RF - Earnings call transcript Q2 2018 | Regions Financial Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Regions Financial Corporation Quarterly Earnings Call. My name is Shelby, and I'll be your operator for today's call. I'd like to remind everyone that all participants all lines have been placed on listen only. At the end of the call, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Dana Nolan to begin.

Dana Nolan

Shelby. you, Thank Second Regions Earnings Call. Conference Welcome Quarter to XXXX overview Officer, highlights Turner, of John through Chief Turner, financial provide Executive Chief an you take David our our will performance; Officer, will the of quarter. Financial our and well the earning release available the as are of section our Investor earnings A copy Relations presentation regions.com. as of under slide and supplement

as SEC now Our well that, materials, today's presentation of in the forward-looking appendix presentation segment question-and-answer statements disclosure the call I our within as and to filings. our of non-GAAP prepared With cover reconciliations John. comments turn are included call. over These and today's the will

John Turner

Thank you, joining for you morning Dana. and thank our call today. Good

by Let with we second saying pleased are that me quarter begin our results.

to long-term customers, plans, our Our performance successfully shareholders. clearly execute sustainable to our while demonstrates building delivering communities value and continuing strategic that growth are we

operations from compared prior million Our to continuing second an XX% year. quarter the reported of of the increase of $XXX earnings reflected

focus while increased Importantly, to in years. we income delivered XX management. a highest pre-provision growth solid level maintaining note, on pre-tax expense revenue adjusted Of disciplined

another strong this marks asset credit metric very virtually addition, quarter improved. to with quality, In as respect every

our our by of Once focused and continued environment, overall terms remained economic capital customers. are growth, while We process. robust we loan of as planning evolving softer In as of conditions again, on the well improvement encouraged expectations sentiment. the customer prudent in improving remain generating meeting proud also we

meet execution operational support notable With while our maintaining this improvement is deliver efficiencies, progress strategy, results making accelerating the set committed approximately in respect to driving to shareholders, of been much technology aim of deliver and levels revenue we return underway, recent are XX expanding over plan improving diligent to Our initiatives of to ended Grow a capital we the the process Simplify capital plan CCAR results, consistent no strategic of and continuous long-term. to and respect customer and organic have we're while received to process, with and the experience. growth, business ultimately reliable actions and the our ongoing, objection further Through we accomplished, our initiative, and are growth. has needs appropriate robust our use currently customer to

while a strengths Regions. about been now, believe provide we've For considerable speaking we for four to momentum key

franchise in advantage, asset sensitivity competitive our is finding deposit our driven lower by and rate First significant low advantage, a value a particularly and base. This environment. cost rising and provides

experienced modest with in quarter Second the continue for the credit the to portfolio cycle. we improvements believe our have management we well and that the risk remainder sound completed, positioned and combined year. asset us another practices relates of We credit Further, broad-based de-risking quality. activities quality expect to next improvement shaping throughout of

initiative, which position Third, process. actions performance as improvements The supports was towards Tier Grow returns which is CCAR Equity finally, additional our additional recent Simplify capital again overtime X by strategic ratio. in underway and we execution evidenced our through the capital move validated expect through our Common core our we as And well target of today.

ahead, look building we day. As is and momentum well positioned every Regions we're

to Company's strong executing and anticipate on strategic while remaining our clear plans major We our changing team, not a plans have changes focus direction. do adapting environment the We and effectively ever steadfast. the to

the XX through led our service class and solid associates, years to the industry's the it Grayson not and of delivering most Providing well On guidance, for improvement will his to Company positioned our continues for for and of want one him already and now financial behalf foundation thank change. challenging over has our Going the that, associates his support. commitment and future. of With service, communities consistent history. to a counsel His in I'll reliable creating customer established, in dedicated turn our I of personally best periods Grayson the leadership and commitment unwavering thank on forward, will build we priorities. and we results, Hall Company culture David.

David Turner

John, you, and morning. Thank good

our in lending C&I and previous to Let's the average mortgage lead loan growth balances our with by again lending. growth the associated Growth de-risking Headwinds the efforts should driven product. slowed, lending growth our by begin portfolio a and across increased from an continue over areas. both modest our as business prior begun have $XXX result, was should we see with portfolio as portfolio million continue well to real real average quarter, estate indirect categories, consistent estate to business Adjusted on sale and produce loan loans. primarily residential expanded a growth of was primarily specialized lending. portfolios. and largely have basis by consumer lending, investor partnerships term in growth ending in driven loan as Consumer most C&I in driven in loan business Average vehicle point lending the consumer within

