for our customers through digitization Biometric and mobile based ZELLE® (expanded P2P solution) interactions across channels with differentiation Partnering with Digital Eco System Mobile-friendly applications for Strategic partnerships with FinTech deposit accounts and credit
Slide 37: All efforts focused on customer journeys
All efforts focused on CUSTOMER JOURNEYS Modern execution approach with 25% IT in Agile and DevOps Automation Artificial intelligence • Rolled out pre-approved consumer • Cognitive capabilities in the loan offers within online banking contact center improving as well as eSignature capabilities custo
Slide 38: Capital & Liquidity
CAPITAL & LIQUIDITY Ma REGIONS «
Slide 39: Solid liquidity
Solid liquidity Loan-to-deposit ratio(1) • Regions has a strong, core funded balance sheet resulting in a low loan- to-deposit ratio 82% 81% 83% 82% 84% • Future debt maturities are manageable and allow for efficient re-financing • Regions’ liquidity policy requires that the holding company maintain
Slide 40: Strong capital levels
Strong capital levels Basel III common equity tier 1 ratio(1) Capital priorities Peer #1 12.2 Peer #2 11.9 Peer #3 11.2 RF 11.0 Peer #4 10.9 Peer #5 10.5 Peer #6 10.5 Peer #7 10.4 Peer #8 10.2 Peer #9 10.1 Peer #10 10.1 Peer #11 9.7 Peer #12 9.5 Peer #13 9.1 Peer #14 9.0 (1) Current quarter ratio is
Slide 41: Robust capital returns
Robust capital returns • Sufficient capital to support organic Capital returned to shareholders growth, strategic investments, and a ($ in millions) robust return to shareholders $1,645 • Remain committed to target CET1 ratio of 9.5% based on current risk in our balance sheet • Repurchased $470 mill
Slide 42: Solid total shareholder returns
Solid total shareholder returns (1) 1 Year 3 Year(1) 5 Year(1) Peer #1 33.3 Peer #1 109.3 Peer #1 144.2 Peer #2 31.0 Peer #2 93.4 Peer #2 135.3 RF 30.0 RF 86.5 Peer #3 130.4 Peer #3 19.9 Peer #3 75.3 Peer #4 110.4 Peer #4 19.4 Peer #4 70.0 Peer #5 101.2 Peer #5 17.4 Peer #5 66.7 RF 99.3 Peer #6 15.9
Slide 43: Long-term Targets & 2018 Expectations
LONG-TERM TARGETS & 2018 EXPECTATIONS 43
Slide 44: 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 45: 2018 full-year expectations
2018 full-year 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
Slide 46: Long-term financial targets
Long-term financial targets Strategic financial initiatives 2016 - 2018 long-term financial targets Adjusted EPS growth of 12-15% (CAGR)(1) Adjusted efficiency ratio of <60%(1) Adjusted ROATCE 14-16%(1)(2) (1) Non-GAAP; the reconciliation with respect to forward-looking non-GAAP measures is expected
Slide 47: Corporate Governance & Corporate Social Responsibility
CORPORATE GOVERNANCE & CORPORATE SOCIAL RESPONSIBILITY 47
Slide 48: Corporate governance
Corporate governance The company understands that good governance is the Engagement foundation of sustainable business and good decision making is • We take a long-term view of how we create value, and we necessary for creating shareholder value over the long term. take a similar approach to corpora
Slide 49: Corporate social responsibility
Corporate social responsibility Communities(1) Associates • Commitment to community development • Invest in our associates Invested $2.96 billion Increased entry-level wage to $15 per hour • Support our communities • Engage our associates Contributed $40 million to the Regions Received Gallup Great
Slide 50: Non-GAAP & Forward Looking Statements
NON-GAAP & FORWARD LOOKING STATEMENTS 50
Slide 51: Selected items impacting earnings
Selected items impacting earnings 2Q18 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 $1 million in branch consolidation Pre-tax adjusted items: expenses related to Simplify and Grow Branch consolidati
Slide 52: Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio
Non-GAAP reconciliation: NII/NIM, non-interest income/expense, operating leverage and efficiency ratio The table below and on the following page present computations of the net interest margin; efficiency ratio, which is a measure of productivity, generally calculated as non-interest expense divided
Slide 53: Non-GAAP reconciliation: NII/NIM, non-interest income/expense - continued
Non-GAAP reconciliation: NII/NIM, non-interest income/ expense, operating leverage and efficiency ratio - continued Six Months Ended June 30 ($ 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 54: 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 55: 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 56: 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 57: 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 58: 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 busi
Slide 59: Regions
A REGIONS Ma REGIONS »
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