Attached files
| file | filename |
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| 8-K - 8-K - REGIONS FINANCIAL CORP | rf2017-05x08ir.htm |
2Q17 Investor Deck
May - June, 2017
Exhibit 99.1
Table of Contents
Topic Page #
Profile 3-8
Net Interest Income and Asset Sensitivity 9-13
Fee Income and Efficiencies 14-19
Balance Sheet 20-26
Credit 27-33
Capital and Liquidity 34-38
Long-term Targets and 2017 Expectations 39-41
Non-GAAP and FLS 42-48
2
Profile
3
Regions Banking Franchise
(1) Full Service branches as of 03/31/2017
(2) Source: SNL Financial as of 6/30/2016
Regions aims to be the premier regional financial institution in America
4
Strength of our Markets
5
Market Rank in Core States
78% of total deposits are in our core states
Alabama - Mississippi - Florida
Louisiana - Tennessee - Arkansas
78%
High Market Share, High Growth Markets
Source: SNL Financial
As of 6/30/2016 FDIC summary
Strength of our Markets - our 15 state footprint
6 1. Source: Bureau of Labor Statistics through March 2017; Data pulled May 2, 20172. Source: Auto Alliance; Data ; Data pulled May 2, 2017
3. Source: Automotive News Light Vehicle Production by state for 2016
4. Source: Based on Total Domestic Shipping Tonnage by state; U.S. Army Corps of Engineers, as of 2015
5. Bureau of Economic Analysis; non-durable goods is as a percent of the non-durable good subcomponent of gdp, as of 2015
Of all new jobs
created in the US
since 2009 were
in our footprint(1)
Of all US
automotive
employment is in
our footprint(2)
Of all US light vehicle
production is within
our footprint(3)
Of all US port trade
tonnage(4) traveling
through ports in our
footprint
Of non-durable goods
manufacturing occurs
in our footprint(5)
Of the total US GDP is
within our footprint(5)
61%
50%
36%
43%
44%
58%
Regions Receives Top Honors
7
Strategic Initiatives
8
Net Interest
Income and Asset
Sensitivity
9
Improving net interest income(1) and net
interest margin
Net Interest Income and Other Financing Income (FTE)
Net Interest Margin
1Q16 2Q16 3Q16 4Q16 1Q17
$883
$869
$856
$874 $881
3.19%
3.15%
3.06%
3.16%
3.25%
• Net interest income(1) (FTE) increased $7 million or
1%, and the net interest margin increased 9 basis
points
◦ Both margin and income benefited from
higher interest rates and lower premium
amortization, partially offset by lower
average loan balances
◦ Margin benefited further from two less
days in the quarter
• Premium amortization on mortgage related
securities declined to $38 million during the
quarter
◦ If interest rates remain at current levels, or
rise further, run rate expected in the low-
to-mid $30 million range
• Expect 2Q17 NIM expansion of 3-5 bps, in spite of
negative impact of one additional day in the
quarter
($ in millions)
10
Net interest income(1) and net interest margin
(1) Net interest income and other financing income
1Q17 Results and Outlook
2017 Guidance - Net interest income(1)
growth of 3%-5%
Deposits
90%
Borrowings
8%
Other
2%
IB Checking,
Money Market
& Savings
56%
Non-Interest
Bearing
Checking
37%
Time
7%
Interest Rate Risk Exposure
(as of March 31, 2017)
• Naturally asset sensitive balance
sheet poised to benefit from rising
interest rates
• 45% of loans are floating rate,
including hedges(1)
• $32B of net contractual(3)
floating rate exposure(1)(2)
• Funded mostly (90%) by large,
predominantly consumer
deposit franchise, which is
44% fixed rate (non-interest
bearing or time)
• Securities portfolio with 4.3
year duration and relatively
modest extension risk from
current levels
• Loan hedges(1) used at the margin
to protect earnings under low rates,
while allowing for NII to expand as
rates rise
• Deposit betas were roughly 54%
through the last cycle(4), at the
lower end of peers
Portfolio Compositions
11
1. Including balance sheet hedges ($8.25B receive fixed loan swaps, $1.85B received fixed debt swaps); the March 31, 2017 cash flow interest rate swap notional value
includes the termination of $1.75 billion hedges that were transacted after quarter end
2. ARM mortgage loans are included as floating rate loans
3. Excluding management priced deposits
4. Last rising rate cycle measured from 2Q04 – 2Q07
Contractual(3) Floating Rate Exposure(1)(2)
Loans
64%
Securities
20%
Other
16%
$125B
Assets Liabilities
$109B
Floating
28%
Fixed
72%
Wholesale Borrowings(1)
$8B$99B
Deposits
Floating
45%
Fixed
55%
Loans(1)(2)
$80B
Interest Rate Risk Assumptions
(as of March 31, 2017)
Standard Interest Rate Risk Scenario Assumptions
12
1. Growth expectations exclude the impact of third-party indirect-vehicle portfolio
2. Impacts of stresses to standard shock scenario are applied independently; not cumulative
3. Including balance sheet hedges ($8.25B receive fixed loan swaps, $1.85B received fixed debt swaps); the March 31, 2017 cash flow interest rate
swap notional value includes the termination of $1.75 billion hedges that were transacted after quarter end
Assumption Sensitivity Analysis (2)(3)
($ in millions)
1Q16 2Q16 3Q16 4Q16 1Q17
17 18 18 18 19
17
$34
17
$35
17
$35
17
$35
17
$36
$56
$8
$28
$4
Other
Segment
Deposit Advantage
Non-Interest Bearing Deposits
by Customer Type(1)
Deposits by Customer Type(1)
(Retail vs. Business)
• Retail deposits consist of consumer and private wealth
accounts and represent 65% of total deposits
• Business deposits consist of corporate, institutional and
other accounts and represent 35% of total deposits
◦ Indexed deposits are approximately 6% of
interest bearing deposits
• 64% of total average 1Q17 deposits are interest bearing
deposits
• More than 40% of our consumer low-cost deposit dollars
have been customers for over 10 years
• Deposit MSA stratification
◦ ~50% of deposits <1M people
◦ ~35% of deposits <500K people
Interest Bearing Deposits
by Customer Type(1)
1Q16 2Q16 3Q16 4Q16 1Q17
44 44 44 45 46
20
$64
18
$62
19
$63
18
$63
16
$62
13
Consumer
Segment
Private
Wealth*
Corporate
Segment
Institutional
Trust*
$2
* Private Wealth and Institutional Trust deposits are combined into the Wealth Management Segment.
