Summary of Regions Financial Corporation Q3 2025 Earnings Call

1Key Financial Results and Metrics

Net Earnings: $548 million, or $0.61 per share; adjusted earnings were $561 million, or $0.63 per share.

Adjusted Pretax Pre-Provision Income: $830 million, up 4% year-over-year.

Return on Tangible Common Equity: 19%.

Average Loans: Grew 1% year-over-year; ending loans declined 1%.

Deposits: Strong overall growth; consumer deposits were flat quarter-over-quarter.

Net Interest Income: Relatively stable; expected to grow 3-4% for the full year.

Non-Interest Income: Adjusted non-interest income increased 6% linked quarter, with record performance in wealth management and capital markets.

2Strategic Updates and Business Highlights

Regions Financial reported strong deposit growth, achieving top quartile deposit growth and maintaining the lowest deposit costs among peers.

The bank is progressing with core technology modernization, with plans for a new cloud-based commercial loan system in 2026 and deposit system pilots in late 2026.

Continued investments in recruiting quality bankers and enhancing branch banker skills.

Strong performance in non-interest revenue, particularly in wealth management and capital markets, driven by increased M&A activity and commercial swaps.

3Forward Guidance and Outlook

The bank anticipates stronger loan growth moving into 2026, supported by improving corporate client sentiment and increased production.

Full-year 2025 average loans expected to remain stable, while average deposits are projected to increase by low single digits.

Net interest margin expected to rebound to the mid-360s in Q4 2025, with net interest income growth anticipated from fixed-rate asset turnover and prudent funding cost management.

4Bad News, Challenges, or Points of Concern

The bank is facing headwinds from portfolio shaping efforts, particularly in higher-risk leverage lending, with approximately $900 million in targeted loans exited year-to-date and an additional $300 million expected to be worked through.

Increased loan refinancings through debt capital markets resulted in a $700 million reduction in loan balances.

The allowance for credit losses decreased by $30 million, but net charge-offs increased to 55 basis points, with expectations for elevated losses in Q4.

Concerns about credit quality in specific sectors, particularly telecommunications and office portfolios, were highlighted, although overall credit quality remains stable.

5Notable Q&A Insights

Management confirmed that charge-offs were primarily related to previously identified problem portfolios, with expectations for continued elevated charge-offs in Q4.

The bank remains committed to its strategic plan and is not currently considering M&A despite competitive pressures in the regional banking space.

There is confidence in the bank's ability to manage deposit costs effectively, with a target beta of mid-30s for interest-bearing deposits.

Management emphasized the importance of maintaining strong relationships and service quality to compete against larger banks, particularly in smaller markets where they have a significant presence. Overall, Regions Financial Corporation reported solid financial results in Q3 2025, with a focus on strategic growth initiatives and technology modernization, while navigating challenges in loan growth and credit quality.