Let's move deposits. onto

a low business to deposits relationship while services our consumer, focusing deposit reducing certain cost execute optimize and by deliberate deposits. cost and to continue We collateralized higher base strategy on brokered valuable,

of the growth a focus. experienced our with deposits declined consumer $X however, As solid consistent average average quarter; total during result, over deposits banking billion relationship modestly segment

has granular generated deposit loyal from and advantage Our base. deposit our

basis low betas quarter, funding betas the retail deposit current X%. deposit deposit XX%, the strength second total remain our Cumulative rate approximately cost XX at During of rising cost totaled importantly, XX cycle only basis through remained at franchise. consumer the points deposit by low illustrating are interest-bearing and points

of reactive marketplace. XX%, retail in deposits large large believe a and approximately more primarily by franchise corporate our beta commercial brokered deposits. expected, differentiates We have cumulative us driven deposit with been As the

a are peers. deposit As to such, we a relative lower beta in maintain position to

The customers year, XX% and are to mobile of is checking and customers increased all doubled. XX% digital. has number the more consumer more mobile multiple of base deposit engaged prior now utilizing banking highly active with customer Our XX% compared over also of customers channels than active than interactions has

checking We continue bank checking to include focus our high-quality customers' of households consumer a XX% our primary on being primary account. as

quarters So, XXXX, to now impacted expected and rate margin our full towards quarter prudent X.XX%. the of driven along current experienced to this taxable expectations interest of income deposit equivalent in Net for were continue X by X% to the push are betas increased third what market deposit quarter interest pricing current Specific points interest market benefit result to These respect cost better additional our X% combined over increased will deposit reduced look with increases than guidance on in forecasted in non-fully management. third will With in a higher increase X% upper market net September day how have interest that similar year basis. of we and to to recent to for have with along net interest margin. income margin primarily likely growth income, solid quarter end XXXX, quarter let's our with net fed modest NII but the the one net basis interest another at Remember, prior the rates will expansion. the net increasing interest expectation rates results.

relates quarter the growth sale housing benefited most the a it revenue private associated not a to income categories, equity within income. We another non-interest with did $XX record associated capital corporate to Keep continue also $XX included with respect quarter fee revenue net certain with across businesses with as totaling gains delivered non-interest investment contributing. during investments, income that business valuation were increased a quarter. the from gains These a as million categories good quarter. quarter. of in X% markets to in Adjusted fee first Company's experienced totaled million adjustment off low non-interest With and the markets revenue. mind, this Revenues repeat other pay positive capital all in investments

advisory approximately merger services fees growth remain was Consumer by To increase This derivative of the that ATM and charges important quarter and service and growth activity. aided by year-to-date and of an X% second X% been categories by card led revenue. account X.X%. grew checking customer respectively. The fee acquisition has component point, and

credit addition, quarter due income remained seasonally to revenue despite supported basis the second primarily reduction increase quarter. of the was XX an growth during and In debit spending production XX% increase a an during gain sale. in stable Mortgage point card in transactions higher in by X% of on

we expect performance While to to across better of industry, the mix continue versus to peers due production our refinance volume. purchase is lower relative historically higher

in of Wealth the an help We lower to in agreement closing servicing with during conditions. of Increasing servicing close management mortgage rights an investment subject was our is reached to $X.X continue billion driven purchase to residential grow up quarter, of income fee modestly it's the evaluate opportunities income. customary XX% and the offset by expected XX, production. July service portfolio, we services the mortgage impact increase approximately loans, date XXXX, mortgage to expected to quarter to income and

Let's on in expenses. sold shares to X%, the expense expenses year. to basis, fees On an non-interest increases increased Class professional B adjusted primarily with approximately associated in attributable Visa move and prior

and charges, increases. by the payroll annual taxes, offset staffing Excluding X%, salaries benefits merit partially decreased impact severance to reflecting reductions of lower approximately and

reductions reductions expense as in XXX and full-time As in full-time not to benefits position benefit are of to the second run equivalent prior and prior Year-to-date, quarters quarter salaries Regions full-time fourth efforts Keep equivalent our XXX XXX and include rate. Further compared year. these positions. staffing the approximately our compared the expected position approximately insurance. rationalize positions positions XXX of declined approximately and additional numbers reductions positions do will have X,XXX streamline with by a quarter organization, by to declined the associated third equivalent mind, result the levels the

XXX,XXX X.X% a This year six will addition, associated of this of the ratio reductions XX.X% and square XXX,XXX does Company and we the leverage. generated The the beyond. was continue not operating amount include XXXX, positive slightly to down exit approximately In Regions quarter, through efficiency occupancy first prior expense adjusted at of insurance. another look adjusted and has months with feet hard square benefiting XXXX feet take from

