  June 9, 2015 Morgan Stanley Financial Services Conference Bruce Van Saun Chairman and Chief Executive Officer Exhibit 99.1 |
 Forward-looking statements
Forward-Looking Statements
This document contains forward-looking statements within the Private
Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,”
“plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,”
“will,” “should,” “would,” and
“could.” Forward-looking statements are based upon
the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation
to update these statements or to update the reasons why actual results could
differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While
there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: negative economic conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending
habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense; the rate of growth in the economy and employment levels, as well as general business and economic conditions;
our ability to implement our strategic plan, including the cost savings and efficiency components, and achieve our indicative performance targets; our ability to remedy regulatory deficiencies and meet supervisory requirements and expectations;
liabilities resulting from litigation and regulatory
investigations; our capital and liquidity requirements (including
under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms; the effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact
funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets; the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;
financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services; a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber attacks; management’s ability to identify and manage these and other risks; and
any failure by us to successfully replicate or replace certain functions,
systems and infrastructure provided by The Royal Bank of Scotland Group plc (“RBS”) In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or share repurchases
will depend on our financial condition, earnings, cash needs, regulatory constraints, capital requirements (including requirements of our subsidiaries), and any other factors that our Board of Directors deems relevant in making such
a determination. Therefore, there can be no assurance that we will pay any dividends to holders of our common stock, or as to the amount of any such dividends. In addition, the timing and manner of the sale of RBS's remaining
ownership of our common stock remains uncertain, and we have no control over the manner in which RBS may seek to divest such remaining shares. Any such sale would impact the price of our shares of common stock.
More information about factors that could cause actual results to differ
materially from those described in the forward-looking statements can be found under “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the United States Securities and Exchange Commission on March 3, 2015.
1 |
 Building a top-performing regional bank
2 Where we are now Where we are going Where we’ve come from |
 Aspire to be a top-performing regional bank, delivering well for all
stakeholders Colleagues
Regulators Investors Communities & Society Customer-centric culture Customers 3 |
 Building a top-performing regional bank
4 Where we’ve come from Lagging revenue productivity - Under-levered balance sheet - Lack of scale in key businesses - Sub-optimal asset mix/risk appetite - Product and customer proposition behind peers - Under investment in brand Lagging technology investment and sub-optimal expense investment Inconsistent and non-comprehensive risk framework Immature governance and reporting capabilities Need for greater accountability and sense of urgency Where we are now Developed and implemented a plan to address underlying issues and grow revenues - Just entering “middle innings” - Making steady progress - Target meaningful operating leverage during the turnaround phase Have invested $500 million above natural technology spend level over past 5 years - Efficiency initiatives are self-funding growth initiatives Significant efforts in progress to advance risk/regulatory capabilities Fully developed reporting capabilities; well-functioning Board and executive team Preserving “3C” historical culture while improving execution effectiveness Where we’re going Well-balanced Commercial and Consumer business mix - Leading customer service and value proposition - Capital deployment that delivers optimal risk-adjusted returns, NIM, cross sell - Organic growth focus - Powerful, respected brand Technology platform that is customer- centric, reliable, resilient and efficient Fully capable of meeting rising regulatory expectations; strong embedded risk culture Commitment to leadership excellence; widely respected, transparent reporting Top quartile rank – Organizational Health Index, employee engagement |
 5 Building a top-performing regional bank Building out a high-performing risk, governance and regulatory framework
Building out a comprehensive enterprise-wide technology/data
platform Building out customer-centric commitment with
improved products and brand Building scale in key businesses to
