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Group 1 - Regions Financial is focusing on Texas, the Midwest, and the Southern part of the United States [1] - The bank has a balance sheet size of almost $160 billion, making it one of the larger regional banking groups in the US [1] Group 2 - The investment group European Small Cap Ideas offers exclusive access to actionable research on appealing Europe-focused investment opportunities [1] - The focus is on high-quality ideas in the small-cap space, emphasizing capital gains and dividend income for continuous cash flow [1] - Features include two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Core Insights - Regions Financial Corporation (RF) reported second-quarter 2025 adjusted earnings per share (EPS) of 60 cents, exceeding the Zacks Consensus Estimate of 56 cents and up from 53 cents in the same quarter last year [1][9] - The stock price of RF increased by 5.1% in early market trading following the earnings announcement [1] Financial Performance - Total quarterly revenues reached $1.9 billion, which was 2.9% below the Zacks Consensus Estimate but represented a 10.1% increase year over year [3] - Net interest income (NII) was $1.25 billion, reflecting a 6.2% year-over-year increase, while the net interest margin improved by 14 basis points to 3.65% [3] - Non-interest income surged by 18.5% year over year to $646 million [3] - Non-interest expenses rose by 6.9% year over year to $1.07 billion, with adjusted non-interest expenses also increasing by 4% [4] Loan and Deposit Trends - Total loans slightly decreased to $96.1 billion as of June 30, 2025, while total deposits increased by 1.4% to $129.4 billion [5] Credit Quality - Non-performing assets as a percentage of loans decreased to 0.84% from 0.88% year over year, and non-performing loans as a percentage of net loans fell to 0.80% from 0.87% [6] - A provision for credit losses of $126 million was recorded, marking a 23.5% increase from the previous year [6] Capital Position - As of June 30, 2025, the Common Equity Tier 1 ratio was 10.7% and the Tier 1 capital ratio was 11.8%, both showing improvement from the previous year [8] - The company repurchased 7 million shares for $144 million during the quarter [10] Outlook - The company's core business and revenue diversification strategies are expected to drive strong earnings in the future, although declining loans and rising expenses present challenges [11]

Core Insights - Regions Financial Corp. achieved a 10% year-over-year growth in revenue for the second quarter, totaling $1.9 billion, driven by investments in technology and talent [1][2] Business Segments - In the corporate business, Regions Financial is utilizing natural language processing and other technologies to analyze public filings and identify product opportunities for large corporate clients [3] - The consumer business has seen a focus on small businesses and key customer segments, with over 200,000 hours saved through centralized processes, and a 10% year-to-date growth in digital channel checking [4] - The wealth management segment experienced an 8.3% increase in total relationships compared to last year, alongside the completion of a new cloud-based portal and enhancements to CRM systems [6] Digital Transformation - Over the past two years, mobile banking active users increased by 6%, mobile logins rose by 14%, and the share of transactions through digital channels grew from 74% to 78% [5] - The company is modernizing its core technology platforms, including the rollout of a new native mobile app and plans to upgrade its commercial loan system to a cloud platform [9] Operational Efficiency - The efficiencies gained from technology and normal workforce attrition, estimated at 6% to 7% annually, are expected to fund ongoing technology investments [7][8]

Financial Data and Key Metrics Changes - The company reported strong quarterly earnings of $534 million, resulting in earnings per share of $0.59, with adjusted earnings of $538 million or $0.60 per share [4] - Pretax pre-provision income increased by 14% year over year to $832 million, with a return on tangible common equity of 19% [4][10] - Average deposits grew organically by over 30% over the last five years, among the highest in its peer set [5] Business Line Data and Key Metrics Changes - Ending loans grew by 1%, while average loans remained stable; growth in ending business loans was driven by commercial and industrial (C&I) and real estate sectors [13][14] - Wealth management revenue has grown at more than an 8% compounded annual growth rate since 2018, contributing to record fee income [8] - Treasury management revenue increased by 8% year to date, with a 10% increase in the total number of clients served [7] Market Data and Key Metrics Changes - Consumer deposits in priority markets grew 20% more than in core markets during the quarter [15] - Average deposit balances grew over 1% sequentially, while