RF - Earnings call transcript Q2 2024 | Regions Financial Corporation

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Operator

Good morning, and welcome to the Regions Financial Corporation's quarterly earnings call. My name is Christine, and I will be your operator for today's call. [Operator Instructions] I will now turn the call over to Dana Nolan to begin.

Dana Nolan

Thank you, Christine. Welcome to Regions' Second Quarter 2024 Earnings Call. provide regarding will results. David and high-level our commentary John

These disclaimer our information, Relations Earnings presentation website. include and statements prepared section cover and comments materials, our Investor documents, which the forward-looking non-GAAP Q&A. our in are of disclosures available

now over to turn John. call the will I

John Turner

Thank and earnings of earnings $XXX everyone. resulting in good We our $X.XX. you joining quarter you, today. strong . This second share Dana, per of call morning, morning, appreciate we reported million,

at interest quarter, $X.X and revenue second revenue resilient the total to reported an relatively stable first and compared on the basis billion For $X.X adjusted remained a basis income fee on billion modestly quarter. as declined net remained

deposits the adjusted and focus and declined stable quarter-over-quarter driven year. Average improvement in execution quarter, in while declined ending sequentially. In proud second broad-based and quality noninterest charge-offs stable remain quarter. ending also this are loans expected, as Average remained at as selectivity relatively reflecting client expenses the continued We of level demand, remainder asset portfolio. our business modest results, customer successful net of deposits relatively consistent the to tax-related Nonperforming patterns. plan. we're well modestly quarter improved with criticized overall by experienced As loans paydowns for seasonal and the quarter-over-quarter, on expected summary, during this services approximate of remained our the strategic

as making conditions the we're positioning and great in technology benefit have We services plan, improve. products macroeconomic investments are and talent, a us to in and

experiencing more years built our favorable our us positions with communities brand many significant we've Our And long-standing us and footprint we to markets, opportunities. provide in well. continues are the while competition over presence, commitment to

results. focused remain no execution, generating we quartile top doubt that as have we can continue long I As on

highlights the will quarter. David some provide Now regarding

David Turner

Thank you, John.

with relatively on balance sequential Average remained and loans stable start ending quarter Let's sheet. the a basis.

macroeconomic and loans home stable, in modest card other beginning are miscellaneous growth political and loans while loans. to near-term residential X%. loans uncertainty, consumer remained in as rebuild. credit increased portfolio, and Despite business the stable relatively declines equity Average pipelines by mortgage average ending Within remained also consumer offset were consumer

to XXXX. From second deposits, continue deposit and we down average to tax early standpoint, quarter basis loans anticipated deposits which expect a XXXX compared relative stable largely on average prepandemic to stable remained is patterns, modestly reflect be declines while summer These declined returned to stability balances We the in relatively to fall. for in seasonality. Having an X%. expect typical ending

slowed. has has demand Competitive and pricing promotional remixing deposit for expected, products customer As stabilized.

Over the low remained second range. in proportion quarter, the has noninterest-bearing XX% to of relative steady deposits the deposits total

Now trends interest the yield the income. expectations, basis resulting let's during asset primarily points, increase from shift interest outperforming net reflects net The and modestly interest expectations. exceeding income average our stabilizing quarter, Net deposit cash declined levels. Also expansion. margin to increased X higher only

will beta in and deposit beta As remixing the full to slowed at expected, XX%, increases deposit this The and interest-bearing cycle peak cycle. continue a be expect meaningfully the remained we deposit quarter. cost stable mid-XX%

million years of approximately of the quarter pretax the includes late an in quarter. $X yields this X.X billion replacement levels. securities rate maturity recorded to the from benefited relative payback fixed the higher This loss and estimated Asset current loans at repositioning of period and of securities rate with $XX

to used grow deposit fixed asset the of benefits persists. over issuance relatively duration balance maintain to like $XXX in we successful an our the turnover a order of bolster believe is net rate and interest as half income year the neutral improve has with securities point million to inflection continue to June, trends the reached in and a Following sheet second a purchase position of and liquidity. We debt amount similar proceeds expected

expectation As repositioning interest securities levels, a and a under pushed array further favorable $X.X debt billion range range. XXXX, our end income and we issuance towards with profile have narrow stabilizing deposit along environment, net economic our billion to for portrays This of move funding a of well-protected upper outcomes. $X.X wide into the possible

let's Adjusted at lower fee a revenue markets driven and Now mortgage primarily capital take income performance look X%, income. declined quarter. this noninterest by

