REGIONS FINANCIAL CORP - FORM 8-K - EX-99.1

Attached files

file	filename
8-K - 8-K - REGIONS FINANCIAL CORP	d444561d8k.htm

Goldman Sachs Financial

Services Conference

December 5, 2012

Grayson Hall

President and Chief Executive Officer

Exhibit 99.1

Regions’

mission is to achieve superior economic

value for our shareholders over time by

making life better for our customers, our

associates and our communities

and creating shared value as we help them meet their

financial goals and aspirations.

Regions

makes life better.

BUSINESS PRIORITIES

Four strategic priorities based on a foundation of managing performance

provide direction for all business decisions

OUR COMPANY TODAY…

COMPANY SNAPSHOT

September 2012

Associates

23,361

Assets

$122B

Loans

$75B

Deposits

$95B

Branches

1,716

ATMs

2,061

Market Cap*

$9.3B

•

Operating in sixteen states; however,

seven states represent 85% of total

deposits

•

Primary business lines: Consumer

Services, Business Services, and

Wealth Management

•

22nd Largest Mortgage Servicer, with

$41 billion servicing portfolio

•

Full line insurance brokerage firm

offering all lines of personal and

commercial insurance

* As of November 26, 2012

Regions Branches

Regions Insurance Group

Deposit Market Share

Top 10 MSAs

Deposits

Market

Rank

Birmingham, AL

$10.1

Nashville, TN

$7.0

Tampa, FL

$5.0

Miami, FL

$4.0

Memphis, TN

$3.9

Atlanta, GA

$3.3

St. Louis, MO

$3.0

Jackson, MS

$2.9

New Orleans, LA

$2.4

Mobile, AL

$2.3

($ in billions)

National Average: 3.9%

Source: SNL Financial

Note: Core Markets include AL, FL, LA, MS, AR, TN

Rank

Name

Market

Bank of America

11.1%

Wells Fargo

9.9%

Regions

9.4%

SunTrust

6.7%

JPMorgan Chase

3.8%

BB&T

3.0%

Capital One

2.2%

First Horizon

2.0%

Hancock

1.7%

Citi

1.6%

FOOTPRINT POSITIONING

CHARACTERIZED BY HIGH MARKET SHARE, HIGH

GROWTH MARKETS

Weighted Average Deposit Market

Regions’

Core

Markets

1.0%

8.8%

4.4%

2.0%

10.1%

4.3%

1.4%

3.7%

9.6%

3.4%

’10-’15

Population

Growth

2012 ACCOMPLISHMENT HIGHLIGHTS

Enhance Risk

Management

Focus on the

Customer

Strengthen

Financial

Performance

Build the Best

Team

Manage Performance

Strategic Priorities

•

Capital plan approved and executed

•

Executed MK transaction, raised $900 million in equity, repaid TARP, repurchased warrant

•

Achieved sustainable profitability

•

Investment grade rating improvement

•

Enhanced technology platform; teller image capture, sales and service, mainframe replacement

•

Strengthened

enterprise

risk

management

disciplines

and

improved

credit

risk

profile

•

Issued preferred stock of $500 million and redeemed $345 million of Trust Preferred Securities

REVENUE

GROWTH

–

STEADY

PROGRESS

Note: Peer banks include BBT, CMA, FHN, FITB, HBAN, KEY, PNC, STI, USB, WFC, ZION

Source: SNL Financial

Growth in Total Revenue Linked Quarter vs Peers

-0.5%

-0.4%

0.4%

1.3%

0.1%

2.2%

0.8%

1.2%

-0.7%

-1.1%

3Q11

4Q11

1Q12

2Q12

3Q12

Regions

Peer Median

REGIONS HAS THE SECOND LOWEST EXPENSE TO

ASSETS RATIO VS PEERS

(1) Adjusted

exclude

non-core

items,

ratios

are

annualized

–

See

appendix

for

reconciliation

Peer banks include: BBT, CMA, FHN, FITB, HBAN, KEY, MTB, PNC, STI, USB, WFC, ZION

