Release Date: April 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Regions Financial Corp (RF, Financial) reported strong quarterly earnings of $465 million, with adjusted earnings of $487 million.
• The company achieved a 21% year-over-year increase in pre-tax pre-provision income, reaching $745 million.
• Regions Financial Corp (RF) delivered a return on tangible common equity of 18%, the highest among peers for the last four years.
• The company has a robust capital position, with a common equity Tier 1 ratio of 10.8%, and strong organic capital generation.
• Regions Financial Corp (RF) experienced growth in average deposit balances, which increased by 3% at the end of the quarter.

Negative Points

• Average loans declined by 1% at the end of the quarter, with a stable outlook for the full year 2025.
• Net interest income declined by 3% linked quarter, driven by lower loan balances and less origination fee activity.
• The capital markets business faced challenges, with lower M&A, real estate capital markets, and loan syndication activity.
• Provision expense was equal to net charge-offs at $124 million, with an increase in the allowance for credit losses ratio to 1.81%.
• The outlook for unemployment has increased, and there is an expectation for a pronounced slowdown in GDP growth, creating uncertainty for clients.

Q & A Highlights

Q: Can you provide insight into when customers might reengage with investments or strategic decisions, and how this might differ between commercial lending and capital markets? A: John Turner, CEO, noted that customer uncertainty due to market volatility and tariffs has led to a wait-and-see approach. Customers are optimistic but cautious, awaiting clarity on tariffs and regulatory changes. David Turner, CFO, added that lower interest rates could stimulate capital markets activity.

Q: Regarding the lower expense growth rate for the year, how much is due to naturally lower costs versus actual cuts or delays in investments? A: David Turner, CFO, explained that lower headcount and retirements have offset seasonal increases in salaries and benefits. The company continues to invest in growth markets, managing costs by leveraging technology and controlling headcount in other areas.

Q: Can you elaborate on the loan growth outlook amid customer uncertainty and any areas of growth? A: John Turner, CEO, mentioned that while pipelines are mixed, middle market and real estate pipelines are expanding. Customers are cautious due to tariff impacts, and line utilization remains flat as customers hold excess liquidity. Growth is expected in middle market and real estate sectors.

Q: With a solid CET1 ratio, how do you view the pace of share buybacks given muted growth and economic outlook? A: David Turner, CFO, stated that with strong capital generation, the company plans to continue buybacks, especially if loan demand remains low. The focus is on supporting business growth and returning capital to shareholders through dividends and buybacks.

Q: What is the outlook for net charge-offs and provisions, and how does this relate to identified problem credits? A: John Turner, CEO, indicated that charge-offs are expected to be higher in the first half of the year due to specific portfolios of interest. The provision is expected to align with charge-offs unless economic conditions worsen or loan growth occurs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.