Regions CEO John Turner

🎥 Apr 09, 2019 📺 DB Plowden ⏱ 50m 👁 91 views

Regions CEO John Turner speaks @ Kiwanis April 9.

About John Turner

On Regions Financial's Q2 2026 earnings call, John Turner reported earnings of $549 million, or $0.64 per share, and adjusted earnings of $583 million, or $0.68 per share. He stated that the company delivered adjusted pre-tax pre-provision income of $831 million and an adjusted return on tangible common equity of 20%. Turner said the company was "pleased with our performance," attributing it to "disciplined execution" and prior investments. Turner noted that credit performance improved, with lower net charge-offs and reductions in criticized and non-performing loans, and stated that "credit has largely normalized." Regarding deposits, he said interest-bearing deposit costs declined three basis points to 1.69%, and he expected costs to remain near current levels. On funding loan growth, Turner stated the company would not use "high cost promotional deposits" and would instead rely on other funding sources, adding that the business model "is not built around using high-cost deposits as a funding source."

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Transcript (17 segments)

Jennifer0:37

About your displaced father, we come to you today and thankful for your love, for your mercy, and for your grace, Lord. Even when we're far from you, we know that you see and are near to us by the slopes filled with women and men. And you know the teachings of Matthew 25: when we do for the least of these brothers and sisters, we do for you. And when we fail to do for the least of your brothers and sisters, we fail to do for you. Father, your love exists so that we can please you and continue to provide for all of your brothers and sisters, including the least of these. I ask that you continue to bless the members of this club so that we may multiply your blessings and extend them to all your brothers and sisters. Follow my prayers that this club will be divided by unity. Time our members of the living on the right and number one years will be on the left. Father, thank you for making the ultimate sacrifice for us, for doing all the hard work, the heavy lifting, ever giving us a promising community that all the stuff for us to do is a super relationship to you and love you with all of our heart, mind, soul, and love our neighbors. All father, bless those who prepare this meal and bless this meal. Prepare us, lastly father, that you continue to bless our speaker and his family and as you continuously around all the.

Host2:59

So coming up we're going to play this video but we've got a great event coming up and I'm looking at the people involved in the event, we're called War Room 2, and it's a documentary 'Normal Isn't Real' that was actually made by my first sister, and it's coming up. Remind me of the date: this Thursday out of Spring Valley. It's a terrific event, you're gonna learn a lot about the great work that Pretty Mouthy School does, and you're going to learn a lot based on this Dr. Starr documentary. So please come out on this Thursday. One small step: you can learn more at WBHM dot org. So some participants in this, care homes of course is over there and running next, and it's a terrific organization. I storyboarded my mom as well, let's go. I think we were the actual first ones up, and if I've never spoken to my mom I think consecutively for 25 minutes in that direction, it was phenomenal, my experience. So please go to WBHM to learn more and sign up. Want to congratulate Virginia on the national championship and obviously congratulate Halloran or their run in the tournament. Bruce Fertile and his team were incredibly classy, and of course in defeat as we would expect for Boston College alone, and just appreciate them being so classy. So those of us who were rooting for offer don't have to tremendous run to them and a credit mistake, but also congratulations. 14 years, a heck of a game last night. And then otherwise just want to say this year at the End Foundation, we have already reached 2800 family members, door-knocking, phone calls, focus groups, talking to them about what they want for their kids, what they desire for them, what needs they have. That is a very time-consuming, painstaking process, that's very expensive as well as you want to get right. But getting that valuable information of those 2800 families, it is important to have more to do. And zero percent of that would've been possible without Regions, without the fund, the fund network, and support that work. Looking at Scott Russell, our work at the foundation, and just want to take an opportunity to thank Regions for that.