optimize revenues Blueprint calls for building a strong
foundation Building a strong team and culture
|
 Building scale in key businesses to optimize revenues
6 Where we are now Where we’re going Where we’ve come from Lack of scale in key businesses Delivering solid progress Under-scale in mortgage Mortgage LOs up 84, or 23%, YoY to 442; origination volume up 87% YoY Targeting ~700 loan officers and top-12 bank mortgage originator; ~65% conforming production. Key consumer product and fee business Note: Year-over-year comparisons are based on 1Q14 to 1Q15 1) Thomson Reuters LPC, 2014-1Q15 data. Based on number of deals for Overall Middle Market (defined as Borrower Revenues < $500MM
and Deal Size < $500MM). At full scale in key activities,
oriented to serve customers well
Missing out on corporate opportunities
Limited capital markets capabilities
Underinvestment in Treasury Solutions
and Global Markets
Fully built out coverage model across
Middle Market, Mid-Corporate, and
Verticals Broader product set across Capital and Global Markets products; market share gains Targeting 2% industry market share in Treasury Solutions (vs. 1% today) Expanding Mid-Corporate platform and Specialty Verticals Added 11 RMs YoY Consistent middle-market league table ranking of 5-8 nationally Treasury Solutions beginning to see benefit of recent people and technology investments; Global Markets separating from RBS and expanding capabilities Outdated auto platform limited to lower-return super prime space, too few dealer partnerships Limited student loan offering Underinvested in Business Banking and Wealth Targeting 10%+ market share of the attractive private student loan market ~400 Business Bankers, ~500 Wealth Managers and ~600 Licensed Bankers Target high single to-low double digit revenue CAGR New auto platform and presence in 43 states with over 6,700 dealers; Originations up 9% YoY New Education Refinance and Parent Loans; partnered with over 1,300 universities nationally Hired 16 Business Banking RMs, 28 wealth managers and 198 licensed bankers over the past year 43 state geography and ~7,000 dealer partnerships; prime/super prime; top 12 bank auto originator |
 7 Where we are now Where we’re going Where we’ve come from Product and customer proposition behind peers Making steady progress Limited customer value proposition Focus on product sales vs. building deep customer relationships Limited marketing to support brand and products Technology capabilities not customer centric nor joined up Leveraging segmentation and customer insights to build strong value propositions and better target customers Aligning product, marketing, technology, and talent to deliver differentiated customer experiences Leader in serving customers well; gain trusting, deep, lasting relationships Deliver strong value proposition across all customer channels, leverage powerful brand Leading customer service and value proposition Several years of household attrition in Consumer despite strong customer loyalty reflecting product and customer experience issues Limited one-size fits all product sets with limited ability to target and measure cross-sell and cost to serve Built out experienced coverage banking force committed to “thought leadership” Committed to relationship profitability model Invested heavily in Capital Markets, Global Markets, and Treasury Solutions capabilities to strengthen value proposition Improved customer satisfaction scores faster than peers over past two years Launched new “Bank Better” initiative in 2014 driving improved HH acquisition - New product innovation - “One Deposit” checking; Education Refinance loan; Cash Back Plus card - Launched “Ask a Citizen” campaign to strengthen brand Consistently deliver high level of customer satisfaction and top 10 JD Power rank Continually innovate to keep up with technology, product, and consumer trends Largely credit-focused platform with limited cross sell Lack of expertise in more complex products, with few lead left relationships Highly respected commercial player with great customer satisfaction and broader product capabilities Increased market share with higher percentage of lead relationships Building out customer-centric commitment with improved products and brand
1) Source: J.D. Power and Associates US Retail Bank Satisfaction Study Press Releases --
2013, 2014 and 2015. Peers = Bank Region Averages in New England, Mid-Atlantic and North Central Regions. 1 |
