Regions Financial Corporation · NYSE:RF
Regions Financial — Q1 2025 Earnings Presentation
43 slides from Regions Financial's earnings presentation, Apr 17, 2025
Slide 1: 1st Quarter Earnings April 17, 2025
1st Quarter Earnings April 17, 2025 Exhibit 99.3
Slide 2: First Quarter Overview
2 First Quarter Overview Continue to deliver consistent, sustainable long-term performance (1) Non-GAAP, see appendix for reconciliation. (2) Peers include CFG, CMA, FHN, FITB, HBAN, HWC, KEY, MTB, PNC, SNV, TFC, USB, ZION. Key Performance Metrics 1Q25 Reported Adjusted(1) Net Income Available to Co
Slide 3: Longstanding Strategic Priorities
3 Longstanding Strategic Priorities Committed to: • Diversified Revenue Streams • Appropriate Risk Adjusted Returns • Disciplined Expense Management Profitability Strategically Investing in: • Top quartile organic loan & deposit growth over the last 5 yrs vs. peers(1) • Non-bank M&A, expanding produ
Slide 4: Faster Earnings Growth and Top Returns
4 Faster Earnings Growth and Top Returns Supports a higher P/E multiple 9.0% 9.7% 11.0% 17.6% 14.9% 9.2% 21.4% 24.1% 21.9% 17.8% 12.0% 11.0% 12.0% 17.0% 14.7% 8.5% 16.5% 19.3% 16.4% 14.3% RF Peer Median 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (1) Non-GAAP; see Appendix for RF reconciliatio
Slide 5: Capital Strength
5 2.5% 1.8% Peer Median RF Capital Strength Robust capital balances and strong organic capital generation position Regions well for full range of potential economic conditions • Hedge program introduced in 2018 to protect NIM against falling interest rates was highly effective • Actions taken in 202
Slide 6: Loans
6 QoQ Highlights & Outlook • Avg loans remained relatively stable while ending loans declined 1% • Avg business loans remained stable; Customers carrying more liquidity & utilization rates remain below historic levels • Pipelines and commitments continue to trend higher, with clients ready for expan
Slide 7: Deposits
7 QoQ Highlights & Outlook • Avg deposits increased 1% and ending deposits increased 3%, typical for 1Q tax seasonality as well as customer preference for liquidity amid the uncertain environment • NIB mix has remained steady in the low 30% range, despite IB deposit growth • Expect 2Q balances to be
Slide 8: Net Interest Income
8 $1,230 1,220 $1,213 $1,194 Ex cl . N on -R ec ur rin g(1 ) • NII -3% QoQ (down less than -1% excluding non-recurring items and two fewer days); NIM decreased 3bps to 3.52% • Pressure from loan balances, fee activity, and spread compression associated with mix shift to higher-rated credits • Benefi
Slide 9: Resilient NII expected to grow in 2025
9 Expectation: NII expected to grow in 2025, with fixed-rate asset turnover and funding cost management as the primary drivers; opportunity if balance sheet growth accelerates in 2H25 • 2Q25 NII to increase ~3% vs 1Q25, from day count, the removal of 1Q nonrecurring items, fixed rate asset turnover
Slide 10: Non-Interest Income
10 QoQ Highlights & Outlook • NIR remained stable on an adjusted(1) basis and increased slightly on a reported basis, which included a $25M pre-tax loss on securities repositioning in 1Q (similar to 4Q amount) • Service charges increased ~4% primarily driven by an increase in Treasury Management; 1Q
Slide 11: Non-Interest Expense
11 QoQ Highlights & Outlook • NIE remained relatively stable on a reported basis and increased ~1% on an adjusted(1) basis, driven primarily by a 1% increase in S&B, including one month of merit, payroll tax resets and 401(k) matching • Seasonal increase in S&B was lower than expected due to reduced