Scott6:18

All right, thank you. Welcome to all of our guests here today. Hey, just a reminder, our tornado relief efforts to recap: we raised about $1,600, so tomorrow we hope to raise about $10,000. My hips work, congratulations. And of course, it's Master's Week, right? You know, Springtime, students, Master's Suite. So always one of my favorite times of year. So we've got a great crowd here today to hear from John Turner, really looking forward to it. And thanks to all those teammates for being here, especially my friend. Also pleased to announce, Mrs. really exciting that Regions has agreed to contribute another $100,000 to the Centennial Park today. Thanks to all of you for hosting. All different, okay. Now, as we say, new members are the lifeblood of our club, and we have another member introduction today. I'd like to call Mariani over the podium to introduce Dee Mathis.

Mary O'Neill8:33

President Scott, and welcome distinguished guests. I'm honored to be up here today. A new membership was sponsored by both Scott Adams, myself, and John. Reporter Dee Mathis is the senior vice president of sales and marketing at Grinnell Events, and she will be the newest member of the Birmingham Kiwanis Club. She is responsible for workforce development and sponsorship for the World Games 2021, which we heard about here last year. And what's his name? DJ members at dinner. It's fitting that we see her here today in these regions is one of the title sponsors for the World Games. She is responsible for corporate sponsorship, also working on Regions tradition which comes up on May 8th. When she's not working on the World Games, she oversees emergency vision and ticketing division of Critter Events. Prior to joining Grinnell Events, she was the vice president of digital sales for Community Newspaper Holdings, one of the top publishers of local news in the United States. She spent eleven years at Al.com leading a team of digital media marketing effectiveness. She received her bachelor's from the University of Alabama. She is married to Ed Mathis and has a son and a stepson, Evan, and her son played football at Alabama and for the Broncos when they were through the wall 50 against my love it. Candidness Panthers, so far that was her favorite sporting event. Please welcome Dee Mathis.

Scott10:35

Thanks Mary, and welcome. We'll hopefully get you engaged in one of our committees so we can get fully assimilated in the club. All right, let's do a culinary introduction, our programming introduction at that table. So Brittany Wagler, everybody's head of corporate communications, Regions. Kiwanis since 2018. Mary O'Neill, who you just heard from, attorney at Ogletree Deakins, Kiwanis since 2016. Dee Mathis, new member, just introduced by Mary. JW Carpenter, executive director, Birmingham Education Foundation, member since 2013. Jeff Lee, that's Jennifer, who gave the invocation, deputy general counsel, Regions, since 2003. Region change job. Leroy Abrahams, EVP and head of Community Affairs, Regions, since 2015. Leroy has the honor of introducing our speaker.

Leroy Abrahams11:52

President and CEO of Regions, man, I'm betting that many of you probably already met John. And most others, and those of you who have jobs, they see over Regions in 2018. Since joining Regions in 2011, John had positions as head of the corporate bank and president of the South region, which included Alabama, Mississippi, South Louisiana, and Florida. And before joining Regions, John held senior leadership positions at Whitney National Bank, including being the president of that company in 2008. Prior to his time in senior leadership positions, he held positions in consumer and commercial banking. John is a graduate of the University of Georgia with a bachelor's degree in economics, and he's been actively engaged in many nonprofits both in Mobile and other places he's lived in, including Birmingham, some of which are the Public Affairs Research Council, the Alabama Education Foundation, and the Infirmary Health System board. John is also a graduate of Leadership Alabama, a former board member of Leadership Birmingham. That's what you could read in the press today, but let me predict what you're going to be reading 20 minutes, so, in this career, hopefully not anytime soon. Now before I predict, I need to read the standard kind of about make or necessarily involve risks and uncertainties which make about actual results. Seven things I'm going to predict: John's bankers who work for him will say these things. Number one: John was focused on performance, but his passion was around three C's: customers, culture, and community. All three were made better by his leadership. He constantly encouraged his team to make banking easier for customers. He was relentless about building and maintaining a culture of inclusion, and he was committed to the idea of growing your community. Number two: He was concerned about making the numbers but more concerned about how the numbers were made. Number three: He was less excited about short-term wins and much more interested in long-term sustainable and repeatable results. Number four: John created a sense of urgency about acting on the things that are in our control without creating a sense of anxiety about things that are not within our control. Number five: His bankers will say that he was interested in listening to everyone's opinion, but in the end he made fact-based decisions and he was not afraid to make the tough call. Number six: He's an accessible leader who made time for people and was genuinely interested in what everyone was doing. And finally, number seven: His bankers will say that he never seems uncomfortable in any setting. He found a way to relate to everyone who came across his path. So now these may be forward-looking statements, but I have to assure you that they are grounded in the reality of Regions. So please join me in welcoming the President and CEO of Regions, John Turner.

