- Making targeted investments in
technology, markets and talent to achieve targeted adjusted ROATCE
of 18-20% by 2021
- Focus on efficiency and effectiveness
to achieve <55% adjusted efficiency ratio by 2021
- Strong capital levels position company
to win in an evolving operating environment
Regions Financial Corp. (NYSE:RF) today presented the company’s
three-year strategic growth plan at an Investor Day in New York.
Members of the company’s management team reviewed investments
Regions is making in talent, technology, and communities to make
banking easier for customers, expand its reach to serve more
consumers and businesses, and deliver attractive and sustainable
returns to shareholders.
“At our last Investor Day in November 2015, we laid out an
intentional and measurable path to creating sustainable franchise
value and strengthening financial performance. Through the hard
work of our associates, we delivered on that commitment and met our
goals by building a stronger, more profitable and innovative
company,” said John Turner, President and Chief Executive Officer.
“As we look to the future, Regions is focused on generating
consistent, sustainable, long-term performance. Today we presented
a meaningful, three-year growth agenda anchored by our relentless
focus on making banking easier for customers and associates while
enhancing profitability through improved risk-adjusted returns.
Through our ongoing commitment to efficiency, effectiveness and
continuous improvement, we will accelerate our growth by making
strategic and disciplined investments in technology, talent and the
markets we serve while also maintaining a strong and integrated
risk management culture.”
Strength of Markets
Regions’ strategic plan is built around the unique strengths of
the franchise: customer focus, markets, team, culture, and risk
management. Over the next three years, Regions will lean into these
strengths by making targeted investments to expand the reach and
profitability of the company’s core markets and to leverage its
established presence in large, growing metros.
The company today announced it will pursue opportunistic hiring
and de novo branch expansion in key growth markets including
Atlanta, Houston, and Orlando. To support growth in these key
markets as well as across the bank’s service area, Regions expects
to open new branches and hire corporate bankers, wealth management
professionals, mortgage loan originators and other customer-facing
associates to meet the needs of more individuals and businesses.
Regions is funding these investments through continuous improvement
initiatives that make banking easier for customers, simplify
processes, and drive profitable, long-term growth. By leveraging
data and technology, Regions is repositioning its retail
distribution network and employing a thin network strategy to serve
more current and prospective customers while reducing costs. Over
the next three years, the company will continue expanding digital
banking capabilities, such as online account openings, digital loan
applications, and wealth management digital advisory capabilities
while also consolidating branches across its service area.
Accelerating Innovation
Through FinTech partnerships, strategic investments, and
in-house development, Regions is accelerating innovation across the
enterprise to make banking easier for customers and to operate more
efficiently and effectively. Regions continues to leverage
technology through innovative solutions around digital lending
capabilities, mobile deposit functionality, deploying flexible card
controls for consumers, and integrating artificial intelligence
(AI) tools across multiple consumer banking channels. The company’s
test-and-learn approach, agile development model, and scalable
network allow Regions to make meaningful investments with strong
expected returns and adapt to a rapidly-changing marketplace.
The company announced today it has allocated approximately $625
million this year, or 11 percent of 2018 revenue, for technology
investments, with nearly half of that budget dedicated to new
projects that will accelerate growth and improve the customer
experience. Over the next three years, Regions will pilot voice
banking capabilities and expand its use of AI for both
customer-facing and back-office applications. Additionally, Regions
is investing in data and analytics to provide more relevant
financial advice to customers, improve the customer experience, and
enhance credit risk management, as well as a variety of other
internal processes across the company.
“Technology changes and data innovation are resetting consumer
expectations, while also enabling Regions to anticipate customer
needs, improve service quality, better manage risk, and operate
more efficiently,” said John Owen, Chief Operating Officer. “This
is an exciting time for our industry, as talented people with big
ideas are leveling the playing field in a way that benefits
consumers and businesses. At Regions, we are focused on winning the
customer experience race, and we are making thoughtful technology
investments to deliver tangible benefits for customers and
associates and meaningful returns for our shareholders.”
Efficiency and Effectiveness
Regions’ Simplify and Grow continuous improvement approach was
introduced in late 2017 and has become a foundational strategic
priority for the company, integrated across the franchise. Today
Regions is committed to achieving an adjusted efficiency ratio of
less than 55 percent by 2021 by growing revenue and aggressively
managing expenses. The company has approximately 35 efficiency and
effectiveness work streams in progress that will contribute to
achieving this goal, and anticipate the addition of new initiatives
throughout the 3-year planning period.
Regions continues to reduce real estate square footage, the
bank’s second-largest expense category, through branch and
back-office space consolidations, introduction of collaborative
workspaces, hoteling, and expanding remote work options. The
company is in the process of exiting 2.1 million square feet,
resulting in a 15 percent reduction in total branch and non-branch
space between 2017 and 2021. Regions is also delivering reductions
in third-party spending through strategic sourcing and vendor
selectivity and anticipates annual cumulative savings of
approximately $60 million between 2018 and 2021.