and revenue seasonally run the recall, in near term, in deals elevated of as million But the markets XXXX. you quarter. The If pushed capital per that first income Over repeat. $X by capital will positive mortgage adjustment more markets to valuation quarter a in interest were expect from our rate favorable million approximately $XXX business several consistently environment, to mortgage generate quarter time company's we activity quarterly first it in of a driven fourth we $XX the experienced was in quarter expect the around pipeline the million. not did decline $XX million can primarily

expect $X.X a the first quarterly Versus activity Helping well. noninterest quarter income reflecting last treasury X% at first to treasury management continues increased full high be revenue X%. year the total of client our record, range. quarter, to has increased strong new lower billion up perform modestly a end was offset fee this and half of to year, sales the billion on quarter's the Based year, we to XXXX wealth $X.X While management X% stronger declines, seasonally second base management's increased while to markets. top of versus now exceptionally income adjusted

expenses and improvement to noninterest noninterest by Let's to during Adjusted HR-related continues expected decreased in and and expense. the occupancy salaries move lower quarter, on compared quarter primarily to normalize within the also expense prior salaries fees. lower and levels. the benefits, losses seasonally primarily Operational current higher first driven and quarter. X% activity attributable in base benefits decreased to was professional salaries The

$XXX full operational business. to approximately prudently committed XXXX remain our continue year to expenses to losses expect to investments managing We be in fund million. We

$X.XX the through occupancy benefits, Based vendor noninterest year, to include outperformance billion. expectation results We towards and will to including expenses and expense spend. top our in revenue now revenue previously the of XXXX full provided largest our end and be year salaries of full on continue focusing and half be $X.X first billion on adjusted which year ranges, between categories, we expect the our

Regarding Provision the allowance equal loss credit as remained stable expense was overall John quality, relatively at during X.XX%. asset for resulting improved net quarter. million, essentially performance the indicated, charge-offs to credit $XXX and ratio at

basis to higher-risk a year the expect within attributable net our portfolios. charge-offs end upper to towards We full XX few range, to large XX our XXXX credits of point be

However, those losses are reserved for. fully

the to a we Assuming outlook, half stable stable relatively to declining ACL the our year. second of economic over expect balances ratio and remain loan flat

and of million capital the common with in XX.X% ended X% consecutive while quarter. common increase dividends to We second during million liquidity. Earlier underlying this share over $X.XX performance. in an quarterly $XXX of increase X turn dividend quarter. Let's supported ratio and in well years financial increase $XX dividend of per the a estimated growth, quarter of XX% stock share, addition equity repurchases the is representing common week, This the year, robust X Tier the by Directors executing to a declared last Board

will of notification remain the XXXX third including capital we quarter Additionally, which stress our XXXX. results, buffer, through of capital preliminary received quarter the stress of the fourth at test X.X% for supervisory

regulatory the provide current We over levels time expect shares along sufficient to This and with consistent common meet earnings. dividend Tier allowing line will proposed to the maintain commensurate our repurchase level strategic near supporting flexibility increase to changes while to equity ratio the with growth implementation term. us objectives X continue and

portion Q&A the to the of move With that, we'll call.

Operator

[Operator Instructions] Our the question Ryan Sachs. comes of line with first Goldman from Nash

Ryan Nash

the some updated of through walk Maybe key the NII guidance. just of drivers

growth expecting And growth about for you second beyond talk where fed magnitude margin the a You're a little bit you're cuts the head half. over does what the you the that expecting. this that can of term? the some can driver, And be all maintain maybe pace think material the medium in second And the that half? nice mean given just won't

David Turner

Yes.

mentioned had we're neutral last rates. we short-term quarter, as to So

and benefit the how deposit this for we we that our costs. so going forward And see control is quarter then

basis up points. costs were interest-bearing our So X

book/back overwhelming that deposit costs. So rest of continue the to the change expect the and you book call securities XXX the that -- when we're is the loans, about, year. And we for basis in now is benefit front getting add points,

need neutral to So we're any them. that. help that. really cuts to -- we don't we But get We're if get, we

So we balance addition be think going driver forward, growth. sheet to in really mentioned, just the what will I

that, we'd to look range. we felt of And NII. so saying the upper can be we all at help end us think comfortable when that And continue grow our at you

did a well. us also as upper towards that'll end march help and the trade We repositioning

us sets growth loan think we're up little back in half XXXX. of good a for of we year. get shape. the It So We in the nicely pretty bit

