Regions Financial Corporation (NYSE:RF) today reviewed the Company’s
strategy to build sustainable franchise value and strengthen financial
performance. During an investor day conference in New York, senior
executives discussed Regions’ business model and outlined steps the
Company will take over the next three years to grow and diversify
revenue, manage expenses and effectively deploy capital. Specifically,
the Company detailed plans to restructure its expense base to become
more efficient and invest in its revenue-producing businesses.
“Regions has a solid foundation that is built on the strength of our
team, our markets, our culture and our ability to execute,” said Grayson
Hall, chairman, president and CEO. “Operating more efficiently and
implementing smart expense controls to fund revenue-producing businesses
will accelerate our performance and drive growth and improved
profitability in a challenging economy.”
The Company provided guidance on 2016 expectations and discussed
long-term financial targets.
2016 Expectations:
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Average Loan growth 3-5 percent
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Average Deposit growth 2-4 percent
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Net interest income up 2-4 percenti
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Adjusted non-interest income up 4-6 percent
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Adjusted expenses flat to up modestly: efficiency ratio under 63
percent
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Operating leverage of 2-4 percenti
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Net charge-offs 25-35 bps
Long-Term Financial Targets:
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Earnings Per Share (EPS): Deliver EPS compounded annual growth rate
(CAGR) of 12-15 percent.
-
Efficiency Ratio: Achieve an efficiency ratio under 60 percent by
eliminating $300 million in expenses over the next three years to fund
revenue-producing businesses while keeping expenses flat to slightly
up.
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Return on Average Tangible Common Equity (ROATCE): Improve ROATCE to
12-14 percent.
A replay of the video webcast and presentation materials referenced
during the event are available at http://ir.regions.com.
About Regions Financial Corporation
Regions Financial Corporation (NYSE:RF), with $125 billion in assets, is
a member of the S&P 500 Index and is one of the nation’s largest
full-service providers of consumer and commercial banking, wealth
management, mortgage, and insurance products and services. Regions
serves customers in 16 states across the South, Midwest and Texas, and
through its subsidiary, Regions Bank, operates approximately 1,630
banking offices and 2,000 ATMs. Additional information about Regions and
its full line of products and services can be found at www.regions.com.
_____________________________
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i Interest rate scenarios include a flat yield curve
and market forward interest rates as of 11.6.15. Expectations
assume the low end of the range under flat yield curve and the
higher end of the range for market forward interest rates.
|
Note: 2016 non-interest income reflects the impact from posting
order change of approximately $10M-$15M per quarter.
|
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Forward-Looking Statements
This release may include forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. The terms “Regions,”
the “Company,” “we,” “us” and “our” mean Regions Financial Corporation,
a Delaware corporation, and its subsidiaries when or where appropriate.
The words “anticipates,” “intends,” “plans,” “seeks,” “believes,”
“estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,”
“will,” “may,” “could,” “should,” “can,” and similar expressions often
signify forward-looking statements. 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 current
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, and because they also relate to the future they are
likewise subject to inherent uncertainties and other factors that may
cause actual results to differ materially from the views, beliefs and
projections expressed in such statements. Therefore, we caution you
against relying on any of these forward-looking statements. These risks,
uncertainties and other factors include, but are not limited to, those
described below:
-
Current and future economic and market conditions in the United States
generally or in the communities we serve, including the effects of
declines in property values, unemployment rates and potential
reductions of economic growth, which may adversely affect our lending
and other businesses and our financial results and conditions.
-
Possible changes in trade, monetary and fiscal policies of, and other
activities undertaken by, governments, agencies, central banks and
similar organizations, which could have a material adverse effect on
our earnings.
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The effects of a possible downgrade in the U.S. government’s sovereign
credit rating or outlook, which could result in risks to us and
general economic conditions that we are not able to predict.
-
Possible changes in market interest rates or capital markets could
adversely affect our revenue and expense, the value of assets and
obligations, and the availability and cost of capital and liquidity.
-
Any impairment of our goodwill or other intangibles, or any adjustment
of valuation allowances on our deferred tax assets due to adverse
changes in the economic environment, declining operations of the
reporting unit, or other factors.
-
Possible changes in the creditworthiness of customers and the possible
impairment of the collectability of loans.
-
Changes in the speed of loan prepayments, loan origination and sale
volumes, charge-offs, loan loss provisions or actual loan losses where
our allowance for loan losses may not be adequate to cover our
eventual losses.
