Form 8-K REGIONS FINANCIAL CORP For: Nov 15
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 15, 2016
REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE | 001-34034 | 63-0589368 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1900 FIFTH AVENUE NORTH
BIRMINGHAM, ALABAMA 35203
(Address, including zip code, of principal executive office)
Registrant’s telephone number, including area code: (800) 734-4667
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 7.01 Regulation FD Disclosure.
Regions Financial Corporation executives are scheduled to make a presentation at the Bank of America Merrill Lynch Future of Financials 2016 Conference in New York on Wednesday, November 16, 2016 at 11:40 a.m. EST.
A webcast of the presentation will be available for a limited time on the Investor Relations page of Regions' website at www.regions.com.
A copy of the presentation materials is being furnished as Exhibit 99.1 to this report, substantially in the form intended to be used. Exhibit 99.1 is incorporated by reference under this Item 7.01.
In accordance with general instruction B.2. of Current Report on Form 8-K, this information (including Exhibit 99.1) is furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.
ITEM 9.01 Financial Statements and Exhibits.
(d) Exhibits. The exhibits listed in the exhibit index are furnished pursuant to Regulation FD as part of this Current Report on Form 8-K and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934.
Exhibit Index
No. Exhibit
99.1 | Presentation of November 16, 2016. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
REGIONS FINANCIAL CORPORATION
By: /s/ Fournier J. Gale, III
Name: Fournier J. Gale, III
Title: Senior Executive Vice President,
General Counsel and Corporate Secretary
Date: November 15, 2016
Bank of America
Merrill Lynch
“Future of Financials 2016”
Scott Peters, Consumer Services Group Head
Logan Pichel, Consumer Lending Group Head
November 16, 2016
Exhibit 99.1
Strategic initiatives
Optimize and Effectively Deploy
Regulatory Capital
Disciplined Expense Management
Grow and Diversify Revenue
2
Strategic choices driving Consumer Banking Strategy
Consumer segment generated $3.5B in total revenue in 2015 and
has grown +2% YTD
Relationship
Banking
Model
Continue to
build best in
class Risk
Management
Focused on
Organic
Growth
Bolt on
Acquisitions
Focused on
innovation
that helps our
customers
Reshaping
our retail
distribution
network
3
The right delivery model – Relationship Banking
Regions Customers
1,597
Branches
1,969
ATM’s
2.3 million
Digital Users
200 million
Social Media
Views
91 million
Contact Center
calls per year
Guided by Local Bankers and Digital Capabilities
› Relationship Managers
› Branch Team
› Wealth Advisors
› Insurance Specialists
Supported by Industry Specialists and a strong back office
› Mortgage Loan Originators
› Specialized Industries
4
Core and priority markets
5
Core Deposit States
Priority Growth Cities
Atlanta
Houston
Core markets provide a
sound source of deposits
Core deposit markets
represent 78%* of total
deposits
Growing branch presence
in higher opportunity
metro markets
Opportunity to increase
our presence in large
markets where we can
deploy our full banking
model, achieve higher
growth rates, improve
efficiency and diversify
revenue
*As of 6/30/16 based on FDIC deposit data
St Louis
6
Will consolidate 100 - 150 branches by 2018 and
expect to be at the high end of the range. We
will continue to look for opportunities to
consolidate additional branches.
Deploying new designs that leverage technology
to provide self-service driving efficiency and
freeing bankers for more valuable interactions
Utilizing Full Universal Banker format in new
branches and retrofits to improve efficiency and
customer convenience
Launching offsite ATM/VTM’s at high traffic sites
in Houston to efficiently expand presence
Deployed technology to every branch allowing
Platform to execute non-cash transactions
improving customer service and reducing teller
staffing
Reshaping our branch network to better serve our
customers
Better serving our customers through innovation
Track record of launching innovative initiatives
such as:
– Now Banking
– Regions Mobile Deposit funds availability
– GreenSky®
– ATM check cashing
– Avant ®
– Fundation ®
Engaging with FinTech companies and
innovation incubators hosting annual digital
innovation workshops
Innovations in the works:
– Rollout of new branch designs
– New online and mobile banking offerings
– Expand point-of-sale financing
– Continue to enhance digital banking
offerings
– Robo Advisors
7
Innovative products - Now Banking
8
Now Banking is a full service cash banking platform designed to serve the cash
flow management needs of low and middle income consumers, with or without a
Regions account.