(1) Average Balances
($ in billions)1Q17, ($ in billions) ($ in billions)
Fee Income and
Efficiencies
14
Creating sustainable franchise value
(1) Non-GAAP; see appendix for reconciliation
($ in millions)
15
Non-interest income
Capital markets
Mortgage
income
Other
Wealth
management
income
Card and ATM
fees
Service charges
on deposit
accounts
Selected items
1Q16 2Q16 3Q16 4Q16 1Q17
41 38 42 31 32
38 46 46 43 41
69 68 78 59 56
106 103
107
103 109
95 99
105
103 104
159
$506
166
166
173 168
$510
6
$526
55
$599
10
$522
• Non-interest income decreased $12 million or
2% QoQ; adjusted non-interest income(1)
decreased $2 million QoQ, but increased $2
million YoY
◦ Wealth management income increased
6% QoQ and 3% YoY
◦ Card and ATM income increased 1% QoQ
and 9% YoY
◦ Mortgage income decreased 5% QoQ, but
increased 8% YoY; expect recent MSR
purchases to help offset lower production
◦ Capital markets income increased 3%
QoQ; expect incremental M&A advisory
income growth throughout remainder of
2017
• Expect 1Q17 adjusted non-interest income to
represent low-point for the year
1Q17 Results and Outlook
2017 Guidance - Adjusted non-interest
income growth of 1%-3%
(2)
Diversified fee income
Note: Excludes Other Segment information of $10mm in 1Q17
($ in millions)
16
Fee revenue by Segment
• Seasonally lower 1Q17 service charges are expected to increase
throughout 2017 consistent with growth in checking accounts and
households
• Card and ATM fee growth is expected to continue consistent with
growth in active cards and increased transactions
• Mortgage income expected to hold up in spite of rising rate
environment due to predominance of purchase volume, expanded
home loan direct channel, and support from recent servicing
purchases
Consumer
Consumer
$275
Wealth
$111
Corporate
$114
Wealth
• Growth in investment services and Private Wealth contributed to a
6% increase in wealth management income in the first quarter
◦ Wealth management relationships increased 3% QoQ
◦ Assets under management increased 4% QoQ
• Growth from prior insurance lift-outs and increases in the number of
investment advisors are expected to drive additional growth
Corporate
• Capital markets income is expected to improve throughout the
remainder of the year
• Additional contributions from M&A advisory services, loan
trading, CMBS, and syndications, are expected to contribute to
this growth
Investing in Fee Income Growth Initiatives
17
2015-2016
† GreenSky
† Fundation
† CMBS Origination
† Regions.com powered by Avant
† Mortgage Servicing Rights Acquisitions
† Financial Consultants
† Retail Bankers
† Insurance lift-outs and acquisitions
† M&A Advisory
• BlackArch Acquisition
† Multi-family Debt Placements
† Affordable Housing
• First Sterling Acquisition
† Treasury Platform
2017-2018
• Additional Point-of-Sale
Opportunities
• Expansion of Mortgage Home
Loan Direct Channel
• Additional Mortgage Servicing
Rights Acquisitions
• Loan Sales & Trading
• Fixed Income Sales & Trading
• Multi-family Debt Placements
• Grow Affordable Housing
• Treasury Management Platform
• Insurance Acquisitions
• De-Novo Branch Additions
• Digital Loan Offers
• Additional Retail Bankers
Prudently managing expenses
1Q16 2Q16 3Q16 4Q16 1Q17
843
889 912 877 872
26
26
22
22
5
1,754
(1) Non-GAAP; see appendix for reconciliation
($ in millions)
Selected Items(1)Adjusted Non-Interest Expense(1)
$869
$915
18
$934
26
$899
$877
Non-interest expenses
5
• Expenses decreased $22 million or 2%; adjusted
expenses(1) decreased $5 million or 1%
◦ Salaries and Benefits increased 1% as
seasonal increases in payroll taxes were
partially offset by declines in production-
based incentives
◦ Professional, legal and regulatory
decreased 15%
◦ Net occupancy decreased 4%
• Adjusted efficiency ratio(1) improved 50 bps to
62.7%
• Expect 2Q17 increase in salaries and benefits
associated with merit and long-term incentive
grant, as well as increases associated with higher
production-based incentives
1Q17 Results and Outlook
2017 Guidance - Adjusted non-interest
expenses 0%-1%; full year efficiency ratio
~62%
Focus on Efficiency Remains Firmly Intact
19
Operational
Efficiencies
Branch and Real Estate
Optimization
Third-Party
Discretionary and Other
• Staffing levels decreased more
than 1,200 or 5% in 2016
• Universal Banker deployed in all
branches allowing for the
migration of non-cash
transactions away from the teller
line
• Six Sigma deployed to review and
optimize business processes
throughout the organization and
has resulted in numerous
efficiency and cost saving
opportunities
• Certain organizational units have
been realigned to better achieve
efficiencies
• Realignment of incentive
programs
• Total square footage has declined
by approximately 5% from 2015
• Consolidated 103 branches in
2016
• Another 27 branches previously
announced to be consolidated
were closed during 2Q17
• Eliminated or reduced office
space by consolidating corporate
locations into high volume
workspaces
• Renegotiation or cancellation of
third party agreements
• Curtailment of discretionary
expenses (i.e. travel and
entertainment, conferences,
etc.)
