Regions Financial Corporation · NYSE:RF
Regions Financial — Q4 2024 Earnings Presentation
41 slides from Regions Financial's earnings presentation, Jan 17, 2025
Slide 1: 4th Quarter Earnings
Exhibit 99.3 4th Quarter Earnings January 17, 2025
Slide 2: 2024 Overview
2024 Overview Continue to deliver consistent, sustainable long-term performance 4Q24 FY24 Highlights Key Performance Metrics Reported Adjusted(1) Reported Adjusted(1) • Top-quartile ROATCE(1) of 18% FY24 and 19% 4Q24 vs peer group(2) Net Income Available to Common $508M $1,774M Shareholders • Contin
Slide 3: Positioned For Growth
Positioned For Growth Home field advantage in the southeast…Building trust & serving clients for over 170 years Strong Growth Alongside Strong Markets Priority Market Growth Opportunities(4) Winning in Core Markets Investing for Future Growth Opportunity Proven Track Record of Success Top 5 Market s
Slide 4: Positioned For Growth
Positioned For Growth Investing in people, enabled with technology in markets with highest opportunity to achieve long-term growth targets Investing in Banker Market Opportunity Investments in Technology Expansion ☑ Largest Opportunity Personalization Powered by AI Over the next 3 years, will invest
Slide 5: Loans
Loans Average Loans & Leases ($ in billions) QoQ Highlights & Outlook $98.3 $97.0 $96.4 • Avg and ending loans declined modestly $33.4 $33.2 $33.2 on a QoQ basis • Avg business loans decreased modestly; $64.9 $63.8 $63.2 Customers carrying more liquidity & utilization rates remain below historic 4Q2
Slide 6: Deposits
Deposits Deposit trends are stabilizing Average Deposits by Segment ($ in billions) QoQ Highlights & Outlook $126.4 $126.0 $126.5 $3.0 $2.8 $3.1 • Ending and average deposits grew $7.5 $7.7 $36.3 $7.4 $36.9 $37.4 modestly QoQ, consistent with normal 1.60% year-end seasonality 1.41% 1.47% • Commercia
Slide 7: NII & Margin Performance
NII & Margin Performance NII protected from falling short-term rates; growth from steeper curve/securities repositioning FTE NII and NIM ($ in millions) Drivers of NII and NIM $1,244 $1,230 $1,243 • NII +1% QoQ; NIM increased +1bps to 3.55% ◦ Cash increase partially from higher seasonal deposits red
Slide 8: 2025 NII Expected Range and Assumptions
2025 NII(1) Expected Range and Assumptions NII expected to grow in 2025 from asset turnover at elevated rates, more normal banking environment • Expectation: NII expected to continue growth trend in 2025, with fixed-rate asset turnover at elevated rate levels as the primary driver ◦ 1Q25 NII to decl
Slide 9: Non-Interest Income
Non-Interest Income Non-Interest Income Adj. Non-Interest Income(1) ($ in millions) ($ in millions) QoQ Highlights & Outlook $650 $615 • NIR increased ~2% on a reported basis and $580 $572 $585 $581 included $30M pre-tax loss on securities repositioning in 4Q vs $75M in 3Q; NIR decreased ~5% on an a
Slide 10: Non-Interest Expense
Non-Interest Expense Non-Interest Expense Adj. Non-Interest Expense(1) ($ in millions) ($ in millions) QoQ Highlights & Outlook $1,185 $1,038 $1,069 $1,029 $1,069 $1,038 $53 $— • NIE decreased ~3% on a reported basis and ~4% 65.0% on an adjusted basis,(1) with declines in S&B and Visa Class B shares
Slide 11: Asset Quality
Asset Quality Customers remain healthy - Credit Metrics within expectations Net Charge-Offs(1) Non-Performing Loans (NPLs)(1) $821 $928 $132 $805 $117 $119 0.96% 0.82% 0.85% 0.54% 0.48% 0.49% 4Q23 3Q24 4Q24 0.39% 0.48% 0.49% NPLs - excluding LHFS NPL/Loans 4Q23 3Q24 4Q24 NCOs Adjusted NCOs Ratio NCO
Slide 12: Capital and Liquidity
Capital and Liquidity Tier 1 Capital Ratio(1) QoQ Highlights & Outlook 11.6% 12.0% 12.2% • Declared 4Q common dividends of $226M and executed $58M in share repurchases 4Q23 3Q24 4Q24 • Dividend payout target of 40-50% of earnings (1) • In near term, will manage adjusted CET1(1)(4) Common Equity Tier
Slide 13: CET1 Under Basel III Endgame
CET1 Under Basel III Endgame Basel III Endgame Update Volatility Management • Basel III Endgame has yet to be finalized but expect AOCI to be • Reclassified Available-for-Sale securities into included in Regulatory Capital Held-to-Maturity to reduce volatility; ~14% of • CET1 inclusive of AOCI decli
