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- Full Year Earnings: $1.8 billion.
- Earnings Per Share (EPS): $1.93.
- Return on Average Tangible Common Equity: 18%.
- Deposit Growth Since 2019: $12.5 billion.
- Branch Small Business Deposit Growth Since 2019: $2.6 billion or 30%.
- Net Interest Income Growth (Q4): 1%.
- Net Interest Margin: 3.55%.
- Adjusted Noninterest Income Growth (Full Year): 9%.
- Adjusted Noninterest Expense Decline (Q4): 4%.
- Provision Expense: $120 million.
- Allowance for Credit Loss Ratio: 1.79%.
- Annualized Net Charge-Offs: 49 basis points.
- Common Equity Tier 1 Ratio: 10.8%.
- Share Repurchases (Q4): $58 million.
- Common Dividends Paid (Q4): $226 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Regions Financial Corp (NYSE:RF) reported strong full-year earnings of $1.8 billion, with an earnings per share of $1.93 and a top quartile return on average tangible common equity of 18%.
- The company achieved record revenue in its capital markets, wealth management, and treasury management businesses in 2024.
- Regions Financial Corp (NYSE:RF) has a strong and diverse balance sheet, solid capital liquidity positions, and prudent risk management strategies.
- The company has a significant presence in some of the fastest-growing markets in the country, with population growth expected to more than triple the national average.
- Regions Financial Corp (NYSE:RF) plans to strategically invest in talent, technology, and markets, including adding approximately 140 bankers across various segments to drive growth and generate efficiencies.
- Average and ending loans declined modestly on a sequential quarter and full-year basis, with continued softness in commercial real estate originations.
- Net interest income is expected to decline modestly in the first quarter of 2025 due to two fewer days, despite an overall expected increase for the year.
- Adjusted noninterest income declined 5% from a strong third quarter, with some fee categories experiencing declines.
- Provision expense was approximately equal to net charge-offs at $120 million, with nonperforming loans as a percent of total loans increasing 11 basis points.
- The company faces challenges in achieving robust loan growth due to excess liquidity among customers and historically low line utilization rates.
A: David Turner, CFO, explained that they focus on managing headcount, reducing occupancy costs, and optimizing vendor spend to create capacity for investments. They are investing in new deposit and loan systems and plan to hire approximately 140 bankers over the next few years, aiming to generate positive operating leverage.
Q: What are your thoughts on capital management and the potential impact of regulatory changes on capital ratios?
A: David Turner, CFO, stated that they aim to manage their Common Equity Tier 1 ratio closer to 9.25% to 9.75% inclusive of AOCI. They plan to use capital for loan growth, dividends, and share buybacks, adjusting based on loan growth and regulatory changes.
Q: How do you see deposit pricing evolving, and what factors are you most focused on regarding net interest income?
A: David Turner, CFO, emphasized the importance of competitive deposit pricing and growing noninterest-bearing deposits. They expect a 35% down beta on deposit costs and are focused on managing deposit costs and benefiting from a steeper yield curve.
Q: Can you elaborate on your loan growth expectations and the factors influencing risk-adjusted returns?
A: John Turner, CEO, mentioned that they focus on capital allocation and remixing their business to exit relationships that don't generate appropriate returns. They expect C&I loan growth but face challenges in commercial real estate and consumer lending.
Q: What are your priorities for fee income investments in 2025, and how do you see this evolving?
A: David Turner, CFO, highlighted investments in mortgage servicing rights and potential acquisitions in wealth management. They aim to provide products and services that customers need and value, focusing on appropriate pricing for acquisitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.