Balance Sheet
20
Average loans and leases
1Q16 2Q16 3Q16 4Q16 1Q17
$81.5
$82.0
$81.3
$80.6
$80.2
Prudently managing loans
($ in billions)
21
• Average Consumer and Business loans declined during 1Q17
• Consumer lending was impacted by exit of third-party indirect-
vehicle portfolio and sale of affordable housing mortgage loans
in 4Q16
◦ Continue to experience loan growth in credit card,
home equity loans, indirect-other, and direct lending
categories
• Business lending was impacted by continued focus on
achieving appropriate risk-adjusted returns, the de-risking of
certain portfolios and asset classes, and ongoing softness in
demand for middle market commercial and small business
loans
◦ Continue to pass on loan opportunities due to price
and/or structure
◦ Continue to reduce exposure to energy and multi-
family
◦ Customer optimism has yet to translate into balance
sheet growth
1Q17 Results and Outlook
2017 Guidance - Excluding the impact of the third-party
indirect-vehicle portfolio, full-year average loans are expected
to be flat to slightly down compared to the prior year. Expect
modest growth of average and ending loans on a sequential
linked-quarter basis throughout the rest of 2017.
Average consumer loans
Consumer Lending
($ in billions)
22
• Consumer lending decreased 1% in 1Q17
◦ Impacted by exit of third-party indirect-
vehicle portfolio and sale of affordable
housing mortgage loans in 4Q16
◦ Full-year average decline from third-party
indirect vehicle portfolio expected between
$500-$600 million
◦ Average home equity lines of credit
continue to decline faster than growth in
home equity loans
• Expect growth in 2017 from residential mortgage,
home equity loans, consumer credit card, indirect-
other and direct consumer categories
◦ Regions' mortgage production is weighted
heavily to purchase, and the contribution
from online home loan direct channel is
expected to increase helping to offset
lower mortgage production associated with
rising interest rates
1Q17 Results and Outlook
Mortgage $13.5
Indirect-Vehicles
$2.1
Indirect-Vehicles
Third-Party $1.8
Indirect-Other $0.9
Home Equity $10.6
Credit Card $1.2
Other $1.1
1Q16 2Q16 3Q16 4Q16 1Q17
$30.5 $30.8
$31.1 $31.4 $31.2
$31.2B
Average business loans
Business Lending
($ in billions)
23
• Business lending remained relatively stable in
1Q17 with continued focus on improving risk-
adjusted returns and reducing exposures
◦ Direct energy and multi-family loans
decreased $240 million
◦ Optimism has yet to materialize into
meaningful loan growth
• Expect the pace of average energy and multi-
family declines to slow from 1Q levels
• Expect average CRE-owner occupied portfolios
to continue to decline but at a modest pace
• Average commercial & industrial loans grew
$181 million in 1Q17
◦ Expect continued growth in 2017 with
contributions from technology &
defense, healthcare, power & utilities,
and asset-based lending
1Q17 Results and Outlook
Commercial and
industrial $35.3
CRE Mortgage - OO
$6.8
CRE Construction -
OO $0.4
IRE - Mortgage $4.2
IRE - Construction
$2.2
$48.9B
1Q16 2Q16 3Q16 4Q16 1Q17
$51.0 $51.2 $50.2 $49.1 $48.9
Average deposits by type
Solid Deposit Mix
Low-cost
deposits
Time deposits
+ Other
1Q16 2Q16 3Q16 4Q16 1Q17
90.4 90.2 90.5 91.0 90.8
7.4
$97.8
7.3
$97.5
7.4
$97.9
7.5
$98.5
7.2
$98.0
($ in billions)
24
($ in billions)
Average deposits by segment
Consumer
Bank
Corporate
Bank
Wealth
Management
Other
1Q16 2Q16 3Q16 4Q16 1Q17
53.5 54.7 55.2 55.6 56.2
27.6 27.6 28.3 28.7 28.2
12.3 11.3 10.6 10.2 10.0
4.4
$97.8
3.9
$97.5
3.8
$97.9
4.0
$98.5
3.6
$98.0
• Average deposits decreased $530 million in 1Q17
◦ Consumer deposits increased 1%
◦ Corporate deposits decreased 2% driven by
seasonality and profitability decisions
◦ Wealth Management deposits decreased 2% as
a result of ongoing strategic reductions of
certain collateralized deposits
◦ Other deposits declined 9% due to strategic
decline in higher cost retail brokered sweep
deposits
◦ Deposit costs remained near historically low
