Regions Financial Corporation (RF) | Investment Case

1. Company Snapshot

1.a. Company Description

Regions Financial Corporation, a financial holding company, provides banking and bank-related services to individual and corporate customers.It operates through three segments: Corporate Bank, Consumer Bank, and Wealth Management.The Corporate Bank segment offers commercial banking services, such as commercial and industrial, commercial real estate, and investor real estate lending; equipment lease financing; deposit products; and securities underwriting and placement, loan syndication and placement, foreign exchange, derivatives, merger and acquisition, and other advisory services.

It serves corporate, middle market, and commercial real estate developers and investors.The Consumer Bank segment provides consumer banking products and services related to residential first mortgages, home equity lines and loans, consumer credit cards, and other consumer loans, as well as deposits.The Wealth Management segment offers credit related products, and retirement and savings solutions; and trust and investment management, asset management, and estate planning services to individuals, businesses, governmental institutions, and non-profit entities.

The company also provides investment and insurance products; low-income housing tax credit corporate fund syndication services; and other specialty financing services.As of March 01, 2022, it operated through a network of 1,300 banking offices and 2,000 automated teller machines across the South, Midwest, and Texas.Regions Financial Corporation was founded in 1971 and is headquartered in Birmingham, Alabama.

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1.b. Last Insights on RF

Regions Financial Corporation's recent performance faced challenges due to muted loan growth, despite solid Q3 results that alleviated sector concerns. The company's decision to actively reduce higher-risk exposures and accelerate buybacks, with capital ratios in the targeted range, supports a stable outlook. However, with deposit growth resuming and a cautious stance on growth, Regions Financial's upside potential appears limited. Its Q3 earnings, marked by higher net interest and fee income, offset expense pressure but did not dispel concerns about sustaining organic growth momentum.

1.c. Company Highlights

Last Price	26.28
Change Percentage	-0.49%
Open	26.28
Previous Close	26.41
Market Cap ( Millions)	23697
Volume	8459205
Year High	27.61
Year Low	17.74
M A 50	24.96
M A 200	23.71

FCF Yield	9.50%
Dividend Yield	3.92%
ROE	12.03%
Debt / Equity	31.94%
Net Debt / EBIDTA	103.19%
Price To Book	1.24
Price Earnings Ratio	10.63
Price To FCF	10.52
Price To sales	2.33
EV / EBITDA	9.15

2. Regions Financial Corporation Delivers Strong Quarterly Earnings

Regions Financial Corporation reported strong quarterly earnings of $548 million, resulting in earnings per share of $0.61, and $561 million or $0.63 per share on an adjusted basis. The company delivered adjusted pretax pre-provision income of $830 million, a 4% increase year over year, and a strong return on tangible common equity of 19%. Net interest income was relatively stable linked quarter, and the net interest margin declined six basis points to 3.62%. Adjusted non-interest income increased 6% linked quarter, driven by growth in several categories.

Publication Date: Oct -20

                                    📋 Highlights
                                    Strong Earnings Growth:
                                                Quarterly earnings reached $548 million ($0.61 EPS), with adjusted earnings at $561 million ($0.63 EPS), driven by 4% YoY growth in adjusted pretax pre-provision income ($830 million) and 19% ROE.
Deposit Expansion:
                                                Total average deposits rose across consumer checking, small business, and wealth management, with 2025 guidance for low single-digit deposit growth and stable loan levels versus 2024.
Net Interest Margin Outlook:
                                                NIM declined 6 bps quarter-over-quarter but is projected to rebound to mid-360s in Q4 2024, supported by hedging strategies and a target of 1-2% net interest income growth.
Portfolio Optimization:
                                                $900 million in year-to-date reductions from leverage lending and identified exit portfolios ($300 million), alongside a $1 billion decline in criticized loans, reflecting proactive risk management.
Capital and Expense Discipline:
                                                Maintained a 10.8% common equity Tier 1 ratio, targeted 2% expense growth in 2025, and $5.5 billion CD rollover expected to impact NIM, while prioritizing organic growth and mid-30% deposit beta recovery.