Slide 12: Asset Quality
12 QoQ Highlights & Outlook • 1Q annualized NCOs totaled 52bps, up 3bps, driven by loans in previously identified portfolios of interest, as expected and already reserved for • NPLs decreased 8bps to 88bps, below our pre-pandemic historical average of 107bps; Business services criticized loans incre
Slide 13: Capital and Liquidity
13 QoQ Highlights & Outlook • Declared 1Q common dividends of $226M or $0.25 per share and executed $242M in share repurchases • Dividend payout target of 40-50% of earnings • In near term, will manage adjusted CET1(1)(4) (inclusive of AOCI) closer to the lower end of 9.25 – 9.75% operating range •
Slide 14: Common Equity Tier 1
14 Common Equity Tier 1 10.4% 10.6% 10.8% 10.8% 8.2% 9.1% 8.8% 9.1% Reported CET1 Ratio Adjusted CET1 Inclusive of AOCI Operating Range 2Q24 3Q24 4Q24 1Q25 CET1 Under Basel III Endgame (B3E) B3E Update • B3E has yet to be finalized but expect AOCI to be included in Regulatory Capital • CET1 inclusiv
Slide 15: 2025 Expectations
15 Expectations for 2Q25 & Beyond(3) • NII expected to grow in 2025, with fixed-rate asset turnover and funding cost management as the primary drivers; opportunity if balance sheet growth accelerates in 2H25 ◦ 2Q25 NII to increase ~3% vs 1Q25 • NIM increase to 3.60% by 4Q25 • Expect Capital Markets
Slide 16: Appendix
Appendix
Slide 17: Growth in Digital
17 2.46 2.57 2.63 1Q23 1Q24 1Q25 3.50 4.35 5.03 1Q23 1Q24 1Q25 166 183 188 1Q23 1Q24 1Q25 22.3% 24.2% 24.6% 32.3% 30.8% 31.3% 45.4% 45.0% 44.1% 1Q23 1Q24 1Q25 2.9 6.0 4.9 1Q23 1Q24 1Q25 73% 75% 78% 27% 25% 22% 1Q23 1Q24 1Q25 Growth in Digital Mobile Banking Log-Ins (Millions) Customer Transactions(2
Slide 18: Investments in Our Businesses
18 Investments in Our Businesses Investments in talent, technology and strategic acquisitions continue to pay off • Continuing to drive growth in our primary priority and core markets by adding 11 locally placed resources in Treasury Management and Commercial Banking in 1Q25 • Treasury Management re
Slide 19: Investing in People, Enabled with Technology
19 ☐ Core Modernization ☐ Loan System ☐ Deposit System ☐ General Ledger ☐ Enhanced Mobile & Digital Experiences ☐ Small Business Digital Origination Platform Investing in People, Enabled with Technology in Markets with Highest Opportunity Investing in Banker Expansion Over the next 3 years, will inv
Slide 20: Asset Hedge Notional
20 Asset Hedge Notional (1) Floating rate leg of swaps vs overnight SOFR. (2) Net Asset Swap Position equals Receive-Fixed Cash Flow Swaps - Loans minus Pay-Fixed Fair Value Swaps - AFS Securities. (3) Collars use short interest rate caps to pay for long interest rate floors; weighted avg. floor of
Slide 21: Securities Portfolio
21 • Portfolio constructed to protect against changes in market rates ◦ Duration of ~4.2 years (AFS ~3.9 years) as of 3/31/2025; provides offset to long-duration deposit book ◦ ~23% of securities in the portfolio are bullet-like (CMBS, corporate bonds, agency bullets, and USTs) ◦ MBS mix concentrate
Slide 22: Securities Portfolio - Repositioning
22(1) NII estimate and payback assumptions use Market Forwards as of trade completion dates. (2) Point in time impact; portfolio duration is naturally shortening and repositioning provides offset. Securities Portfolio - Repositioning Provides efficient use of capital/downside rate protection Rationa