levels at 14 basis points
◦ Funding costs remained low at 32 basis points
• Expect continued growth in low-cost consumer
deposits will offset the strategic declines in
collateralized and brokered deposits in 2017
1Q17 Results and Outlook
2017 Guidance - Full year average deposits are
expected to be relatively stable with the prior year
Securities Portfolio
25
• Portfolio is managed within the construct of the
overall balance sheet and risk management process
• Well constructed and expected to perform well in a
variety of economic environments
• Supportive of both regulatory and market liquidity
objectives
• Selective when purchasing MBS - choose loan
characteristics that offer prepayment protection
while preserving upside in rising rate scenario
• Supplement MBS with bullet like assets such as
Agency & Non-Agency CMBS and Investment Grade
Corporate Bonds
• ~4.3yr duration with relatively modest extension risk
from current levels
Agency/UST 1%
Agency MBS 74%
Agency CMBS 16%
Non-agency CMBS 3%
Corporate Bonds 5%
Other Credit Related 1%
(1) Includes both AFS and HTM securities at 3/31/2017
Securities Portfolio Composition(1)
($ in millions)
$25.3B
Historical Debt Profile
Unsecured Secured (FHLB)
Total Debt as a % of Assets
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
3.16
3.16
2.31
3.06 3.06
3.55
4.15
3.50 3.50 3.50
3.00
5.31
4.25
7.31 5.25
8.31
4.25
7.80 4.75
8.90
2.50
6.00
4.25
7.75
2.50
6.00
2.58%
4.35%
5.85%
6.58%
6.20%
7.04%
4.79%
6.14%
4.82%
Balance Sheet Optimization
• Regions actively manages its debt
profile in response to balance
sheet changes and growth
dynamics
• Actions include tender offers for
unsecured issuances as well as
active management of FHLB
advances
• During 2016, repurchased $649
million of 2.00 percent senior
notes
• At 3/31/17, weighted average
interest rate for FHLB advances
was 1.0 percent and the weighted
average remaining maturities was
0.4 years
26 Note: Balances exclude valuation adjustments on hedged long-term debt and capital lease obligations.
Credit
27
Net Charge-Offs (Direct Energy) Net Charge-Offs (Non-Energy)
Net Charge-Offs ratio
1Q16 2Q16 3Q16 4Q16 1Q17
$17 $6 $14 $13
$68
$68
$55
$72
$48
$54 $69
$83 $87
$100
0.34%
0.35%
0.26%
0.41%
0.51%
1Q16 2Q16 3Q16 4Q16 1Q17
$993 $1,025
$1,078
$995 $1,004
116% 112% 104% 110% 106%
132% 124% 123% 138% 135%
Coverage excluding Direct Energy
Stable asset quality
• Net charge-offs include the impact of 3 large dollar commercial charge-
offs totaling approximately $39 million
• Provision for loan losses $30 million less than net charge-offs primarily
attributable to a reduction in loans outstanding and overall net
improvement in energy portfolio
• Allowance for loan losses, as a percent of non-accrual loans, was 106%;
Excluding direct energy this ratio decreased linked quarter from 138%(2)
to 135%(2)
• Delinquencies decreased 16% driven by improvement in consumer
loan categories
• Direct energy charge-offs totaled $13 million during the quarter; Given
current market conditions, expect additional energy losses to be less
than $27 million during remainder of 2017
NPLs and coverage ratio(1)
($ in millions)
($ in millions)
28
1Q17 Results and Outlook
(1) Excludes loans held for sale
(2) Non-GAAP; see appendix for reconciliation
Net charge-offs and ratio
(2)NPLs (1) Coverage Ratio
CRE - Retail
• Outstandings at 3/31/17 total $2.6 billion
◦ $1.5 billion in REIT portfolio consists of a small number of
investment grade credits
◦ $1.1 billion within Income Property Finance Group is widely
distributed; largest tenants typically include 'basic needs'
anchors like grocery
• Generally, well placed retail centers continue to perform well with low
vacancy rates vs. those that are not well placed
• Regions has not been impacted by recent big name bankruptcies; we
continue to watch the sector closely, but feel good with current
exposure
29
Significant Improvement in Asset Quality
Net Charge-Offs Non-Performing Loans
4Q
10
4Q
11
4Q
12
4Q
13
4Q
14
4Q
15
4Q
16
$682
$100
$3,160