John Turner16:17

Thank you. I love you very much. 150 years representing all of us. So it's great to be here with us. I'll share with you some of my thoughts about the times. I'll talk about the company profile and our view of the current operating environment, surely some about our strategy and our plans, and then I'll talk about the investments that we're making in our company and our community and our associates. And then if there's time, I'm happy to answer questions. I'm joined by lots of Regions associates today. I think you know the company is now over 167 years old. Five years ago we completed a history book of Regions with the combination of constituent banks, beginning with the 1971 formation of First Alabama, which was the exchange carrier in Birmingham, the first Alabama National Bank of my company. Today we're the 16th largest bank in the country. We operate in 15 states, with about $126 billion in assets. We employ about 20,000 people. We have over 4.5 million customers that we serve across lots of different businesses. So we've been, I think we're proud of the last few years, we were beginning to harvest the fruits of our labor and have lots of success. We've increased our dividend payout ratio over the last five years about 100%. We've grown net income about 55%. You can see the benefits we've enjoyed from rising interest rates, tax reform most recently in 2018. We've been increasing our dividend payout per share from $0.23 to $0.56 in the first quarter of 2018, so a compound annual growth rate of about 20-26% over that period of time. Our priorities are to support our organic growth, and we've enjoyed some of that, particularly more recently. Consistent and sustainable dividend somewhere between 35 and 45% payout ratio. We're interested in adding capabilities and capacity, but maybe later you'll ask about M&A. It's sort of a topic. We are interested in M&A, but I would say today we're focusing on our plan. We don't think the economic conditions are right for us to anticipate bank M&A, and frankly, I think our plan produces better returns. We have been active buying non-banks: we bought an advisory firm, we acquired a low-income housing tax credit originator, we are buying more servicing, doing things to expand our capabilities, and will continue to do that. Finally, if we don't have a use for capital, we return it to shareholders through share repurchases. In fact, over the last three years we've returned, including dividends, about $5.4 billion to shareholders. The result of that is that we've generated a total shareholder return over three years of 72%, ranking third amongst our peers. We think that this is a result of a lot of good focus on fundamentals, improving the way that we operate, improving execution, returning capital to shareholders, and we believe we are really well positioned for the future.

We look at the current environment that we're in. Updates and interesting times. I travel across our footprint. I'm probably doing ten different markets in the last nine or ten weeks. I'm here with customers. What I hear from them is that 2018 was maybe the best year they had, certainly a very good year for every business owner I've talked to. I'm yet to find one, and I've probably met with 50 business owners, not a single one who's not optimistic about 2019. Our own opinion is that the economy will likely grow at about 2% in 2019, a little less than 2% maybe in 2020, but we don't see anything on the horizon that would indicate to us that a recession is imminent. Having said that, credit quality is as good as it's ever been in our consumer portfolio and in our commercial book, but we know that can't continue, so we have to think about how do we build a business for the downturn, the credit cycle, and the eventualities of some sort of recession. So we talk a lot about the disease. Technology is an issue that all bankers have to address. Our largest competitors, money center banks, are investing tremendous amounts of money in technology. In fact, we'll invest $625 million in technology in 2019. By contrast, JPMorgan Chase will spend over $11 billion. So we often get the question: how do you keep up? How can you possibly have the scale to compete with the big banks? We think we'll do that. We'll talk about that. We're also under a lot of pressure from non-banks, from financial technology companies, who are challenging our very business model. And we are focused on our belief that the business will continue to be a relationship business. As long as we execute our plan, we can be successful. And then you hear a lot about the regulatory environment easing. In fact, it is. I would say it has moderated. But our own view is that the regulation is going to shift from the law to the examination process. Expectations really are not going to be any less regulatory. We think that the rate of change will still be fairly constraining. So if we think about our plans in this environment, we want to lead fresh drinks. We would say that our business model is pretty simple. We don't have a really complex platform. We believe that if we remain committed to continuous improvement, we continue to invest in innovation and technology, we can make investments in people and capabilities, and we can have a lot of success.