Slide 14: 2025 Expectations
2025 Expectations Expectations for 1Q25 & Beyond(3) FY 2025 Expectations • NII expected to continue growth trend in Net Interest Income up 2 – 5% 2025, with fixed-rate asset turnover at (vs. 2024 of $4,818)(3) elevated rate levels as the primary driver Adjusted Non-Interest Income up 2 – 4%(4) (1)(2
Slide 15: Appendix
Appendix 4 a
Slide 16: Fourth Quarter 2024 Highlights
Fourth Quarter 2024 Highlights Summary of Fourth Quarter Results Selected Items Impact QoQ YoY ($ amounts in millions, except per share data) 4Q24 Change Change (amounts in millions, except per share data) 4Q24 Net interest income $ 1,230 1.0% (0.1)% Pre-tax adjusted items(1): Provision for (benefit
Slide 17: Growth in Digital
Growth in Digital Digital Usage Sales & Transactions Zelle Transactions (Millions) Mobile Banking Active Users (Millions)(1) Consumer Checking Sales by Channel(4) +49% 5.13 +9% 4.28 2.56 2.62 2% 2% 1% 3.44 2.40 76% 75% 77% 22% 23% 22% 4Q22 4Q23 4Q24 4Q22 4Q23 4Q24 4Q22 4Q23 4Q24 Digital Branch Conta
Slide 18: Investments in Our Businesses
Investments in Our Businesses Investments in talent, technology and strategic acquisitions continue to pay off Corporate Consumer Wealth • Growth in Real Estate Capital • Optimizing location and skill set of • Strong 4Q24 NIR, up 8% vs 4Q23 Markets small balance revenue with our bankers to align tal
Slide 19: Hedging Strategy Update
Hedging Strategy Update Mostly "neutral" IRR position focusing on protecting margin & decreasing capital volatility Asset Hedge Notional(1) (Quarterly Avg) (Annual Avg) Receive-Fixed, Cash Flow Swaps - Loans Pay-Fixed, Fair Value Swaps - AFS Securities Net Asset Swap Position(2) Cash Flow Collars -
Slide 20: Securities Portfolio
Securities Portfolio Provides downside rate protection/liquidity • Portfolio constructed to protect against changes in market rates Securities Portfolio Composition(1) ◦ AFS+HTM duration of ~4.5 years as of 12/31/2024; provides offset to long-duration deposit book Agency/UST HTM, 14% Corporate Bonds
Slide 21: Securities Portfolio - Repositioning
Securities Portfolio - Repositioning Provides efficient use of capital/downside rate protection Multiple, distinct securities repositioning Rationale for Securities Repositioning strategies occurred in 2024 Efficient Portfolio Favorable Capital Use Management Market • Sold mostly shorter-duration ag
Slide 22: Historical Credit Profile
Historical Credit Profile Total Net Charge-Offs 2.00% 1.50% Average Pre-Pandemic Average Pandemic 0.46% 0.35% 1.00% 0.49% 0.50% —% 13 20 22 24 1Q 1Q 4Q 4Q Non-Performing Loans 2.50% 2.00% Average Pre-Pandemic Average Pandemic 1.07% 0.64% 1.50% 0.96% 1.00% 0.50% —% 13 20 22 24 1Q 1Q 4Q 4Q • Non-Accru
Slide 23: Portfolios of Interest
Portfolios of Interest Key Portfolio Metrics(1) Senior Office Trucking Housing(2) Commitments (CMT) $1,546 $1,215 $1,941 Balances $1,473 $1,077 $1,514 % of Total Loans 1.5% 1.1% 1.6% Non-Performing Loans (NPL) $241 $114 $105 NPL / Portfolio Loans 16.3% 10.6% 7.0% NPL Paying Current 57.0% 54.8% 77.4%
Slide 24: Commercial Real Estate
Commercial Real Estate (Outstanding balances as of December 31, 2024) Highly Diversified Portfolio (IRE including Unsecured CRE) Key Portfolio Metrics Other Hotel Healthcare 1.7% 5.1% Res. Homebuilders 7.4% • Unsecured loans for RE purposes generally have low 7.1% leverage, with strong access to liq
Slide 25: CRE- Office Portfolio
CRE- Office Portfolio (Outstanding balances as of December 31, 2024) Key Portfolio Metrics(1) Investor Real Estate Office Portfolio Overview Balances $1,473 % of Total Loans 1.5% 7% 20% 42% NPL $241 58% 80% NPL / Loans 16.3% 93% Charge-offs $32 Class A Class B Multi-Tenant Single Tenant Suburban Urb
Slide 26: Transportation - Trucking
Transportation - Trucking (Outstanding balances as of December 31, 2024) Key Portfolio Metrics(1) Ongoing Portfolio Surveillance Balances $1,514 • The trucking industry enters 2025 showing positive signs with the stabilization of truckload capacity, % of Total Loans 1.6% firm growth in retail spendi