$1,004
Net Charge-Offs and NPLs have significantly improved
1Q1
7
• Total outstandings and commitments
declined primarily due to paydowns and
payoffs
• Allowance for loan and lease losses was
6.1% of direct energy balances at
3/31/17 vs 7.0% at 12/31/16
• No second lien exposure outstanding
within the energy portfolio
• Leveraged loans account for 22% of
energy related balances; the majority are
Exploration & Production and Midstream
• Energy charge-offs are $13 million for
1Q17
• Given current credit conditions,
additional energy charge-offs for the
remainder of 2017 are expected to be
less than $27 million
• Under a stressed scenario with oil
averaging below $25, incremental losses
could total $100 million over the next 8
quarters
• Utilization rate has remained between
40-60% since 1Q15
• 15% of direct energy loans are on non-
accrual status
• ALLL/NPL excluding direct energy is
135%(1) at year end
Energy lending overview
Total energy
As of 3/31/17 As of 12/31/16
($ in millions)
Loan /
Lease
Balances
Balances
Including
Related
Commitments
%
Utilization
$
Criticized
%
Criticized
Loan /
Lease
Balances
Balances
Including
Related
Commitments
%
Utilization
$
Criticized
%
Criticized
Oilfield services
and supply (OFS) $647 $1,015 64% $375 58% $754 $1,186 64% $431 57%
Exploration and
production
(E&P) 664 1,298 51% 445 67% 702 1,301 54% 492 70%
Midstream 502 1,152 44% 27 5% 445 1,044 43% 28 6%
Downstream 83 278 30% 16 19 77 270 29% 17 22%
Other 117 256 46% 3 3% 119 264 45% 3 3
Total direct
2,013 3,999 50% 866 43% 2,097 4,065 52% 971 46%
Indirect 514 913 56% 112 22% 536 982 55% 119 22%
Direct and
indirect 2,527 4,912 51% 978 39% 2,633 5,047 52% 1,090 41%
Operating leases
119 119 — 61 51% 131 131 — 71 54%
Total energy $2,646 $5,031 53% $1,039 39% $2,764 $5,178 53% $1,161 42%
Note: Securities portfolio contained ~$4MM of high quality, investment grade corporate bonds that are energy related at 3/31/17, down from ~$11MM at
12/31/16. A leveraged relationship is defined as senior cash flow leverage of 3x or total cash flow leverage of 4x except for Midstream Energy which is 6x
total cash flow leverage.
(1) Non-GAAP; see appendix for reconciliation
30
Energy lending - Oil Field Services and Exploration
& Production detail
Type As of3/31/17
# of
Clients* Commentary
Marine $414 8 Sector remains under stress. Approximately
45% of marine outstandings are under contract
for remainder of 2017.
Integrated OFS 117 8 Improving conditions for companies servicing
onshore activity. Average utilization remains at
34% indicating clients have ample liquidity.
Compression 63 3 Linked to movement of natural gas. Sector is
more stable and lower risk than other sectors.
Fluid Management 11 3 Improvement in this sector as rig counts have
improved. Exposure is minimal after recent
payoffs.
Pre-drilling / Drilling 42 2 Outlook for onshore drillers is improving.
Offshore drillers remain stressed; however
Regions only has minimal exposure to offshore
drillers.
Total Oil Field Services
(OFS)
$647 24
Exploration and
production (E&P)
$664 26**
Total OFS and E&P $1,311
• 46% shared national credit (SNC) loans
• 64% utilization rate compared to 65%
in 4Q16
• 88% Non-pass rated (criticized) loans
paying as agreed
E&P Portfolio
*Represents the number of clients that comprise 75% of the loan balances outstanding.
**Represents the number of clients that comprise 90% of the loan balances outstanding.
OFS Portfolio
• Majority of borrowing is senior
secured
• 97% shared national credit (SNC) loans
• 51% utilization rate compared to 54%
in 4Q16
• Essentially all non-pass rated
(criticized) loans paying as agreed
($ in millions)
31
Commercial -
Non-Energy,
$2,191
Investor Real
Estate, $217
Consumer Real
Estate Secured,
$1,117
Consumer Non-Real Estate
Secured, $289
Commercial - Energy
(Direct), $437
Loan balances by select states
Texas Louisiana
Note: Intelligence from our customer assistance program (CAP) reveals no noticeable increase in assistance requests in these markets to date.