ending balances remained stable [16] - The company expects full-year average balances to be up modestly compared to the prior year [16] Company Strategy and Development Direction - The company is focused on growth across its businesses, with a commitment to delivering top quartile results and shareholder value [10][12] - A significant technology modernization project is underway, including a new cloud-based core platform expected to enhance efficiency and service delivery [9][75] - The company is not currently interested in depository M&A, preferring to focus on executing its existing strategic plan [38] Management's Comments on Operating Environment and Future Outlook - Management noted that both business and consumer customers are in good shape, maintaining liquidity and managing debt levels well [32][34] - There is some uncertainty regarding interest rates and inflation, but overall sentiment among business customers has improved [31][34] - The company expects to maintain momentum into 2025 and beyond, with opportunities for continued growth [12] Other Important Information - The company executed $144 million in share repurchases and paid $224 million in common dividends during the quarter [24] - The common equity Tier one ratio increased from 9.1% to an estimated 9.2% due to strong capital generation [24][25] - The company has increased its dividend at a compounded annual growth rate of over 10% over the last six years, the highest among peers [10] Q&A Session Summary Question: Implications of the tax bill on loan growth and consumer spending - Management indicated that the tax package creates certainty for businesses and consumers, which is expected to lead to positive momentum in 2025 and 2026 [34][35] Question: Perspective on bank M&A activity - Management stated they are not interested in depository M&A, focusing instead on executing their current plan and technology projects [38] Question: Details on net interest margin dynamics - Management explained that the margin growth was aided by the removal of negative hedges and improved deposit cost management, with expectations for stable to modest growth in the future [46][50] Question: Loan growth dynamics and competitive landscape - Management highlighted a 17% year-over-year increase in pipelines and emphasized disciplined portfolio management while experiencing growth in commercial and consumer lending [60][62] Question: Credit quality and economic uncertainty - Management noted improved credit quality metrics and strong consumer balance sheets, with expectations for charge-offs to remain within the anticipated range [110][113] Question: Approach to stablecoin and payment systems - Management expressed intent to participate in a consortium of banks for stablecoin solutions, similar to their involvement with Zelle [115] Question: Operating leverage expectations - Management committed to delivering positive operating leverage over time while balancing necessary investments in technology and business segments [125][126]

Financial Data and Key Metrics Changes - The company reported strong quarterly earnings of $534 million, resulting in earnings per share of $0.59, with adjusted earnings of $538 million or $0.60 per share [3] - Pretax pre-provision income increased by 14% year over year to $832 million, with a return on tangible common equity of 19% [3] - Average deposits grew organically by over 30% over the last five years, among the highest in its peer set [4] Business Line Data and Key Metrics Changes - Ending loans grew by 1%, while average loans remained stable; growth in ending business loans was driven by commercial and industrial (C&I) and real estate sectors [12] - Wealth management revenue has grown at more than an 8% compounded annual growth rate since 2018, contributing to record fee income [6] - Treasury management revenue increased by 8% year to date, with a 10% increase in total clients served [6] Market Data and Key Metrics Changes - Consumer deposits in priority markets grew by 20% more than in core markets during the quarter [14] - Average deposit balances in the Corporate Banking Group grew over 1% sequentially, while ending balances remained stable [15] - Net interest income rebounded, increasing by 5% linked quarter, with expectations for full year 2025 net interest income to grow between 3% to 5% [18] Company Strategy and Development Direction - The company is focused on modernizing its core technology platforms, including a new cloud-based commercial loan system and deposit system [8] - The company is not interested in depository M&A, preferring to execute its existing strategic plan and focus on organic growth [37] - The company aims to continue delivering top quartile results and has increased its dividend at a compounded annual growth rate of over 10% over the last six years [9] Management's Comments on Operating Environment and Future Outlook - Management noted that both business and