Regions Financial Corporation

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 third 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. Earlier this morning, we reported earnings of $465 million, resulting in earnings per share of 49 cents. And while we have some unusual items in our results this quarter, our core performance remains strong. and we continue to have one of the best return on average tangible common equity ratios in our peer group at 21%. During the quarter, we continue to experience elevated levels of check-related fraud. Our third quarter results reflect an incremental $53 million in losses stemming from a second fraud scheme, which also began in the second quarter, but was unknown to us at the time. This scheme manifested itself in delayed returns and, as a result, has had a much longer tail. After adjusting our countermeasures to identify potential fraud instances more quickly, the volume of new fraud claims has slowed. Although difficult to project, based on what we know today, we expect quarterly fraud losses to come down significantly and to be approximately $25 million in the fourth quarter. Based upon the increases we are seeing in check fraud across the industry, in fact, based on data we have, we indicate losses are up about 40% year over year. We expect future fraud losses to normalize in the $25 million per quarter range in 2024. Although the industry faces headwinds from lingering economic and regulatory uncertainty, we continue to benefit from our strong and diverse balance sheet with solid capital, robust liquidity, and prudent credit risk management. Our proactive hedging strategies have positioned us for success in any interest rate environment. And our granular deposit base and relationship banking approach continue to serve us well. We spent over a decade de-risking our balance sheet and are well positioned to manage the proposed regulatory changes without significant impact to our business model. We remain committed to appropriate risk adjusted returns and now is not the time to stretch for growth. We're focused on supporting existing customers where we have a relationship and a proven history. We have a great team with a proven track record of executing our strategy with focus and discipline. I'm confident in our ability to adapt to the changing regulatory and economic landscape while continuing to generate top quartile returns through the cycle.