“Regions’ focus on continuous improvement positions us to
succeed as industry and market conditions change, and our strong
capital position provides flexibility to pursue attractive growth
opportunities in any environment,” said David Turner, Chief
Financial Officer. “We are committed to sound capital management
practices that enable us to grow organically and deliver attractive
returns for our shareholders.”
As part of its Investor Day presentation, Regions provided 2019
expectations and long-term financial targets.
2019 expectations:
- Adjusted average loan growth in the low
single digits
- Adjusted total revenue growth of 2-4
percent
- Relatively stable adjusted non-interest
expense
- Net charge-offs as a percentage of
average loans of 40-50 bps
- Effective tax rate of 20-22
percent
Three-year financial targets (2019-2021):
- 2021 adjusted return on average
tangible common equity of 18-20 percent
- 2021 adjusted efficiency ratio less
than 55 percent
- Annual net charge-offs as a percentage
of average loans of 40-65 bps
- Annual positive operating leverage
A replay of the video webcast and presentation materials
referenced during the event are available at
http://ir.regions.com.
The information above is summary and subject to numerous
assumptions, including future market and economic conditions.
About Regions Financial Corporation
Regions Financial Corporation (NYSE:RF), with $126 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, and mortgage products and services.
Regions serves customers across the South, Midwest and Texas, and
through its subsidiary, Regions Bank, operates approximately 1,500
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.
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” as used herein mean
collectively Regions Financial Corporation, a Delaware corporation,
together with its subsidiaries when or where appropriate. The words
“future,” “anticipates,” “assumes,” “intends,” “plans,” “seeks,”
“believes,” “predicts,” “potential,” “objectives,” “estimates,”
“expects,” “targets,” “projects,” “outlook,” “forecast,” “would,”
“will,” “may,” “might,” “could,” “should,” “can,” and similar terms
and 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, the risks identified in Item 1A. “Risk Factors” of this Annual
Report on Form 10-K and 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 possible declines in property
values, increases in 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.
- 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, any repricing of assets, or any adjustment of
valuation allowances on our deferred tax assets due to changes in
law, adverse changes in the economic environment, declining
operations of the reporting unit or other factors.
- The effect of changes in tax laws,
including the effect of Tax Reform and any future interpretations
of or amendments to Tax Reform, which may impact our earnings,
capital ratios and our ability to return capital to
stockholders.
- Possible changes in the
creditworthiness of customers and the possible impairment of the
collectability of loans and leases, including operating
leases.
- 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.
- Loss of customer checking and savings
account deposits as customers pursue other, higher-yield
investments, which could increase our funding costs.
- 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 effectively compete with
other traditional and non-traditional financial services companies,
some of whom possess greater financial resources than we do or are
subject to different regulatory standards than we are.
- Our inability to develop and gain
acceptance from current and prospective customers for new products
and services and the enhancement of existing products and services
to meet customers’ needs and respond to emerging technological
trends in a timely manner could have a negative impact on our
revenue.
- Our inability to keep pace with
technological changes could result in losing business to
competitors.
- Changes in laws and regulations
affecting our businesses, including 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 effects of any developments,
changes or actions relating to any litigation or regulatory
proceedings brought against us or any of our subsidiaries.
- 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 risks and uncertainties related to
our acquisition or divestiture of businesses.
- The success of our marketing efforts in
attracting and retaining customers.
- 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.
- 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 or failure to deliver our services effectively.
- Dependence on key suppliers or vendors
to obtain equipment and other supplies for our business on
acceptable terms.
- The inability of our internal 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. The severity and impact of future earthquakes,
fires, hurricanes, tornadoes, droughts, floods and other
weather-related events are difficult to predict and may be
exacerbated by global climate change.
- 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 ability to identify and address
cyber-security risks such as data security breaches, malware,
“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 adjusted
efficiency ratio target as part of our expense management
initiatives.
- Possible cessation or market
replacement of LIBOR and the related effect on our LIBOR-based
financial products and contracts, including, but not limited to,
hedging products, debt obligations, investments, and loans.
- Possible downgrades in our credit
ratings or outlook could increase the costs of funding from capital
markets.
- 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.
- 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 our financial statements and how
we report those results, and expectations and preliminary analyses
relating to how such changes will affect our financial results
could prove incorrect.
- Other risks identified from time to
time in reports that we file with the SEC.
- Fluctuations in the price of our common
stock and inability to complete stock repurchases in the time frame
and/or on the terms anticipated.
- 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 and do not intend 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20190227005060/en/
Media Contact:Evelyn Mitchell(205) 264-4551
Investor Relations Contact:Dana Nolan(205) 264-7040
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