consumer customers are in good shape, maintaining liquidity and managing debt levels well [31] - There is some uncertainty regarding interest rates and inflation, but overall sentiment among business customers has improved [30] - The company expects to maintain positive operating leverage over time, despite the need for ongoing investments [120] Other Important Information - The company executed $144 million in share repurchases and paid $224 million in common dividends during the quarter [23] - The estimated common equity Tier one ratio increased from 9.1% to 9.2% due to strong capital generation [23] Q&A Session Summary Question: Implications of the tax bill on loan growth and consumer spending - Management indicated that the tax package creates certainty for businesses and consumers, which is expected to lead to positive momentum in 2025 and 2026 [30][34] Question: Perspective on bank M&A activity - Management stated they are not interested in depository M&A, focusing instead on executing their current plan and exploring non-bank opportunities [37][39] Question: Details on net interest margin and deposit cost leverage - Management discussed the recent improvements in net interest margin and the expectation for stable to modest growth in the third quarter [18][52] Question: Loan growth dynamics and competitive backdrop - Management highlighted a 17% year-over-year increase in pipelines and emphasized their disciplined approach to portfolio management [59][61] Question: Credit quality and specific portfolios under scrutiny - Management noted that overall credit quality remains strong, with some challenges in specific portfolios, but they are manageable [106][108] Question: Approach to stablecoin solutions - Management expressed intent to participate in a consortium of banks for stablecoin solutions, similar to their involvement with Zelle [111][112]

Core Insights - Regions Financial reported a revenue of $1.91 billion for the quarter ended June 2025, marking a year-over-year increase of 10.1% and exceeding the Zacks Consensus Estimate by 2.8% [1] - The earnings per share (EPS) for the same period was $0.60, up from $0.52 a year ago, representing a surprise of 7.14% over the consensus estimate of $0.56 [1] Financial Performance Metrics - Net interest margin (FTE) was reported at 3.7%, slightly above the average estimate of 3.6% [4] - The efficiency ratio stood at 56%, better than the estimated 56.9% [4] - Net charge-offs as a percentage of average loans were 0.5%, matching the average estimate [4] - Common Equity Tier 1 ratio was 10.7%, in line with the average estimate [4] - Total earning assets averaged $139.66 billion, close to the estimated $139.69 billion [4] - Non-performing assets totaled $808 million, below the average estimate of $899.1 million [4] - Non-performing loans, including loans held for sale, were $792 million, also below the estimated $885.13 million [4] - Leverage ratio was reported at 9.7%, slightly below the average estimate of 9.8% [4] - Tier 1 Capital Ratio was 11.8%, lower than the estimated 12.1% [4] - Total Non-Interest Income reached $646 million, exceeding the average estimate of $621.4 million [4] - Net Interest Income was $1.26 billion, above the estimated $1.2 billion [4] - Net interest income on a taxable equivalent basis was $1.27 billion, surpassing the estimated $1.24 billion [4] Stock Performance - Shares of Regions Financial have returned +11.6% over the past month, outperforming the Zacks S&P 500 composite's +5.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Performance - Net income available to common shareholders was $534 million[3], with diluted earnings per share at $0.59[3] - Adjusted net income available to common shareholders reached $538 million[3], resulting in adjusted diluted earnings per share of $0.60[3] - Total revenue remained stable at $1,905 million[3] - Pre-Tax Pre-Provision Income was $832 million[3] - The efficiency ratio was 560%[3] - Return on Average Tangible Common Equity was 1934% on a reported basis and 1948% on an adjusted basis[3] Loan and Deposit Trends - Average loans remained stable, while ending loans grew by 1%[8] - Average deposits increased over 1%[22] - Pipelines are up 17% YoY and commitments are up 1%[8] Net Interest Income (NII) and Margin (NIM) - NII increased by 5% QoQ, and NIM increased 13bps to 365%[27] - Expect 2025 NII to grow between 3-5%[31] Non-Interest Income and Expense - Adjusted non-interest income increased 5%[36] to $646 million[33] - Non-interest expense increased 3%[40] to $1,073 million[38] - Expect FY25 adjusted non-interest income to grow between 25-35%[36]

