Regions Financial Corp Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ken Usdin - Autonomous Research - Analyst : So I just want to level set and just make sure we're very clear with everybody that it was the stuff you had set aside, David, that you ended up with, that was stuff you've been talking about for a long, long time, and it looks like underneath that, once those are resolved, just can you just give an update for how you're seeing any other portfolios that you're watching, obviously, given the tone that we're talking about this week across the group?

Question: Ken Usdin - Autonomous Research - Analyst : Appreciate all that color. So one more point on that loan point you made that there has been some continued, like you said, paydowns in a bunch of the portfolios. So how close are we to getting to what you would anticipate to be the bottom, just looking at a bunch of the ending period balances and also just noting that C&I was a little bit lower this quarter probably in part to what you were just speaking to. Thanks.

Question: R. Scott Siefers - Piper Jaffray Inc - Analyst : I guess I want to follow up just a little just so I make sure that I understand kind of what's being reduced. When you make the comments about portfolio shaping, are those did those indeed align with what you'd characterize as sort of portfolios of interest on the credit side? In other words, the stuff that you're charging off, is that also the stuff that's where we're getting those balance reductions? Or are those like mutually exclusive?

Question: R. Scott Siefers - Piper Jaffray Inc - Analyst : Okay. Wonderful. And I guess regardless, it sounds like we're getting to a point where you enter next year is kind of free and clear anyway. So -- but nonetheless, I appreciate that. And then John, just a broader strategic question. You've been pretty clear that you all would rather focus internally than engage in M&A. Just curious if your thoughts have changed now that you have a smaller competitor in your footprint getting much larger and then one of your Category 4 competitors making its way into Category 3 with a deal of its own. Any change now that the ground is shifting a little in your thinking at all?

Question: John Pancari - Evercore Group L.L.C. - Analyst : So back to the charge-offs and the resolutions that you're working through, just for a little bit more color there. Is this more a function of a more proactive posture by regions to address some of these lingering and previously identified issues? Or is it more a function of borrower progression that they're now at the point where you can quantify the lost content and then address them?

Question: John Pancari - Evercore Group L.L.C. - Analyst : Okay. Got it. And then secondly, also related to this, I guess, back to the portfolio shaping efforts around the exit portfolios. If I could maybe ask Scott's question another way. How much of the rationale in these portfolio shaping actions is rate is driven by the rate environment and the backdrop versus the credit risk dynamic.

Question: John Pancari - Evercore Group L.L.C. - Analyst : Got it. And if I could just ask one more related to that. What's the risk that or the potential that you flagged the remaining $300 million that you're working through? That's still a potential that it could continue to increase even after that and be more of a growth headwind or anything as you look at it.

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : You guys don't have a dog in this fight, so I'm asking this more from a theoretical point of view. These issues we're seeing with some of your peers in the regional bank space on fraud. Can you share with us from your experience, when fraud happens, is it driven more because the people that are running the organizations are crooks?Or is it more that the underlying fundamentals really deteriorate in the first action they may take is to kind of cover it up with fraud, which eventually leads to bad outcome. Do you guys have a sense from just your experience when you go back a number of decades how this kind of develops?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Very good. Very helpful. And then coming back to your earlier comments, John, about your deposits and I think deposit market share from the FDIC data. There's always been a concern that the big trillionaire banks are going to take advantage of deposits from the regional banks obviously, you're not seeing that. Can you share with us the strategies you're using that you have seen your success in deposit growth and maybe align some of the fears that some investors have that regional banks are not going to be that competitive against these trillionaire banks.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : I just wanted to follow up, when we think about just the expense growth this year, 2% means you have best-in-class ROE. Just remind us, you started this, I think, a year ago in terms of just the investment spend. And to what level do you think you could see like investment spend pick up, be it branches, you obviously have a big technology conversion coming up. And kind of how are you thinking about growth versus the ROE math's, whether better growth for a slightly lower ROE would be okay. Just would love your thought process there. David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank Well, to your point, we continue to make investments in our technology initiative. That's kind of in our run ready. We don't expect that to change materially year-on-year. We have made investments in bankers and we will continue to do so, in particular, in those eight priority markets that we have listed. It's important for us. It's a great question because it's a good challenge in terms of how much money can we invest today without having too much negative impact on our return. The return on tangible common equity is critically important to us. John mentioned it in 2015, we became fixated on capital allocation because we think having an appropriate return correlates real tightly to your share price, and that's what shareholders want you to do. That being said, we want to grow, too. So we're trying to be balanced in terms of how much investment we make while keeping the returns relatively high. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 2:00PM, RF.N - Q3 2025 Regions Financial Corp Earnings Call And so we do -- we have begun to invest in our network and in marketing and things of that nature to change a little bit of the growth trajectory. You should see us grow things like small business relationships, which will come with deposits, not really as much as loans but deposits which is the fuel for how we really make money going forward. So as loan growth picks up, we want a good core low-cost funding to be right there with it. And that's why we started making the investments like you said, about a year ago, and we'll continue that into 2026.

Question: Betsy Graseck - Morgan Stanley - Analyst : So I had two quick questions. One is on the CD roles that are coming in the coming quarter. Can you give us a sense as to the NIM impact there or basis point impact in deposits? David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank Well, it's $5.5 billion. It really just depends on what happens with rate there. And our -- that's a big driver of our improvement from 3.59% to the mid-3.60%s. We also have some back book opportunities to change as we go through time. So we're trying to shortcut the math for you and tell you that's the driver of probably the single -- well, that and the front book, back book repricing, those are the two big drivers of getting to the mid-3.60%s.