Slide 23: Continuous Improvement in Risk Management
23 Continuous Improvement in Risk Management Our commitment to strengthening credit risk disciplines and intentional portfolio shaping over the past decade leaves us well positioned for sound, profitable growth Strong Origination Disciplines Aligned with Comprehensive Risk Framework ☑ Enhanced risk
Slide 24: Historical Credit Profile
24 0.88% —% 0.50% 1.00% 1.50% 2.00% 2.50% 0.52% —% 0.50% 1.00% 1.50% 2.00% Historical Credit Profile Non-Performing Loans Total Net Charge-Offs 1Q20 1Q25 4Q221Q20 4Q22 1Q25 • Non-Accrual and loss rate levels have reverted to historical pre-pandemic ranges as expected Average Pre-Pandemic 0.46% Avera
Slide 25: Commercial Real Estate
25 Commercial Real Estate (Outstanding balances as of March 31, 2025) Highly Diversified Portfolio (IRE including Unsecured CRE) (1) Excludes $5.2B of Owner-occupied CRE whose source of repayment are individual businesses, and whose credit performance resembles Commercial during periods of stress. (
Slide 26: CRE - Office Portfolio
26 CRE- Office Portfolio (Outstanding balances as of March 31, 2025) (1) $ in Millions. Amounts include IRE and CRE Unsecured loans but exclude Held For Sale loans. Metrics represent 03/31/2025 results except for charge-offs, which reflects results for the 3 months ended March 31, 2025, annualized,
Slide 27: Transportation - Trucking
27 Transportation - Trucking (Outstanding balances as of March 31, 2025) (1) $ in Millions. Metrics represent 03/31/2025 results except for charge-offs, which reflects results for the 3 months ended March 31, 2025, annualized, based on average balances. NPL & ACL percentages are based on Portfolio t
Slide 28: Consumer Lending Portfolio
28 Consumer Lending Portfolio • Avg. origination FICO 757 • Current LTV 53% • 99% owner occupied • 1Q25 QTD NCO 0.00% • Avg. origination FICO 760 • Current LTV 37% • 59% of portfolio is 1st lien • Avg. loan size $34,732 • $113M to convert to amortizing or balloon during 2025 • 1Q25 QTD NCO (0.03%) •
Slide 29: Allowance for Credit Losses
29 QoQ Highlights • 1Q allowance essentially flat compared to the prior quarter, resulting in a $124M provision expense • A consistent ACL resulted from: ◦ Decreases in Specific Reserve borrowers driven by charge-offs ◦ Portfolio decrease due to net portfolio runoff and a reduction in the remaining
Slide 30: Base R&S Economic Outlook
30 Pre-R&S period 1Q2025 2Q2025 3Q2025 4Q2025 1Q2026 2Q2026 3Q2026 4Q2026 1Q2027 Real GDP, annualized % change 1.4 % 1.1 % 0.9 % 1.4 % 1.7 % 2.1 % 2.3 % 2.1 % 2.0 % Unemployment rate 4.1 % 4.2 % 4.2 % 4.3 % 4.3 % 4.3 % 4.2 % 4.2 % 4.1 % HPI, year-over-year % change 3.1 % 2.8 % 2.3 % 1.6 % 1.1 % 1.2
Slide 31: Allowance Allocation
31 As of 3/31/2025 Day 1 Ratios (in millions) Loan Balance ACL ACL/Loans Actual Proforma C&I $46,140 $572 1.24 % CRE-OO mortgage 4,849 107 2.21 % CRE-OO construction 316 10 3.04 % Total commercial $51,305 $689 1.34 % 1.33 % 1.32 % IRE mortgage 6,376 211 3.31 % IRE construction 2,457 33 1.36 % Total
Slide 32: Non-GAAP Financial Measures
32 Management uses computations of earnings and certain other financial measures, which exclude certain adjustments that are included in the financial results presented in accordance with GAAP, to monitor performance and believes these measures provide meaningful information to investors. Non-intere
Slide 33: Non-GAAP Reconciliation Pre-Tax Pre-Provision Income