Source: SNL Financial

Non-Interest

Expense

(1)

Average

Assets

2.7%

2.8%

2.9%

3.0%

3.1%

3.3%

3.4%

3.5%

3.6%

3.9%

4.2%

Bank

#10

Bank

#11

Bank

#12

Bank

#13

FOCUSED ON IMPROVED EFFICIENCY

(1) Non-GAAP

–

See

appendix

for

reconciliation

Note: Results from Continuing Operations

Peer banks include: BBT, CMA, FHN, FITB, HBAN, KEY, MTB, PNC, STI, USB, WFC, ZION

Source: SNL Financial

Efficiency Ratio

(1)

Target-

Mid to

High 50s

3Q11

4Q11

1Q12

2Q12

3Q12

Regions

Peer Median

61.8%

64.6%

67.9%

64.6%

64.3%

64.9%

69.4%

65.0%

62.8%

64.3%

CONTINUED ASSET QUALITY IMPROVEMENT;

SIGNIFICANT CREDIT LEVERAGE REMAINS

Allowance for Loan Losses / Total Loans

Note: Peer banks include BBT, CMA, FHN, FITB, HBAN, KEY, PNC, STI, USB, WFC, ZION

Source: SNL Financial

35% decrease Y-O-Y

Non-Performing Assets

$3,391

$2,996

$2,641

$2,331

$2,215

3Q11

4Q11

1Q12

2Q12

3Q12

3Q11

4Q11

1Q12

2Q12

3Q12

Regions

Peer Group Median

3.73%

2.74%

2.58%

1.84%

SOLID CAPITAL AND LIQUIDITY

Loan to Deposit Ratio

(1) Non-GAAP

–

See

appendix

for

reconciliation

Note: Peer banks include BBT, CMA, FHN, FITB, HBAN, KEY, PNC, STI, USB, WFC, ZION

Source: SNL Financial

Tier

Common

Ratio

(1)

3Q11

4Q11

1Q12

2Q12

3Q12

3Q11

4Q11

1Q12

2Q12

3Q12

82.8%

81.1%

79.0%

80.1%

79.3%

90.3%

89.8%

89.7%

88.7%

88.4%

8.2%

8.5%

9.6%

9.9%

10.5%

9.8%

9.7%

9.9%

10.0%

9.8%

Regions

Peer Median

Regions

Peer Median

•

Getting

full

and

detailed

view

customer

financial

needs

–

360°

View

•

Deepening customer relationships through cross-sell

•

Going

market

One

bank,

One

team,

One

Regions

–

making

referrals and meeting needs

•

Providing service quality that creates exceptional loyalty & retention

CREATING SHARED VALUE FOR OUR CUSTOMERS, OUR

COMMUNITIES, OUR ASSOCIATES AND OUR

SHAREHOLDERS THROUGH…

Community Service

Housing Assistance

Disaster Response Policy

•

Regions associates

volunteered for nearly 5,300

community service activities

in first-half 2012

•

Included teaching 3,300-plus

financial education classes

•

Impacted students at all

levels, potential first-time

homebuyers, small business

owners

•

Significant increase over

previous years due to

company-wide emphasis on

service

•

Regions Customer

Assistance Program (CAP)

has helped more than 45,000

homeowners restructure $3.9

billion in mortgages, keeping

people in their homes after

job loss, natural disasters

and other setbacks

•

Regions foreclosure rate

remains well below industry

average

•

Regions promotes affordable

housing by investing in Low

Income Housing Tax Credits

•

Penalty free withdrawals on

CDs

•

Personal and business loan

deferral

•

Up to 3 months payment

forbearance/extensions for

all Consumer Loan/Line

Products

•

ATM fees waived

•

NSF/OD Fees waived

•

Mobile ATM available for

deployment

OUR APPROACH TO SERVING OUR COMMUNITIES

Business Services –

Key Focus Areas for 2013

TRANSITION TO GROWTH

Healthcare

Technology/Defense

Energy

(Houston)