Our business, we think, is still a relationship business. We would argue that while technology is certainly important, it is still about bankers who are enabled with really good technology building trusting relationships with customers based upon unique ideas and solutions that they provide. We operate a number of businesses that are national scale, but our focus is on our footprint, on doing things, building relationships within our states. If you think about our unique strengths: customer service, the way that we work together, the culture that we have, what we call shared value, and I'll talk a bit about that, and Regions 360, the way that the team works together to serve the customer. We all believe that is a differentiator against our competition. We make a tremendous investment in building a risk culture and infrastructure post-Great Recession, and we think the combination of those things positions the company to do well. Customer service is a hallmark of our business. We are consistently recognized by third parties for the quality of our customer service, and I like to say we're rewarded for the good work with very loyal, long-term relationships and growth in our business. Our customers increasingly are expecting speed, convenience, and reliability in their banking. We think about our channels in this way: customers can bank with us in a branch, they can bank with us using a mobile application, using online banking, using an ATM, or a call center. So there are five basic channels we think about for how we interact with the customer today. Over 60% of our customers use multiple channels, and in fact we'll have 400 million logins to mobile banking, 300 million logins to our online platform, we'll do 100 million transactions in our branches, about 80 million calls to our call center, and 75 million transactions through our roughly 1900 ATMs. The customer expects the same great experience whether they are at an ATM, in a branch, or on online banking. So technology is increasingly important if we're going to deliver that same great experience to our customers across all those channels. And this is where the question of scale comes in. We think that we are making an appropriate investment. I mentioned $625 million of investment in technology. 42% of that will be around new capabilities, new offerings for our customers. We think combine that with the quality of people that we're hiring to work in our technology business, the speed with which we can make decisions, we think we can compete very effectively.

Our culture is one of shared value. We all believe in the mission of serving customers and making life better. We believe in the concept we call shared value, that is the business can win when all parties benefit: our customers, shareholders, our communities. We share this belief that honesty and integrity is the foundation of our business and that trust is earned and shared by all, but can be lost often quickly. So we cherish the trust of our customers. Our marketing is around local bankers working in communities, combining industry and product expertise with those local bankers, and we think the way that we do that, the way that our teams work together, is truly differentiated from our competitors. And so we're focused on how we can attract, retain, motivate, and develop talent, because at the end of the day, our business is still very much a people business. We operate in 15 states. 86% of our deposits, which is the raw material of our business, are in seven southeastern states: Florida, Alabama, Mississippi, Louisiana, Georgia, Tennessee, and Arkansas. About 70% of our deposits are in markets where we have top 5 market share. The demographics of our markets are very favorable. We don't have more than 20% in any one state. We largely operate in the South. Think about how all of these states are growing. The population is coming to the Southeast. The region has a very good business climate. About 42% of all new jobs created in the United States are created in our footprint. 51% of all labor force growth in the United States is in our footprint. Only 35% of the United States GDP is in Regions' markets. These are very desirable locations. Think about our market position. We have high market share in many of these markets. Automation is a thing that makes Regions so unique from an investment standpoint. We have the ability to automate probably 70% of our profits. We identify probably 60% of our jobs or high-value accounts by customers. Our largest customers have been with us for 10 years or more. We have 93% of our consumer checking accounts have a common shape account with us. That is important because it results in having a very stable, low-volatility deposit base. We grow checking accounts at about 1.5% per year, which is a good positive number. I worry about the youth, but the reality is that 60% of the accounts opened are for people under 32, so we are clearly appealing to the younger crowd.

