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 second 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, REASONS delivered another solid quarter, underscoring our commitment to generating consistent, sustainable long-term performance. We generated earnings of $556 million, resulting in earnings per share of 59 cents and one of the best return on average tangible common equity ratios in our peer group at 24%. Our consistent strong earnings performance has given the board confidence to increase the quarterly common stock dividend by 20%, which was officially reported in a press release earlier this week. Although some lingering economic uncertainty remains, we feel good about our ability to carry this momentum into the second half of the year. We continue to benefit from our strong and diverse balance sheet, robust liquidity position, and prudent credit risk management. Our proactive hedging strategies have positioned us for success in any interest rate environment, and our granular deposit-based and relationship-based banking approach continue to serve us well. Overall sentiment among our corporate customers remains relatively positive despite ongoing labor shortages, persistent inflationary pressure, and slowly improving supply chain issues. In fact, most are continuing to forecast solid performance in 2023, although they are expecting modest declines from levels experienced in 2022. We remain committed to serving our customers while maintaining our focus on risk-adjusted returns. We're being judicious with capital, preserving it for our best clients and relationships. Year to date, the corporate bank has grown loans 2% in line with our expectations. with the vast majority of this growth coming from existing customers. Our consumer customers also remain healthy. Unemployment in seven of our eight top states remains at or near historical lows. And housing prices in 13 of our 15 states are forecast to outperform the HPI index in 2023. Wages in much of our footprint have kept pace with or exceeded increases in inflation, and as a result, consumer deposit balances and credit card payment rates remain higher than pre-pandemic levels. Our credit quality remains strong. Although normalization continues, charge-offs remain below historical through-the-cycle levels. We also continue to benefit from the strategic investments we're making in our business. For example, over the last few years, we've focused on enhancing our treasury management suite of products and services. We've invested in talent and technology, including data and analytics, improving our ability to provide our clients with data-driven insights. Today, our relationship managers lead every prospective client conversation with a cash flow mindset, enabling us to clearly understand our customer needs. We're very pleased with the success of our treasury management business, which has produced 13% revenue growth year over year. Although our penetration rate for treasury management solutions ranks among the top versus peers, we continue to see further opportunity in our existing customer base, particularly in lower-end commercial. Additionally, during the second quarter, we introduced region's no-cost overdraft grace feature, giving consumers the opportunity to remedy overdrafts and avoid fees. To date, the data indicates that customers are seeing an approximate 30 percent reduction in the occurrence of assessed fees. We're excited about the financial benefits and flexibility our customers are enjoying as a result of the changes we've made over the past two years. We also continue to actively search for investment opportunities with respect to mortgage servicing rights. And during the last 18 months, we've acquired the rights to service approximately $23 billion in mortgage loans through a combination of bulk purchases and flow deals. These are just a few examples of our commitment to investing in markets, technology, talent, and capabilities that grow and diversify our revenue base and enhance offerings to our customers. Now, David will provide some highlights regarding the quarter.