For efficiency stable of we ratio of positive X%, less full and expect operating year to relatively expenses adjusted XXXX, adjusted adjusted than leverage continue to XX%. X%

outstanding, prior loan Let's asset total decline loss total the the continued points basis of decreased losses since of non-accrual during all approximated Net asset allowance charge-offs troubled and for quarters declined. loans. X improvement loans loans loan loan restructured The loans during loan sale well held remaining adjusted loans, as lowest quality. XXXX. basis included and of X.X% total specific The loans of and outstanding allowance net our $XX million. of the quarter ratio. XXX% losses totaled for hurricane of provision delinquencies point X.XX% from the as average and Non-performing, XX to charge-offs totaled Broad-based level quality quarter. to debt shift the excluding for Non-performing criticized release

comments Let me brief liquidity. and give you some to related capital

pleased shareholders. Tier of and and for Common interest committed As a and our million mentioned, associated prudent results possibly transaction while we was On future the John with sale our $XXX capital subsidiary, our of July Regions capital delivering Xnd, capital are solid investing we return was growth CCAR ratios remain businesses to our to with in the the million. gain $XXX after-tax approximately approximately completed Equity X generated maintaining

beginning the next board's XX% generated $X.XX plan over to in and four common stock it incorporates to includes this quarter. also our the share $X.XX program for repurchase capital Region's to Our increase share in quarterly is third dividend the board transaction, Subject billion per the common a our from included in plan up quarters. in authorized approval, capital shares

again for XXXX this your remain expectations reference. Regarding our summarized and on unchanged are expectations, full-year slide

So you for advantages initiative Simplify strategic competitive Grow position with and the XXXX with of our With Q&A other along and we I'll pleased and morning, call. well the Dana for that, our this the over quarter believe and results to it instructions in are turn for back remainder time we of attention and beyond. conclusion, on us thank second and opportunities your portion

Dana Nolan

David. you, Thank

Q&A, please accommodate many it primary possible. as your questions follow-up one As relates limit as and to participants to to one

open your for questions. the now will We line

Operator

from comes Thank is [Operator you. question ISI. Your questions. floor Evercore open for Pancari Instructions] of John The now first

John Pancari

to the you a us more through give shift outlook see On to coming of and the on color back you of I full-year loan point at you be you way? seems the see front, growth Or like that. this can from, the break do and if back half drivers might bit it Do the growth lower that the low want of you a you little the, your half? of single-digits trending bit where through loan end see it think upside can at

John Turner

loan are the good for business, and excluding this of we we the mortgage, growth low affirming Well, targeted be and I would forecast on the single-digit sales feel to indirect we generally By expect our TDR focus all, at consumer we side current first obviously. and guidance the say about our of run look flat. off portfolio pretty it

see we sectors believe the and I the balance HELOC the our across part modestly, should portfolio we of grow in of consumer think raw remaining the the and business of most year.

corporate side solid. They quarter have the they are good. the since be our continue the first pipelines pretty On and of business, to improved

and you in customers the Our say segments but been will as a additional the within borrowing borrowing diversified fund group and business, more that bankers, use we've of rate some pretty help customers second of our in our will some traditional we of a in cautious. would additional we if we balance small about to have have we indicated we result beginning our activity are finally of Owner-occupied in narrow and still balances. optimistic, slow industries seen the specialized the And lot corporate us, them, teams of years banking, has the focus begun have modestly targeted additional think some would largely the I needs then business that part are grow first quarter market to banking banking balance guess bit through been off would But the estate, needs really their see a about some deposit loan XX both what that growth of real seeing we see traction. believe there running the at industry's is or you think think the In by modest that I commercial I focus through traditionally to last there year our we generally and see their the over year. three have those begin thought growth. see the a had which and in success liquidity real can really of renewed to We're some estate get rapid year. through business middle

positive in portfolio. been the that portfolio many was we competitive, has have remember exiting it on begun I that de-risking been think, have the loans construction term have that has impact and we very when multifamily You lending successful books our of that a to

estate the So, the this guidance growth would nice our loan and be solid. the all-in-all, would result a do it end banking, I we if, at quarter guide our to so and saw of think meet all that, and the at to I is end think some middle we not we will of end that of I towards in other real say point we the we will objectives, achieve those range, But lower range. upper that. of believe we as targets do

John Pancari

transaction. sensitivity also updated the this are of the is, get moves, expansion ongoing and the each terms your leverage that it’s your again been for in What's to higher, lease point not quarter I basis rising good some betas? would hike? Then your margins, just But pretty XX probably the want have fed even but saw wondering incremental on to to thoughts updated impairment that I sensitivity

