Regions Financial Corp at Goldman Sachs U.S. Financial Services Conference Transcript

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

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Thank you, John. Appreciate the prepared remarks. So maybe to build on some of the things that you talked about, [Regions] banks had a really good year. Revenues continue to grow, margins expanding, controlling costs. However, loan growth remains somewhat soft for a variety of reasons, which we'll get into later. But maybe just talk a little bit about what do you think are the key variables that are going to allow the bank to succeed as we move into 2026.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Great. So I wanted to talk about sentiment in markets. I'm not talking about Georgia reading Alabama, but the sentiment in the actual lending markets. I know that you're out in the market talking to clients a lot. Brian, I know that you're obviously out of ton. Maybe we get your updated views on both the economy across your footprint and client sentiment in terms of how you're positioned into the current -- the environment we're about to go into.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : We'll come back to that shortly. So there's a lot of things going on in your markets. On one side, there's banks coming into your footprint, right, including Alabama. Also there's a handful of banks going through big deals including an MOE, which is obviously creating disruption. So when you put these together, are you seeing any of these things impacting competition, either good or bad? And do they, on net, present opportunities for Regions?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : And John, you showed in one of your slides, I think the slide that's up there, you've been hiring a lot across commercial, middle market, consumer, wealth, small business, a handful of other areas talked about relocating branch bankers. Maybe talk a little bit about what are the benefits from -- you're seeing from these if they've started to kick in? How do you think about the payback? And are there opportunities to accelerate these?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : And the company has had better-than-expected deposit performance year-to-date. I think I'm sure the priority markets that you guys have identified has been a part of that. I think you've taken share in seven of them. Maybe just talk about what you guys are seeing on the deposit side, how these strategies in these markets are helping you succeed? Talk about how you're bringing in checking accounts and how you're using pricing to -- as part of your strategy. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 3:40PM, RF.N - Regions Financial Corp at Goldman Sachs U.S. Financial Services Conference David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank I'll start on the consumer side and Brian can talk about the corporate side. So the consumer, we've been very successful. We're growing checking accounts just a little less than 1%, which doesn't sound like a lot. But using third-party data, we're one of the leaders in the peer group. So consistently growing checking accounts, looking at operating accounts of a small business and our commercial business is vital to us. That's how we maintain our profitability. And we're feeling loan growth is going to be picking up here. And so you need that core deposit growth to fund the loan growth. But do you want to talk a little bit about what we're seeing in corporate?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Let's talk a little bit about loan growth, John, Brian, whoever makes the most sense. Your loan growth has been impacted by some of the strategic run-up that you've done. I think it was like $600 million. You got another couple of hundred million to go. Maybe just talk about what you're seeing. Brian mentioned pipelines being up in the 80s percent which sounds very good. How are you feeling about the growth into 2026? And what are some of the areas where you expect to see growth across the bank?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : So we're now two months into the quarter. Just David, any thoughts on how things are progressing? I think we were talking about 1% to 2% NII growth, the margin back in the [360s], some moving pieces on capital markets. Maybe just talk to us about what you're seeing quarter-to-date. Anything changed since you gave us --? David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank Nothing's really changed from the last meeting that we had. NII continues to perform like we expect it to perform. NIR is performing. I will tell you, capital markets is a little more episodic, in particular, the M&A component of that. So we have a nice pipeline of M&A opportunities, as Brian just mentioned. Whether those get closed in the quarter or not is what is the push pull on that. So we'll see what happens there. The rest of the businesses are doing fine, expenses well controlled. Credit well controlled, criticized classified, nonperformers continuing to get better. We will have elevated charge-offs coming from our portfolios of interest. And then we think we get next year, we'll be in that 40 to 50 basis points range for charge-offs. Capital continues to look good. We generate a lot of capital in the quarter. When you don't have loan growth, you have a lot that you can put to work or buy it back. So we hadn't had a lot of loan growth, so we've been able to buy back more than normal, and that's been helpful. So yeah, all in all, I think we're going to finish strong in the quarter. More importantly, set us up for, I think, 2026 could be very good for us as well.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : So you guys have had tremendous success in fee income this year, wealth, capital markets payments. I think you've had 5% growth year-to-date. As you look ahead, what are the areas that you're most excited about into '26? Can we continue to see this kind of momentum? And where do you feel your value proposition is really differentiated in these areas? David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank Yeah. I think we'll continue to see growth in those same areas. So let's just go through five major categories. Service charges will continue to grow. Treasury management is embedded in that. Those service charges grow because we are continuing to grow customers and growing new logos in the commercial space or checking accounts in the consumer space is important to us. Interchange continues to be pretty resilient. We should see that continue to grow a bit. Wealth management has done a good job of adding people. So we have part of our folks, you can see on the slide, still up 30 wealth -- private wealth advisers that will help us grow customers. And assuming the market continues to stay healthy, which I think it will, that will be supportive of continued growth in wealth management. Mortgage should have a little bit more of a rebound. We've gotten the 10-year down a little bit. It drifts even a little lower, you're talking about 6 and change of 30-year fixed rate mortgages, that gets to be pretty affordable. If we get housing costs to come down a little bit, which -- to make it more affordable for everybody, that would be helpful, too. So I think those are the five categories.