Regions Financial(RF) - 2024 Q4 - Annual Results

Financial Highlights Earnings Summary Regions Financial Corporation reported increased net income and diluted EPS in Q4 2024 compared to prior periods Quarterly Earnings Summary (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :--------------------------------- | :--------- | :-------- | :--------- | | Net income ($ millions) | $534 | $490 | $391 | | Net income available to common shareholders ($ millions) | $508 | $446 | $367 | | Diluted EPS | $0.56 | $0.49 | $0.39 | - Net interest income remained relatively stable at $1,230 million in Q4 2024, compared to $1,218 million in Q3 2024 and $1,231 million in Q4 2023[4] - Provision for credit losses increased slightly to $120 million in Q4 2024 from $113 million in Q3 2024, but decreased from $155 million in Q4 2023[4] Balance Sheet Summary Total assets remained stable in Q4 2024, with a slight QoQ decrease and YoY increase, while deposits grew modestly Quarterly Balance Sheet Summary (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :--------------------------------- | :--------- | :-------- | :--------- | | Loans, net of unearned income ($ millions) | $96,727 | $96,789 | $98,379 | | Assets ($ millions) | $157,302 | $157,426 | $152,194 | | Deposits ($ millions) | $127,603 | $126,376 | $127,788 | | Shareholders' equity ($ millions) | $17,879 | $18,676 | $17,429 | - Loans, net of unearned income, remained relatively stable quarter-over-quarter at $96,727 million, but decreased by 1.7% year-over-year from $98,379 million[4] - Deposits increased by 1.0% from $126,376 million in Q3 2024 to $127,603 million in Q4 2024, but were slightly down from $127,788 million in Q4 2023[4] Selected Ratios and Other Information Key Performance Ratios (Quarterly) Profitability and efficiency ratios improved in Q4 2024, with return on average assets at 1.36% and strong CET1 Selected Quarterly Ratios (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------------------ | :--------- | :-------- | :--------- | | Return on average assets* (%) | 1.36 % | 1.26 % | 1.02 % | | Return on average common shareholders' equity* (%) | 12.39 % | 10.88 % | 9.95 % | | Efficiency ratio (%) | 56.8 % | 59.3 % | 65.0 % | | Common equity Tier 1 ratio (estimated) (%) | 10.8 % | 10.6 % | 10.3 % | | Net interest margin (FTE)* (%) | 3.55 % | 3.54 % | 3.60 % | | Net charge-offs as a percentage of average loans* (%) | 0.49 % | 0.48 % | 0.54 % | - The allowance for credit losses as a percentage of loans, net of unearned income, remained stable at 1.79% in Q4 2024, consistent with Q3 2024[5] - Non-performing loans, excluding loans held for sale, increased to 0.96% of loans in Q4 2024 from 0.85% in Q3 2024[5] Key Performance Ratios (Annual) Annual performance for 2024 showed a return on average assets of 1.23% and a net interest margin of 3.54% Selected Annual Ratios (2024 vs. 2023) | Metric | 2024 | 2023 | | :------------------------------------------------ | :----- | :----- | | Return on average assets (%) | 1.23 % | 1.36 % | | Return on average common shareholders' equity (%) | 11.24 %| 13.29 %| | Efficiency ratio (%) | 59.5 % | 57.9 % | | Net interest margin (FTE) (%) | 3.54 % | 3.90 % | | Net charge-offs as a percentage of average loans (%) | 0.47 % | 0.40 % | - The dividend payout ratio for 2024 increased to 50.5% from 41.6% in 2023[5] Consolidated Balance Sheets Assets, Liabilities and Equity Total assets remained stable in Q4 2024, with increased deposits and a significant rise in long-term borrowings Consolidated Balance Sheet Highlights (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :--------------------------------- | :--------- | :-------- | :--------- | | Total assets ($ millions) | $157,302 | $157,426 | $152,194 | | Net loans ($ millions) | $95,114 | $95,182 | $96,803 | | Total deposits ($ millions) | $127,603 | $126,376 | $127,788 | | Long-term borrowings ($ millions) | $5,993 | $6,016 | $2,330 | | Total shareholders' equity ($ millions) | $17,879 | $18,676 | $17,429 | - Debt securities held to maturity significantly increased to $4,427 million in Q4 2024 from $2,787 million in Q3 2024 and $754 million in Q4 2023[7] - Non-interest-bearing deposits decreased by 1.4% QoQ and 7.6% YoY, while interest-bearing deposits increased by 2.0% QoQ and 3.6% YoY[7] Loans End of Period Loans Total loan portfolio remained stable at $96,727 million in Q4 2024, with slight QoQ and YoY decreases End of Period Loans by Category ($ millions) | Loan Category | 12/31/2024 | 9/30/2024 | 12/31/2023 | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :------------------------------------ | :--------- | :-------- | :--------- | :---------------- | :---------------- | | Commercial and industrial ($ millions) | $49,671 | $49,565 | $50,865 | 0.2 | (2.3) | | Total business ($ millions) | $63,555 | $63,591 | $64,883 | (0.1) | (2.0) | | Residential first mortgage ($ millions) | $20,094 | $20,125 | $20,207 | (0.2) | (0.6) | | Consumer credit card ($ millions) | $1,445 | $1,372 | $1,341 | 5.3 | 7.8 | | Total consumer ($ millions) | $33,172 | $33,198 | $33,496 | (0.1) | (1.0) | | Total Loans ($ millions) | $96,727| $96,789| $98,379| (0.1) | (1.7) | End of Period Loans by Percentage | Loan Category | 12/31/2024 (%) | 9/30/2024 (%) | 12/31/2023 (%) | | :------------------------------------ | :--------- | :-------- | :--------- | | Commercial and industrial | 51.4 % | 51.2 % | 51.7 % | | Total business | 65.7 % | 65.7 % | 66.0 % | | Total consumer | 34.3 % | 34.3 % | 34.0 % | - Consumer credit card loans showed strong growth, increasing by 5.3% QoQ and 7.8% YoY[9] Average Balances of Loans Average total loans decreased to $96,408 million in Q4 2024, with commercial and industrial loans declining Average Balances of Loans by Category ($ millions) | Loan Category | 4Q24 ($ millions) | 3Q24 ($ millions) | 4Q23 ($ millions) | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :------------------------------------ | :--- | :--- | :--- | :---------------- | :---------------- | | Commercial and industrial | $49,357 | $49,847 | $50,939 | (1.0) | (3.1) | | Total business | $63,225 | $63,818 | $64,847 | (0.9) | (2.5) | | Total consumer | $33,183 | $33,222 | $33,446 | (0.1) | (0.8) | | Total Loans | $96,408| $97,040| $98,293| (0.7) | (1.9) | Annual Average Balances of Loans by Category ($ millions) | Loan Category | 2024 ($ millions) | 2023 ($ millions) | 2024 vs. 2023 (%) | | :------------------------------------ | :--- | :--- | :---------------- | | Commercial and industrial | $49,834 | $51,465 | (3.2) | | Total business | $63,773 | $65,218 | (2.2) | | Total consumer | $33,263 | $33,021 | 0.7 | | Total Loans | $97,036| $98,239| (1.2) | - For the full year 2024, average total loans decreased by 1.2% compared to 2023, primarily driven by a 3.2% decline in commercial and industrial loans[13] Deposits End of Period Deposits Total deposits increased by 1.0% QoQ to $127,603 million in Q4 2024, with interest-free deposits declining End of Period Deposits by Type ($ millions) | Deposit Type | 12/31/2024 | 9/30/2024 | 12/31/2023 | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :-------------------------- | :--------- | :-------- | :--------- | :---------------- | :---------------- | | Interest-free deposits ($ millions) | $39,138 | $39,698 | $42,368 | (1.4) | (7.6) | | Interest-bearing checking ($ millions) | $25,079 | $23,704 | $24,480 | 5.8 | 2.4 | | Money market—domestic ($ millions) | $35,644 | $35,205 | $33,364 | 1.2 | 6.8 | | Time deposits ($ millions) | $15,720 | $15,684 | $14,972 | 0.2 | 5.0 | | Total Deposits ($ millions) | $127,603| $126,376| $127,788| 1.0 | (0.1) | End of Period Deposits by Segment ($ millions) | Segment | 12/31/2024 | 9/30/2024 | 12/31/2023 | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :-------------------- | :--------- | :-------- | :--------- | :---------------- | :---------------- | | Consumer Bank Segment ($ millions) | $78,637 | $78,858 | $80,031 | (0.3) | (1.7) | | Corporate Bank Segment ($ millions)| $38,361 | $36,955 | $36,883 | 3.8 | 4.0 | | Wealth Management Segment ($ millions) | $7,736 | $7,520 | $7,694 | 2.9 | 0.5 | - Corporate Bank Segment deposits increased by 3.8% QoQ and 4.0% YoY, indicating strong growth in this area[15] Average Balances of Deposits Average total deposits increased by 0.4% QoQ to $126,493 million in Q4 2024, with time deposits growing Average Balances of Deposits by Type ($ millions) | Deposit Type | 4Q24 ($ millions) | 3Q24 ($ millions) | 4Q23 ($ millions) | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :-------------------------- | :--- | :--- | :--- | :---------------- | :---------------- | | Interest-free deposits | $39,424 | $39,690 | $43,167 | (0.7) | (8.7) | | Interest-bearing checking | $24,060 | $23,599 | $23,128 | 2.0 | 4.0 | | Money market—domestic | $35,264 | $35,051 | $33,216 | 0.6 | 6.2 | | Time deposits | $15,725 | $15,427 | $14,045 | 1.9 | 12.0 | | Total Deposits | $126,493| $125,950| $126,414| 0.4 | 0.1 | Annual Average Balances of Deposits by Type ($ millions) | Deposit Type | 2024 ($ millions) | 2023 ($ millions) | 2024 vs. 2023 (%) | | :-------------------------- | :--- | :--- | :---------------- | | Interest-free deposits | $40,136 | $46,150 | (13.0) | | Time deposits | $15,471 | $10,545 | 46.7 | | Total Deposits | $126,615| $126,543| 0.1 | - For the full year 2024, average time deposits surged by 46.7% compared to 2023, reflecting a shift towards higher-yielding deposit products[17] Consolidated Statements of Income Quarterly Statements of Income Net income increased to $534 million in Q4 2024, driven by lower interest and non-interest expenses Quarterly Income Statement Highlights ($ millions) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :--------------------------------- | :--------- | :-------- | :--------- | | Total interest income ($ millions) | $1,802 | $1,820 | $1,751 | | Total interest expense ($ millions) | $572 | $602 | $520 | | Net interest income ($ millions) | $1,230 | $1,218 | $1,231 | | Provision for credit losses ($ millions) | $120 | $113 | $155 | | Total non-interest income ($ millions) | $585 | $572 | $580 | | Total non-interest expense ($ millions) | $1,038 | $1,069 | $1,185 | | Net income ($ millions) | $534 | $490 | $391 | | Diluted EPS | $0.56 | $0.49 | $0.39 | - Interest expense on deposits decreased to $467 million in Q4 2024 from $507 million in Q3 2024, contributing to the net interest income stability[18] - Non-interest expense decreased by 2.9% QoQ and 12.4% YoY, primarily due to lower salaries and employee benefits and other miscellaneous expenses[18] Annual Statements of Income Annual net income for 2024 decreased to $1,893 million, primarily due to a decline in net interest income Annual Income Statement Highlights ($ millions) | Metric | 2024 | 2023 | | :--------------------------------- | :--- | :--- | | Total interest income ($ millions) | $7,108 | $6,897 | | Total interest expense ($ millions) | $2,290 | $1,577 | | Net interest income ($ millions) | $4,818 | $5,320 | | Provision for credit losses ($ millions) | $487 | $553 | | Total non-interest income ($ millions) | $2,265 | $2,256 | | Total non-interest expense ($ millions) | $4,242 | $4,416 | | Net income ($ millions) | $1,893 | $2,074 | | Diluted EPS | $1.93 | $2.11 | - Net interest income decreased by 9.4% year-over-year, primarily due to a significant