RF
RF
Accumulate 2026-03-31
Model
DDM
Price at Report
$25.24
Base IV
$31.08
Bear IV
$20.52
Bull IV
$42.21
Entry Zone: 22-29 · Sell Above: 36
Bore Family Office
Valuation Report — Regions Financial (RF) • March 31, 2026
3-Stage DDM (Ke) • Discount Rate: 10.14% • Current Price: $25.24
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Regions Financial Corporation is a $159B-asset super-regional bank headquartered in Birmingham, Alabama, operating ~1,300 banking offices and 2,000+ ATMs across 15 states in the Southeast and Midwest. Founded in 1971, Regions serves approximately 7 million consumer and business clients through three segments: Corporate Bank (commercial lending, treasury management, capital markets), Consumer Bank (retail banking, mortgage), and Wealth Management ($51B+ AUM).
FY2025 net income was $2.06B (EPS $2.30, +19% YoY) on revenue of $6.0B, driven by NII growth of 3.6% to $5.0B and stable non-interest income of $1.5B. Regions has built a strong franchise in high-growth Southeast markets (Florida, Texas, Georgia, Tennessee) with favorable demographics and in-migration trends. The bank trades at 1.2x book value with 11.5% ROE and a 4.2% dividend yield backed by 13 consecutive years of growth. The total shareholder yield of 6.6% (dividends + buybacks) makes Regions one of the most shareholder-friendly large regional banks.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Corporate Bank | $2,800M | 40% | +5.0% | — | Commercial & industrial lending, CRE, treasury management, capital markets |
| Consumer Bank | $3,500M | 50% | +4.0% | — | Retail banking, mortgage, auto, consumer lending; 1,300+ offices across Southeast |
| Wealth Management | $700M | 10% | +7.0% | — | $51B+ AUM; trust, brokerage, insurance; growing high-margin business |
| Blended Growth Rate | — | 100% | +4.7% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 11.5% | 8–12% adequate |
| FCF Margin | 36.3% | ≥10% strong |
| Debt / EBITDA | 1.5x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $5,863 | $5,966 | $6,176 | $5,748 | $6,005 |
| Rev YoY Growth | — | +1.8% | +3.5% | -6.9% | +4.5% |
| Gross Margin | 66.8% | 80.2% | 86.1% | 83.8% | 83.1% |
| EBITDA ($M) | $3,215 | $2,876 | $2,607 | $2,354 | $2,743 |
| EBITDA Margin | 54.8% | 48.2% | 42.2% | 41.0% | 45.7% |
| Operating Income ($M) | $2,400 | $2,146 | $1,976 | $1,774 | $2,061 |
| Operating Margin | 40.9% | 36.0% | 32.0% | 30.9% | 34.3% |
| Net Income ($M) | $2,400 | $2,146 | $1,976 | $1,774 | $2,061 |
| Net Margin | 40.9% | 36.0% | 32.0% | 30.9% | 34.3% |
| EPS (diluted) | $2.49 | $2.28 | $2.11 | $1.93 | $2.30 |
| Free Cash Flow ($M) | $3,030 | $3,102 | $2,308 | $1,598 | $2,181 |
| Annual DPS | $0.650 | $0.720 | $0.840 | $0.960 | $1.000 |
| Total Debt ($M) | $2,400 | $2,300 | $2,300 | $6,000 | $4,100 |
💹 Capital Return & Share Count Analysis
Net Share Change
-10.1% (2021→2025)
📉 Net reduction — buybacks exceed issuances
EPS Amplification
EPS grew -7.6% vs net income -14.1% over the period — +6.5pp of EPS growth amplified by share reduction.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2021 | 964.0M | — | $467 | 1.9% |
| 2022 | 941.0M | -2.4% | $230 | 1.0% |
| 2023 | 937.0M | -0.4% | $252 | 1.1% |
| 2024 | 918.0M | -2.0% | $348 | 1.5% |
| 2025 | 867.0M | -5.6% | $1,067 | 4.9% |
Share count declined 10.1% from 964M (2021) to 867M (2025), averaging a 2.6%/yr reduction. Buyback activity has been present every year but highly variable — $230M in FY2022 vs $1,067M in FY2025 (4.6x difference). The FY2025 surge in buybacks likely reflects management's confidence in the earnings recovery and capital position. Total capital return of $1.98B in FY2025 was 96% of NI — an extremely shareholder-friendly posture. EPS growth has been amplified by buybacks: FY2025 NI grew 16.2% ($1,774M → $2,061M) while EPS grew 19.2% ($1.93 → $2.30) — 3pp from share reduction.