Products and Services Success Factors
Check Cashing
Reloadable Cards
Money Remittance
Bill Payment
Money Orders
Savings Account
Secure Checking
Trusted service provider
Bringing credibility, security, and access
Use of services without a checking account
Competitively priced
Meets needs of existing customers and
attracts new customers
Now Banking
Households have
grown 14% on average
per year since 2012
Innovative solutions to allow customers to bank the
way they choose
9
Simplifying and streamlining the
digital account opening process.
True definition of serving as a
relationship bank and helping
improve customers financial lives.
Allows customers to access
information quickly and easily;
provides efficiencies for both the
customer and the bank.
Allows customers to bank when,
where and how they choose,
regardless of device or channel.
Optimizing Sales Responsive Design User Experience and
Convenience
Advice, Guidance and
Education
Efforts in 2016 into 2017 (partial list)
Touch ID Digital Account Opening Guided Selling Regions.com Redesign
10
Developed an addressable marketing system
The system results in:
– Targeted and timely customer offers and
messages across channels
– Increased Sales, Retention & Revenue
– Continuous Improvement
Enables the targeting of messages throughout
the entire customer and prospect lifecycle
Aggregated data and automated decisioning
drives an “always on” environment
Analytics determine the optimal offer and
refine ongoing activities
Investment has driven additional loan and fee
income across the network
Leveraging data to anticipate and fulfill customer needs
Awareness
Consideration
Intent
Shopping
Purchase
Lead
Desktop
Tablet TV
Branch
Contact
Center
IVR
Site
Digital
Media
Email Direct
Mail
Mobile Social
Media
36%
27%
21%
8%
8%
Interest-free
Money market
Interest-bearing
checking
Time
Savings
$98B
56% 29%
11%
4% Consumer Segment
Corporate Bank
Segment
Wealth Management
Segment
Other
Well-positioned deposit base is a competitive advantage
Deposits – Composition(1)
Deposits – by Segment(1)
(1) 3Q16 average balances
(2) Betas measure deposit rate changes relative to market rate changes over a 3 year horizon (2Q04-2Q07).
(3) Regions current +200 bps gradual rate shock assumes parallel yield curve shift with a 60% deposit beta and a $3.5B deposit mix shift out of non-interest bearing
deposits.
Peers include BBT, FITB, PNC, STI, WFC, ZION
Historical Deposit Betas(2)
11
Assuming meaningful rate increases, Regions plans for higher betas than
seen in the prior cycle and stresses those assumptions to understand
potential downside. Regions’ current baseline assumption is for a 60%
deposit beta(3).
There is also an assumption of mix shift out of non-interest bearing
deposits and into time deposits in a rising rate environment. This
baseline shift equates to approximately $3.5B in a +200 gradual 12
month shift(3).
45.0%
50.0%
55.0%
60.0%
65.0%
Cards and payments
Best in Class Visa
Transaction Power
Score ranking since
1Q14(1)
80%+ penetration of
Regions Consumer
Checking accounts
12
(1)Visa Consumer Debit 2Q16 Scorecard Results
Participating in Apple Pay,
Android Pay, Samsung
Pay, and Visa Checkout
Regions Mobile Deposit
usage has grown more
than 60% annually since
inception in 2013
All portfolios to be
100% EMV Chip Card
issued in 2017
ATM Fleet 100% chip
enabled
Debit Card Products designed
especially for Regions
customers with 18.2%
penetration rate
Over the last year
balances have increased
10.6% and active credit
cards 12.3%
Credit Card
Consumer loan product offerings
13
Serving 500,000
households with a
mortgage or home
equity loan/line
Vehicle lending
through our preferred
dealer network or
directly through our
branches
Unsecured direct
lending through our
branch network and
online capabilities
Home improvement
loans through our
third-party
relationships
Consumer Loan Product Strategy
• Diversify revenue and loan portfolio by expanding non-real estate and non-branch
generated loan production
• Deliver a consistent and differentiated customer experience for all consumer
lending products and across all channels
Consumer loans – steady year-over-year growth
14
Product
3Q16 Avg.