David Turner

I so -- our is think John, this David.

than the expectation year, mentioned look is up of with We half is far is we Our we've in I at the think but beta earlier. do -- anticipated as the guidance XXXX, year back for we XX% we've our Thus our thus well. that come if beta, XX% we picks the as on in ranges rates into beta have expectation the outperformed and had think you. what's far, given that baked faster

the end can year X% think X% this that. we are reiterating interest to higher net we higher And range, on the to guidance our we that get end of income so, growth of

in As it next think about NII, our quarter, quarter. because the has think another growth margin relates we we solid grew for have will to points will two next modestly of and quarter of it overcome

about good very feel we expectations. that think I So, our

Operator

from Our question comes SunTrust. of Jennifer next Demba

Jennifer Demba

clarify this point? is interest Just you're could what and M&A capacity wondering, at if

John Turner

Sure.

we acquiring for likely say, charged relative We contribution. in opportunities a some Partners those to and quarter in fill more have the businesses, is will a to challenging, to of are peers, good M&A BlackArch kinds rights we bank and with non-bank loan meet and in targets point they where trading think look an continue to real revenue. of importantly half point help and other about their and non-bank investment And our mortgage being because Bank fact capabilities had success us opportunities M&A and I is Regions team opportunities, and are our we terms bit and targets. would trades relative customer non-bank gaps we've needs row portfolios both that we finding servicing diversify

We a trading for they're economics opportunities rising plans just benefit are result, us. We rates. work significant. We don’t the look think our our as and a at at discount, from we and and

We good should to have business. initiatives improve a our returns. core to which is Simplify and through generate our We plan capital shareholders outsize to opportunity return Grow that there think our real a

going And this do transaction shareholders so, would in not we're to environment. a be and just our dilutive that to significantly

that. not Let’s not we’re to we will look, as to say we do. that We do learn continue going

conservative, We’re thoughtful. very be going to very

to relationships potential with We will build sellers. seek

regard, outsized a principally the market, to returns to drive We because have that take be the advantage levers shareholders. very we in for other of but will watch going again, we’re disciplined number of that think opportunity we will

Operator

of Ken from question next Your Jefferies. Usdin comes

Ken Usdin

that much more have what the better allowed asset to And sheet market with In out into you part think which trajectory deposit now you the lot and side. in loan might earning shrinkage the disciplined is think mix, a How in do side? to growth just a you just the of up, at terms is terms non-interest-bearing could growth, be the balance think so point of see had I of do to you you keep deposit haven’t go -- you hopefully -- sorry, interest-bearing side? on on

David Turner

David. is this Again,

side, we’re So the on needs grow on very been to you, grow layout their disciplined appropriate serve we've the we on you to we sure disciplined, paid deposit remain loans pricing that making but being on put when return left sheet. quarter, capital this would we We going our have did out. to loans. customers we want very I that tell capital of that mentioned an and balance We us but the disciplined side to

We ratio have our disciplined a side low the let’s unless loan to And staying of to sheet, on deposit left be the more side. right relative on peers. even balance discipline the us

see not correct to of put has customers You deposits on corporate to are have yield. generate corporate been are banking where interest-bearing a banking that been for the lot work, looking alternatives that side

Some of that's that. interest-bearing gone accounts into with

expenditures Some to put John and dissipate we'll earlier of as work, that's loans. those to excess utilized been at grow and capital some point we and to the fund but mentioned believe, will cash be actions

relationship be like the always bid the to being have side. this are at looking will it'd structure important to have order others point. said, deposits a changes opportunities near-term not we our in business go standpoint. is and in that, That deposit cost strengthen side the whether wholesale and will market, but for promotions deposits, do we leveraging service on we the constantly at out consumer We any look the don't from to up That see of in be us. need to But do

John Turner

growth and by Yes, demand look another at points, maybe see I consumer you deposits, good in grew household. year-over-year deposits if and the is, two checking will to business in just X.X% consumer Ken. accounts growth One we continue in make

growth -- so, will steady on believe And deposits. we see nice in that consumer we

would second The is. I thing say

guidance -- We reiterating single-digit for the low are deposit the our year. end growth again through

continue And will to growth. and so, we do deposits the finish expect that grow with year little

Operator

of Moss Steve FBR. from comes question Next Riley B.