Commercial - Non-
Energy, $4,377
Investor Real
Estate, $1,167
Consumer Real Estate
Secured, $1,054
Consumer Non-Real Estate
Secured, $949 Commercial - Energy
(Direct), $1,019
Investor Real Estate Balances by City
($ in millions)
Office Retail Multi-Family
Single
Family Other Total
Houston $42 $48 $211 $64 $17 $382
Dallas 131 32 176 55 30 424
San
Antonio — 26 49 43 46 164
Other 16 60 90 3 28 197
Total $189 $166 $526 $165 $121 $1,167
Investor Real Estate Balances by City
($ in millions)
Office Retail Multi-Family
Single
Family Other Total
Baton
Rouge $37 $13 $8 $50 $21 $129
New
Orleans 5 8 1 1 6 21
Other 1 43 5 1 17 67
Total $43 $64 $14 $51 $44 $217
$4.3B$8.6B
32
Loan balances by select states
Alabama Mississippi
Commercial - Non-
Energy, $4,870
Investor Real Estate,
$290
Consumer Real
Estate Secured,
$3,585
Consumer Non-Real Estate
Secured, $833
Commercial -
Non-Energy,
$1,539
Investor Real
Estate, $133
Consumer Real
Estate Secured,
$942
Consumer Non-Real Estate
Secured, $334
Commercial -
Energy (Direct),
$41
$3.0B$9.6B
Investor Real Estate Balances by City
($ in millions)
Office Retail Multi-
Family
Single
Family
Other Total
Birmingham $15 $21 $5 $20 $24 $85
Huntsville 82 17 6 6 3 114
Mobile /
Baldwin County 1 18 3 2 9 33
Other 7 11 19 9 12 58
Total $105 $67 $33 $37 $48 $290
Investor Real Estate Balances by City
($ in millions)
Office Retail Multi-Family
Single
Family Other Total
North
Mississippi — — — — $80 $80
Jackson/Other 4 3 17 1 2 27
Gulfport /
Biloxi /
Pascagoula — — 18 — 8 26
Total $4 $3 $35 $1 $90 $133
Commercial- Energy
(Direct), $10
33
Capital and
Liquidity
34
Solid Liquidity
• Regions has a strong, core funded
balance sheet resulting in a low loan-
to-deposit ratio
• Future debt maturities are manageable
and allow for efficient re-financing
• Regions’ liquidity policy requires that
the holding company maintain at least
18 months coverage of maturities, debt
service and other cash needs
• Management targets 24 months
coverage
• Bank wholesale funding requirements
will be largely dictated by the relative
performance of loan and deposit
growth
(1) Based on ending balances35
Loan-to-deposit ratio(1)
1Q16 2Q16 3Q16 4Q16 1Q17
83% 84% 82% 81% 80%
Strong Capital Levels
Note: Regions’ CET1 ratio is estimated at 3/31/17. Peer financial data as of 3/31/17 includes BBT, CFG, CMA, FHN, FITB, HBAN, HBHC, KEY, MTB,
PNC, SNV, STI, USB and ZION.
Source: SNL Financial.
36
Basel III Common Equity Tier 1 Ratio
Peer #1
Peer #2
RF
Peer #3
Peer #4
Peer #5
Peer #6
Peer #7
Peer #8
Peer #9
Peer #10
Peer #11
Peer #12
Peer #13
Peer #14
12.2
11.5
11.3
11.2
10.8
10.7
10.5
10.3
10.2
10.2
9.9
9.9
9.7
9.7
9.5
Capital Priorities
Capital Returned to Shareholders
Dividends Share Repurchases
2014 2015 2016 03/31/17
247 304 318
78
256
$503
623
$927
839
$1,157
150
$228
Robust Capital Returns
(1) Includes fees associated with open market share repurchases.37
• Remain committed to target
CET1 ratio of 9.5 percent
based on current risk in our
balance sheet
• Target dividend payout ratio
between 30 and 40 percent
over time
• Sufficient capital to support
organic growth, strategic
investments, and a robust
return to shareholders
• 2Q17 share repurchases
through May 3rd totaled
$125.3 million completing
our 2016 CCAR
authorization
($ in millions)
(1)
Solid Total Shareholder Returns
Source: Bloomberg
Note: Total shareholder return data as of 3/31/2017
Peers include BBT, CFG (Publicly traded as of 2015), CMA, FITB, HBAN, HBHC, KEY, MTB, PNC, SNV, STI, USB, FHN and ZION
38
1 Year
Peer #1
RF
Peer #2
Peer #3
Peer #4
Peer #5
Peer #6
Peer #7
Peer #8
Peer #9
Peer #10
Peer #11
Peer #12
Peer #13
Peer #14
103.9
89.2
84.1
75.0
68.1
64.9
56.5
56.0
45.6
44.1
43.9
43.7
42.4
38.5
29.9
3 Year
Peer #1
Peer #2
Peer #3
Peer #4
Peer #5
RF
Peer #6
Peer #7
Peer #8
Peer #9
Peer #10
Peer #11
Peer #12
Peer #13
Peer #14
80.2
57.8
48.4
48.0
44.4
39.9
39.6
38.8
36.5
36.2
33.3
28.9
21.2
19.6
—
5 Year
Peer #1
Peer #2
RF
Peer #3
Peer #4
Peer #5
Peer #6
Peer #7
Peer #8
Peer #9
Peer #10
Peer #11
Peer #12
Peer #13
Peer #14
207.2
149.1
140.2
134.0
133.0
131.6
110.0
105.5
101.9
101.4
92.5
82.9
64.6
49.6
—
Long-term Targets
and 2017
Expectations
39
2017 Expectations
40
Assumptions Expectations
• GDP growth of 2% to 2.5%
• Assumes market forward interest rate
curve as of March 28, 2017
◦ Average Fed Funds of 1.06%
◦ Average 10-year Treasury of 2.48%
• Expected declines in indirect vehicle
loans
• On track to exceed branch consolidation
target of 150 branches by end of 2017
• Expenses reflect continued cost
elimination
• Excluding the impact of the third-party indirect-vehicle
portfolio, full-year average loans are expected to be flat to
slightly down compared to the prior year*
▪ Expect modest growth of average and ending loans on
a sequential linked-quarter basis throughout the rest
of 2017
• Full year average deposits are expected to be relatively stable
with the prior year*
• Net interest income and other financing income growth of
3%-5%*
• Adjusted non-interest income growth of 1%-3%*
• Adjusted expenses 0%-1%; full year efficiency ratio ~62%
• Adjusted operating leverage of 2%-4%
• Full year effective tax rate expected in the 30%-32% range
• Net charge-offs of 35-50 bps
Note: The reconciliation with respect to these forward-looking non-GAAP measures is expected to be consistent with the actual non-GAAP
reconciliations included in the attached appendix.