Slide 27: Consumer Lending Portfolio
Consumer Lending Portfolio Consumer Credit Card Home Equity Consumer FICO Scores(1) • Avg. origination FICO 779 • Avg. origination FICO 772 • Current LTV 36% 2% 2% 2% • Avg. new line $8,029 • 60% of portfolio is 1st lien • 4Q24 Yield 14.37% • Avg. loan size $34,788 • 4Q24 QTD NCO 3.94% • $137M to co
Slide 28: Allowance for Credit Losses
Allowance for Credit Losses QoQ Highlights ($ in millions) • 4Q allowance essentially flat compared to the prior quarter, resulting in a $120M $1,728 $56 $1,729 provision expense $(5) $(50) • A consistent ACL resulted from: ◦ Increases in Specific Reserve borrowers driven by non-performing loans in
Slide 29: Base R&S Economic Outlook
Base R&S Economic Outlook (As of December 2024) Pre-R&S period 4Q2024 1Q2025 2Q2025 3Q2025 4Q2025 1Q2026 2Q2026 3Q2026 4Q2026 Real GDP, annualized % change 2.5 % 2.2 % 2.0 % 2.3 % 2.2 % 1.9 % 2.0 % 1.9 % 1.9 % Unemployment rate 4.2 % 4.2 % 4.3 % 4.3 % 4.2 % 4.1 % 4.1 % 4.0 % 3.9 % HPI, year-over-yea
Slide 30: Allowance Allocation
Allowance Allocation Regions "Day 1" CECL ACL ratio on 1/1/2020 was 1.71%. The company has executed a number of de-risking strategies that have improved the overall loan portfolio. Taking the 4Q24 loan portfolio and applying the "Day 1" ACL rates would produce a proforma Day 1 ACL ratio of 1.61%. As
Slide 31: Non-GAAP Information
Non-GAAP Information Management uses computations of earnings and certain other financial measures, which exclude certain adjustments that are included in the financial results presented in accordance with GAAP, to monitor performance and believes these measures provide meaningful information to inv
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Net Charge-Offs and Ratio For the Quarter Ended ($ amounts in millions) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Net loan charge-offs (GAAP) $ 119 $ 117 $ 101 $ 121 $ 132 Less: charge-offs associated with the sale of loans — — — — 35 Adjusted net loan char
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation Pre-Tax Pre-Provision Income (PPI) Quarter Ended ($ amounts in millions) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 4Q24 vs. 3Q24 4Q24 vs. 4Q23 Net income available to common shareholders (GAAP) $ 508 $ 446 $ 477 $ 343 $ 367 $ 62 13.9 % $ 141 38.4 % Preferred dividen
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation NII, Non-Interest Income/Expense, and Efficiency Ratio Quarter Ended ($ amounts in millions) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 4Q24 vs. 3Q24 4Q24 vs. 4Q23 Non-interest expense (GAAP) A $ 1,038 $ 1,069 $ 1,004 $ 1,131 $ 1,185 $ (31) (2.9)% $ (147) (12.4)% Adj
Slide 35: Non-GAAP Reconciliation
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) (1
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted CET1- inclusive of AOCI(4) Quarter Ended ($ amounts in millions) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 ADJUSTED CET1 RATIO Common Equity Tier 1(1) A $ 13,434 $ 13,185 $ 13,093 $ 12,913 $ 12,976 Adjustments: AOCI gain (loss) on securities(2) (2,024) (1,3
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation Tangible Common Ratios As of and for Quarter Ended ($ amounts in millions, except per share data) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 TANGIBLE COMMON RATIOS Shareholders’ equity (GAAP) A $ 17,879 $ 18,676 $ 17,169 $ 17,044 $ 17,429 Less: Preferred stock (GAAP)
Slide 38: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements This presentation may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words “future,” “anticipates,” “assumes,” “intends,” “plans,” “seeks,” “believes,” “predicts,” “potential,” “objectiv
Slide 39: Forward-Looking Statements (continued)
Forward-Looking Statements (continued) • 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 co
Slide 40: Forward-Looking Statements (continued)
Forward-Looking Statements (continued) • 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 abi
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