2024 Results

Regions reported net income available to common shareholders of $1.8 billion or $1.93 per diluted share in 2024, down from $2.0 billion or $2.11 per diluted share in 2023. This decrease was primarily driven by higher funding costs, which included an increase in deposit costs due to continued remixing of deposits into higher-interest-bearing products.

Net interest income (taxable-equivalent basis) totaled $4.9 billion in 2024, down from $5.4 billion in 2023. The net interest margin (taxable-equivalent basis) was 3.54% in 2024, a 36 basis point decrease from 2023. The provision for credit losses totaled $487 million in 2024, down from $553 million in 2023, driven by asset quality normalization.

Non-interest income was $2.3 billion in both 2024 and 2023. Increases in capital markets income and other categories were largely offset by net securities losses and decreased card and ATM fees. Non-interest expense decreased to $4.2 billion in 2024 from $4.4 billion in 2023, driven by declines in operational losses, FDIC insurance assessments, and miscellaneous expenses, partially offset by an increase in salaries and employee benefits.

Regions’ effective tax rate was 19.6% in 2024 compared to 20.5% in 2023.

Capital

Regions participates in supervisory stress testing conducted by the Federal Reserve, and its Stress Capital Buffer (SCB) is currently floored at 2.5%. In 2022, the Board authorized the repurchase of up to $2.5 billion of the Company’s common stock, and as of December 31, 2024, Regions had repurchased approximately 34 million shares under this program.

At December 31, 2024, Regions’ Tier 1 capital and Total capital ratios were estimated to be 12.17% and 14.06%, respectively, well above the regulatory minimums for a well-capitalized bank.

Loan Portfolio and Credit

During 2024, total loans decreased by $1.7 billion or 1.7% compared to 2023, primarily driven by a decline in the commercial portfolio. Net charge-offs totaled $458 million, or 0.47% of average loans, in 2024, up from $397 million, or 0.40%, in 2023. The allowance was 1.79% of total loans at December 31, 2024, up from 1.73% at December 31, 2023.

The coverage ratio of allowance to non-performing loans excluding held for sale was 186% at December 31, 2024, down from 211% at December 31, 2023. Regions monitors certain portfolios, such as office, senior housing, and trucking, more closely due to elevated risk from factors like higher interest rates and adverse market conditions.

Liquidity

At the end of 2024, Regions Bank had $7.8 billion in cash on deposit with the Federal Reserve Bank, and the loan-to-deposit ratio was 76%. Regions also maintains significant borrowing capacity with the Federal Reserve and the FHLB, as well as a shelf registration statement that can be utilized to issue debt and/or equity securities.

General Overview

Regions’ profitability is dependent on its ability to generate revenue from net interest income and non-interest income sources. Net interest income is primarily the difference between the interest income Regions receives on interest-earning assets, such as loans and investments, and the interest expense it pays on interest-bearing liabilities, principally deposits and borrowings.

Non-interest income includes fees from service charges, card and ATM fees, mortgage servicing, investment management, capital markets, and other customer services. Results of operations are also affected by the provision for credit losses and non-interest expenses such as salaries, equipment, occupancy, professional fees, and FDIC insurance assessments.

Regions’ business strategy focuses on providing a competitive mix of products and services, delivering quality customer service, and continuing to develop and optimize distribution channels that include a branch network, as well as electronic and mobile banking.

Business Segments

Regions has three reportable segments: Corporate Bank, Consumer Bank, and Wealth Management, with the remainder in Other. The Corporate Bank provides traditional commercial banking services, the Consumer Bank provides retail and mortgage banking services, and the Wealth Management segment provides asset management, wealth management, securities brokerage, and other specialty financing services.

Critical Accounting Estimates and Related Policies

The most significant estimates and assumptions for Regions relate to the allowance, fair value measurements, intangible assets, mortgage servicing rights, and income taxes.

The allowance represents management’s best estimate of expected losses over the life of the loan portfolio and consists of the allowance for loan losses and the reserve for unfunded credit commitments. Key inputs include loan risk ratings, maturity dates, days past due, FICO scores, collateral values, and Regions’ economic forecast.