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 1.070 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 10.14% | Ke = Rf + β × ERP |
📈 DDM Scenarios
$21
🔴 Bear
$31
📊 Base
$42
🚀 Bull
$25.24
Current Price
$29
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.0% | 2.0% | 10.14% | $21 | ▼18.7% |
| 📊 Base | 10.0% | 5.0% | 2.5% | 10.14% | $31 | ▲23.1% |
| 🚀 Bull | 15.0% | 7.0% | 3.0% | 10.14% | $42 | ▲67.2% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.617 | $1.468 | $1.47 |
| Year 2 | Stage 1 | $1.666 | $1.373 | $2.84 |
| Year 3 | Stage 1 | $1.716 | $1.284 | $4.13 |
| Year 4 | Stage 1 | $1.767 | $1.201 | $5.33 |
| Year 5 | Stage 1 | $1.820 | $1.123 | $6.45 |
| Year 6 | Stage 2 | $1.856 | $1.040 | $7.49 |
| Year 7 | Stage 2 | $1.894 | $0.963 | $8.45 |
| Year 8 | Stage 2 | $1.931 | $0.892 | $9.34 |
| Year 9 | Stage 2 | $1.970 | $0.826 | $10.17 |
| Year 10 | Stage 2 | $2.009 | $0.765 | $10.93 |
| Terminal | — | TV=$25.18 | PV(TV)=$9.59 (47% of IV) | $20.52 |
| Intrinsic Value | — | — | PV(Divs) $10.93 + PV(TV) $9.59 | $20.52 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.14%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $25.18. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $9.59). Intrinsic value = PV of all dividends ($10.93) + PV of terminal value ($9.59) = $20.52 per share.
Base Scenario
Stage 1: 10.0% | Stage 2: 5.0% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.727 | $1.568 | $1.57 |
| Year 2 | Stage 1 | $1.900 | $1.566 | $3.13 |
| Year 3 | Stage 1 | $2.090 | $1.564 | $4.70 |
| Year 4 | Stage 1 | $2.299 | $1.562 | $6.26 |
| Year 5 | Stage 1 | $2.529 | $1.560 | $7.82 |
| Year 6 | Stage 2 | $2.655 | $1.487 | $9.31 |
| Year 7 | Stage 2 | $2.788 | $1.418 | $10.73 |
| Year 8 | Stage 2 | $2.927 | $1.352 | $12.08 |
| Year 9 | Stage 2 | $3.073 | $1.289 | $13.37 |
| Year 10 | Stage 2 | $3.227 | $1.228 | $14.59 |
| Terminal | — | TV=$43.30 | PV(TV)=$16.48 (53% of IV) | $31.08 |
| Intrinsic Value | — | — | PV(Divs) $14.59 + PV(TV) $16.48 | $31.08 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.14%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $43.30. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $16.48). Intrinsic value = PV of all dividends ($14.59) + PV of terminal value ($16.48) = $31.08 per share.