Balance
YOY
Growth
Mortgage $13.2B +4.7%
Indirect – Vehicles $4.1B +6.5%
Indirect – Other
Consumer
$0.8B +77.4%
Consumer Credit
Card
$1.1B +10.6%
Successful execution on our strategic plan to
grow consumer loans
Expand Home Loan Direct Mortgage Channel by
leveraging data analytics combined with
targeted marketing efforts
Growing the mortgage servicing portfolio
through bulk purchases and flow deal
arrangements
– Leverage servicing platform and take
advantage of our low cost to service
Developed expanded product offerings and
distribution channels
– Growing indirect consumer loans through
successful partnerships with GreenSky®
– Direct consumer loans have grown 8.7%
YoY through targeted in-branch offers
– Direct Consumer loans expanded online
distribution through Avant partnership
Indirect home improvement loans partnered with
GreenSky®
15
Partnership puts customer convenience at the
forefront
Outstanding balances at Sept 30 ~$660MM
Average FICO score ~745
Average loan size ~$12k
Average going-on rate 9-11%
Focused on profitability within the indirect vehicle
portfolio
16
Focused on improving the economics of the
portfolio
Continued focus on growing the Preferred
Dealer Network which yields better returns
– 25% of total dealers and 60% of direct
dealer production
Avg FICO above 740
Avg Term ~68 months
No leases
Approximately 50% of total production and
balances originated by a third-party
– Terminated third-party contract during
the 4th quarter
$3,863
$3,969
$4,056
$4,149
$4,113
3Q15 4Q15 1Q16 2Q16 3Q16
Average Balances
$564 $542 $561
$583
$421
3Q15 4Q15 1Q16 2Q16 3Q16
Production
($ in millions)
($ in millions)
Regions Personal Unsecured Loans Powered by Avant
17
New online platform rolled out in August for unsecured consumer loans
Early results are meeting expectations
Just recently began marketing
Avg FICO 700-750 – Avg Loan Balance $10k – Avg Term 36 months – Avg Rate 8-9%
Strategic initiatives
Optimize and Effectively Deploy
Regulatory Capital
Attractive ROA and Risk Adjusted Returns
Return appropriate capital to shareholders
Disciplined Expense Management
$400mm in expense saves by 2019
Continuously focus on efficiency and effectiveness
Generate positive operating leverage
Grow and Diversify Revenue
Leverage SM to grow customers and households and
deepen existing relationships
Prudently grow non-interest income
Balance growth across geographies and businesses
18
®
19
Forward-looking statements
This presentation 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 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:
• 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.
• 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.
• 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.
• The effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or any of our subsidiaries.
• 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 a regulatory non-objection (as part of the 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 stress testing and capital planning requirements (as part of the CCAR process or otherwise) may continue to require a significant investment of our managerial resources
due to the importance and intensity of such tests and requirements.
• Our ability to comply with applicable capital and liquidity requirements (including, among other things, the Basel III capital standards and the LCR rule), 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 Basel III framework calls for additional risk-based capital surcharges for globally systemically important banks. Although we are not subject to such surcharges, it is possible that in the future
we may become subject to similar surcharges.
• 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.
• 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 success of our marketing efforts in attracting and retaining customers.
• 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.
• Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes in laws and
regulations in effect from time to time.
• Fraud or misconduct by our customers, employees or business partners.
20
Forward-looking statements continued
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" of Regions' Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission.
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. 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.
• 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 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.
• 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.
• Changes in commodity market prices and conditions could adversely affect the cash flows of our borrowers operating in industries that are impacted by changes in commodity prices
(including businesses indirectly impacted by commodities prices such as businesses that transport commodities or manufacture equipment used in the production of commodities),
which could impair their ability to service any loans outstanding to them and/or reduce demand for loans in those industries.
• Our inability to keep pace with technological changes could result in losing business to competitors.
• 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; disruption or damage to our systems; increased costs; losses; or
adverse effects to our reputation.
• Our ability to realize our efficiency ratio target as part of our expense management initiatives.
• Significant disruption of, or loss of public confidence in, the Internet and services and devices used to access the Internet could affect the ability of our customers to access their
accounts and conduct banking transactions.
• 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 FASB or other regulatory agencies could materially affect how we report our financial results.
• Other risks identified from time to time in reports that we file with the SEC.
• The effects of any damage to our reputation resulting from developments related to any of the items identified above.
21
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