increase in interest expense on deposits (up 57.1%)[21] - Total non-interest expense decreased by 3.9% year-over-year, driven by lower operational losses and FDIC insurance assessments[21] Consolidated Average Daily Balances and Yield/Rate Analysis Quarterly Yield/Rate Analysis Net interest margin (FTE) slightly increased to 3.55% in Q4 2024, with an improved net interest spread Quarterly Yield/Rate Analysis Highlights (Q4 2024 vs. Q3 2024) | Metric | 12/31/2024 (%) | 9/30/2024 (%) | | :------------------------------------ | :--------- | :-------- | | Yield on Total earning assets | 5.17 % | 5.26 % | | Rate on Total interest-bearing liabilities | 2.41 % | 2.59 % | | Net interest spread | 2.76 % | 2.67 % | | Net interest income/margin FTE basis | 3.55 % | 3.54 % | - The yield on loans, net of unearned income, decreased to 5.87% in Q4 2024 from 6.02% in Q3 2024[23] - The rate for total deposit costs decreased to 1.47% in Q4 2024 from 1.60% in Q3 2024[25] Annual Yield/Rate Analysis Annual net interest margin (FTE) for 2024 was 3.54%, a decrease from 2023 due to higher liability rates Annual Yield/Rate Analysis Highlights (2024 vs. 2023) | Metric | 2024 (%) | 2023 (%) | | :------------------------------------ | :--- | :--- | | Yield on Total earning assets | 5.18 % | 5.02 % | | Rate on Total interest-bearing liabilities | 2.50 % | 1.84 % | | Net interest spread | 2.68 % | 3.18 % | | Net interest income/margin FTE basis | 3.54 % | 3.90 % | - The rate for total deposit costs increased significantly to 1.56% in 2024 from 0.99% in 2023[33] - The yield on total loans, net of unearned income, increased to 5.93% in 2024 from 5.86% in 2023[30] Pre-Tax Pre-Provision Income ("PPI") and Adjusted PPI (non-GAAP) Quarterly PPI and Adjusted PPI Pre-tax pre-provision income (non-GAAP) increased to $777 million in Q4 2024, showing strong QoQ and YoY growth Quarterly PPI and Adjusted PPI ($ millions) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :------------------------------------ | :--------- | :-------- | :--------- | :---------------- | :---------------- | | Pre-tax pre-provision income (non-GAAP) ($ millions) | $777 | $721 | $626 | 7.8 | 24.1 | | Adjusted pre-tax pre-provision income (non-GAAP) ($ millions) | $816 | $799 | $774 | 2.1 | 5.4 | - Key adjustments to PPI included a $30 million securities loss (net) in Q4 2024, a significant improvement from a $78 million loss in Q3 2024[35] - The FDIC insurance special assessment reflected a reduction to the accrual in Q4 2024 and Q3 2024, contrasting with a large expense in Q4 2023[35][36] Annual PPI and Adjusted PPI Annual pre-tax pre-provision income (non-GAAP) decreased by 10.1% to $2,841 million in 2024 Annual PPI and Adjusted PPI ($ millions) | Metric | 2024 | 2023 | 2024 vs. 2023 (%) | | :------------------------------------ | :--- | :--- | :---------------- | | Pre-tax pre-provision income (non-GAAP) ($ millions) | $2,841 | $3,160 | (10.1) | | Adjusted pre-tax pre-provision income (non-GAAP) ($ millions) | $3,064 | $3,317 | (7.6) | - The annual decline was largely influenced by a $208 million securities loss (net) in 2024, compared to a $5 million loss in 2023[35] - FDIC insurance special assessment adjustments significantly impacted the year-over-year comparison, with a $103 million reduction in 2024 compared to 2023[35] Non-Interest Income, Mortgage Income, Wealth Management Income and Capital Markets Income Quarterly Non-Interest Income Breakdown Total non-interest income increased by 2.3% QoQ to $585 million in Q4 2024, driven by capital markets and MSR impact Quarterly Non-Interest Income ($ millions) | Income Category | 12/31/2024 | 9/30/2024 | 12/31/2023 | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :------------------------------------ | :--------- | :-------- | :--------- | :---------------- | :---------------- | | Service charges on deposit accounts ($ millions) | $155 | $158 | $143 | (1.9) | 8.4 | | Card and ATM fees ($ millions) | $113 | $118 | $127 | (4.2) | (11.0) | | Wealth management income ($ millions) | $126 | $128 | $117 | (1.6) | 7.7 | | Capital markets income ($ millions) | $97 | $92 | $48 | 5.4 | 102.1 | | Mortgage income ($ millions) | $35 | $36 | $31 | (2.8) | 12.9 | | Securities gains (losses), net ($ millions) | $(30) | $(78) | $(2) | 61.5 | NM | | Total non-interest income ($ millions) | $585 | $572 | $580 | 2.3 | 0.9 | - Capital markets income surged by 102.1% year-over-year, reaching $97 million in Q4 2024[37] - Mortgage income increased by 12.9% YoY, primarily due to a significant fair value increase in MSRs (Mortgage Servicing Rights) offsetting hedge losses[37][38] Annual Non-Interest Income Breakdown Total non-interest income remained flat at $2,265 million in 2024, with capital markets and mortgage income growth offset by securities losses Annual Non-Interest Income ($ millions) | Income Category | 2024 | 2023 | 2024 vs. 2023 (%) | | :------------------------------------ | :--- | :--- | :---------------- | | Service charges on deposit accounts ($ millions) | $612 | $592 | 3.4 | | Card and ATM fees ($ millions) | $467 | $504 | (7.3) | | Wealth management income ($ millions) | $495 | $451 | 9.8 | | Capital markets income ($ millions) | $348 | $222 | 56.8 | | Mortgage income ($ millions) | $146 | $109 | 33.9 | | Securities gains (losses), net ($ millions) | $(208)| $(5) | NM | | Total non-interest income ($ millions) | $2,265| $2,256| 0.4 | - Capital markets income increased by 56.8% year-over-year, contributing significantly to non-interest income[44] - Mortgage income grew by 33.9% year-over-year, driven by increases in production and sales, and loan servicing income[44][45] Non-Interest Expense Quarterly Non-Interest Expense Breakdown Total non-interest expense decreased by 2.9% QoQ to $1,038 million in Q4 2024, driven by lower salaries and FDIC assessments Quarterly Non-Interest Expense ($ millions) | Expense Category | 12/31/2024 | 9/30/2024 | 12/31/2023 | 4Q24 vs. 3Q24 (%) | 4Q24 vs. 4Q23 (%) | | :------------------------------------ | :--------- | :-------- | :--------- | :---------------- | :---------------- | | Salaries and employee benefits ($ millions) | $617 | $645 | $608 | (4.3) | 1.5 | | Equipment and software expense ($ millions) | $104 | $101 | $102 | 3.0 | 2.0 | | Net occupancy expense ($ millions) | $67 | $69 | $71 | (2.9) | (5.6) | | FDIC insurance assessments ($ millions) | $20 | $17 | $147 | 17.6 | (86.4) | | Operational losses ($ millions) | $16 | $19 | $29 | (15.8) | (44.8) | | Total non-interest expense ($ millions) | $1,038 | $1,069| $1,185 | (2.9) | (12.4) | - FDIC insurance assessments decreased significantly by 86.4% YoY, reflecting a reduction to the Company's FDIC special assessment accrual[50] - Salaries and employee benefits decreased by 4.3% QoQ, contributing to the overall expense reduction[50] Annual Non-Interest Expense Breakdown Total non-interest expense decreased by 3.9% to $4,242 million in 2024, primarily due to reduced FDIC assessments and operational losses Annual Non-Interest Expense ($ millions) | Expense Category | 2024 | 2023 | 2024 vs. 2023 (%) | | :------------------------------------ | :--- | :--- | :---------------- | | Salaries and employee benefits ($ millions) | $2,529 | $2,416 | 4.7 | | FDIC insurance assessments ($ millions) | $109 | $228 | (52.2) | | Operational losses ($ millions) | $95 | $212 | (55.2) | | Total non-interest expense ($ millions) | $4,242| $4,416| (3.9) | - FDIC insurance assessments decreased by 52.2% year-over-year, reflecting accrual reductions[50] - Operational losses decreased by 