Regions Financial Corporation Q4 FY2025 earnings call

• Acknowledged David Turner's retirement and introduced Anil Chadda as new CFO. - Reported strong full-year and fourth-quarter earnings. - Made progress in hiring bankers, modernizing core systems, and launching a new mobile app. - Loan growth faced challenges but net interest income benefited from fixed asset turnover. - Adjusted noninterest income grew, expenses were managed prudently, and capital was grown. - Asset quality improved with decreases in criticized loans and nonperforming loans, and allowance for credit losses decreased.

Full-year earnings were $2.1 billion, resulting in adjusted earnings per share of $2.33. Fourth-quarter earnings were $514 million, with adjusted EPS of $0.57. Return on tangible common equity was over 18%. Net interest income grew 2% linked quarter, with net interest margin rebounding to 3.7%. Adjusted noninterest income grew 5% in 2025. Loans: average and ending loans were stable, with over $2 billion in strategic runoff. Deposits: ending balances were up ~$800 million, average deposits were flat, and deposit costs were reduced. Asset quality: annualized net charge-offs as a percentage of average loans increased to 59 basis points, but business services criticized and total nonperforming loans decreased, with the allowance for credit losses decreasing $27 million.

• Net interest income expected to grow 2.5%-4% in 2026. - Adjusted noninterest income expected to grow 3%-5% in 2026. - Adjusted noninterest expense expected to be up 1.5%-3.5% in 2026 with full-year adjusted positive operating leverage. - Net charge-offs expected to be between 40 and 50 basis points in 2026.

• Macro conditions could impact net charge-offs. - Exposure to middle and long-term rate fluctuations affecting asset repricing. - Potential impact of regulatory changes on capital and liquidity.

Q: Ryan Nash asked about loan growth guidance, C&I, consumer, and runoff.

A: John Turner said customer sentiment is positive, pipeline activity is up, they're hiring bankers, and most runoff has been worked through.

Q: Scott Siefers inquired about capital markets performance and outlook.

A: David Turner and John Turner mentioned seasonality in loan syndications, pipeline in M&A, and hiring in related businesses will drive growth.

Q: Gerard Cassidy asked about credit quality and allowance for credit losses.

A: John Turner and David Turner discussed improvement in criticized loans and NPLs, and expected allowance trends to continue.

Q: John Pancari questioned capital buybacks and M&A.

A: Anil Chadda and John Turner said capital is used for loan growth first, then buybacks if not needed, and M&A is not part of current strategy.

Q: Peter Winter asked about competition and tech modernization.

A: John Turner said it's an opportunity, they're in good markets, and tech modernization is in user testing phase with benefits.

Q: Christopher Spar asked about expenses and tech spend.

A: Anil Chadda said they focus on funding growth through positive operating leverage and prudent expense management.

Q: David Chiaverini asked about hiring pace and loan growth outlook.

A: John Turner said hiring is upticking, and momentum will continue in loan growth.

Q: Ebrahim Poonawala asked about systems conversion and loan growth sentiment.

A: John Turner said systems conversion is expected to be completed by late 2027, and customers have enough clarity on borrowing plans.

Q: Betsy Graseck asked about NIM and tech spend.

A: David Turner explained NIM components and tech spend is a new level set of 10-12% of revenue.

Q: Chris McGratty asked about consumer checking growth and tech spend.

A: John Turner said they're seeing growth in consumer checking with digital originations, and tech spend range is 10-12%.

Q: Erika Najarian asked about Anil's priorities.

A: Anil Chadda said continuing to execute the strategic plan is the top priority.

Q: Matt O'Connor asked about CRE recovery leverage.

A: David Turner and John Turner discussed opportunities in CRE with strong teams and products, expecting growth.