Company Performance - Regions Financial reported quarterly earnings of $0.6 per share, exceeding the Zacks Consensus Estimate of $0.56 per share, and up from $0.52 per share a year ago, representing an earnings surprise of +7.14% [1] - The company posted revenues of $1.91 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.80%, compared to year-ago revenues of $1.73 billion [2] - Over the last four quarters, Regions Financial has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance and Outlook - Regions Financial shares have increased by approximately 4.2% since the beginning of the year, while the S&P 500 has gained 7.1% [3] - The company's current consensus EPS estimate for the coming quarter is $0.57 on revenues of $1.88 billion, and for the current fiscal year, it is $2.26 on revenues of $7.42 billion [7] - The Zacks Rank for Regions Financial is currently 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Banks - Southeast industry, to which Regions Financial belongs, is currently in the top 19% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Financial Highlights](index=3&type=section&id=Financial%20Highlights) Regions Financial Corporation reported Q2 2025 net income of $563 million, with total assets at $159.2 billion [Financial Highlights](index=3&type=section&id=Financial%20Highlights) In the second quarter of 2025, Regions Financial Corporation reported a net income of $563 million, or $0.59 per diluted share. This represents a significant increase from the $490 million, or $0.51 per diluted share, in the prior quarter. Total assets stood at $159.2 billion, a slight decrease from the previous quarter, while total deposits remained stable at $130.9 billion. Net interest income grew to $1.26 billion, up from $1.19 billion in the first quarter of 2025 Q2 2025 Earnings Summary ($ in millions, except per share data) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net interest income | $1,259 | $1,194 | $1,186 | | Provision for credit losses | $126 | $124 | $102 | | Non-interest income | $646 | $590 | $545 | | Non-interest expense | $1,073 | $1,039 | $1,004 | | Net income | $563 | $490 | $501 | | Net income available to common shareholders | $534 | $465 | $477 | | Diluted earnings per common share | $0.59 | $0.51 | $0.52 | Q2 2025 Balance Sheet Summary ($ in millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Loans, net of unearned income | $96,723 | $95,733 | $97,508 | | Assets | $159,206 | $159,846 | $154,052 | | Deposits | $130,919 | $130,971 | $126,616 | | Shareholders' equity | $18,666 | $18,530 | $17,169 | [Selected Ratios and Other Information](index=4&type=section&id=Selected%20Ratios%20and%20Other%20Information) Key performance ratios for Q2 2025 showed improved profitability and efficiency, with ROA at 1.43% and efficiency ratio at 56.0% [Selected Ratios and Other Information](index=4&type=section&id=Selected%20Ratios%20and%20Other%20Information) Key performance ratios for Q2 2025 showed improvement in profitability and efficiency. The return on average assets (ROA) increased to 1.43% and the return on average common shareholders' equity rose to 12.72%. The efficiency ratio improved to 56.0%. The Common Equity Tier 1 (CET1) ratio was 10.7%, and the net interest margin (FTE) expanded to 3.65% Key Performance Ratios - Q2 2025 | Ratio | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Return on average assets* | 1.43% | 1.27% | 1.32% | | Return on average common shareholders' equity* | 12.72% | 11.49% | 12.74% | | Efficiency ratio | 56.0% | 57.9% | 57.6% | | Common equity Tier 1 ratio (estimated) | 10.7% | 10.8% | 10.4% | | Net interest margin (FTE)* | 3.65% | 3.52% | 3.51% | | Net charge-offs as a % of average loans* | 0.47% | 0.52% | 0.42% | *Annualized - The tangible common book value per share increased to **$12.91** at the end of Q2 2025, up from **$12.29** in the prior quarter and **$10.61** in the prior year[6](index=6&type=chunk) - The allowance for credit losses to non-performing loans increased to **225%** from **205%** in the prior quarter, indicating stronger coverage[6](index=6&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $159.2 billion, with net loans at $95.1 billion and total deposits stable at $130.9 billion [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $159.2 billion, a slight decrease from $159.8 billion in the previous quarter. Net loans increased to $95.1 billion. Total deposits remained stable at $130.9 billion. Total shareholders' equity increased to $18.7 billion, partly due to a reduction in accumulated other comprehensive loss Consolidated Balance Sheet Highlights ($ in millions) | Account | 6/30/2025 | 3/31/2025 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total assets | $159,206 | $159,846 | ($640) | | Net loans | $95,111 | $94,120 | $991 | | Debt securities (AFS & HTM) | $32,305 | $31,137 | $1,168 | | **Liabilities & Equity** | | | | | Total deposits | $130,919 | $130,971 | ($52) | | Total liabilities | $140,500 | $141,279 | ($779) | | Total shareholders' equity | $18,666 | $18,530 | $136 | - Accumulated other comprehensive loss improved, decreasing from a loss of **$2.28 billion** in Q1 2025 to a loss of **$1.97 billion** in Q2 2025[9](index=9&type=chunk) [Loans](index=6&type=section&id=Loans) Loan