Ryan Nash

somewhat on commensurate Maybe in it. expenses. in The follow-up increase seemed with Got increase the revenue. the as a expenses

So of expenses next can increase was for there operating of improved pull parse in forward year driven by some you a positive is leverage? maybe better order revenues? the in maybe And position from you much how just to out expenses

David Turner

at Really, Also attributable on for in associated the year expected we Yes. have the for adjustments market expenses you $XX that's the the year, it's to NII the in value our Both primary revenue. that the expectations assets. being about is ranges, driver. that end and -- -- the our increase mentioned, full increase HR impacting upper of NIR million with

We'll see reverses is. likely. year, offset if extent, a half or we the modest the not. And that of that the so lesser first incremental is And what that in increases opportunities experienced to it to aren't some and

we committed half to you consider that operating XXXX. important it's the when this, So firmly over our and generating are of revenue expense, positive all back leverage

Operator

comes Scott from of with Siefers Piper question next Our line Sandler. the

Robert Siefers

the of, generate like appropriately you it to take a maybe commercial demand point. maybe you it the seems competitive like tough competitive highlight would thoughts, overall lending. could was wants speak landscape. at sort what be better this the in loan it's own please your could in I commercial to top everyone just the I southeast, of also so mean, hoping it seems on just And or to please then if for backdrop words maybe everywhere, level, kind but

John Turner

Yes.

So it competitive. is

You're and ideas a our talent. well. -- business competition. right. business great differentiate and and We unique us. plan, And think solutions as believe the execution competing lot. We And We're our in our is to people, quality of we're that seeing providing of talk more our in think more it fundamentally largely about things about We we Those customers. result is markets. that, we're of about the a

We recruit doing good having markets our across success continue that. some and to are

result, by you as estate, down. of might a middle offset industries commercial we're pay in seeing declines specialized as investor As imagine, market business, our in portfolios real in some groups nice our growth and those

some given activity cautious, But about the Pipelines quarters in remain general they concern all than activity muted. is are uncertainty. still somewhat were just is certainly But X stronger year ago. environment, inflation were all, a improving. they than cost, Customers political ago, stronger

not projecting is, And in economic see so I do much the loan our activity think, while and in activity up, by this growth there likely we're expect, we increase would pick that reflected in year, for to XXXX, believe pipeline. we

So yes, continue We we that and on effectively, think of relationships quality largely long-term competing it's the we're focus because we we'll continue the teams to enjoy. competitive. to And build that the that. of

Robert Siefers

for a then, you. Okay, And perfect. David, one quick just

You've done has push incremental especially expectations NII helps up repositionings, the as these great, balance it the of to which through sort sheet year. a of couple been

Maybe deck the speaking of the Would of ones. of at you cetera? a sort reference. What of like you're put et could opportunities, help size iterative this? we think just opportunities to similar frame would for further be the sort look I if ones

David Turner

Yes.

we ratio to opportunities capital. -- That's so for think our look kind like a of we use got be. need to I capital good where continue of this. We've it

for from capital XX% earnings is to that of the to like be us. would it probably good this, something earnings. in the use about size. do. you we And our the would It's extent So can is accretion see This range this biggest through

fairly is one to was like this period. do years. the X.X. period first This our we X.X-year opportunities X So We one, when And like tight. payback in one this was to take payback

and and take in, to And if X it as we do continues to that might opportunity steep, could an an that gives so opportunity take really that. We The of do curve us may get to of advantage well. we that. advantage something in

Operator

Jefferies. with question next Our Ken line the from comes Usdin of

Kenneth Usdin

Question on the deposit side.

Just lower basis the plus better, -- cost thought. probably a lot X interest-bearing the I was than a think on points people lot

some terms of what Just to wondering can change to ability expectation. there that price build that talk if back into you're you're seeing how starting see in and see kind of underneath continuing of to you us kind book forward the catch-up you of where kind through where you're and

David Turner

Yes.

competition we other our XX%, So We XX% because to the things because of some our in go XX%. know deposit cumulative understand been we But we'd so advantage may have short for we rates in when a take the We've feel way. customer deposits we are. didn't said think call it competitive on. has We've there. be still that growth, confident was very or -- middle remixing There not beta our with loan the And aggressive of rates, demand to the on be and industry is we think been like CDs just have the we actually XX%. lot to base. going

a may think, important is us. it to to important. the shift a you're though, cumulative And up are up beta happens. in checking major accounts deposit -- core costs our grow may have deposit therefore, those in I a our tick accounts, range, really see that going on depending we confidence, to think I how the as Continuing and don't operating And lot cost. XX% that change tick result, So of mix