* Expectations have been revised since originally being announced during the fourth quarter of 2016.
Executing on our Strategy
41 Note: The reconciliation with respect to forward-looking non-GAAP measures is expected to be consistent with the actual non-GAAP reconciliations
included in the attached appendix.
(1) Non-GAAP; see appendix for reconciliation
Non-GAAP and
FLS
42
Non-GAAP reconciliation: Non-interest income,
non-interest expense and efficiency ratio
NM - Not Meaningful
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. Management uses this ratio to monitor
performance and believes this measure provides 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 income ratio. Net
interest income and other financing income on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total
revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the efficiency ratio. 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 related to the adjustments to be indications of ongoing
operations. The table on the following page presents a computation of the operating leverage ratio (non-GAAP) which is the period to period percentage change in adjusted total revenue on a taxable-equivalent basis (non-
GAAP) less the percentage change in adjusted non-interest expense (non-GAAP). 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.
Quarter Ended
($ amounts in millions) 3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016 1Q17 vs. 4Q16 1Q17 vs. 1Q16
ADJUSTED EFFICIENCY, FEE INCOME AND OPERATING LEVERAGE
RATIOS, ADJUSTED NON-INTEREST INCOME/EXPENSE-CONTINUING
OPERATIONS
Non-interest expense (GAAP) A $ 877 $ 899 $ 934 $ 915 $ 869 $ (22) (2.4)% $ 8 0.9 %
Adjustments:
Professional, legal and regulatory expenses — — — (3) — — NM — NM
Branch consolidation, property and equipment charges (1) (17) (5) (22) (14) 16 (94.1)% 13 (92.9)%
Loss on early extinguishment of debt — — (14) — — — NM — NM
Salary and employee benefits—severance charges (4) (5) (3) (1) (12) 1 (20.0)% 8 (66.7)%
Adjusted non-interest expense (non-GAAP) B $ 872 $ 877 $ 912 $ 889 $ 843 $ (5) (0.6)% $ 29 3.4 %
Net interest income and other financing income (GAAP) $ 859 $ 853 $ 835 $ 848 $ 862 $ 6 0.7 % $ (3) (0.3)%
Taxable-equivalent adjustment 22 21 21 21 21 1 4.8 % 1 4.8 %
Net interest income and other financing income, taxable-equivalent basis C $ 881 $ 874 $ 856 $ 869 $ 883 $ 7 0.8 % $ (2) (0.2)%
Non-interest income (GAAP) D $ 510 $ 522 $ 599 $ 526 $ 506 $ (12) (2.3)% $ 4 0.8 %
Adjustments:
Securities (gains) losses, net — (5) — (6) 5 5 (100.0)% (5) (100.0)%
Insurance proceeds — — (47) — (3) — NM 3 (100.0)%
Leveraged lease termination gains, net — — (8) — — — NM — NM
Gain on sale of affordable housing residential mortgage loans — (5) — — — 5 (100.0)% — NM
Adjusted non-interest income (non-GAAP) E $ 510 $ 512 $ 544 $ 520 $ 508 $ (2) (0.4)% $ 2 0.4 %
Total revenue, taxable-equivalent basis C+D=F $ 1,391 $ 1,396 $ 1,455 $ 1,395 $ 1,389 $ (5) (0.4)% $ 2 0.1 %
Adjusted total revenue, taxable-equivalent basis (non-GAAP) C+E=G $ 1,391 $ 1,386 $ 1,400 $ 1,389 $ 1,391 $ 5 0.4 % $ — — %
Operating leverage ratio (GAAP) F-A (0.8)%
Adjusted operating leverage ratio (non-GAAP) G-B (3.4)%
Efficiency ratio (GAAP) A/F 63.1% 64.4% 64.2% 65.6% 62.5%
Adjusted efficiency ratio (non-GAAP) B/G 62.7% 63.2% 65.3% 64.0% 60.6%
Fee income ratio (GAAP) D/F 36.7% 37.4% 41.2% 37.7% 36.4%
Adjusted fee income ratio (non-GAAP) E/G 36.6% 36.9% 38.8% 37.5% 36.5%
43
The table below presents computations of the adjusted allowance for loan losses to non-performing loans, excluding loans held for sale ratio (non-GAAP), generally calculated as adjusted allowance for
loan losses divided by adjusted total non-accrual loans, excluding loans held for sale. The allowance for loan losses (GAAP) is presented excluding the portion of the allowance related to direct energy
loans to arrive at the adjusted allowance for loan losses (non-GAAP). Total non-accrual loans (GAAP) is presented excluding direct energy non-accrual loans to arrive at adjusted total non-accrual loans,
excluding loans held for sale (non-GAAP), which is the denominator for the allowance for loan losses to non-accrual loans ratio. Management believes that excluding the portion of the allowance for
loan losses related to direct energy loans and the direct energy non-accrual loans will assist investors in analyzing the Company's credit quality performance absent the volatility that has been
experienced by energy businesses. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, are not audited, and should not be considered in isolation, or as a
substitute for analyses of results as reported under GAAP.