Steve Moss

and heard relates to are was more growth? wondering spreads. here, as what real the types estate comments commercial are Wondering, seeing around driving On of that? tighter competition growth, I what guys we’ve you And just properties

John Turner

question. so a great Yes,

have space. been portfolio growth we compressed the since our a more XX% lot of think have quite out to about very had, a XX represents term and year. basis and expertise. office primarily particularly in back total to time the though managing today seeing for We've -- or bar lending it that selective modest, opportunities actively competition crises. one-time where of of The during very down X% multifamily from, some in good in the we've This has that be the points are product. We audience have at had been loan that in Spreads portfolio beginning range in seeking we

provide So, an we business you grow business believe capital to term we fee relationships opportunities see income we us, Also can with owner for develop as and in us nice the it's a who that continue begin opportunity lending customer. really deposits markets grow will improving. the and for to is to modestly that and and our customer presents more operator

modestly, judiciously. grow it we but think will carefully again I So it and manage very

Steve Moss

I'm wondering the the on has the going the balances of are what if yield then here, in forward curve And portfolio narrowed? are convert And couple quarters? they thoughts, your next securities what your as on thoughts

David Turner

more Fannie manage right earnings and liquidity, there. If to the continuing don’t out change we level Yes, same now, are we effectively. any like get some work so to Mae change book them significant with the some or do of But think that duration. in the terms just anticipate LCR for securities we securities put of we may assets, the we percentage we relief,

assets a price to a over fixed year. if securities lending $XX they where worth we We to given right $XX now as flat are billion have lift our and stay coming re-rate rates book, of some even from

in inversion and NII. have continue you that even And driven still downturn. we and through, up help central growing significant an shifted precursor a spoke, bank us to think be to comes a than would have rates if we with tailwind that re-pricing more very to a So

Operator

UBS. Saul of Martinez next comes Your question from

Saul Martinez

ask yield. about loan to wanted I

but yield trend I benefited than the think But up had the who other Your less banks bit not some do C&I margin do more lease something sequential of right of the a with you're And out rates, down been yield do why and LIBOR with a it the funds rate it of as strategy? have? leverage the or of does have your picked curious, have from competitors blowing lot seeing structure? fed to last on your higher over it's I'm it. quarters XX with maybe bps about pickup few a of with the relative with some Does to obviously hedging to But to every significantly rate this maybe yield hike.

So I'm portfolio? your the growth manage curious, if how C&I different something or there why is through you that is there about

John Turner

it. while don't peers part of our of -- a there's view it I'll that relationships. We and and significant of much enjoy relationships those oriented business deep our we very Tennessee long very can time Typically very take C&I around there and Alabama, We David the business, a get with greater same on typically business a the deposits enjoy back and a side think fair at going loan our where deposits relationship is demand the follow. that We relationship as have has shot so that’s we generally business. yield built when we in long our maybe demand perspective. markets we from been don't a associated we a think trade-off look core Mississippi,

is we narrower, tide little which working government of portfolio. yields in our business, more that a banking we've hard been both is Another and to institutional grow have stem our are seeking owner-occupied part competitive, separately, been estate runoff real and the to it and

compressed there to. so, a been And bit have deals

David Turner

relationship got loan and lease deposits. out, million first, leverage of look other the I'll at to impairment have points we side that's change about versus thing you basis three apart But didn't you that too. the add taking whole really pointed $X

other piece that’s of So this.

Saul Martinez

kind a guys hard bps at some peers sequentially been points for of and have basis higher though, plus it's you pretty XX having hike. Yes, if quarter LIBOR, to the you pointing XX just when bps, your yield of consistent have to pickup XX triangulate rate to

So, how has there's if anything but you bit it because of with the you seems seen some -- everything know a banks it hedging make of I other want -- structure of because to we've reported. like sense, disconnect to is and there loan versus strategy what do said the a anything

John Turner

have you its to look strategy. sensitivity, on if to at middle of and But our look long at the So, hedging on everybody's you you term on short-term, got XX% end. the XX% mix, look assets XXs its at of the

a up. have rate impact of will move in that of the bit dampening that So increases terms little

peers think to I lot There that so, on hard And it's really compare to peer. it. and are takes a puts

Saul Martinez

sky. consumer of can size grow the that If over you year think in just get pretty to next think pretty, absolute two? do in quick other a where or terms book one, could I green the growing the you indirect well But obviously where you -- can remind us,

John Turner

that have billion do X now, consumer want, how of terms much number limits get our we billion, to. about So, a our we’re $X in at indirect Right be we that in to range. other other indirect looking

growth. but extraordinary a there, growth some not So,

Saul Martinez

end. year by billion X

John Turner

I say yes. would overtime,

Operator

question Elliott Autonomous Geoffrey Research. from of comes Next

Geoffrey Elliott

discussion side Can up rise economics particularly the other outline on perspective? of non-banks the rise following M&A. both points the strategic if earlier interested either and Maybe and on be prices a geography of on product kind you the the areas side view you point from or from of where banks view, a will

