Regions Financial (RF)

Total return at 5 years: 16.9%/year = 12.5% appreciation + 4.4% dividend. The target price ($49) is ex-dividend; the $8 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $80 · Multiples $46) exceeds the market price ($27).

Today — with margin of safety: at $27 trades ~40.7% below its value discounted to today (~$46) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($49) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($27) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-14.7%/year) than we project (8.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$1 bn of owner earnings in year 5 (vs ~$3.2 bn of our base case). It recalculates if the DCF assumptions are edited.

A bank is valued on equity (P/E × common earnings + price/tangible book), not EV: deposits and debt are funding. It returns capital via dividend + buyback —the buyback reduces the share count, so earnings per share grow faster than aggregate earnings—. Total return adds the dividend collected along the way. In edit mode, the metric, shares, dividend, and exit multiple can be adjusted.

Year 0 = TTM to 30-Jun-2026 (net income to common US$2.150bn, EPS ~US$2.51). The 8-K of 17-Jul-2026 (Ex-99.1) was read in full: it carries no numerical revenue or EPS guidance for the current year, only qualitative commentary on 'momentum' into the second half — the path starts from the real trajectory, not from guidance that does not exist. Base case: growth in earnings to common decelerating from ~8% (year 1, reflecting the net interest margin stabilizing at ~3.66% and the continued normalization of credit quality) to a terminal ~4.5% (a mature regional bank, with no runway for aggressive geographic expansion). ROTCE starts at ~18.6% (TTM) and converges to ~15.7% by year 5, still comfortably above the 10% bar. Buybacks: -2.3%/year sustained (the historical net reduction FY23→FY25, the same path in all three scenarios by the method's convention), on 857M TTM diluted shares. The TTM dividend is re-anchored to the current rate (US$0.30/quarter = US$1.20/year), declared by the board on 17-Jul-2026 —a 13% increase over the previous US$0.265—, more recent than the market feed's run rate.

Today's multiple compresses on its own going forward as the metric per share grows (accelerated by the buyback, which reduces the share count). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—. Total return adds the dividend collected; the required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $49 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $27, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $49 in 5 years plus $8 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $46. Against the current market price ($27), the margin of safety is 40.7% (trades below the maximum → there is margin) and the total return at that price would be 16.9% annually.

• Multiple vs band. 13x P/E base, upper half of the method's 10-15x bank band.
• P/TBV. Cross-check against a tangible book value that grows with retention and buybacks.
• Dividend yield. Forward dividend of 4.4% with recent 13% growth.
• Margin of safety. There is a margin of safety: the market's perception is meaningfully worse than reality.

• Return on capital. ROTCE TTM ~18.6%, sustained above the 10% bar.
• Earnings quality. Net charge-offs declining (42bp) and reserve coverage rising (241%): the improvement is cash-backed, not from accruals.
• Reinvestment runway. Scarce: mature bank without aggressive geographic expansion, retaining only ~4% of earnings.
• Rate-cycle sensitivity. Net interest margin depends on the relative speed between rate cuts and deposit repricing.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

Volume (deposits and loans) × price (net interest margin) is the central driver of a commercial bank: the balance sheet grows modestly and steadily while the NIM — today near its recent high point — determines how much of that balance converts into revenue. Net charge-offs, on a downward trend, are the credit-quality signal supporting provision reversal.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (30-jun-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Loan growth. Quality commercial loans growing (C&I +5.0% average year over year), consumer flat.
• Deposit growth. Total deposits roughly flat year over year (+1.0% average).
• Fees. Wealth management and capital markets revenue growing faster than the balance sheet.
• Market ceiling. Mature, regional bank, without room for sustained double-digit growth.

• Deposit franchise. Interest-bearing deposit cost of 1.69%, peer-leading.
• Fee diversification. Wealth management in its fifth record quarter in six.
• Geographic concentration. South, Midwest and Texas: exposed to a region-specific economic shock.
• Regulatory moat erosion. Fintechs and DeFi structurally pressure the traditional entry barrier.
• Scale. US$161.3bn in assets, Category IV, without the regulatory burden of systemically important institutions.

• ✓Capital adequacy (CET1)CET1 10.7% (+3.7pp above the minimum)
• ✓Reserve coverage (allowance / loan book)1.50% of the loan book
• ✓Credit quality (net charge-off rate)0.53% annually
• ✓Value creation (ROTCE − 10% bar)+9pp
• ✓Funding (deposit base)Deposits $130.7 bn

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

ⓘ Has a loan book: credit health (delinquency, coverage, normalized CECL, RoA/RoE) is evaluated separately, not with corporate solvency.

• CET1. 10.7% with a cushion above regulatory requirements.
• Reserve coverage. 241% allowance over nonperforming loans, improving from 186% a year earlier.
• Liquidity. ~US$69bn available, ~181% coverage of uninsured deposits.
• Loan quality. 26.5% residential and 9.5% investor commercial real estate, the highest-risk category due to concentration.

How cash comes in and how it is deployed. In green, the business's own cash (the owner-FCF it generates and reinvests); in gray, the float and credit — customer and funding money, which is not the shareholder's.

On TTM net income to common of US$2.150bn, Regions allocated ~43% to dividends (US$0.917bn) and ~53% to buybacks (US$1.141bn), retaining just ~4% to build capital. It is an aggressive capital-return profile, consistent with a well-capitalized bank (CET1 10.7%) without a growth runway that would absorb more retained capital — the main additional value-creation lever is buying back stock at a reasonable multiple, not reinvesting in balance sheet expansion.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Capital return. Dividend +13% in Jul-2026 and sustained buybacks of ~US$1.1bn annually.
• Concentrated governance. The CEO also chairs the board; no explicit independent counterweight in the extracted data.
• Disciplined M&A. The Frazer Lanier acquisition is small and complementary, not a diworsification.
• Insider ownership. Directors and executives as a group report less than 1% of shares.

• Missing buyers: a regional bank without the glamour of a high-growth fintech draws less coverage relative to the size of its deposit franchise, despite a ROTCE that competes with more prestigious-multiple banks.
• Residual motivated sellers from the 2022-2024 rate cycle: the market still discounts some net interest margin compression risk inherited from uncertainty over the Federal Reserve's rate-cut pace, even though the NIM has already stabilized near 3.66-3.70%.
• As of Aug-13-2026 no specific recent price-drop catalyst was identified (alertaDesplome does not apply): the discount appears more structural — perception of regional banking as a mature, cyclical sector — than a specific event being misread.

The combination of a high ROTCE, improving credit quality and aggressive capital return (dividend +13%, sustained buybacks) is not fully reflected in a multiple of 11× TTM earnings.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +8%/year (+49% total): the margin of safety protects the downside. The bull (+21%/year, +159% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Rate sensitivity. Net interest margin depends on the relative pace between rate cuts and deposit repricing.
• Investor commercial credit. The fastest-growing category recently and the highest concentration risk per deal.
• Geographic concentration. South, Midwest and Texas: without broad geographic diversification.
• Non-bank competition. Fintechs, DeFi and crypto assets erode the traditional regulatory barrier.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: narrow moat, eroding.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 8% at a PEG of 1.4 → reasonable for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Not applicable — the Magic Formula excludes financials and regulated businesses (EBIT/EV does not capture the operating leverage).

• Howard Marks Perception vs reality + cycle

  The price discounts -15% vs our 8%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +3%/yr, bull-scenario ceiling +17%/yr over 5y and a +41% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, eroding; sources: cost advantage, efficient scale, switching costs, intangibles → fails the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -15%, within what we project (8%) — the story squares with the numbers.