Kenneth Usdin

Yes.

that point are then just ] Okay, Great. NPAs fully come understanding down you're you're quality -- of And you just underlying kind Can also credit. just general most? just the cool. surface to that flesh reserved Great things out And watching on feels? migration? the couple just your underneath follow-up just a credits out and Q any just how your [ for. still for the in the seeing on see points What asset

John Turner

Sure, yes.

for commercial quarters couple metrics thought industries for, our areas we've we true. that second likely I that's think we've highlighted particular we and improving. are So recession, couple specifically in are manufacturing been housing, seems but talked transportation Senior been senior still companies And improving portfolios that housing are through, a a that couple housing. impact, be peak indicated, That's about office. Office, be particularly following. The those of to quarters. in Transportation, credit well. may We've again, operating market, nondurables, still some in to the now we're credit for where senior obviously transportation, transportation, a about asset a think of smaller we office, there's systemic be office, proven modestly guess, spot of we quarter, I our working that concerned that credit. really as by the of classes, would information

We are have XXX about of those single credits, and -- they are XX% tenant.

the getting in work working really got, credit. some additional are in think we we're XX% a it. With support We think, our nonperforming that guidance, approach to XX continuing credits. nonperforming of improvement adding we're about we're We've exposure the are know represent to on multi-tenant. collateral and every we So resolving handle reserved. to that good good total We have are our some XX to our through may I loans credits are And respect on centered XX pretty relationships believe we of well Five loans. that -- We money. a with the to are tenant office-related. those case, instances, customer. additional In working be about

X.X%. book Just asked book, been allowance. office Total point, allowance a Allowance about against multi-tenant against our we've X.X%. about our is as our

continue like and to we're the feel have portfolio, we work So we adequately them. against just reserved to through

large that higher, Otherwise, sort ebb them we flow, They to we'll the timing, a get is reached but work we next upper some coming They have on our we metrics X continue charge-offs expect downgrades and exposures. The think so -- of stability. is predict point XX potentially of things it. should these lower. will go do And little into may we've of the think not, of again issue the stabilization. will see equilibrium, but XX may the level point a guide range. upgrades is or and of quarters. our basis can't and we've resolved That and a a they over we fact reflects So the indicates little end reached which to a toward point that some go credit we

Operator

Does that complete your question?

Kenneth Usdin

It does.

Operator

Erika comes of the from with line UBS. next Our Najarian question

L. Erika Penala

Following Ken's up deposits. on on questions

it and I'm always of consumer expect consumer for be well. us And cuts, of view could telling well. to look how good terms know deposit like? commercial what sort ] the of then break wondering the [ as betas a had versus you've contemplate you your should in You're very could you these in and rate as peak and and could the betas we deposits sort of if we behave expect how helpful betas also down the balances David,

David Turner

Erika, there, I look think rates of like little a we come as down. think you broke it's but will do up betas what kind

So our everybody a have look to It's in It's Page at. XX. good schedule we on do a investor deck. one for

And buckets. really beta so have will, if all you assumptions deposits, X buckets we these in different of with of X

in mid-XX% general, a we rate So expect down beta.

about you accounts repriced if think with of XX% market. so the And those -- about

they're to tied CDs. they're an So short-term or index

So our months. tenors short, it, we kept call fairly X

So would somewhere beta that. And XXX%. to down, those have that a then rates between the XX% as came is chance and for we reprice

cost, our end It had down. you up, to we about of never was of moved going the go the to XX% deposit beta, not If spectrum, probably other move base. low low

about be that beta. it so is, kind XX% middle And have XX% very base is increased. that the XX% because in never is And actually think to we it, low going to of we call

even earlier, we we've could deck. from though beta, in comes book than XX% XX% you XX again to just factoring rate. have better of that. I our down. we through, XX% on so we're advantage mentioned take rates I the deposit as But come in It -- as walked -- that on guidance And of had to they rates, our factored up structured really the in And only math is down which Page investor that be but our only