55.2% year-over-year, contributing significantly to the overall expense reduction[50] Reconciliation of GAAP Financial Measures to non-GAAP Financial Measures Adjusted Efficiency Ratios, Adjusted Fee Income Ratios, Adjusted Non-Interest Income/Expense, Adjusted Operating Leverage Ratios, and Adjusted Total Revenue Adjusted efficiency ratio (non-GAAP) improved to 55.4% in Q4 2024, indicating better operational efficiency and decreased expenses Quarterly Adjusted Ratios (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------------------ | :--------- | :-------- | :--------- | | Adjusted non-interest expense (non-GAAP) ($ millions) | $1,029 | $1,069 | $1,038 | | Adjusted total revenue, taxable equivalent basis (non-GAAP) ($ millions) | $1,858 | $1,880 | $1,825 | | Adjusted efficiency ratio (non-GAAP) (%) | 55.4 % | 56.9 % | 56.9 % | | Adjusted fee income ratio (non-GAAP) (%) | 33.1 % | 34.6 % | 31.8 % | - Adjustments to non-interest expense included a $2 million reduction in FDIC insurance special assessment accrual in Q4 2024[54] - For the full year 2024, the adjusted efficiency ratio (non-GAAP) was 57.6%, an increase from 55.9% in 2023, while adjusted total revenue (non-GAAP) decreased by 3.8%[57] Return Ratios Return on average tangible common shareholders' equity (non-GAAP) increased to 19.19% in Q4 2024, showing improved profitability Quarterly Return Ratios (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------------------ | :--------- | :-------- | :--------- | | Return on average common shareholders' equity (GAAP)* (%) | 12.39 % | 10.88 % | 9.95 % | | Return on average tangible common shareholders' equity (non-GAAP)* (%) | 19.19 % | 16.87 % | 16.57 % | | Return on average tangible common shareholders' equity excluding AOCI (non-GAAP)* (%) | 15.46 % | 13.69 % | 11.45 % | - For the full year 2024, return on average tangible common shareholders' equity (non-GAAP) was 17.77%, down from 21.93% in 2023[61] Tangible Common Ratios Tangible common shareholders' equity to tangible assets (non-GAAP) was 6.86% in Q4 2024, a decrease from Q3 2024 Quarterly Tangible Common Ratios (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------------------ | :--------- | :-------- | :--------- | | Tangible common shareholders' equity (non-GAAP) ($ millions) | $10,388 | $11,172 | $9,944 | | Tangible common shareholders' equity to tangible assets (non-GAAP) (%) | 6.86 % | 7.37 % | 6.79 % | | Tangible common book value per share (non-GAAP) | $11.42 | $12.26 | $10.77 | - The decrease in tangible common shareholders' equity to tangible assets was primarily due to a decrease in tangible common shareholders' equity[64] Common Equity Tier 1 (CET1) Ratios Estimated Common Equity Tier 1 (CET1) ratio increased to 10.8% in Q4 2024, while the adjusted ratio was 8.8% Quarterly CET1 Ratios (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------------------ | :--------- | :-------- | :--------- | | Common equity Tier 1 (estimated) ($ millions) | $13,434 | $13,185 | $12,976 | | Total risk-weighted assets (estimated) ($ millions) | $124,493 | $124,645 | $126,475 | | Common equity Tier 1 ratio (estimated) (%) | 10.8 % | 10.6 % | 10.3 % | | Adjusted common equity Tier 1 ratio (non-GAAP) (estimated) (%) | 8.8 % | 9.1 % | 8.3 % | - The adjusted CET1 ratio decreased QoQ due to a larger AOCI loss on securities in Q4 2024[66] Credit Quality Allowance for Credit Losses, Net Charge-Offs and Related Ratios Allowance for Credit Losses remained stable at $1,729 million in Q4 2024, with net charge-offs increasing slightly QoQ Quarterly Net Charge-Offs by Loan Category ($ millions) | Loan Category | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :-------- | :--------- | | Commercial and industrial ($ millions) | $39 | $55 | $34 | | Total business ($ millions) | $64 | $68 | $34 | | Total consumer ($ millions) | $55 | $49 | $98 | | Total Net charge-offs ($ millions) | $119 | $117 | $132 | Key Credit Ratios (Q4 2024 vs. Q3 2024 vs. Q4 2023) | Metric | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------------------ | :--------- | :-------- | :--------- | | ACL/Loans, net (%) | 1.79 % | 1.79 % | 1.73 % | | Allowance for credit losses to non-performing loans, excluding loans held for sale (%) | 186 % | 210 % | 211 % | | Net charge-offs as a % of average loans, annualized (%) | 0.49 % | 0.48 % | 0.54 % | - For the full year 2024, net charge-offs were $458 million, up from $397 million in 2023, with the net loan charge-offs as a % of average loans increasing to 0.47% from 0.40%[72] Adjusted Net Charge-offs and Ratio (non-GAAP) Adjusted net loan charge-offs (non-GAAP) for Q4 2024 were $119 million, consistent with GAAP figures due to no loan sale adjustments Adjusted Net Charge-offs ($ millions) and Ratio (Q4 2024 vs. Q4 2023) | Metric | 12/31/2024 | 12/31/2023 | | :------------------------------------------------ | :--------- | :--------- | | Net loan charge-offs (GAAP) ($ millions) | $119 | $132 | | Less: charge-offs associated with the sale of loans ($ millions) | — | $35 | | Adjusted net loan charge-offs (non-GAAP) ($ millions) | $119 | $97 | | Adjusted net loan charge-offs as a % of average loans, annualized (non-GAAP) (%) | 0.49 % | 0.39 % | - In Q4 2023, $35 million in charge-offs were associated with the sale of a loan portfolio, which is excluded from the adjusted non-GAAP measure[73][74] - For the full year 2024, adjusted net loan charge-offs were $458 million, with an adjusted ratio of 0.47%, compared to $362 million and 0.37% in 2023[74] Non-Accrual Loans, Early and Late Stage Delinquencies Non-performing loans increased to $928 million in Q4 2024, representing 0.96% of total loans, with commercial real estate rising Non-Performing Loans (Excludes Loans Held for Sale) ($ millions) | Loan Category | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :-------- | :--------- | | Commercial and industrial ($ millions) | $408 | $430 | $471 | | Commercial investor real estate mortgage ($ millions) | $423 | $287 | $233 | | Total non-performing loans ($ millions) | $928 | $821 | $805 | | Non-performing loans as % of loans (%) | 0.96 % | 0.85 % | 0.82 % | Total Delinquencies ($ millions) | Delinquency Stage | 12/31/2024 | 9/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :-------- | :--------- | | Accruing 30-89 Days Past Due Loans ($ millions) | $367 | $369 | $330 | | Accruing 90+ Days Past Due Loans ($ millions) | $166 | $183 | $171 | | Total delinquencies ($ millions) | $533 | $552 | $501 | - Commercial investor real estate mortgage non-performing loans increased significantly to $423 million in Q4 2024 from $287 million in Q3 2024[75] Forward-Looking Statements Risks and Uncertainties Key risks include economic conditions, interest rate volatility, regulatory changes, technological advancements, and operational risks like cybersecurity - Current and future economic and market conditions, including property values, interest rates, unemployment, and inflation, may adversely affect lending and financial results[80] - Changes in market interest rates or capital markets could impact revenue, expenses, asset values, and the availability and cost of capital and liquidity[80] - The ability to effectively compete with traditional and non-traditional financial services companies, including fintechs, and to keep pace with technological changes, including AI, is crucial for future success[80] - Operational risks, such as data security breaches, malware, ransomware, and failures of third-party infrastructure, could disrupt businesses and lead to financial losses or reputational harm[80][85]