But in the wake of the Great Recession, we learned a lot of hard lessons. Maybe the biggest one was the importance of a balanced portfolio, concentrating on good policy, thinking about concentration risk. We have different types of early warning indicators that give us notice we need to consider exiting a relationship. We fabricated a risk portfolio across different businesses. We have a culture that is really grounded in profitability, risk, and return. We take the pill margins we don't need to grow. We talked a lot about that. So the class is building a business for consistent, stable times. We believe in 2017 we announced the Mr. T cause, it was all about looking out years, recognizing that we would not keep everything for riding in a crater. Later, we would stop driving. We quit benefiting from great credit losses from the language of the polarized. It cost us a bit more, and we had the people in place. So five rows was our lives. We thought we needed to begin to build a culture of continuous improvement. It's not a program, it doesn't have a beginning and end. It's really important for us to talk the entire organization about an agent office culture all the way to the back office. How do we become more efficient by improving their processes? At the end of the day, we think that over time that can help drive costs down while still remaining very strong in service. That's all the camera in order to be able to be effective in the future. We call it 'Thematic Easier'. Some revenue growth including effectiveness. 2018 was a good year to streamline the organization, flatten the organization, eliminate some layers, grow revenue, reduce expenses, and make investments in order to be a really efficient company.

I want to talk about the investments we want to make. We gotta continue to be focused on how we improve customer experience, whether we're working on a mobile banking platform or a team to develop a consumer loan application that can be completed entirely online. Some of the signatures will come from a device. That comes to mind. Our team would have to be very, very passionate about improving education that reduces the economy. We also have to do better using data analytics, whether we're in front of a customer, on the phone, or in marketing. How do we target our marketing? This is where the bigger credit card companies, I think, are doing better than the regional banks. They are using data analytics to market. We've got to get better at that. We are already using artificial intelligence to group processes. We have a call center today that almost intercepted 1.5 million calls in 2008 because of that, reducing or eliminating 455 thousand calls that would otherwise have been handled. That call center uses AI in a place like call center using a back office processor. It will continue to be really important to think about how we drive our cost down and shift resources that would have otherwise been used into more customer-generating activities. We need to continue making investments in our technology platform and things like the cloud, which will drive our computation allowing us to be more efficient. We are investing in communities. In 2018, we announced the Regions Foundation, which is a charitable foundation. Leroy is leading that effort. We funded it with $100 million, and our intention is to be purposeful about the contributions that we make. We make about $18 million in charitable contributions on an annual basis, and we give lots of things. We believe that our business can only be as good as the health of the communities that we serve. So it was important for us to be more intentional to positively impact the quality of our foundation. Because of the strong economic and community development, we focus on financial wellness, targeting those areas where people are purpose-driven.

Finally, I need to talk about investing in our associates. We have so many great stories to tell. It's important to our community, but they think it's not sometimes kind of really a positive economic impact. Our company helps to stay about $7.6 billion, $260 million in taxes on an annual basis, we will contribute about $7.6 million to nonprofits in this community. Our associates will give a thousand hours of their time to impact the community. We are fully invested in Birmingham, Alabama. We are finding ways to invest in our associates. The rest of my career is important for our associates. Our associates benefit from being well in our community. We also raised our starting wage to $15, increased our 401(k) matching. We actually match 100% of the first 5% for associates, and for those who are not eligible, we provide a supplemental contribution. So we can now say effectively a 12% contribution. We have a really good family leave policy. We went to a family policy at the beginning of the year. It's going to be great. Over 7,300 Regions families can have up to 8 weeks for childbirth or adoption each year. We hired a chief diversity officer to help with managing diversity and inclusion. We are doing a lot of things to invest in our associates and continue to build a culture that we can be really proud of. I've always said the company is simple and we have a very good, very simple business plan. We stay focused on our plan, execute our plan, and we will deliver top-tier financial results for our shareholders and also impact the communities that we operate in a really beautiful way. Yes, our village. So I'm happy to take questions.

