Regions Financial (RF) Goldman Sachs 2024 U.S. Financial Services Conference summary

Strategic positioning and outlook for 2025

• Anticipates a stable 2% GDP growth in 2025, with optimism for solid performance in core markets.

• Plans to invest in talent, especially relationship managers and wealth advisors, to capture migration-driven growth in the Southeast and Southwest.

• Focus remains on organic growth, with M&A not a current priority but open to opportunities if conditions change.

• Targeting CET1 capital ratio of 9.25%-9.75%, aiming to reach 9.5% soon for greater flexibility.

• Regulatory clarity on Basel III and AOCI remains a watch point, but capital management is proactive.

Loan growth, client sentiment, and pipeline trends

• Loan growth has been subdued in 2024 due to rate and election uncertainty, but client optimism is rising post-election.

• Corporate banking commitments have grown, though line utilization remains below historical averages.

• Loan and revenue pipelines are currently 42% higher year-over-year, signaling potential for stronger growth in 2025.

• Clients are beginning to pre-fund inventory and prepare for capital investments, indicating readiness for increased borrowing.

• De-risking efforts and capital markets momentum have supported fee income, even as balance sheet growth faces headwinds.

Net interest income, margin, and deposit strategy

• Net interest income growth is expected to be driven more by asset repricing and yield curve normalization than by Fed rate cuts.

• $12-$14 billion in loans and securities will reprice in 2025, providing a tailwind for NII.

• Margin is projected to reach the 360s basis points in 2025, with further expansion possible if yield curve steepens.

• Deposit costs are trending as expected, with betas moving from low 30s to mid-30s, and deposit growth stabilizing, especially on the consumer side.

• Treasury management and small business deposits are key focus areas, with banker expansion and digital initiatives planned.