33 Non-GAAP Reconciliation Pre-Tax Pre-Provision Income (PPI) Quarter Ended ($ amounts in millions) 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 1Q25 vs. 4Q24 1Q25 vs. 1Q24 Net income available to common shareholders (GAAP) $ 465 $ 508 $ 446 $ 477 $ 343 $ (43) (8.5) % $ 122 35.6 % Preferred di
Slide 34: Non-GAAP Reconciliation NII, Non-Interest Income/Expense, Efficiency Ratio
34 Non-GAAP Reconciliation NII, Non-Interest Income/Expense, and Efficiency Ratio NM - Not Meaningful Quarter Ended ($ amounts in millions) 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 1Q25 vs. 4Q24 1Q25 vs. 1Q24 Non-interest expense (GAAP) A $ 1,039 $ 1,038 $ 1,069 $ 1,004 $ 1,131 $ 1 0.1 % $
Slide 35: Non-GAAP Reconciliation Net Income, Adjusted Diluted EPS, Return Ratios
35 Non-GAAP Reconciliation Net Income Available to Common Shareholders, Adjusted Diluted EPS, and Return Ratios NM - Not Meaningful Quarter Ended ($ amounts in millions) 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 1Q25 vs. 4Q24 1Q25 vs. 1Q24 Net income available to common shareholders (GAAP)
Slide 36: Return on Average Tangible Common Shareholders' Equity
36 Non-GAAP reconciliation Return on Average Tangible Common Shareholders' Equity Quarter Ended Year Ended ($ amounts in millions) 3/31/2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 RETURN ON AVERAGE TANGIBLE COMMON SHAREHOLDERS' EQUITY Net income available to common shareholders A $ 465 $
Slide 37: Non-GAAP Reconciliation Non-Interest Expense
37 Non-GAAP Reconciliation Non-Interest Expense Twelve Months Ended December 31 ($ amounts in millions) 2024 2023 2022 2021 2020 2019 2018 2017 2016 Non-interest expense (GAAP) $ 4,242 $ 4,416 $ 4,068 $ 3,747 $ 3,643 $ 3,489 $ 3,570 $ 3,491 $ 3,483 Adjustments: FDIC insurance special assessment (16)
Slide 38: Adjusted CET1 Inclusive of AOCI
38 Quarter Ended ($ amounts in millions) 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 ADJUSTED CET1 RATIO Common Equity Tier 1(1) A $ 13,355 $ 13,434 $ 13,185 $ 13,093 $ 12,913 Adjustments: AOCI gain (loss) on securities(2) (1,645) (2,024) (1,369) (2,298) (2,264) AOCI gain (loss) on defined be
Slide 39: Tangible Common Ratios
39 As of and for Quarter Ended ($ amounts in millions, except per share data) 3/31/2025 12/31/2024 9/30/2024 6/30/2024 3/31/2024 TANGIBLE COMMON RATIOS Shareholders’ equity (GAAP) A $ 18,530 $ 17,879 $ 18,676 $ 17,169 $ 17,044 Less: Preferred stock (GAAP) 1,715 1,715 1,715 1,659 1,659 Common shareho
Slide 40: Forward-Looking Statements
40 Forward-Looking Statements This presentation and the accompanying earnings call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. In addition, the company, through its senior management, may from time to time make forward-looking public sta
Slide 41: Forward-Looking Statements (continued)
41 • Our inability to develop and gain acceptance from current and prospective customers for new products and services and the enhancement of existing products and services to meet customers’ needs and respond to emerging technological trends in a timely manner could have a negative impact on our re
Slide 42: Forward-Looking Statements (continued)
42 • Our ability to comply with stress testing and capital planning requirements (as part of the CCAR process or otherwise) may continue to require a significant investment of our managerial resources due to the importance of such tests and requirements. • Our ability to comply with applicable capit
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