L. Erika Penala

lot about level there while I'm Got price it's a income. as price [indiscernible] XX% do And if your deposit X.XX%, in it historically, fed being out, Historically, settle Is funds of net cycle where there's to and funds? you Do we it. stopped costs you're -- it trying terms has relative X.XX%, Just been X. at -- where think above through of as had worse? it obviously, that a we usually -- is better? because about up to XXXX thinking as time. help be. to that that, some of And didn't obviously, when sort easing path uncertainty an had ultimate since of fed what we've to we an is where a is at where easing But the rate been you haven't X everybody had need this sure for ends we that's going cycle interest end

David Turner

Yes.

think fed who in maybe margin are going knows. balance I in to to our our to is little are And and in to yield of guess. our to have get kind going that's where funds be. X% you X.X% we're we best be the more terminal terms that, that's of X.XX% have it so of a there, globally you funds and with funds do range, to expectation. a kind structure When -- think fed where think of X%, fed X.XX%, curve normal X.X% sheet

a cut curve, yield rates normalizing we'd with here beyond. XXXX increase our kind the start get at that's pick would to us to be should for X%. as as should up. the have from X.XX%, fed and our climb that inverted can we to net we start to X.XX% margin funds or X.XX% we margin We think said of state interest less and We exit through X.X% as But go and to steady bit start a

Operator

line next Ebrahim question Bank Poonawala America. of Our of comes from with the

Ebrahim Poonawala

conclude XX the there of guess sort maybe, safe a charge-offs. basis I absent XX should a David, with the recession, in than points understand what Is of looking historical environment? sort reason that a I to in just be Slide at years? can why high non-recession of charge-offs guess, charge-offs net generally, it end be the forward XX, last any non-recessionary XX over around. I could is elevated going we've move even quarter But the any given seen,

John Turner

we mean, believe don't I Yes. Ebrahim. so,

obviously, have since the in we're companies. We handle We a relative those acquired on change operate our have frame. as will contribution the be. Capital. portfolio those the EnerBank. composition what loan pre-COVID of We and we charge-offs But good had believe We've to a we that, little Ascentium charge-offs time acquired observing

presence our space. corporate grown the have We in banking

some talked markets business think about as about helps exposures. intentional, being we important customers. So taking as to before, growing That's are we've larger us our we capital more

may us, points time. a view currently I'm the much could little our that's expect of impact believe, reasonable credit But wouldn't given have. portfolios range what to We our the as XX And that somewhere on like, observations, we have appropriate composition point a that higher. I charge-off -- a would higher little historically you XXX be where that generally, time. Similarly, acknowledged, so loans, be time, time a we our numbers. will sorry, is should we from large basis look to we But nonperforming and and the from is XX operate frankly, of time to basis all range. the over metrics kind of lower, based XX between to

Ebrahim Poonawala

we would us hiring give -- just a branches lot ] sense are across customers where or et driver the is the What I to John. start cetera? of need beginning your translate? rate I on say to competitively. bank pipelines [ to I bankers, do from Like a Obviously, the going cuts markets we be the a prepared standpoint, remarks -- where of, sense, going? hiring? color, -- begin pipelines guess, often you That elections be of us are pick need sidelines, helpful. to also good there's order And the get would in we get like your to things what do in a yes, heard in to that off pipelines get investing lending for That's to think Give through borrowing? And Or up. terms

John Turner

So Tampa, maybe where either an significant We're I'll presence time or Nashville, work Dallas, like over made Houston, and we investment, like investing in Orlando, have a had backwards. opportunity markets Houston. Atlanta, in to grow have see

markets, or X first time. the been some there So we've X for

like We and to making have I to -- and Markets to there. With We're to the we're a I'm Dallas, that. Houston investments real grow your presence. strong pipelines, now. trying continuing see build think about on opportunity remember respect question question

Let's see, somebody help me.

Ebrahim Poonawala

would when catalyst What Yes. talk -- speak rate you the it like your Is for to -- cuts? be customers, pipelines building. are it... Is

John Turner

Thank Thank sorry. I'm you. Yes, you.

create eliminating construction lot I So -- a uncertainty materials. our that awarded. this that they're cost And fact of indicated of is I've cost bids, And whether interest supplier a some talking labor it uneconomic than bids. of things with it materials, issue. a of risk is customers cost, they're think time and cost, completing bigger I costs large for who's seeing not with. lot requests of he one a are think They're be comfortable but that's week work still spent lot or but make getting the consistent more to that the costs customers of are high, somewhat

in to just At the pricing. I see so their think I expect changes accommodate pricing. operations adjustments will our -- that customers continue to time, to continue we in adjust And same need

catalysts, are that the for interest costs be I and I believe think on uncertainty impact more will probably factor. overall election likely events probably the occurring. as rates it's those economic the just The geopolitical But broader has activity. more as that's things down, come some do bigger