portfolio analysis reveals end-of-period loans increased to $96.7 billion, driven by business loan growth, while average balances remained stable [End of Period Loans](index=6&type=section&id=End%20of%20Period%20Loans) Total loans at the end of Q2 2025 were $96.7 billion, an increase of 1.0% from the previous quarter, primarily driven by growth in business loans. Total business loans grew by 1.5% QoQ to $63.8 billion, while consumer loans remained flat. Year-over-year, total loans decreased by 0.8% End of Period Loans by Category ($ in millions) | Loan Category | Q2 2025 | Q1 2025 | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Total business | $63,849 | $62,877 | 1.5% | (0.6)% | | Total consumer | $32,874 | $32,856 | 0.1% | (1.3)% | | **Total Loans** | **$96,723** | **$95,733** | **1.0%** | **(0.8)%** | - Within business loans, Commercial investor real estate mortgage loans saw the largest quarterly growth, increasing by **9.0%** to **$6.9 billion**[11](index=11&type=chunk) - The loan portfolio composition remained stable, with business loans constituting **66.0%** and consumer loans **34.0%** of total loans[12](index=12&type=chunk) [Average Balances of Loans](index=7&type=section&id=Average%20Balances%20of%20Loans) Average total loan balances in Q2 2025 were $96.1 billion, nearly flat compared to Q1 2025 and down 1.2% from Q2 2024. Average business loan balances saw a slight increase of 0.1% QoQ, while average consumer loan balances decreased by 0.4% QoQ Average Loan Balances ($ in millions) | Loan Category | 2Q25 | 1Q25 | QoQ Change | 2Q25 vs. 2Q24 | | :--- | :--- | :--- | :--- | :--- | | Total business | $63,212 | $63,140 | 0.1% | (1.2)% | | Total consumer | $32,865 | $32,982 | (0.4)% | (1.2)% | | **Total Loans** | **$96,077** | **$96,122** | **(0.05)%** | **(1.2)%** | [Deposits](index=8&type=section&id=Deposits) Total deposits remained stable at $130.9 billion, with average balances increasing to $129.4 billion, driven by money market growth [End of Period Deposits](index=8&type=section&id=End%20of%20Period%20Deposits) Total deposits at the end of Q2 2025 were $130.9 billion, remaining flat compared to the prior quarter but increasing by 3.4% year-over-year. There was a notable shift in deposit mix, with non-interest-bearing deposits decreasing by 0.6% QoQ, while money market deposits grew by 3.3% QoQ End of Period Deposits by Type ($ in millions) | Deposit Type | Q2 2025 | Q1 2025 | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Non-interest-bearing | $40,209 | $40,443 | (0.6)% | (1.8)% | | Interest-bearing | $90,710 | $90,528 | 0.2% | 5.9% | | **Total Deposits** | **$130,919** | **$130,971** | **(0.04)%** | **3.4%** | - By segment, Corporate Bank deposits grew **1.0%** QoQ to **$40.1 billion**, while Consumer Bank and Wealth Management deposits saw modest declines[16](index=16&type=chunk) [Average Balances of Deposits](index=9&type=section&id=Average%20Balances%20of%20Deposits) Average total deposits for Q2 2025 increased by 1.4% QoQ to $129.4 billion. The growth was driven by a 5.0% increase in average money market deposits and a 1.3% increase in average non-interest-bearing deposits. Year-over-year, average total deposits grew by 2.0% Average Deposit Balances ($ in millions) | Deposit Type | 2Q25 | 1Q25 | QoQ Change | 2Q25 vs. 2Q24 | | :--- | :--- | :--- | :--- | :--- | | Non-interest-bearing | $39,556 | $39,053 | 1.3% | (2.4)% | | Money market—domestic | $37,389 | $35,625 | 5.0% | 8.8% | | **Total Deposits** | **$129,444** | **$127,687** | **1.4%** | **2.0%** | [Consolidated Statements of Income](index=10&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, net income increased to $563 million, driven by higher net interest income and non-interest income [Consolidated Statements of Income](index=10&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, the company reported net income of $563 million, a 14.9% increase from Q1 2025. Net interest income rose to $1.26 billion, and non-interest income increased to $646 million. Non-interest expense also grew to $1.07 billion. For the six months ended June 30, 2025, net income was $1.05 billion, compared to $869 million for the same period in 2024 Q2 2025 Income Statement Summary ($ in millions) | Item | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total interest income | $1,784 | $1,725 | $1,762 | | Total interest expense | $525 | $531 | $576 | | **Net interest income** | **$1,259** | **$1,194** | **$1,186** | | Provision for credit losses | $126 | $124 | $102 | | Total non-interest income | $646 | $590 | $545 | | Total non-interest expense | $1,073 | $1,039 | $1,004 | | **Net income** | **$563** | **$490** | **$501** | Six Months Ended June 30 Income Statement Summary ($ in millions) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net interest income | $2,453 | $2,370 | | Total non-interest income | $1,236 | $1,108 | | Total non-interest expense | $2,112 | $2,135 | | **Net