David Turner

portfolios, us as said that earlier, and meet capabilities loan whether markets those been mortgage help we'll to continue fill to as customer think has capital wealth With it'd so gaps acquiring be in adding needs. in and focus to or products on, our been I respect an non-bank, capabilities management We've servicing I things rights, do. example, adding

have within capacity servicing operation. our mortgage We

portfolio. we that continue we so and to think that to do I likely well add will

dilutive footprint. side, to significantly On little range. of gives transaction intangible but in been to our in of are $XX kind and us. and I as interested, typically going billion We're the that to you value have We think that hope $X talk doing be about size the I not a billion book earned bank earlier, is I the perspective. and interest ranges, that our a bit be important backs said would conversations

Geoffrey Elliott

quick as expecting year then to a then, you issuance results little one a the is CCAR, discuss the it those baked case? that's bit And what into you'd the on was as well. circumstances be Could preferred? I there the when issue preferred you last like looks there And some from the discus confirm ask, think CCAR

David Turner

have had XXXX. changes need we do a that originally, terms regulatory the of of with in ratios, in us, We our is more capital amount and to Geoffrey, regards sure want we there, to have therefore to and So, impact changes more X. have There common preferred to was of continue that issuance Equity to preferred in Common appropriate but terms will how that it so to come make build Tier an but might have in, the we X overtime. SAB stock need capital watch negate Tier

And in the our we'll a appropriately now if that, issuance term we we common Our to short focus need target to to backfill now in Tier for do been equity range, and baked X. down right in as we their has get SAB, X.X% sure then relief through get preferred our right the don't we 'XX. make

Operator

next comes of from question Bank. Deutsche Your Matt O'Connor

Matt O'Connor

I look was this after that. again few obviously I charge give about some of very of here. kind quarters starting matching offs, of provision expense you to but was loans released, next a of wondering on talk the the you couple if color grow quarter, I'm wondering with close if at to quarter to relationship can

Barbara Godin

slight see to to Yes, I expect. one there think would be you as build off relative match charge loan a continue the could a provision growth and to will

David Turner

Okay, of say the what's consumer indirect are kind that? being the off as but the that the de-risking, is you now, other still Are content is their and like of would loans that runs the they say in in bag, lost it Or given of lending off? underlying adding that terms higher whole things back of what's than added some of growth which of are I some portfolios. we in you getting terms

Barbara Godin

on very numbers very well what that across well, the definitely, including in our happy our we in improvement would we fact all modest to quality, the than to they off. some and portfolios year, see of is the expect are to is putting loans are it. with going we're over think high we're balance I that performing paying better very continue seeing are What those and with perform those them of

Operator

next Your Stanley. from Graseck Morgan question of Betsy comes

Betsy Graseck

bit is mentioned pass to give or that kinds little is. you've us -- you briefly trajectory we’re a as can operating been little a Or leverage at there trajectory And you where actions that color to taken be could that seeing is Simplify shift into the a But bit the been expect here, quarter the Grow run knew some, feel have year you do last moving the so? or that so? in more how what from maybe we acceleration of there rate that and over peer of I trajectory?

David Turner

could David question your John asked Owen you follow maybe to leading and that I him is work. as on well. answer

John Owen

morning everyone. Good

Simplify and I think months we're this underway. on progress good said that about We we to started about ago initiatives start. Grow We really seven a and off got earlier are XX is. good making initiative We’re

Let underway. me give you examples of of have we products a couple

and provide some color background. think might I that

laptop, First, face take focus customer start a XXX% of it's and working digital, start consumer categories lending digital. complete fully to them in a and make digital channel on our how or consumer let lending mobile space, we come a whether got that a device, be team and all loan meaning there on can we iPad our

example for consumer under over tell some reengineered do have that of we’re the will we've I work majority of minutes. for X you taking to XX something going we by we will down take made, down of well all the be of We’re will time, through going There that process, about changes application. in minutes If done. end we second process. half the categories the application half loan of spill the but day mortgage the into from process. requirements That's the will application the road that over XXXX, that for I XXXX,

seeing terms out apps the thing huge in out December In format. XX% about in our shift digital adoption filling were of other space. application a filled The in of only is digital your in

now We’re digital of still approaching about space. our down the XX% application

out, point to being through team a would process. goal is I really We've and focus back other our put do with at, one that process other for dedicated us really the answer on The gone initiatives commercial the we how lending reengineer faster a get customers. to

So that a to about by we from applications drop time or no XX%. to, yes customer,