Operator

comes Bank. the Our of next from Matt O'Connor with Deutsche question line

Matthew O'Connor

the are in in of increased on expenses. as guidance, Just investment well? else off that to the like that spend is end just Or towards The fees higher? anything the of the kind coming range, top terms of because upper

David Turner

million modest market in extent, As income I the $XX value mentioned first that half some the attributable to piece. standpoint. largely a earlier, the expected assets. in year, to we the offset to both was noninterest and interest lesser we've in opportunities expenses That HR-related aren't increase from And experienced net with also on just of And revenue increases increase and associated a a revenue, is likely. incremental adjustments the had

operating generating I the year. this of as committed However, to are mentioned in leverage positive we second earlier, half

Matthew O'Connor

as bit next is term, Okay. some you medium do call of think up, positives couple growth capital maybe it about then And but then I'm of is you a expense rate? a years, down the as would think good you trying like 'XX, helpful. out mentioned as growth loan pin longer like like you the look level? think that's to And -- term, little not the reasonable underlying run a what What higher we the you like picking before, markets just

David Turner

going as You year, be expenses go want discussion what 'XX a you budget forward. to through 'XX to pin us added down but we Every and challenging to didn't on there. we think ought to for our

deck that everybody And costs is the a have growth can. that up. last We've X.X% technology our about continue obviously, annual we it labor If as keep do slide has, over a of had X%. We over try investor go to some compound little to our shows rate, couple in you since years. XXXX, if we look, to inflation,

would committing Matt, not to be at us X% just I that somewhere, give should that least in So expect to range start. that give for X.X% you and yet. January, to a 'XX but the in We'll you guidance

Operator

line of Wells from Spahr the Fargo. next question Chris comes with Our

Christopher Spahr

So question. Ebrahim's follow-up, think, this I is just to a

year. do in to to digit think, this achieve think core So I you've be And are years can X about over with years? -- XX% do X X% the they had could on all next fees What X of the tactical you're start mid-single you or you think Regions hires growth, that good a have if monetizing? you've made kind fees revenues, when X and to of what pace in

David Turner

our look and to continue services for to that value need. fees customers offering generate we products Well, ways by and

acquisitions And end. that seen do so to several us you've

made in that you give 'XX. that Our we're to growth to controlling haven't able our continue do But to We've of declines, expect and think would We'll awful trying of if for percentage -- treasury now. positive to NII fees base. and in revenue stay January. lot generate if investments going time interchange OD Durbin, whether generating in products us, made, have in like operating long we've overcome expense little I NIR increase of could And that management we're our been helped that been it been positive years again including XX% revenue like. an leverage investments and committed in And there. call fees, and always to to that, and great. We've X NIR. we'll to we it, point XX% have to that get operating leverage call we've higher up, through consumer between saying where the said X% and be a running a fees, our we it, XX-XX between finer fee that services would on we've be a But NII we've other have and

quarter quarter, wealth So grow. hit a had this great a to management as continues of They record fact. matter

we to updated. for and So -- look we're given some you generate gets to offset potential impacts some continue if We've ways have information. fee growth going to Durbin that

for grow. incumbent upon to ways I -- us to continue think to look to it's it's continue So

Christopher Spahr

XX. Slide And regarding on then capital

X.X% aspirational of do have at or have Just target target you CETX that at you end? it's all-in, for if any quarter kind

David Turner

Yes.

XX.X%. the to was Basel this economy for we III operating that what uncertainty have partly mean that and -- on X.XX% to of with range regards So CETX. with going a We've increased then X.XX% and quarter, us. reason to uncertainty was of that The to capital to, range

the is the seen everybody. have of within as think of we're striking draft We whatever going III ultimate distance be. we And BX, Basel to has

higher need accrete from here. don't our capital we to so continue let And to

if if our for that. for securities we makes continue we'll fair result, look continue we then reposition those generate look back. grow to loans dividend. stock income, a pay as ways And as a our we've to past. this to And should done of of things sense. all And buy you us we'll use And don't to if We'll all to portfolio, work, that well. continue And that else X course,

going be about expect capital ultimately III. the XX.X%, should until CETX where of get forward we you is Basel so And to of it XX.X%

