Regions Financial Corporation

Good morning, and welcome to the Region's Financial Corporation's quarterly earnings call. My name is Christine, and I will 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, Christine. Welcome to region's first quarter 2023 earnings call. John and David will provide high-level commentary regarding the quarter. Earnings documents, which include our forward-looking statement disclaimer and non-GAAP information, are available in the investor relations section of our website. These disclosures cover our presentation materials, prepared comments, and Q&A. I will now turn the call over to John.

Thank you, Dana, and good morning, everyone. We appreciate you joining our call today. Once again, Regents delivered another solid quarter, underscoring our commitment to generating consistent, sustainable, long-term performance. We generated earnings of $588 million, resulting in earnings per share of 62 cents. Despite recent events in the banking industry, we remain focused on the fundamentals and things we can control. We've spent over a decade enhancing our interest rate risk, credit risk, capital and liquidity management frameworks. Our relationship-based banking approach, coupled with our favorable geographic footprint, uniquely positions us to weather an uncertain market backdrop. Further, balance and diversity on both sides of the balance sheet have been a key focus for years. As a result, we are well positioned to withstand an array of economic conditions. Approximately 70% of our deposits are retail deposits. These deposits tend to be granular and less rate sensitive. In fact, approximately 90% of these deposits are insured. Our strategy focuses on promise and customer loyalty. We want to be our customer's primary banking relationship. This strategy is evident in the fact that over 90% of our consumer checking households include a high quality checking account and over 60% of consumer checking deposit balances are with customers that have been with regions for 10 years or more. Our wholesale or business services deposits are also highly diversified from an industry, size, and geography perspective, with approximately 75% of deposits that are either insured, operational in nature, or collateralized. In total, approximately 75% of our deposits across all business lines are insured or collateralized by securities. And our deposits are with customers we know as over 97% reside within our 15-state footprint. Further supporting our high-quality deposit franchise, we had access to total primary liquidity of approximately $41 billion at the end of the quarter. sufficient to cover uninsured retail and non-operational wholesale deposits by more than a two-to-one ratio. If you include access to Federal Reserve's discount window, available liquidity increases to $54 billion, or approximately a three-to-one coverage. We have a strong team of bankers, and the recent disruption has given us an opportunity to connect with our customers and top prospects to answer questions and reassure them of our stability. We've experienced some deposit outflows as corporate treasurers look to diversify and sought higher interest rates for their excess cash. However, we've also experienced deposit inflows from new and existing customers. Importantly, our total deposits at March 31st were roughly unchanged from what they were prior to the onset of liquidity concerns in the industry. A majority of the $3 billion deposit decrease this quarter was as expected due primarily to further normalization in corporate deposits, which had dramatically increased during the pandemic, as well as a continuation of rate-seeking behavior in certain wealth and higher-balance consumer accounts. From a lending perspective, our focus on risk-adjusted returns continues. Overall sentiment among our corporate customers remains positive. While most are forecasting strong performance in 2023, they are expecting modest declines from levels seen in 2022. While current market conditions warrant heightened caution, we believe our strong liquidity profile provides an advantage in terms of supporting our customers' borrowing needs. In closing, despite all the industry turmoil, we feel very good about our balance sheet and strong liquidity positions. and through our proactive hedging strategies, we are positioned for success in any interest rate environment. Our granular deposit-based and relationship-based banking model continue to serve us well, and we're proud to continue supporting our customers' banking needs. Now, David will provide some highlights regarding the quarter.