Non-GAAP reconciliation continued: Adjusted allowance for loan
losses to non-performing loans, excluding loans held for sale
As of
($ amounts in millions) 3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016
Allowance for loan losses (GAAP) A $ 1,061 $ 1,091 $ 1,126 $ 1,151 $ 1,151
Less: Direct energy portion 123 147 176 226 218
Adjusted allowance for loan losses (non-GAAP) B $ 938 $ 944 $ 950 $ 925 $ 933
Total non-accrual loans (GAAP) C $ 1,004 $ 995 $ 1,078 $ 1,025 $ 993
Less: Direct energy non-accrual loans 310 311 305 280 287
Adjusted total non-accrual loans (non-GAAP) D $ 694 $ 684 $ 773 $ 745 $ 706
Allowance for loan losses to non-performing loans, excluding loans held for sale (GAAP) A/C 1.06x 1.10x 1.04x 1.12x 1.16x
Adjusted allowance for loan losses to non-performing loans, excluding loans held for sale (non-GAAP) B/D 1.35x 1.38x 1.23x 1.24x 1.32x
44
Non-GAAP reconciliation: Basel III common equity Tier 1
ratio – fully phased-in pro-forma
(1) Current quarter amounts and the resulting ratio are estimated.
(2) Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III on a fully phased-in
basis. The amount included above is a reasonable approximation, based on our understanding of the requirements.
The calculation of the fully phased-in pro-forma "Common equity Tier 1" (CET1) is based on Regions’ understanding of the Final Basel III requirements. For Regions, the Basel III framework became
effective on a phased-in approach starting in 2015 with full implementation beginning in 2019. The calculation provided below includes estimated pro-forma amounts for the ratio on a fully phased-in
basis. Regions’ current understanding of the final framework includes certain assumptions, including the Company’s interpretation of the requirements, and informal feedback received through the
regulatory process. Regions’ understanding of the framework is evolving and will likely change as analysis and discussions with regulators continue. Because Regions is not currently subject to the fully-
phased in capital rules, this pro-forma measure is considered to be a non-GAAP financial measure, and other entities may calculate it differently from Regions’ disclosed calculation.
A company's regulatory capital 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 broad risk categories. The aggregated dollar amount in each category is then multiplied by the prescribed risk-weighted percentage. The resulting weighted
values from each of the 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. Common equity
Tier 1 capital is then divided by this denominator (risk-weighted assets) to determine the common equity Tier 1 capital ratio. The amounts disclosed as risk-weighted assets are calculated consistent
with banking regulatory requirements on a fully phased-in basis.
Since analysts and banking regulators may assess Regions’ capital adequacy using the fully phased-in Basel III framework, we believe that it is useful to provide investors the ability to assess Regions’
capital adequacy on this same basis.
($ amounts in millions) 3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016
Basel III Common Equity Tier 1 Ratio—Fully Phased-In Pro-Forma (1)
Stockholder's equity (GAAP) $ 16,722 $ 16,664 $ 17,365 $ 17,385 $ 17,211
Non-qualifying goodwill and intangibles (4,943) (4,955) (4,936) (4,946) (4,947)
Adjustments, including all components of accumulated other comprehensive income, disallowed deferred tax assets, threshold
deductions and other adjustments 504 489 (173) (227) (64)
Preferred stock (GAAP) (820) (820) (820) (820) (820)
Basel III common equity Tier 1—Fully Phased-In Pro-Forma (non-GAAP) D $ 11,463 $ 11,378 $ 11,436 $ 11,392 $ 11,380
Basel III risk-weighted assets—Fully Phased-In Pro-Forma (non-GAAP) (2) E $ 102,551 $ 102,975 $ 103,749 $ 105,199 $ 106,227
Basel III common equity Tier 1 ratio—Fully Phased-In Pro-Forma (non-GAAP) D/E 11.2% 11.1% 11.0% 10.8% 10.7 %
45
Non-GAAP reconciliation continued: YTD return on average tangible
stockholders' equity and earnings per common share from continuing
operations
The tables below present computations of "adjusted net income from continuing operations available to common shareholders," "adjusted return on average
tangible common stockholders' equity" and "adjusted earnings per common share from continuing operations," which exclude certain significant items that are
included in the financial results presented in accordance with GAAP. Management believes these measures provide a meaningful base for period-to-period
comparisons, and 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 related to the adjustments to be indications of 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. These
non-GAAP measures also provide analysts and investors certain metrics regarding the progress of the Company in comparison to long-term expected results
previously communicated.
(1) The total net adjustments to non-interest expense is the summation of the adjustments previously shown on page 26.
(2) The total net adjustments to non-interest income is the summation of the adjustments previously shown on page 26.
(3) The computation of the income tax impact for adjusted items is based on 38.5%, comprised of the statutory federal rate of 35%, adjusted for applicable state income taxes, net of the related federal tax benefit. The tax
adjustment also includes the tax impact from leveraged lease termination gains.
(4) On a continuing operations basis.
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 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 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.
• 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 following 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, 2016, 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.
47
• 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.
• 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 adjusted 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.
Forward-looking statements continued
48
®
49