Christopher Spahr

in -- implies Okay. in second kind But decline your was were a -- so -- it quarter. the of buybacks you that

expect we quarter. fourth increase meaningful third in the So should a and

David Turner

loss earnings. we that the for we the changed, it a million we of pretax with reason -- if that took $XX commensurate we repositioning. the Well, capital securities had on bit And used

it's getting predicated any, than will all on XX.X% nothing common more XX.X% generation The solve use equity for is for if X. how to us capital to to takes Tier big, what that. So of it buyback our we

Operator

comes Our of next Gerard with RBC. from line the Cassidy question

Gerard Cassidy

better kind past about you that have even be are know opinion any any can pipelines, talked could there? John, pull-through have And and subjective you the recently. quantify past? and the they that than give today pipelines, us I but this, in in of hard emphasized than they stronger been color the I you to it's Or these

John Turner

said, I build. pipelines don't seeing, different Gerard, experience. be historical it know that having I would I our we as think than an do that are opinion,

some who also been lines in of relationships lending believe particular, areas got we good lend to insurance improve, businesses customers I in include beginning comprised softness any pipelines, We can't in the strong in rates. where of going time. see I where consumer necessarily But others. we're financial finance that some that are have we're tell be in that pull-through you our some subscription to and example, particularly like as to some energy, change -- really We've book, those actually specialized have over to our that of would an our businesses. services, our seen of And

Gerard Cassidy

have done Very know detail there's the over on more past, over outlook give your years, you, or of acquisitions, capital for the X know, I of kind both or you acquisitions? out you or us of I securities uses for good us the good. you, Possibly, can given How David when look buybacks repositioning. do and to But nondepository banking CETX And recent consolidation. next John or views be on you've X very David, the likely of look that course. at you Regions?

John Turner

thank Gerard, Yes. you.

returns obviously revenue, believe said that added acquisition. historically time, our solid grow have, interested It's diversify our and we over continue our a made for doing execute generate have certainly quartile we if any shareholders we've helped a us improved depository really number that for look have top nonbank we through and those. to acquisitions that our plan, of that can our not It's our plan challenging. We M&A. disruptive. we We We've We performance, in have without capabilities, been positioning. to bank

strategy Our our part currency not of don't But we that is much our years stronger than it think future. acquisition bank It's was in ago. is X, X today. still years, necessarily XX

complicated. our it's pay on won't shareholders. deliver to just We'll said, say not follow today, observe I and what's we're on. plans. executing if market. disruptive. frankly, for we the we plan, think execute we to can will going results continue great we But And focused That's we our As It's attention, our

Operator

next Our Evercore. the from line John of comes Pancari question with

John Pancari

expectations quarter front, your just Back bp. given trends given you to from certain the your on of the do commentary fronts, walk release through slightly And front? that Can quarter ratio ACL that came could this you the seeing on credit, by see your are see what here? you're around down going where peaking if reserve incremental this on credit you about kind X ratio

David Turner

John. Yes,

reserved So upper of stated, said metrics, as you at our improving. those at end so our range, We be look if charge-offs and the would our are for. credit we they're

to down. Where those So through, would or growth I would tell. the what expect hard come which you it's conditions, expect wouldn't is loan to the is, expectation comes you ACL absent changes ultimately, in be your economic question -- down think coming as come it charge-offs --

come information We have all reserve. up that's to the to available look quarter it at take with and the every

look good. the forecasted can X.XX%. absolute reserve prepandemic is in at a pretty But credit a go was downturn was which at looking you you of pre-CECL, of to fourth guide bit in as if the time, quarter was that just were economy that kind that or CECL little our 'XX, and and Something scenario, a was to there of

by portfolio, to current and our level it X.XX%. reserve take that apply time losses though the If portfolio you of at a that would to equate

I bottom one on the of we charts. of that think our put

there, through you expect, if normal us gets coming to that's that. And we over when what in more for short But we it it's have something the generally so fast How know get impossible tell. there, to can you come time, back that towards bleed -- should down like see term, that charge-offs today would is speaking, the down. ACL

John Pancari

like flat expect helping it you to down, helpful. to know but it definitely that is I frame

and question. expense in like confident Matt's in leverage The and of you're front secondly, follow-up operating back the for the year the year, sounds a focusing operating positive half I leverage to this as on next well. -- you're then know on it as positive

now, areas And would that to in about that X.X% that is response talk alluded it rate a could at. Your you long-term to of looks consensus what that that above you expense X%, you that's right lower? put in X% where I guess for year. investing next where in longer-term your anywhere X% to mean running range be you should growth maybe bit a for running X.X% if like ratio are versus could around you efficiency