-
Possible acceleration of prepayments on mortgage-backed securities due
to low interest rates, and the related acceleration of premium
amortization on those securities.
-
Our ability to effectively compete with other financial services
companies, some of whom possess greater financial resources than we do
and are subject to different regulatory standards than we are.
-
Loss of customer checking and savings account deposits as customers
pursue other, higher-yield investments, which could increase our
funding costs.
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Our inability to develop and gain acceptance from current and
prospective customers for new products and services in a timely manner
could have a negative impact on our revenue.
-
Changes in laws and regulations affecting our businesses, such as the
Dodd-Frank Act and other legislation and regulations relating to bank
products and services, as well as changes in the enforcement and
interpretation of such laws and regulations by applicable governmental
and self-regulatory agencies, which could require us to change certain
business practices, increase compliance risk, reduce our revenue,
impose additional costs on us, or otherwise negatively affect our
businesses.
-
Our ability to obtain no regulatory objection (as part of the
comprehensive capital analysis and review ("CCAR") process or
otherwise) to take certain capital actions, including paying dividends
and any plans to increase common stock dividends, repurchase common
stock under current or future programs, or redeem preferred stock or
other regulatory capital instruments, may impact our ability to return
capital to stockholders and market perceptions of us.
-
Our ability to comply with applicable capital and liquidity
requirements (including the Basel III capital standards), including
our ability to generate capital internally or raise capital on
favorable terms, and if we fail to meet requirements, our financial
condition could be negatively impacted.
-
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
any of our subsidiaries are a party, and which may adversely affect
our results.
-
Our 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 our business.
-
Possible changes in consumer and business spending and saving habits
and the related effect on our ability to increase assets and to
attract deposits, which could adversely affect our net income.
-
Any inaccurate or incomplete information provided to us by our
customers or counterparties.
-
Inability of our framework to manage risks associated with our
business such as credit risk and operational risk, including
third-party vendors and other service providers, which could, among
other things, result in a breach of operating or security systems as a
result of a cyber attack or similar act.
-
The inability of our internal disclosure controls and procedures to
prevent, detect or mitigate any material errors or fraudulent acts.
-
The effects of geopolitical instability, including wars, conflicts and
terrorist attacks and the potential impact, directly or indirectly on
our businesses.
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The effects of man-made and natural disasters, including fires,
floods, droughts, tornadoes, hurricanes, and environmental damage,
which may negatively affect our operations and/or our loan portfolios
and increase our cost of conducting business.
-
Our inability to keep pace with technological changes could result in
losing business to competitors.
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Our ability to identify and address cyber-security risks such as data
security breaches, "denial of service" attacks, "hacking" and identity
theft, a failure of which could disrupt our business and result in the
disclosure of and/or misuse or misappropriation of confidential or
proprietary information; increased costs; losses; or adverse effects
to our reputation.
-
Possible downgrades in our credit ratings or outlook could increase
the costs of funding from capital markets.
-
The effects of problems encountered by other financial institutions
that adversely affect us or the banking industry generally could
require us to change certain business practices, reduce our revenue,
impose additional costs on us, or otherwise negatively affect our
businesses.
-
The effects of the failure of any component of our business
infrastructure provided by a third party could disrupt our businesses;
result in the disclosure of and/or misuse of confidential information
or proprietary information; increase our costs; negatively affect our
reputation; and cause losses.
-
Our ability to receive dividends from our subsidiaries could affect
our liquidity and ability to pay dividends to stockholders.
-
Changes in accounting policies or procedures as may be required by the
Financial Accounting Standards Board or other regulatory agencies
could materially affect how we report our financial results.
-
The effects of any damage to our reputation resulting from
developments related to any of the items identified above.
You should not place undue reliance on any forward-looking statements,
which speak only as of the date made. Factors or events that could cause
our actual results to differ may emerge from time to time, and it is not
possible to predict all of them. We assume no obligation to update or
revise any forward-looking statements that are made from time to time,
either as a result of future developments, new information or otherwise,
except as may be required by law.
See also the reports filed with the Securities and Exchange Commission,
including the discussion under the “Risk Factors” section of Regions’
Annual Report on Form 10-K for the year ended December 31, 2014 as filed
with the Securities and Exchange Commission and available on its website
at www.sec.gov.
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