The to banking calls our in our have of there We've IBM to for And point contact take contact of call Couple some call to from assist we really finish. had the customers. better last types in We've about center with be actually I center certain so equivalent service they the our gone in commercial XXX,XXX would that handle used can that area. XX Watson. one center job so Watson out being, assistance our initiative customers. making team already and has easier year-to-date reps, call Watson much reps has with the through customer, that contact first that provide and right a would handle alone. start for our done use to about Watson call, call the cases deployed, that great That’s

back reps other mode. we as arm really tried we thing to our to fast so done a chat through have almost with gone that we've answers customers, able and have quick to Watson be and The in

times a on ask So they that rep have a done actually year-to-date. questions have Watson a mean, customer when customer phone. I XXX,XXX -- the They can

lot energy. there, And lot good of a of so, a good work

that David about estate, corporate strategy. big headcount watch progress to we're indicators about real things As think on us if mentioned making are headcount, those also earlier and two of our while Grow and that you one and see Simplify the you can

XXX management balance that And that's that's July see the out half actions are Simplify of the June of Also XX We’re of the Grow and direct eliminated closing on down about second initiatives XXX result through insurance Xnd, probably a these up in been there. get rate. will got be a another in positions last Regions there. and continue impact we over positions with taken about second you had plus the year. I run that the in XXX year, that would to XXXX to across the would tell our That's positions space on this point show opportunity when The and I full the really We've good X,XXX is, you make of reduce a real-estate positions will would side. what half bank.

We will XXX,XXX down year. this feet be about square

We expect continue. to trend that

David Turner

to I'll that. Betsy, So, add

X.X%. So, is today operating leverage

having for cost both get improvements for rate revenue, the from revenues balance are whether We initiatives continuing X.X% come year. Simplify our of the our in it'd and guidance there then year. remainder We the watch growth, reiterating Growth through by of and sheet helps to

and our ramp You but the not us that just XX% quarters, third target, John confidence operating that, in also going that, such benefits will only see getting up really the we're our mentioned below as gives leverage to we're level. fourth ratio the efficiency meet

Betsy Graseck

the That Got little we was question. separate like just a It color. a capital exactly capital, other already. David one I return prepared and for a on know well it. sounds bit capital topic, really helpful you about that talked are Yes, but

mid there or year. return? do de insurance acquisition sale this opportunity Is to capital quarter well Just I terms insurance of sorry, -- or is minimis task a as especially in sense any a the happening

David Turner

include the you Well, that the is generate numbers that the see. extent were so, to into we submission going be we and that also we capital to had baked in that our able to

been asked So that $XXX million for. has already

back. the see but no a on is anticipate have number there opportunity fairly do not now small to minimis always do is We to to and is need de minimis. an we always de will back go it's that, There changes. So, circumstances The an option.

Operator

of from comes question next Your Peter Wedbush. Winter

Peter Winter

longer targeting, down on think what timeframe, you're mid-XXs. over And follow wanted there? it do if to you the term, up still bring can the out just to get I efficiency you ratio looking

David Turner

So, It's on 'XX of Day three-year November 'XX. at meet that. our laid out we've been just kind to of our sure year plan focused third of make in Investor we pretty the we

are we're three the Investor we Now, our have going we next we expectations February where going do. 'XX will out we what to for to our are have scorecard years. And be laying on to Day told of going that in

begin mentioned the You've heard we I XX, even think more efficient our before, than and XXs And to think overtime that industry is table. me overtime, I that. targeting I think to I mid certainly better in on something do maybe have the going will to is

better when quarter, you really gone we think haven't should each XXs, but mid get that. Simplify see we Grow hit and said us through and to I can little initiatives out a just that

not in February You're here. up too could wait going think I have we the in and there. But to future, show get distant to actually

John Turner

would that. just I Yes, reiterate

business? we developing How are a got improvement. about easier deliver focused we'd more point very of we’re more our do do the think we Regions. committed value we do efficiency here banker always and we clear customers for and be for And drive continuous It's on making So, culture efficiency we improve try that. make looking processes? is our to be do very that to We've to we at there our to I how a be a for How it Grow our improve about effective operations. shift shareholders? our doing to of really make not Simplify the program, continuing it's and initiative, cultural

Peter Winter

follow And last the up, year, if just I buyback coming a look out CCAR. share of

Should kind buyback. year? type that of trend similar loaded we this frontend expect You

David Turner

we that to haven’t a we that's Well, order but Peter, pretty, soon goal. pretty our led out timing, and our have tall as as possible done get

sooner than later. excess really back like We would from right are get carrying to a return size, right capital an we rather capital been and now that's anchor standpoint