                                

Financial Performance Highlights

The company's total average deposits grew, and accounts increased across consumer checking, small business, and wealth management. Average loans grew modestly during the quarter. The company expects full-year 2025 average loans to remain relatively stable versus 2024 and now expects average deposits to be up low single digits versus the prior year. The actual EPS came out at $0.63, beating estimates of $0.6.

Credit Quality and Portfolio Management

The allowance for credit losses decreased $30 million during the quarter, and the company expects full-year net charge-offs to be approximately 50 basis points. The company has upgraded credits in certain portfolios, such as multifamily, due to improved absorption rates and project stabilization, which has had a positive impact. However, charge-offs occurred in apartment and transportation sectors, partly leading to portfolio reductions.

Outlook and Guidance

The company guides for a net interest margin to rebound into the mid-360s in the fourth quarter. Despite expecting rate cuts, Regions Financial Corporation believes it can maintain a resilient margin due to its hedging portfolio. The company targets 1-2% net interest income growth and expects loan growth consistent with GDP in its markets. The company's allowance ratio could decrease closer to 1.63%, its 2019 CECL level.

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) ratio not directly available but a Price-to-Book Ratio of 1.43 implied by the 'P/B Ratio': 0.0 being likely a placeholder, and a Dividend Yield of 4.27%, the stock appears to offer an attractive income stream. The ROE stands at 11.53%, indicating a decent return on equity. Analysts estimate next year's revenue growth at 4.4%, which is slightly higher than the company's targeted growth rates.

3. NewsRoom

5 Banks That Outperform the S&P 500 in Volatile November

Dec -02

Source: zacks.com

8 'Safer' Dividend Buys In Barron's 23 Better November Bets Than T-Bills

Nov -28

Source: seekingalpha.com

Barnes Pettey Financial Advisors LLC Purchases 29,028 Shares of Regions Financial Corporation $RF

Nov -23

Source: defenseworld.net

Regions Bank Names Andy Voress Head of Affordable Housing Investor Sales and Servicing

Nov -20

Source: businesswire.com

Regions Financial Corporation (RF) Presents at Citi's 14th Annual FinTech Conference Transcript

Nov -19

Source: seekingalpha.com

Regions Financial's Preferreds Reviewed: 2 Buys, 1 Hold

Nov -18

Source: seekingalpha.com

Banco Bilbao Vizcaya Argentaria S.A. Boosts Stock Position in Regions Financial Corporation $RF

Nov -16

Source: defenseworld.net

4 Ideal November Buys In Barron's 100 Sustainable Dividend Dogs Of 47 'Safer'

Nov -13

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.67%)

6. Segments

Consumer Bank

Expected Growth: 3.5%

Regions Financial Corporation's Consumer Bank segment growth of 3.5% is driven by increasing consumer spending, low unemployment rates, and rising wages. Additionally, the bank's digital transformation efforts, expansion of its credit card offerings, and strategic partnerships have contributed to the growth. Furthermore, the bank's focus on customer experience and relationship-building has led to increased customer loyalty and retention.

Corporate Bank

Expected Growth: 3.8%

Regions Financial Corporation's Corporate Bank segment growth of 3.8% is driven by a strong commercial loan pipeline, increased treasury management services, and a growing interest in capital markets products. Additionally, the segment benefits from a favorable interest rate environment, a robust economy, and strategic investments in digital capabilities, resulting in improved customer acquisition and retention.

Wealth Management

Expected Growth: 4.2%

Regions Financial Corporation's Wealth Management segment growth of 4.2% is driven by increasing demand for investment and retirement services, strategic acquisitions, and expansion of advisory services. Additionally, the segment benefits from the company's strong brand reputation, diversified product offerings, and a growing affluent client base seeking comprehensive wealth management solutions.