David Turner

Yes.

you give more to going XXXX we're So for later. guidance pointed

to closer that's ahead Generally that book X.X%. be trying get baked is ourselves. to into going to our not we're So inflation speaking, of

are pay to all improve and expense invest consumer Our investing technology, those compliance. we and have are also adequately in, so a we areas. All take And benefits, of largest lot people. cyber, to category to our in of money salaries to things in those continue

that. We've find there. gets good have to of low-hanging our pay a job fruit's We harder -- that's ways for done base. the not And expense as controlling really we've what to

We of lowest the in have one the group. peer ratios efficiency

over and we that. get that's the than think going But can for be we're time industry. to time. going to hoping leverage were We the to do lower in over I think technology better true today, anybody to We to XXs have we do

And have you that, so doing less reliance on labor. by

And take can of care attrition you as you so labor solutions. implement let technology natural

XX% So on we're technology. it, of X% call spending, to revenue our

new have our Those take projects loan run to some that low a a new how the can. money. to technology big We figure deposit and rate expense as out new pay system, system, for with commercial we in We ledger. keep got works general as

down ratio our are So lower move we to our to goal XXs. to continue efficiency where to to is from get try today that

John Pancari

that's And is you No, mentioned system, since Got running helpful. the still on deposit plan? it. that

David Turner

project, big But we to laid moving a a and it It's according long have way how out. go. we've got to it's

there not we're yet. So

John Turner

Yes. It's John. on running plan,

Operator

Morgan Graseck Our Stanley. next Betsy question comes from the line with of

Betsy Graseck

in just normalized you to want make the sure rate on heard I environment. I right NIM normalized NIM,

And you curve fed heard the on somewhat have right, normalized there starts that's steep it like X%. that with in in inflation, I should if on correctly, So NIM that your year you funds environment And a was noninverted. the curve, environment, X.X%, from be rate range. a normal similar steep normalized right? full saying a to Is or somewhere X.XX% you're X.XX% that basis,

David Turner

right. That's

You it. got

Betsy Graseck

that Okay. And curve, would 'XX again then based or in 'XX. on some time the be forward

David Turner

Yes. That's right.

Betsy Graseck

Okay. just And you time NIM you NII lot take your that I to normalized. and the -- at that where just today your the beginning walk know make on spent that from quarter. part want of is had understand I the a then you obviously, that's Could this call. NIM and drivers to key sure than you NIM the of I higher the

David Turner

costs, as the of down a down, funding come couple I costs to our And Well, to book/back our continue as of book Yes. continue power for come think will front will our rates years. benefit input well. us

the we that perhaps the curve time beta what appropriate, rate we are is down. our and with what a sheet, just that I drives have that's up we It's mean, you from So the you think, of conservative. about. period of repricing down beta to X.XX% steepening just range think balance mid-XXs, where in about the X.XXs we talked in

high-yielding important an and the down continue driver interest grow nice kind to balance sheet get returns, some of assets business a higher to to that accounts have the so grow net And grow input and have deposits. drivers to we checking and cost input it's cost -- to losses, to but have of operating on accounts margins. Continue they consumer huge the lowering are nice a of

side consumer those in And the and earlier markets those get investments reasons, business the why for us important John mentioned for both checking so of in and so accounts. that's side, it's accounts continue that to make operating to to

Betsy Graseck

Yes.

you're or but So I are you changes should drive asset it as as sensitive neutral decliningly you fall? as sensitive or do the with read are I I -- do so higher it liability that read NIM these rates

David Turner

neutral rates. to We're the short

then and start long is the deposit to to will come from help And benefit -- we the And down, end what curve happen rate down. as continue see anchored NII on continuing short and stay benefit you will costs if cuts, Obviously, we the well. that you comes going seeing the margin, that steepen. you're and we'll assets and will so keep to rate to have fixed-rate extent our still

Operator

like would to the back for comments. now over John to Turner closing call I turn

John Turner

all weekend. proud our much. you great very thank our well. appreciate Have We're, interest team our Well, We Okay. quarter, your the plans again, of proud company. in a who's of executing

Operator

teleconference. concludes This today's

You may time. disconnect your at this lines

Regions Financial (RF) 19 Jul 242024 Q2 Earnings call transcript