So I'll leave back. it

Operator

Bank of Your America. from next question comes Najarian of Erika

Erika Najarian

follow-up question me. one for Just

a that starting deposits make it lot am peers accounts of correctly? that online understanding I to rotate a that X% Regions betas die your container of reading on accounts towards consumer our lot offering? and of forward. your going don’t that excess could retail away these stands into Are some we from potentially Is are have more cash transactional the high of aggressive correctly want guess XX% accumulative checking that tie just mentioned sure consumer beta quality to basis. message have Obviously, are them. at I to the You've I

David Turner

time, of a be account why have why fairly of time. piece think was in that’s And we low stable, and our deposit our average consumer is account. why big beta our core will granular been base it it's of very important, That’s low about that’s really, checking base. it really deposits was last the $X,XXX And that’s we this that

that’s what that’s and unique how us So, from beta makes we standpoint. a win

Operator

Your of Christopher FIG partners. next Marinac question comes from

Christopher Marinac

want that what but a just I of get along for it David. Is Thanks markets. angle does in as the that as extent To we Erica, to you the further question a have? benefit still that from look had non-metro cycle? right similar working the at keep you

David Turner

think non-metro have not of Yes, absolutely. loyal and our we big foundational it's deposits are those markets, in to market. whole that’s who dominate and just deposit customers us, these a that relationship we we that part as are to but We It's very base. a

is value really we had couldn't for and again now. So we for important we it's provide solid rising We've customer to which without time, long this extract service but until think retain us differentiator. is continue someone, to strategic those deposits, foundational advantage rates good will a and a

on continues the -- future. in And so, we think that

don’t that relative smaller some growth it that like some is to metro, metros base of capture which why to growth, is, markets in some some to core faster the as us robust investments our is Atlanta smaller you've customer major want in of markets. the major offset we we seen see -- as you of Now where those that us but make can have abandoned

So, our sides. strategy really that's both on

Christopher Marinac

picture a rate non-metro big versus between way there in context? just the on Is metro the to advantage pinpoint even

David Turner

We to back can Chris. that on get you

Operator

RBC. Gerard of final from comes Cassidy question Your

Gerard Cassidy

is that think, David, can hear $XX $XX about I portfolio, reinvest billion to you in you billion every securities said the correctly? Did share I us -- that year. with

David Turner

loan That's to the billion X about billion total Gerard. assets. X the in probably book and XX XX book. securities It's to in

Gerard Cassidy

off? what what up And giving as reinvesting? the you book, that are the you yields securities when do where in it In well? portfolio is rolls And duration

David Turner

our so overtime. change duration can't really Yes,

XXX of going range. years is what's and rolling XXX to duration what's We X.X terms X the about are in on in in range is off in

maturities benefit a one us. that reinvest was and the the that here loans stay is So, big of benefits of in again to both securities on operations

Gerard Cassidy

of deposits, And one using one growth that about Is there you then, commercial deposits any bit as they road evidence felt cash might talking the reasons -- our to a and down your to they capital expenditures? commercial is loan corporate with peer they talked see on seeing circling they your loan their the are to customers growth which banks their their modest. was customers deposits? back their excess in expenditures, of the commercial drawing are down loan use capital book And up for for those

John Turner

kind it a customers that growth. sort more or of has ought a to translate use we number of point, more the think putting point we seen the to exactly is I their specific in to this John. we been think believe some have result loan guess. that $XXX Yes, related is to that I we think deposits the million less -- than case that invest to It's additional that Gerard, be our that's work is will and directed a But that would we've And round customers been think runoff of and decline as into largely at number more businesses. a we

Gerard Cassidy

year this so on you're the David, has you mentioned nominal being that is Is of so factor? Have you rates outperforming another beta low moved rate And there why beta. the interest far it out then or lastly, guys figured the just slowly? so just

David Turner

of intense rates businesses base go pricing intent go the services which our makeup have business trying if that to to to Well, I would are and had what and X% and of to think delivered on are are have their well. base share, I banking, really at It's a the deposit about we've products retail the prepared We are whether be think the us to up we that looking wealth customers customers of what you first relationship to side really competitiveness beta our important side. like a look just keeps question Chris' large XX%. corporate data we on customers or be times it the our But differentiates the from us and for was or often that's Those the fair we maintain and side, to think is standpoint. our gets side answer. as that cumulative for everything for back who down betas I helps consumer for loan was the relationship us, focus on all our

Operator

Turner the any turn to closing John for will remarks. over I now call back

John Turner

Appreciate Just for Regions. interest thank your all Thanks you today. participating in for time.

Operator

today’s call. concludes This conference

now may disconnect. You

Regions Financial (RF) 20 Jul 182018 Q2 Earnings call transcript