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : And I appreciate you going to capital allocation because that's where we were about to go next, John. So when I think about your capital, almost 11% CET1, 9.5% on an adjusted basis, right in the middle of your target range. Maybe let's just start off talking about what the capital priorities look like at this point.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : You had an announcement this morning, David. I think it was a new $3 billion buyback over two years. Maybe just talk about your ability to utilize that? And how do you think about toggling that between using it to buy back shares versus what sounds like it's going to be a better loan growth environment. Can you use all of that even in an improving loan growth environment? David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank Yeah. So first off, don't read too much into this, all right? So our -- we had a $2.5 billion share repurchase plan that was approved that was expiring in December 31. So we had our Board meeting yesterday. It just happened to hit today. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 3:40PM, RF.N - Regions Financial Corp at Goldman Sachs U.S. Financial Services Conference And really wouldn't think about the conference for that. I didn't get a lot of questions, but that $3 billion is just -- we're not going to use all that most likely in that period of time, but it gives us cushion to be able to do it if need be. We much rather use our capital to grow. As John just mentioned, our first order of priority is to support our business. And we'd love to use that as much for loan growth as we can. It's -- second goes to the dividend, having an appropriate dividend for the earnings stream that we have that's protected under any kind of reasonable circumstance. And then we bought mortgage servicing rights before. We've done some securities repositioning when it made sense. Those are getting harder to make sense. We've bought some non bank businesses over time. And then we really don't like to buy our stock back, but we will do that because we don't want our capital to continue to accrete too much. So we think our 9.5% number is the right number for us, for our business model, for our risk profile. We know there's a lot of discussion on some G-SIBs that what they think their capital can go to. We determine what our capital needs to be based on our risk profile with all the data we have going back to the great financial crisis. So 9.5% is a good number for us, and you should see us monitor pretty close to that. And so if you just do some math, you know that with loan growth, you can't spend all that in the share repurchase, but it's available for us should we need it.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : So John, obviously, you did not mention M&A in your traditional bank M&A in your remarks. There was obviously an article in the American Banker that identified the regions as financial institution. It may you sound like a suspect than a crime. Any comments that you'd want to make about that? And if not, what would strategically be a priority for you if you did choose to pursue M&A?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : I guess with the systems integration, it' almost like you're doing an acquisition on yourself.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : A couple of other questions I want to touch up on in the last five minutes here. So David, I think earlier in the year, you promised positive operating leverage for next year, which was good to hear. Obviously, there's a lot of things going on in the expense base, systems upgrade, further investments in tech, frontline bankers. How do you think about balancing the pace of investment with generating operating leverage? And given that next year should be a stronger top line year, how do we think about operating leverage relative to the amount you did this year? David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank Yeah. So I'm still not going to answer your question until January, but a good try. We believe we can generate positive operating leverage in 2026. You're right that as we talked about, the revenue side should be pretty robust. We've been pretty good expense managers, I'd say. Our campaign annual growth rate over the last eight years, I think it has been about just under 3%, 2.8%. And we do a good job of staying on top of our pay (technical difficulty) people and vendors and all third parties, and we're going to continue to do that. We do know that we need to make investments, in particular, in people. We've already got tech investments. John just talked about that. But we're also investing in people, and you see -- well, they're not on your slide, but 180 people that we're investing in, and we can take that and spend that money. So we still have a discussion with the businesses about generating positive operating leverage. We think that's important, but we also have to make investments. So you're trying to figure out where the sweet spot is. I had talked to you or somebody earlier that said we will generate positive operating next year. It's likely to be -- is it going to be consistent with this year? We'll have to wait and see. But it depends on how -- what our timing of expenses and how fast we get all the people in. But--

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Yeah. That was actually going to be my next question. So I appreciate you answering that. So maybe let's just get an update on the systems upgrade. You talked about it not being complete until '27. Talk about how it's progressing. And then Brian made a comment about, like as an example, opening small business accounts. This will give you an ability to do so digitally, you can't do now. Like maybe just talk about any other things that this is going to allow you to do that most peers can't do because obviously, not many banks have gone through this kind of technological overhaul.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : And David, any financial impact to think of? Is that already sort of baked in to that? David Turner - Regions Financial Corp - Chief Financial Officer, Senior Executive Vice President of the Company and the Bank Yeah. Cost of all that's baked in. We do think the benefits of having this new system in will -- it's going to be increase our speed to market dramatically. Today, if we want a new product or service, all the coding that has to go into an old mainframe system just takes forever after you got to test it and all that. This will be more of a plug-and-play type development of an API that you can let it rip pretty quickly. And we think that's going to be a game changer relative to the peer group. And to your earlier point, nobody has really gone through this type of a core modernization yet. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 10, 2025 / 3:40PM, RF.N - Regions Financial Corp at Goldman Sachs U.S. Financial Services Conference