income** | **$1,053** | **$869** | [Consolidated Average Daily Balances and Yield / Rate Analysis](index=12&type=section&id=Consolidated%20Average%20Daily%20Balances%20and%20Yield%20%2F%20Rate%20Analysis) Q2 2025 saw net interest margin expand to 3.65%, driven by higher earning asset yields and lower interest-bearing liability rates [Consolidated Average Daily Balances and Yield / Rate Analysis](index=12&type=section&id=Consolidated%20Average%20Daily%20Balances%20and%20Yield%20%2F%20Rate%20Analysis) In Q2 2025, the net interest margin on a taxable-equivalent basis (FTE) expanded to 3.65%, up from 3.52% in Q1 2025. This was driven by a higher yield on total earning assets (5.12%) while the rate on total interest-bearing liabilities decreased to 2.20%. The total cost of deposits remained relatively stable at 1.39% Yield/Rate Analysis (FTE Basis) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Yield on Total Earning Assets | 5.12% | 5.01% | 5.17% | | Rate on Total Interest-Bearing Liabilities | 2.20% | 2.27% | 2.55% | | Net Interest Spread | 2.92% | 2.75% | 2.62% | | **Net Interest Margin** | **3.65%** | **3.52%** | **3.51%** | - The yield on total loans increased to **5.75%** in Q2 2025 from **5.64%** in Q1 2025[23](index=23&type=chunk) - The total cost of deposits for Q2 2025 was **1.39%**, a slight decrease from **1.40%** in the prior quarter[25](index=25&type=chunk) [Pre-Tax Pre-Provision Income (PPI) and Adjusted PPI](index=14&type=section&id=Pre-Tax%20Pre-Provision%20Income%20(PPI)%20and%20Adjusted%20PPI) Pre-tax pre-provision income (PPI) for Q2 2025 was $832 million, reflecting an 11.7% increase from the prior quarter [Pre-Tax Pre-Provision Income (PPI) and Adjusted PPI](index=14&type=section&id=Pre-Tax%20Pre-Provision%20Income%20(PPI)%20and%20Adjusted%20PPI) Pre-tax pre-provision income (PPI), a non-GAAP measure, was $832 million for Q2 2025, an 11.7% increase from the prior quarter. Adjusted PPI, which excludes certain items like securities losses and severance charges, was also $832 million, up 7.5% from Q1 2025. The report provides a reconciliation from GAAP income before taxes to these non-GAAP measures - The company uses non-GAAP measures like PPI to provide a basis for period-to-period comparisons that management believes assists investors in assessing performance[32](index=32&type=chunk) PPI Reconciliation ($ in millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Income before income taxes (GAAP) | $706 | $621 | $625 | | Provision for credit losses (GAAP) | $126 | $124 | $102 | | **Pre-tax pre-provision income (non-GAAP)** | **$832** | **$745** | **$727** | | Total other adjustments | $0 | $29 | $22 | | **Adjusted pre-tax pre-provision income (non-GAAP)** | **$832** | **$774** | **$749** | [Non-Interest Income](index=15&type=section&id=Non-Interest%20Income) Total non-interest income for Q2 2025 increased to $646 million, driven by growth in mortgage, card, and capital markets income [Non-Interest Income Overview](index=15&type=section&id=Non-Interest%20Income%20Overview) Total non-interest income for Q2 2025 was $646 million, a 9.5% increase from Q1 2025 and an 18.5% increase from Q2 2024. The growth was driven by higher mortgage income, card and ATM fees, and capital markets income, as well as a significant reduction in net securities losses compared to prior periods Non-Interest Income Components ($ in millions) | Category | Q2 2025 | Q1 2025 | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Service charges on deposit accounts | $151 | $161 | (6.2)% | 0.0% | | Card and ATM fees | $125 | $117 | 6.8% | 4.2% | | Wealth management income | $133 | $129 | 3.1% | 9.0% | | Capital markets income | $83 | $80 | 3.8% | 22.1% | | Mortgage income | $48 | $40 | 20.0% | 41.2% | | Securities gains (losses), net | ($1) | ($25) | 96.0% | 98.0% | | **Total non-interest income** | **$646** | **$590** | **9.5%** | **18.5%** | [Service Charges on Deposit Accounts by Segment](index=15&type=section&id=Service%20Charges%20on%20Deposit%20Accounts%20by%20Segment) Total service charges on deposit accounts were $151 million in Q2 2025, a decrease of 6.2% from the prior quarter. The decline was driven by both the Consumer Bank and Corporate Bank segments, which saw decreases of 6.3% each Service Charges by Segment ($ in millions) | Segment | Q2 2025 | Q1 2025 | QoQ Change | | :--- | :--- | :--- | :--- | | Consumer Bank Segment | $90 | $96 | (6.3)% | | Corporate Bank Segment | $60 | $64 | (6.3)% | | **Total** | **$151** | **$161** | **(6.2)%** | [Wealth Management Income](index=15&type=section&id=Wealth%20Management%20Income) Wealth management income rose to $133 million in Q2 2025, up 3.1% from Q1 2025 and 9.0% from Q2 2024. The growth was primarily due to a 4.7% quarterly increase in investment management and trust fee income Wealth Management Income Components ($ in millions) | Category | Q2 2025 | Q1 2025 | QoQ Change | | :--- | :--- | :--- | :--- | | Investment management and trust fee income | $90 | $86 | 4.7% | | Investment services fee income | $43 | $43 | 0.0% | | **Total** | **$133** | **$129** | **3.1%** | [Capital Markets Income](index=15&type=section&id=Capital%20Markets%20Income) Capital markets income was $83 million in Q2 2025, a 3.8% increase from the prior quarter and a 22.1% increase year-over-year. Excluding valuation adjustments on customer derivatives, income was $85 million Capital Markets Income ($ in millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Capital markets income | $83 | $80 | $68 | | Capital markets income excluding valuation adjustments | $85 | $81 | $70 | [Mortgage Income](index=15&type=section&id=Mortgage%20Income) Mortgage income increased significantly to $48 million in Q2 2025, up from $40 million in Q1 2025. The rise was driven by higher production and sales income and a positive swing in the MSR and related hedge impact. Total mortgage production volume surged by 54.0% QoQ to $1.1 billion Mortgage Income and Production ($ in millions) | Metric | Q2 2025 | Q1 2025 | QoQ Change | | :--- | :--- | :--- | :--- | | Production and sales | $17 | $13 | 30.8% | | MSR and related hedge impact | ($16) | ($20) | 20.0% | | **Total mortgage income** | **$48** | **$40** | **20.0%** | | **Total mortgage production** | **$1,118** | **$726** | **54.0%** | [Non-Interest Expense](index=17&type=section&id=Non-Interest%20Expense) Total non-interest expense for Q2 2025 increased to $1.07 billion, primarily due to a rise in salaries and employee benefits [Non-Interest Expense](index=17&type=section&id=Non-Interest%20Expense) Total non-interest expense for Q2 2025 was $1.07 billion, an increase of 3.3% from Q1 2025 and 6.9% from Q2 2024. The quarterly increase was primarily driven by a 5.3% rise in salaries and employee benefits. For the first six months of 2025, total non-interest expense decreased by 1.1% compared to the same period in 2024 Non-Interest Expense Components ($ in millions) | Category | Q2 2025 | Q1 2025 | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $658 | $625 | 5.3% | 8.0% | | Equipment and software expense | $104 | $99 | 5.1% | 4.0% | | Professional, legal and regulatory expenses | $28 | $23 | 21.7% | 12.0% | | **Total non-interest expense** | **$1,073** | **$1,039** | **3.3%** | **6.9%** | - Salaries and benefits expense, when adjusted for market value changes on 401(k) liabilities, increased by a smaller **2.6%** quarter-over-quarter[53](index=53&type=chunk) [Reconciliation of GAAP Financial Measures to non-GAAP Financial Measures](index=18&type=section&id=Reconciliation%20of%20GAAP%20Financial%20Measures%20to%20non-GAAP%20Financial%20Measures) This section reconciles GAAP to non-GAAP financial measures, including adjusted efficiency, net income, tangible common, and CET1 ratios [Adjusted Ratios (Efficiency, Fee Income, Operating Leverage)](index=18&type=section&id=Adjusted%20Ratios%20(Efficiency%2C%20Fee%20Income%2C%20Operating%20Leverage)) This section provides reconciliations for key operating ratios by adjusting GAAP revenue and expense for certain items. For Q2 2025, the adjusted efficiency ratio was 56.0%, an improvement from 56.8% in Q1 2025. The adjusted fee income ratio was 33.7%, roughly in line with the prior quarter Adjusted Ratio Reconciliation - Q2 2025 | Metric | GAAP | Adjusted (non-GAAP) | | :--- | :--- | :--- | | Non-interest expense | $1,073M | $1,073M | | Total revenue, taxable-equivalent basis | $1,917M | $1,917M | | **Efficiency Ratio** | **56.0%** | **56.0%** | | Non-interest income | $646M | $646M | | **Fee Income Ratio** | **33.7%** | **33.7%** | - For Q2 2025, there were no adjustments to non-interest income or expense, so the GAAP and non-GAAP ratios were the same. In prior quarters, adjustments were made for items like securities losses and FDIC special assessments[57](index=57&type=chunk) [Adjusted Net Income, EPS, and Return Ratios](index=20&type=section&id=Adjusted%20Net%20Income%2C%20EPS%2C%20and%20Return%20Ratios) This section reconciles GAAP net income to adjusted non-GAAP figures. For Q2 2025, adjusted net income available to common shareholders was $538 million, or $0.60 per diluted share, compared to GAAP figures of $534 million and $0.59. The adjusted return on average tangible common shareholders' equity was 19.48% Adjusted Net Income and EPS - Q2 2025 | Metric | GAAP | Adjusted (non-GAAP) | | :--- | :--- | :--- | | Net income available to common shareholders | $534M | $538M | | Diluted EPS | $0.59 | $0.60 | | Return on avg. tangible common equity* | 19.34% | 19.48% | *Annualized - Adjustments for Q2 2025 included a **$4 million** non-taxable expense for the redemption of Series D preferred stock[62](index=62&type=chunk)[63](index=63&type=chunk) [Tangible Common Ratios](index=21&type=section&id=Tangible%20Common%20Ratios) The report calculates tangible common equity and related ratios to assess capital adequacy absent intangible assets. As of June 30, 2025, the tangible common