Bull Scenario
Stage 1: 15.0% | Stage 2: 7.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.805 | $1.639 | $1.64 |
| Year 2 | Stage 1 | $2.076 | $1.712 | $3.35 |
| Year 3 | Stage 1 | $2.388 | $1.787 | $5.14 |
| Year 4 | Stage 1 | $2.746 | $1.866 | $7.00 |
| Year 5 | Stage 1 | $3.158 | $1.948 | $8.95 |
| Year 6 | Stage 2 | $3.379 | $1.893 | $10.85 |
| Year 7 | Stage 2 | $3.615 | $1.839 | $12.68 |
| Year 8 | Stage 2 | $3.868 | $1.786 | $14.47 |
| Year 9 | Stage 2 | $4.139 | $1.735 | $16.21 |
| Year 10 | Stage 2 | $4.429 | $1.686 | $17.89 |
| Terminal | — | TV=$63.89 | PV(TV)=$24.32 (58% of IV) | $42.21 |
| Intrinsic Value | — | — | PV(Divs) $17.89 + PV(TV) $24.32 | $42.21 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (10.14%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $63.89. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $24.32). Intrinsic value = PV of all dividends ($17.89) + PV of terminal value ($24.32) = $42.21 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.1% | $39 | $41 | $43 | $46 | $49 |
| 8.6% | $36 | $38 | $39 | $42 | $44 |
| 9.1% | $33 | $35 | $36 | $38 | $40 |
| 9.6% | $31 | $32 | $34 | $35 | $37 |
| 10.1% | $29 | $30 | $31 | $33 | $34 |
| 10.6% | $27 | $28 | $29 | $30 | $31 |
| 11.1% | $26 | $27 | $27 | $28 | $29 |
| 11.6% | $24 | $25 | $26 | $27 | $27 |
| 12.1% | $23 | $24 | $24 | $25 | $26 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E | P/B | Div Yield | ROE | Note |
|---|---|---|---|---|---|
| RF (current) | 11.0x | 1.19x | 4.20% | 11.5% | Southeast franchise; 13yr div streak |
| FITB (Fifth Third) | 10.5x | 1.30x | 3.6% | 12.8% | Midwest/Southeast super-regional |
| HBAN (Huntington) | 11.3x | 1.25x | 4.1% | 11.0% | Midwest super-regional; similar size |
| CFG (Citizens) | 9.5x | 0.95x | 3.9% | 10.1% | Northeast super-regional; lower P/B |
| MTB (M&T Bank) | 12.1x | 1.45x | 3.1% | 12.0% | Northeast premium franchise |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.060 |
| Current Yield | 4.20% |
| Consecutive Growth Years | 13 |
| 1-yr DPS CAGR | +5.6% |
| 3-yr DPS CAGR | +8.4% |
| 5-yr DPS CAGR | +10.0% |
| 10-yr DPS CAGR | +7.5% |
| Payout Ratio (DPS/EPS) | 45.4% |
| FCF Payout Ratio | 42.0% |
| Sustainability Verdict | Safe |
RF's dividend is well-covered at a 45% payout ratio with 13 consecutive years of growth — one of the longest active streaks among large regional banks. The recent increase to $0.265/qtr (5.6% YoY) continues the steady escalation pattern. At 4.2% yield, Regions is among the highest-yielding super-regionals.
Total capital return is the full picture: RF returned $1.98B in FY2025 (96% of NI) through dividends ($912M) and buybacks ($1,067M). The buyback program reduced share count from 964M to 867M since 2021 (-10%). With earnings growing and the balance sheet stable, both dividends and buybacks have room to continue. The 45% payout ratio is at peer median — further expansion is possible but not required for the thesis. Risk: a severe credit cycle could slow buybacks, but the dividend is safe to at least 60% payout ratio ($2.30 EPS).
Total capital return is the full picture: RF returned $1.98B in FY2025 (96% of NI) through dividends ($912M) and buybacks ($1,067M). The buyback program reduced share count from 964M to 867M since 2021 (-10%). With earnings growing and the balance sheet stable, both dividends and buybacks have room to continue. The 45% payout ratio is at peer median — further expansion is possible but not required for the thesis. Risk: a severe credit cycle could slow buybacks, but the dividend is safe to at least 60% payout ratio ($2.30 EPS).
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.49 | — | — | — | Actual |
| 2022 | $2.28 | — | — | — | Actual |
| 2023 | $2.11 | — | — | — | Actual |
| 2024 | $1.93 | — | — | — | Actual |
| 2025 | $2.30 | — | — | — | Actual |
| 2026 | $2.48 | $2.68 | $2.80 | 26 | Estimate |
| 2027 | $2.69 | $2.94 | $3.14 | 25 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $5.9B | — | — | — | Actual |
| 2022 | $6.0B | — | — | — | Actual |
| 2023 | $6.2B | — | — | — | Actual |
| 2024 | $5.7B | — | — | — | Actual |
| 2025 | $6.0B | — | — | — | Actual |
| 2026 | $7.8B | $8.1B | $8.4B | 26 | Estimate |
| 2027 | $8.1B | $8.4B | $8.7B | 25 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $28.97 | Range $24–$32
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Dave Rochester | Cantor Fitzgerald | Buy | $32 | +26.8% |
| Vivek Juneja | JP Morgan | Hold | $32 | +26.8% |
| Scott Siefers | Piper Sandler | Hold | $28 | +10.9% |
| Brian Foran | Truist Securities | Hold | $28 | +10.9% |
| Mike Mayo | Wells Fargo | Sell | $28 | +10.9% |
💡 Investment Thesis
- Southeast Banking Franchise: Regions operates in some of the fastest-growing markets in the US — Florida, Texas, Georgia, Tennessee, and Alabama. Favorable demographics (population growth, business formation) provide a structural tailwind for deposit and loan growth that banks in slower-growth regions cannot match.