 8 Where we are now Where we’re going Where we’ve come from Lagging technology investment Significant investments in technology, largely caught up Underinvested in technology as a result of a focus on acquisitions Outdated customer-facing and back office platforms Fragmented and complex application and infrastructure architecture Limited investment in shared capabilities, processes, and standards to support efficiency, stability, and control Reliance on manual processes and informal organizational relationships to get work done Limited operational data and cost transparency to support decision making and oversight $1.3 billion spent on technology since 2010 - significantly improved the risk and stability of the technology landscape - Additional ~$275 million of spending planned for 2015 Upgraded ATMs, launched new commercial loan, branch teller, contact center and auto origination platforms in 2013 and early 2014 Enhanced online and mobile capabilities, built an award-winning mobile banking application Investing in treasury solutions and capital markets technology to close product gaps; retooling mortgage platform Focused on building out data capabilities Ensure delivery of a customer- centric technology strategy supporting “the best possible banking experience” Always on, always available Quick to deliver results Secure on every level Complete view of the customer Complete modernization of core consumer systems, multi-channel sales & service with shared functionality Seamless commercial systems that allow for greater product depth and cross sell Able to actively adapt to a changing technology environment to meet customer needs and regulatory expectations Customer-centric, reliable, resilient and efficient platform Building out a comprehensive enterprise-wide technology/data platform |
 9 Where we are now Where we’re going Where we’ve come from Inconsistent/Non-comprehensive framework Improving framework and risk culture Inadequate risk oversight and governance Underdeveloped risk culture and framework; significant skill gaps Substantial reliance on manual risk processes and data analysis Conservative risk appetite which limited returns Reactionary approach to risk and regulatory challenges vs. proactive identification and remediation Strengthened Board and key management; developed comprehensive risk policies and strong committee framework Significant new hires and training to close skill gaps; maturing skills and competencies Automation of risk processes and data tracking, improving accuracy and efficiency Significant progress in developing comprehensive risk appetite framework, along with improved capital planning Stronger relationships with regulators; making steady progress in remediating legacy regulatory issues Fully functioning governance and risk oversight framework Active and comprehensive risk culture; risk management is an integral part of everyone’s job and issues are escalated quickly to ensure no surprises Strong capabilities across all “3 lines of defense” Optimized capital deployment, where risk appetite is aligned with growth strategies and goals Dynamic risk systems and reporting with high-quality data to optimize pricing decisions and risk-adjusted returns Strong risk/governance framework with optimized capital deployment Building out a high-performing risk, governance and regulatory framework |
 10 Subsidiary status and parent turmoil created lack of focus on domestic opportunities Some difficulty in recruiting top talent Strong culture around 3 C’s, but lack of urgency and accountability Siloed operating approach Public company status has delivered many benefits: Turnaround plan benchmarked to US peers, de-coupled from RBS agenda Opened up new recruiting capacity (e.g., Eric Aboaf, Don McCree) Higher sense of urgency Equity provides sense of ownership, creates right incentives Fully aligned colleague base with strategy and initiatives Team working together well Known for great leaders Strong culture around customer centricity, continuous improvement, execution orientation, community focus Full sense of ownership and accountability, strong risk management Where we are now Where we’re going Where we’ve come from Subsidiary of large global bank Progressing to full independence Great place to work and
build a career Building a strong team and culture |
 Balancing near-
and long-term considerations
11 Road map to top performing is comprehensive Requires sustained focus, investment and execution Milestones across all initiatives broadly met to date Self funding necessary investments, delivering positive operating leverage
Environment is more subdued than anticipated when plan was
developed Negatives: Rates lower for longer, greater competition
on loan spreads, mortgage market slow to build
Positives: Credit costs favorable partly due to lower rates
Initiatives will be managed dynamically based on market conditions, though
“where we are going” remains the destination
Will adjust asset mix based on market conditions (e.g., lower
SCUSA flow purchases given higher student loans, own
auto) Will adjust hiring targets to reflect market competition,
may take longer on Mortgage and Wealth
Developing new initiatives to help offset revenue pressures (loan spreads,
mortgage market, lower rates for longer)
Important to show consistent financial improvement, while safeguarding the plan
to build a sustainable, great franchise
|
 12 Summary We have the foundation for a great franchise, though much to do to tap full potential
Our turnaround plan addresses gaps/weaknesses on both a tactical and strategic
level We are focused on the keys to our long-term success:
customer proposition, colleagues & culture, revenue
growth/operating leverage, risk management and technology
capability We are executing well against our agenda, delivering
near-term financial progress towards ambitious
medium-term goals Have the roadmap… executing
well |
 Q&A 13 |
 14 |