book value per share increased to $12.91 from $12.29 in the prior quarter. The ratio of tangible common shareholders' equity to tangible assets improved to 7.52% from 7.17% Tangible Common Ratios | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | | :--- | :--- | :--- | :--- | | Tangible common shareholders' equity (non-GAAP) | $11,541M | $11,047M | $9,709M | | Tangible common book value per share (non-GAAP) | $12.91 | $12.29 | $10.61 | | Tangible common equity to tangible assets (non-GAAP) | 7.52% | 7.17% | 6.55% | [Common Equity Tier 1 (CET1) Ratios](index=21&type=section&id=Common%20Equity%20Tier%201%20(CET1)%20Ratios) The estimated Common Equity Tier 1 (CET1) ratio was 10.7% at the end of Q2 2025, slightly down from 10.8% in Q1 2025 but above the 10.4% from the prior year. An adjusted CET1 ratio, which includes the impact of AOCI, was calculated at 9.2%, showing an improvement from 9.1% in the prior quarter CET1 Ratios (Estimated) | Ratio | 6/30/2025 | 3/31/2025 | 6/30/2024 | | :--- | :--- | :--- | :--- | | Common equity Tier 1 ratio | 10.7% | 10.8% | 10.4% | | Adjusted common equity Tier 1 ratio (non-GAAP) | 9.2% | 9.1% | 8.2% | - The company provides the adjusted CET1 ratio to show the potential impact under recent proposed rulemaking standards that would include AOCI in the calculation[66](index=66&type=chunk) [Asset Quality](index=22&type=section&id=Asset%20Quality) Asset quality improved in Q2 2025, with reduced net charge-offs and a decrease in non-performing loans and delinquencies [Allowance for Credit Losses and Net Charge-Offs](index=22&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Net%20Charge-Offs) Asset quality metrics showed improvement in Q2 2025. The total allowance for credit losses (ACL) stood at $1.74 billion, or 1.80% of total loans. Total net charge-offs decreased to $113 million from $123 million in the prior quarter, resulting in an annualized net charge-off ratio of 0.47%, down from 0.52% Allowance for Credit Losses (ACL) Roll-Forward ($ in millions) | Item | Q2 2025 | | :--- | :--- | | Beginning ACL | $1,730 | | Total Net Charge-offs | ($113) | | Provision for credit losses | $126 | | **Ending ACL** | **$1,743** | Net Loan Charge-offs as a % of Average Loans (Annualized) | Category | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total commercial | 0.45% | 0.35% | 0.37% | | Total investor real estate | 0.07% | 1.02% | 0.00% | | Total consumer | 0.63% | 0.66% | 0.61% | | **Total** | **0.47%** | **0.52%** | **0.42%** | [Non-Performing Loans and Delinquencies](index=25&type=section&id=Non-Performing%20Loans%20and%20Delinquencies) Credit quality continued to improve as non-performing loans (NPLs) decreased to $776 million, or 0.80% of total loans, from 0.88% in the prior quarter. Total delinquencies (30-89 days past due) also declined to $312 million from $333 million in Q1 2025 Non-Performing Loans (NPLs) (excludes loans held for sale) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total NPLs ($M) | $776 | $843 | $847 | | NPLs as % of Loans | 0.80% | 0.88% | 0.87% | - The largest portion of NPLs came from the Commercial and industrial category (**$391 million**) and Commercial investor real estate mortgage (**$283 million**)[74](index=74&type=chunk) Total Delinquencies (Accruing 30-89 Days Past Due) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total Delinquent Loans ($M) | $312 | $333 | $300 | | Delinquencies as % of Loans | 0.32% | 0.35% | 0.31% | [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) This section provides a legal disclaimer on forward-looking statements, highlighting various risks and uncertainties that could impact actual results [Forward-Looking Statements](index=26&type=section&id=Forward-Looking%20Statements) This section contains a standard legal disclaimer regarding forward-looking statements. It cautions investors not to place undue reliance on such statements as they are subject to various risks and uncertainties that could cause actual results to differ materially. The company lists numerous risk factors, including economic conditions, interest rate changes, credit risk, competition, regulatory changes, and cybersecurity threats - The company cautions that statements about future operations, strategies, and financial results are not guarantees and are subject to risks beyond its control[78](index=78&type=chunk) - Key risk factors mentioned include: * Economic and market conditions, including interest rates, inflation, and unemployment * Changes in monetary and fiscal policies * Creditworthiness of customers and collectability of loans * Competition from traditional and non-traditional financial services companies * Cybersecurity risks, including data breaches and hacking * Changes in laws, regulations, and accounting policies[78](index=78&type=chunk)[82](index=82&type=chunk) - The company assumes no obligation to update forward-looking statements except as required by law[80](index=80&type=chunk)