Other

Expected Growth: 3.2%

Regions Financial Corporation's 3.2% growth is driven by strategic acquisitions, expansion of mortgage banking and insurance businesses, and a focus on digital transformation, resulting in increased revenue and efficiency gains. Additionally, a favorable interest rate environment and a strong balance sheet have contributed to the company's growth momentum.

7. Detailed Products

Consumer Banking

Regions offers a range of consumer banking products and services, including checking and savings accounts, credit cards, personal loans, and mortgages.

Commercial Banking

Regions provides commercial banking services to businesses, including cash management, treasury management, and lending solutions.

Wealth Management

Regions offers wealth management services, including investment management, trust services, and insurance solutions.

Mortgage Banking

Regions provides mortgage banking services, including mortgage lending and mortgage servicing.

Insurance

Regions offers insurance products, including life insurance, disability insurance, and long-term care insurance.

Treasury Management

Regions provides treasury management services, including cash management, foreign exchange, and trade finance.

Capital Markets

Regions offers capital markets services, including investment banking, equity and fixed income sales and trading, and research.

8. Regions Financial Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Regions Financial Corporation operates in a highly competitive industry, and customers have various alternatives to choose from. However, the company's strong brand reputation and wide range of financial services mitigate the threat of substitutes.

Bargaining Power Of Customers

Regions Financial Corporation's customers have significant bargaining power due to the availability of alternative financial institutions and online banking services. This forces the company to maintain competitive pricing and high-quality services.

Bargaining Power Of Suppliers

Regions Financial Corporation has a diverse supplier base, and no single supplier has significant bargaining power. The company's large scale of operations also gives it negotiating power over its suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the banking industry, including regulatory requirements and significant capital investments. Regions Financial Corporation's established brand and large customer base also make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. Regions Financial Corporation faces intense rivalry from other regional banks, national banks, and online banking services, which drives innovation and competitive pricing.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	12.20%
Debt Cost	10.05%
Equity Weight	87.80%
Equity Cost	10.05%
WACC	10.05%
Leverage	13.90%

11. Quality Control: Regions Financial Corporation passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

First Hawaiian

A-Score: 6.6/10

Value: 6.1

Growth: 4.4

Quality: 6.8

Yield: 8.0

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

Regions Financial

A-Score: 6.6/10

Value: 5.1

Growth: 4.8

Quality: 7.8

Yield: 8.0

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

First Horizon

A-Score: 6.4/10

Value: 5.8

Growth: 4.7

Quality: 5.8

Yield: 7.0

Momentum: 9.0

Volatility: 6.3

1-Year Total Return ->

FNB

A-Score: 6.4/10

Value: 5.9

Growth: 5.3

Quality: 5.4

Yield: 7.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Comerica

A-Score: 6.1/10

Value: 5.8

Growth: 4.6

Quality: 5.6

Yield: 8.0

Momentum: 7.0

Volatility: 5.3

1-Year Total Return ->

Key

A-Score: 5.6/10

Value: 5.2

Growth: 2.7

Quality: 5.2

Yield: 8.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

2.80%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.05%

Regions Financial Corporation - US7591EP1005

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on RF

1.c. Company Highlights

Average Yield

Fairly Valued

Average Growth

Earnings Miss

Revenues Beats

Earnings Beats

Medium Volatility

Stable Momentum

Average Quality

Better Quality

Revenues Miss

2. Regions Financial Corporation Delivers Strong Quarterly Earnings

Financial Performance Highlights

Credit Quality and Portfolio Management

Outlook and Guidance

Valuation and Dividend Yield

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.67%)

6. Segments

Consumer Bank

Expected Growth: 3.5%

Corporate Bank

Expected Growth: 3.8%

Wealth Management

Expected Growth: 4.2%

Other

Expected Growth: 3.2%

7. Detailed Products

Consumer Banking

Commercial Banking

Wealth Management

Mortgage Banking

Insurance

Treasury Management

Capital Markets

8. Regions Financial Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Regions Financial Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

26.28$

Current Price

26.28$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA