Regions Financial Corporation

Good morning, and welcome to the Region's Financial Corporation's quarterly earnings call. My name is Shelby, and I'll be your operator for today's call. I would like to remind everyone that all participant phone lines have been placed on listen only. At the end of the call, there will be a question and answer session. If you wish to ask a question, please press star 1 on your telephone keypad. I will now turn the call over to Dana Nolan to begin.

Thank you, Shelby. Welcome to Region's second quarter 2019 earnings conference call. John Turner will provide highlights of our financial performance and David Turner will take you through an overview of the quarter. The slide presentation as well as our earnings release and earnings supplement are available under the investor relations section of our website. Our forward-looking statements disclosure and non-GAAP reconciliations are included in the appendix of today's presentation and within our SEC filings. These cover our presentation materials, prepared comments, as well as the question and answer segment of today's call. And with that, I will now turn the call over to John.

Thank you, Dana, and thank you all for joining our call today. Let me begin by saying in the face of significant market volatility, we're pleased with our second quarter results. We reported earnings from continuing operations at $374 million, a 3% increase over the second quarter of the prior year and earnings per share of 37 cents, an increase of 16%. We also delivered solid pre-tax, pre-provision income growth compared to the prior year and generated 4% adjusted positive operating leverage. This quarter's results demonstrate our core business remains strong and our focus on meeting client needs is producing sustainable growth. We grew revenue, averaged loans and deposits, and new customer relationships across our markets while reducing expenses. We're also experiencing success in our priority markets, which include Atlanta, Houston, Orlando, and St. Louis. For example, in Atlanta, the pace of new account and deposit growth is approximately two times better than that of the total company. Further, we're outperforming the general market in terms of household account growth in each respective location. Shifting to the corporate bank, in just six months, we've added a significant number of new clients across these same markets. Commercial banking growth has been particularly strong in Houston, where pipelines for credit and deposits are at an all-time high. Although it's early, we believe these facts provide evidence that our investments for growth are paying off. We remain focused on those things we can control. and we continue to feel very good about our future. We're largely complete with our hedging strategy that we began about 18 months ago. These instruments will provide stability to our net interest income and net interest margin. Dave will spend some time discussing the details of that strategy in just a moment. We also remain well positioned to prudently manage through the next credit cycle because of our ongoing risk mitigation activities, including client selectivity, sound underwriting, rigorous credit servicing, and appropriate concentration limits. We remained focused on appropriate capital allocation, balance sheet optimization, and risk-adjusted returns. This work led to our exit of indirect auto and insurance and the decision to exit a point-of-sale relationship earlier this year. It also informed our strategic decision to achieve better balance between construction and term commercial lending within our real estate business, another meaningful example of our commitment to build a business that's sustainable over the long term. This quarter, we repositioned a portion of our investment securities portfolio, continued to focus on client selectivity and relationship profitability within our loan portfolios, and improved our funding mix. These actions will help support net interest income and the net interest margin going forward. Despite recent market uncertainty, the economy still feels pretty good. And while our customers are more cautious than they were just a few months ago, they maintain a positive outlook, and most continue to expect better performance this year than last. Many of our customers have a backlog of orders, with the biggest challenge being an insufficient supply of skilled labor. Fundamentally, the domestic economy remains solid and credit quality continues to reflect relatively stable performance with some continued normalization. And while lower interest rates support continued economic expansion, they will certainly pressure future revenue growth. To respond, we will continue to build on the momentum we've established through our Simplify and Grow initiative to make banking easier, accelerate revenue growth, and importantly, become more efficient and effective. Should the market's current path for lower interest rates persist, with short rates declining in the second half of 2019 and remaining at lower levels into 2020, and the economy soften faster than we expect, achieving some of our long-term financial targets will be challenging. That being said, We remain committed to doing all we can to appropriately adjust our plans and to respond. So to summarize, this was another solid quarter for Regents. And despite the market volatility and uncertainty, I feel good about where we are today and believe we're well positioned to generate consistent and sustainable long-term performance throughout all phases of the economic cycle. With that, I'll now turn it over to David.