- Strong Capital Return Program: $1.98B returned to shareholders in FY2025 (96% of NI): $912M dividends + $1,067M buybacks. The 4.2% yield is backed by 13 consecutive years of growth, and the 45% payout ratio has room for continued increases. Share count declined 10% since 2021.
- Earnings Momentum: FY2025 EPS grew 19% to $2.30 with analyst consensus projecting $2.68 (+16.5%) in FY2026 and $2.94 (+9.7%) in FY2027. The earnings recovery from the 2023-2024 NIM squeeze is well underway.
- Diversified Revenue Base: Unlike pure commercial banks, Regions has meaningful non-interest income ($1.5B, 25% of revenue) from wealth management, capital markets, and fee-based services — providing earnings stability through rate cycles.
- Key Risk — Credit Cycle: Large CRE and C&I exposure could drive elevated provisions in a downturn. The 2023 regional bank stress episode hit RF stock particularly hard (beta 1.07), and any repeat of deposit flight concerns could compress the valuation significantly. Southeast real estate markets are also stretched in some areas.
⚖️ DDM Verdict: Accumulate — Regions Financial (RF)
Current price: $25.24 | Analyst Avg PT: $28.97
$21
🔴 Bear
$31
📊 Base
$42
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$29 | Begin position |
| Tier 2 — Add | ≤$26 | Add on weakness |
| Tier 3 — Full | ≤$22 | Full allocation |
| Sell Alert | ≥$36 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
RF at $25.24 is an Accumulate with a Base Shareholder Yield DDM target of ~$29. The stock trades at 9.7x forward earnings with a 4.2% yield and 6.6% total shareholder yield — attractive for a well-managed super-regional in high-growth Southeast markets. Analyst consensus of $28.97 (+15% upside) supports the thesis.
The SY DDM uses a total base of $1.57/share (cash DPS $1.06 + buyback yield $0.51) with 10% Stage 1 growth reflecting EPS growth of 10-16% and maintained capital return program. The high Ke (10.14%) from beta 1.07 appropriately captures regional bank risk premium.
Action: Accumulate at current levels ($24-26). Add on pullbacks to $21-22 (1.0x book value). Full position below $18 (52-week low zone). Take profits above $30 (approaches analyst high PT).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Shareholder Yield DDM — Total Capital Return Base | Base = $1.57/share (cash DPS $1.06 + buyback yield $0.51). All three SY DDM conditions met: (1) low leverage — $4.1B borrowings vs $19.1B equity (0.21x), (2) buybacks active every year 2021-2025 with consistent share count decline (964M → 867M), (3) total payout = 91% of operating CF. A cash-only DDM at $1.06 base with the high Ke of 10.14% would require 15%+ DPS growth (vs actual 5.6%) to produce values near the $29 analyst PT — unrealistically disconnected from observable dividend policy. The SY DDM at $1.57 with 10% growth aligns perfectly. |
| Ke — High Beta for a Bank | Beta 1.07 (Finnhub) → Ke = 4.25% + 1.07 × 5.5% = 10.14%. This is elevated vs. typical bank betas (0.7-1.0) and reflects the 2023 regional banking stress episode. RF was among the names caught in the deposit flight concerns. The high beta appropriately captures the market's perception of regional bank risk. |
| Southeast Growth Tailwind | Regions operates in 15 states concentrated in the high-growth Southeast — Florida, Texas, Georgia, Tennessee, Alabama. Population in-migration, business formation, and real estate activity in these markets exceed national averages. This geographic advantage supports above-peer loan growth and deposit franchises and is the key structural bull case. |
| Sanity Check | Base IV ~$29 matches analyst consensus PT of $28.97 within 0.1% — excellent alignment. Cross-checks: P/E of 11x FY2026E ($2.68) = $29.5; P/B of 1.36x × BV $21.25 = $28.9. All three methods converge on ~$29, confirming robust model calibration. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.