Truist Securities Reiterates Hold Rating on Regions Financial (RF), PT $25
Truist Securities analyst Brian Foran reiterated a Hold rating and $25.00 price target on Regions Financial (NYSE: RF)
The analyst comments "2025 GUIDE: NII is guided +2-5%, at the mid point it implies $5.0bn, which is on top of the Street. That does leave a decent range though, slide 8 gives detail on what would push them to top and bottom. It also includes loans +1%, and deposits flat, both just behind consensus. Fees are guided +2-4%, that is a little below consensus of 5%. This is offset by expenses guided +1-3%, whereas consensus modeled 3%. Charge-offs are seen 40-50bp, but with commentary that the high end of the range is likely, with consensus at 48bp. Tax rate is seen 20-21%, in-line with consensus. Finally, they say in the near term they want to get CET1 including AOCI up to their 9.25-9.75% operating range, versus 8.8% in 4Q. So it seems like buybacks will take a back seat for a while. They talked about that at the GS conference in December, but the Street still has them buying back 1% of outstanding shares 1H25. • 1Q TRENDS: 1Q NII is seen down a little bit - the dreaded day count. Perhaps we can just shift the calendar so every quarter has the same number of days. They also point to capital markets $80-90mn per quarter in the near-term, which is within their expectation. On deposits, they note growth in commercial deposits in 4Q was mostly seasonal and will reverse out in 1Q. They expect modest deposit growth in 2Q and beyond. On expenses, they don't give a 1Q guide but remind that there are $30mn of seasonal increases. • 4Q RESULTS: 4Q EPS was $0.56, in line with consensus. They give an adjusted result of $0.59, backing out the securities repositioning charge. NII was 1% better than consensus and 4% increase QoQ, with NIM now at 3.55% (Street at 3.53%). This was driven by a higher than expected deposit beta at 34% and fixed asset repricing. Fees were a little soft and expenses were a little better than modeled. 4Q actual charge-offs at 49bp were a little better than the 53bp consensus. NPLs did increase 11% qoq which is not great, with office CRE, senior housing and trucking driving things. Criticized assets were stable though, and the guide for charge-offs in 2025 is flat to down, so hopefully the pig is working through the python. On the securities repositioning, this has been a recurring theme for RF, this quarter they took a $30mm loss to reposition $0.7bn of securities."
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Shares of Regions Financial closed at $24.52 yesterday.