Regions Financial Corp. Q1 FY2025 earnings call

• Regions remains committed to soundness, profitability, and growth, having strengthened soundness through risk management and improved profitability via diversified revenue and expense management.
• Balance sheet: Average loans stable, deposits grew. Net interest income declined but expected to grow in Q2 and full-year. Fee revenue stable with capital markets down. Non-interest expense increased slightly, expected flat to up ~2% full-year. Asset quality: Provision expense equal to net charge-offs, allowance ratio up.
• Capital liquidity: Common equity tier one ratio 10.8%, executed share repurchases and dividends, transferred securities to held-to-maturity.

Balance Sheet: Average loans remained relatively stable quarter over quarter, ending loans declined 1%. Average consumer loans decreased ~1% in Q1. Average deposit balances grew 1% linked quarter, ending balances increased 3%. Net Interest Income: Declined 3% linked quarter, less than 1% excluding nonrecurring items. Full-year 2025 net interest income projected to grow 1%-4%. Fee Revenue: Adjusted non-interest income stable quarter over quarter, growth in most categories offset by lower capital markets. Full-year 2025 adjusted non-interest income expected to grow 1%-3%. Non-Interest Expense: Adjusted non-interest expense increased ~1% QoQ, expected full-year 2025 adjusted non-interest expense to be flat to up ~2%. Asset Quality: Provision expense ~equal to net charge-offs, $124 million. Allowance for credit losses ratio increased two basis points to 1.81%, net charge-offs 52 basis points.

• Net interest income full-year 2025 projected to grow 1%-4%.
• Adjusted non-interest income full-year 2025 expected to grow 1%-3%.
• Adjusted non-interest expense full-year 2025 expected to be flat to up ~2%.
• Full-year 2025 net charge-offs expected towards higher end of 40-50 basis points range.

• Economic uncertainty impacting loan demand and customer investment decisions.
• Volatility in capital markets affecting fee revenue.
• Potential economic deterioration affecting allowance for credit losses.

Q: Scott Siefers asks about customer reengagement and difference between commercial lending and capital markets A: John Turner responds that customers are in wait-and-see mode, capital markets need lower rates for activity Q: Scott Siefers asks about lower expense growth rate and balance between natural lower cost and actual cuts/delays to investments A: David Turner explains it's due to lower headcount and leveraging technology, not holding off on investments Q: John Pancari asks about loan guidance, line utilization, and growth areas A: John Turner says pipelines mixed, line utilization flat, growth in middle market and real estate Q: John Pancari asks about capital markets pace of buybacks A: David Turner says they'll lean into buybacks until loan growth picks up Q: Ebrahim Poonawala asks about bond book restructuring and comparison to buybacks A: David Turner says they're near end of line for restructuring, calculus is comparing securities repositioning vs buybacks Q: Ebrahim Poonawala asks about customer activity pickup and auto tariffs impact A: John Turner says 90 days to 6 months for stability, no significant auto tariff impact yet Q: Matt O'Connor asks about service charge line growth A: David Turner and John Turner mention growth in checking accounts and treasury management relationships Q: Erika Najarian asks about reserve capturing unemployment rate and allowance going forward A: David Turner explains unemployment rate is for their region, allowance should come down with settled economy Q: Gerard Cassidy asks about convincing regulators/ratings agencies on CECL reserves A: David Turner says they have a good process, but pace of reserve reduction depends on economy settling Q: Christopher Spahr asks about core market actions and fee revenue drivers A: John Turner talks about focusing on bankers in core markets, David Turner mentions capital markets as main driver of fee revenue guidance Q: Betsy Graseck asks about net charge-offs front-loaded and provisioning A: David Turner explains net charge-offs front-loaded, provision expected to match charge-offs unless loan growth or economic deterioration