Regions Financial Corporation (NYSE:RF) Q4 2019 Earnings Conference Call - Final Transcript

Jan 17, 2020 • 11:00 am ET

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Regions Financial Corporation (NYSE:RF) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. The floor is now open for questions. [Operator Instructions] Your first question comes from Erika Najarian of Bank of America.

Analyst
Erika Najarian

Hi, good morning.

Executive
John M. Turner

Good morning, Erika.

Analyst
Erika Najarian

So we hear you loud and clear, and I think your investors appreciate your continued discipline in loan underwriting. I think you alluded to in previous calls, potential wholesale consumer strategies to offset some of the GreenSky runoff. I mean, I know you listed the categories, David, during your prepared remarks, but maybe dive a little bit into detail about some of the consumer strategy. And could there be a potential wholesale strategy? And again, I'm not asking if you're buying a depository in terms of obtaining portfolios or accelerating partnerships to deploy your loan-to-deposit ratio of 85%.

Executive
David J. Turner

Yeah. Hello. Good morning. So, as we mentioned in the prepared comments, the growth will -- we should experience actually be it more on the business services side. On the consumer side, we're going to continue to have our runoff of our indirect auto portfolio that will put pressure on total balances. We have made some shift in terms of our indirect other consumer, we saw that in the fourth quarter. That'll continue somewhat in the first part of the year, then we kind of get to our concentration limit after the first quarter or so.

So you shouldn't see that continue to grow at the same pace that you saw in the fourth quarter throughout the year. We are going to continue to grow residential mortgage, we are going to continue to grow our credit card books as well. Those will be the big drivers of consumer, but net-net, total consumer will be relatively stable if you carve out the runoff portfolio. So the growth that we're trying to send the message really is going to come in the -- primarily in the C&I area.

Executive
John M. Turner

But Erika, I would say, we are actively observing what's going on in the market, looking for opportunities. We're evaluating different opportunities that may come along. Clearly, we shifted our exposure from the GreenSky relationship to increasing our exposure through so far that is largely a result in fact that so far is originating loans directly to consumers versus indirectly, which was the GreenSky model. We like that better. We're learning more about so far and the portfolio we have, and I think you can expect us to continue to explore ways -- other ways to grow consumer loans over the next year.

Analyst
Erika Najarian

Got it. I'll go back into queue. Thank you.

Operator
Operator

Your next question comes from Jennifer Demba of SunTrust.

Executive
John M. Turner

Good morning.

Analyst
Jennifer Demba

Good morning. You raised your net charge-offs guidance slightly for 2020 versus '19. Just wondering kind of what's driving that? Is it more conservatism or are you seeing some underlying weakness in any certain portfolios? Thanks.

Executive
David J. Turner

Jennifer, this is David. So, we had 40 to 50 basis points last year. We've raised that slightly about 45 to 55 basis points acknowledging a couple different things. One,