Fair value measurements are used for certain assets and liabilities, such as debt securities, mortgage loans held for sale, and mortgage servicing rights. Regions uses various valuation techniques, including discounted cash flow models and market prices, to determine fair value.

Intangible assets, primarily goodwill and other identifiable intangible assets, are reviewed annually for impairment. Regions completed its annual goodwill impairment test in October 2024 and determined that it is more likely than not that the fair value of the reporting units exceeds their carrying values.

Mortgage servicing rights are measured at fair value, which requires estimates of future net servicing cash flows, prepayment rates, discount rates, and servicing costs.

Income taxes involve estimates of accrued taxes, deferred taxes, and the realizability of deferred tax assets, which can change due to new legislation, judicial guidance, or changes in operating activities.

Provision for Credit Losses

The provision for credit losses is used to maintain the allowance at a level that management believes is appropriate to absorb expected credit losses. During 2024, the provision was $487 million, down from $553 million in 2023, driven by asset quality normalization.

Non-Interest Income

Non-interest income was $2.3 billion in both 2024 and 2023. Key changes include:

• Service charges on deposit accounts increased 3.4% due to higher treasury management fees, partially offset by lower overdraft fees.
• Card and ATM fees decreased 7.3% due to credit card rewards liability adjustments and lower foreign ATM revenue.
• Capital markets income increased 56.8% due to less negative credit/debit valuation adjustments and higher transaction volume.
• Mortgage income increased 33.9% due to higher servicing income from bulk purchases of mortgage servicing rights.
• Net securities losses of $208 million were incurred as Regions sold debt securities and reinvested the proceeds at higher yields.

Non-Interest Expense

Non-interest expense decreased to $4.2 billion in 2024 from $4.4 billion in 2023, driven by:

• Declines in operational losses, FDIC insurance assessments, and miscellaneous expenses.
• Partially offset by a 4.7% increase in salaries and employee benefits due to higher incentives, base salaries, and benefits expenses.

Income Taxes

Regions’ effective tax rate was 19.6% in 2024 compared to 20.5% in 2023, primarily due to lower pre-tax income in 2024 causing tax preferential items to have a more favorable impact.

Balance Sheet Analysis

Cash and cash equivalents increased $3.9 billion to $10.7 billion at the end of 2024, driven by an increase in cash balances on deposit with the Federal Reserve Bank.

Debt securities increased $1.8 billion to $30.7 billion, as Regions purchased additional residential agency mortgage-backed securities and U.S. Treasury securities, partially offset by the sale of shorter-duration commercial agency mortgage-backed securities.

Total loans, net of unearned income, decreased $1.7 billion to $96.7 billion, primarily due to a decline in the commercial portfolio, specifically commercial and industrial loans.

The allowance for credit losses was $1.7 billion at the end of 2024, representing 1.79% of total loans, up from 1.73% at the end of 2023. Non-performing loans, excluding those held for sale, increased to $928 million, or 0.96% of total loans, from $805 million, or 0.82%, at the end of 2023.

Deposits decreased $185 million to $127.6 billion, as growth in corporate and wealth deposits was offset by declines in consumer and other deposits. The deposit mix continued to shift towards higher-interest-bearing products, with the average rate paid on interest-bearing deposits increasing to 2.28% in 2024 from 1.56% in 2023.

Outlook

Regions’ financial performance, like that of many financial institutions, is influenced by economic conditions, competition, new legislation and regulations, and monetary and fiscal policies. Lending, deposit activities, and fee income generation are impacted by factors such as business spending, consumer income and spending, capital market activities, and customer preferences.

Regions’ business strategy focuses on providing competitive products and services, delivering quality customer service, and optimizing its distribution channels. The Company will continue to monitor economic trends, credit quality, and regulatory developments that could impact its future results.

Overall, Regions reported a decline in net income and net interest margin in 2024 compared to the prior year, primarily due to higher funding costs. The Company maintained strong capital levels, saw a decrease in the provision for credit losses, and experienced mixed results across its non-interest income and expense categories. Regions will need to navigate a potentially more challenging economic environment in the coming years, but remains focused on executing its strategic priorities to serve its customers and generate long-term value for shareholders.