The best one was the first one we had. Three female associates, including a diversity officer, came down to visit. Our mercy including officer and one of that is Clara. We had these conversations with Clara where she only asked questions, interviewing. I'm happy to say we had a conversation with Clara and also had a conversation with a woman about how to get our message out about diversity and inclusion. You know, probably could share that you see it started a brave adoption. Bring as a neighbor to that day she came with it all black. We do a lot of work on diversity and inclusion, and another step is helping us continue to advance our efforts to improve the quality of our workforce and make investments in training. I have adopted it.

Plan for increase in June. We're not playing that long, so we expect relatively stable for the economy. Do you think the political nature of the conversation for any trade is putting some pressure on it? There is definitely pressure. It's probably under more pressure than they ever built. Two nominees who seem to be non-traditionally that the family or the bezel Florida helping us maintain stability of the economy. We think that, as I said earlier, we don't see that. We'd see it. People often ask me why we're all worried about cybersecurity. People's privacy is agreed. We'll spend about 10% of that statement. So I'm going to paint a picture about the amount of people in cybersecurity. We have an incredible number of attempts to do us harm. We were widely screening at our operations center. We were standing there watching the screen that has two tracks of independent systems, and it is literally one to create a call about that. We have billions and billions of attempts to get through our system every day. And so we're finding lots of different technology to address that. We talked earlier about trust. The importance of that information is usually important to us. We have a breach response plan. We have multiple different ways to test ourselves. We run running tests all the time. We actually hire people to try to get into our systems three times a year, called team testing. We have a breach response call to go into the breach. So we're working hard. It is a huge threat. And I'll tell you the other thing: fraud. The fraud we experience more often is on the customer side. Our customers are being some way being thorough, having their identity stolen, and then the bad guys acting to the customer as if they are someone on their team. We often see them impersonate a customer service person and see because they are very sophisticated. We can't talk enough about it. We're always happy to help customers keep their eyes open and protect their cybersecurity because it is so prevalent in the marketplace. Really, if you make one technology available, it makes it easier for the bad guys. What are y'all doing to determine what they want? Even relationship with a big 40.

I think we're pretty relevant. Still relevant at the Commission's five days? That would be right because we are seeing transactions in branches come down, but we are also seeing transactions at the end. We think the branch still will be relevant. We have closed about 250 branches over the last three or four years. Over the next three years, we'll close about 175, and in that realization, we will branch into new parts of the community. Here in Birmingham, we have renovated a branch close to one rule. The area is still being redeveloped. I think if you look at the demographic for customers, people come in when they have a life event. They want to come into a branch and talk to somebody about that life event. So now we are basically investing in our local branch form. We are making investments in our branches to improve customer interaction. We want to provide a better customer service. We are thinking about how to help our associates with changing skill sets. I think we have an opportunity at a time. This is our homeless where we continue to need to operate. We have 20,000 people here. That's a lot of folks. We didn't have any time. So do you find a way to get with the community and ensure that we are building the kind of workforce that can take the jobs that we have in a hustle day? We have a labor force participation rate 42% higher than the national average. So how do we continue to work to develop people who might not have a college experience to bring them into the workplace? Is it alone? We still, I'll say this: we do not have a lot of problems. People humor me. In fact, we have been creating jobs, particularly for our taking off. You take someone that wants to live and laugh because that's where they are. People are burning here. Lack of quality? I got two more computers while working remotely. Fine. Okay, well, thank you very much.

Scott49:59

All right, so we have good programs coming up that all of you know. Next week, it will sustain their youth. Here's how it works: program increases encourage out of that. Our guest speaker will be the new president of Birmingham Southern College, Dean Coleman. That will be a program Wednesday. April's one important not one of this. This joint meeting with Rotary, the CEO of Heartache, Brian Radel. And then April 30th, Doctor A. Box will be here. Then they set up will have activities in hearing superintendent. Thanks for being here in the AM.