(Atlanta)

(Charlotte)

(Nashville)

•

Acquire, retain and deepen

relationships

•

Maintain disciplined focus on

specialized industries to drive growth

•

Specialized Industries:

Healthcare, Restaurant,

Transportation, Technology &

Defense, and Energy

•

We are still in the Investor Real

Estate business, where appropriate

•

Get paid for the risks we take

•

Stay focused on prudent Risk

Management disciplines, including

risk rating accuracy

Transportation

Restaurant

Continue Executing our new Wealth Management Strategy -

Key

Focus Areas for 2013

•

Broaden and deepen relationships

•

Grow trust assets under management

•

Roll out branch-based Financial Consultants-

Cetera

•

Enhance performance management and

coaching culture

•

Stay focused on prudent risk management

disciplines

•

Listen to customers’

goals and deliver

products and services they need

•

Expand service and product offerings

TRANSITION TO GROWTH

Consumer Services –

Key Focus Areas for 2013

•

Deepen relationships

•

Attract, retain and expand quality consumer households

•

Stabilize

and

grow

quality

earning

assets

–

get

paid

for

the risks we take

•

Leverage NOW Banking products to bank the under-

banked markets

•

Continue to prudently grow credit cards, mortgage and

indirect lending

•

Remain focused on disciplined risk management,

compliance and regulatory issues

•

Provide trustworthy advice, guidance and education to

help our customers succeed financially

•

Leverage technology to improve channel capabilities,

sales and efficiency

TRANSITION TO GROWTH

APPENDIX

FORWARD-LOOKING STATEMENTS

This presentation may include forward-looking statements which reflect Regions’ current views with respect to future events and financial performance. The Private

Securities Litigation Reform Act of 1995 (“ the Act” ) provides a “ safe harbor” for forward-looking statements which are identified as such and are accompanied by the

identification of important factors that could cause actual results to differ materially from the forward-looking statements. For these statements, we, together with our

subsidiaries, claim the protection afforded by the safe harbor in the Act. Forward-looking statements are not based on historical information, but rather are related to

future operations, strategies, financial results or other developments. Forward-looking statements are based on management’s expectations as well as certain assumptions

and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are

subject to various risks, uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements.

These risks, uncertainties and other factors include, but are not limited to, those described below:

› The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “ Dodd-Frank Act” ) became law in July 2010, and a number of legislative, regulatory and

tax proposals remain pending. Additionally, the U.S. Treasury Department and federal banking regulators continue to implement, but are also beginning to wind down, a number of

programs to address capital and liquidity in the banking system. Future and proposed rules, including those that are part of the Basel III process are expected to require banking institutions

to increase levels of capital. All of the foregoing may have significant effects on Regions and the financial services industry, the exact nature and extent of which cannot be determined

at this time.

› Possible additional loan losses, impairment of goodwill and other intangibles, and adjustment of valuation allowances on deferred tax assets and the impact on earnings and

capital.

› Possible changes in interest rates may increase funding costs and reduce earning asset yields, thus reducing margins. Increases in benchmark interest rates would also

increase debt service requirements for customers whose terms include a variable interest rate, which may negatively impact the ability of borrowers to pay as contractually obligated.

› Possible changes in general economic and business conditions in the United States in general and in the communities Regions serves in particular, including any prolonging or

worsening of the current unfavorable economic conditions including unemployment levels.

› Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans.

› Possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations, may have an adverse effect

on business.

› Possible regulations issued by the Consumer Financial Protection Bureau or other regulators which might adversely impact Regions' business model or products and services.

› Possible stresses in the financial and real estate markets, including possible deterioration in property values.

› Regions' ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support Regions'

business.

› Regions' ability to expand into new markets and to maintain profit margins in the face of competitive pressures.

› Regions' ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by Regions' customers and potential

customers.

› Regions' ability to keep pace with technological changes.

› Regions' ability to effectively manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk, reputational risk, and regulatory and compliance risk.

› Regions’ ability to ensure adequate capitalization which is impacted by inherent uncertainties in forecasting credit losses.

› The cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings.

› The effects of increased competition from both banks and non-banks.

› The effects of geopolitical instability and risks such as terrorist attacks.

› Possible changes in consumer and business spending and saving habits could affect Regions' ability to increase assets and to attract deposits.

› The effects of weather and natural disasters such as floods, droughts, wind, tornados and hurricanes, and the effects of man-made disasters.

› Possible downgrades in ratings issued by rating agencies.

› Possible changes in the speed of loan prepayments by Regions’ customers and loan origination or sales volumes.

› Possible acceleration of prepayments on mortgage-backed securities due to low interest rates and the related acceleration of premium amortization on those securities.

› The effects of problems encountered by larger or similar financial institutions that adversely affect Regions or the banking industry generally.

› Regions’ ability to receive dividends from its subsidiaries.

› The effects of the failure of any component of Regions’ business infrastructure which is provided by a third party.

› Changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies.

› The effects of any damage to Regions reputation resulting from developments related to any of the items identified above.

The foregoing 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” in Regions’ Annual Report on Form 10-K for the year ended December 31, 2011 and the "Forward-Looking Statements" section of Regions'

Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2012. The words "believe," "expect," "anticipate," "project," and similar expressions

often signify forward-looking statements. You should not place undue reliance on any forward-looking statements, which speak only as of the date made. We assume no obligation to

update or revise any forward-looking statements that are made from time to time.

NON-GAAP RECONCILIATION: NON-INTEREST EXPENSE

The table below presents non-interest expense (GAAP) excluding certain adjustments to arrive at adjusted non-interest expense (non-

GAAP).

Regions

believes

that

the

exclusion

these

adjustments

provides

meaningful

base

for

period-to-period

comparisons,

which

management believes will assist investors in analyzing the operating results of the Company and predicting future performance. This

non-GAAP financial measure is also used by management to assess the performance of Regions' business. It is possible that the

activities

the

adjustments

may

recur;

however,

management

does

not

consider

the

activities

the

adjustments

indications of ongoing operations. Regions believes that presentation of this non-GAAP financial measure will permit investors to

assess the performance of the Company on the same basis as that applied by management.

($ amounts in millions)

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

Continuing Operations

Non-interest expense (GAAP)

869

842

913

1,124

850

Adjustments:

Securities impairment, net

(2)

Branch consolidation and property and equipment charges

Goodwill impairment

(253)

Adjusted non-interest expense (non-GAAP)

869

840

913

871

850

Quarter Ended

NON-GAAP RECONCILIATION: FEE INCOME RATIOS AND

EFFICIENCY RATIOS

($ amounts in millions)

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

Continuing Operations

Non-interest expense (GAAP)

869

842

913

1,124

850

Adjustments:

Securities impairment, net

(2)

Branch consolidation and property and equipment charges

Goodwill impairment

(253)

Adjusted non-interest expense (non-GAAP)

869

840

913

871

850

Net interest income, taxable-equivalent basis (GAAP)

830

850

839

858

859

Non-interest income (GAAP)

533

507

524

507

513

Adjustments:

Securities (gains) losses, net

(12)

(7)

Leveraged lease termination (gains) losses, net

(7)

(10)

Adjusted non-interest income (non-GAAP)

521

488

505

490

516

Adjusted total revenue (non-GAAP)

1,351

1,338

1,344

1,348

1,375

Fee income ratio (non-GAAP)

H/I

38.6%

36.5%

37.6%

36.4%

37.5%

Efficiency ratio (non-GAAP)

G/I

64.3%

62.8%

67.9%

64.6%

61.8%

Quarter Ended

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. The table also shows the fee ratio (non-GAAP), generally calculated as non-interest income divided by total revenue. Management uses these ratios to

monitor performance and believes these measures provide meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain

adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the efficiency ratio. Non-interest income (GAAP) is presented

excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the fee ratio. Net interest income on a fully taxable-

equivalent basis (GAAP) and non-interest income are added together to arrive at total revenue (GAAP). Adjustments are made to arrive at adjusted total revenue

(non-GAAP), which is the denominator for the fee and efficiency ratios. Regions believes that the exclusion of these adjustments provides a meaningful base for

period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance.

These non-GAAP financial measures are also used by management to assess the performance of Regions' business. It is possible that the activities related to the

adjustments

may

recur;

however,

management

does

not

consider

the

activities

the

adjustments

indications

ongoing

operations.

Regions

believes

that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by

management.

NON-GAAP RECONCILIATION: TIER 1 COMMON

The following table provides calculations of Tier 1 capital (regulatory) and "Tier 1 common equity" (non-GAAP). Traditionally, the Federal Reserve and other banking

regulatory bodies have assessed a bank's capital adequacy based on Tier 1 capital, the calculation of which is prescribed in amount by federal banking regulations.

In connection with the Company's Comprehensive Capital Assessment and Review ("CCAR"), these regulators are supplementing their assessment of the capital

adequacy

bank

based

variation

Tier

capital,

known

Tier

common

equity.

While

not

prescribed

amount

federal

banking

regulations,

analysts

and banking regulators have assessed Regions' capital adequacy using the Tier 1 common equity measure. Because Tier 1 common equity is not formally defined

by GAAP or prescribed in any amount by federal banking regulations, this measure is considered to be a non-GAAP financial measure and other entities may

calculate it differently than Regions' disclosed calculations. Since analysts and banking regulators may assess Regions' capital adequacy using Tier 1 common

equity,

management

believe s

that

useful

provide

investors

the

ability

assess

Regions'

capital

adequacy

this

same

bases.

Tier 1 common equity is often expressed as a percentage of risk-weighted assets. Under the risk-based capital framework, a company's balance sheet assets and

credit equivalent amounts of off-balance sheet items are assigned to one of four broad risk categories. The aggregated dollar amount in each category is then

multiplied by the risk-weighted category. The resulting weighted values from each of the four categories are added together and this sum is the risk-weighted assets

total that, as adjusted, comprises the denominator of certain risk-based capital ratios. Tier 1 capital is then divided by this denominator (risk-weighted assets) to

determine the Tier 1 capital ratio. Adjustments are made to Tier 1 capital to arrive at Tier 1 common equity (non-GAAP). Tier 1 common equity (non-GAAP) is also

divided by the risk-weighted assets to determine the Tier 1 common equity ratio (non-GAAP). The amounts disclosed as risk-weighted assets are calculated

consistent with banking regulatory requirements.

TIER 1 COMMON RISK-BASED RATIO CONSOLIDATED

Stockholders' equity (GAAP)

14,901

14,455

17,534

16,499

17,263

Accumulated other comprehensive (income) loss

(202)

(54)

(92)

Non-qualifying goodwill and intangibles

(4,836)

(4,852)

(4,881)

(4,900)

(5,649)

Disallowed deferred tax assets

(238)

(336)

(345)

(432)

(506)

Disallowed servicing assets

(33)

(36)

(35)

Qualifying non-controlling interests

Qualifying trust preferred securities

846

Tier 1 capital (regulatory)

10,531

10,118

13,270

12,139

11,919

Qualifying non-controlling interests

(93)

(92)

Qualifying trust preferred securities

(846)

Preferred stock

(3,429)

(3,419)

(3,409)

Tier 1 common equity (non-GAAP)

9,592

9,180

8,903

7,782

7,572

Risk-weighted assets (regulatory)

91,723

91,779

92,546

91,449

92,786

Tier 1 common risk-based ratio (non-GAAP)

O/P

10.5%

10.0%

9.6%

8.5%

8.2%

($ amounts in millions, except per share data)

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

As of and for Quarter Ended

Attached files

Stock widget

Investing forum

REGIONS FINANCIAL CORP Reports