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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Regions Financial Corporation | NYSE:RF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.10 | -0.53% | 18.65 | 18.72 | 18.49 | 18.54 | 7,175,338 | 01:00:00 |
Solid core performance and peer-leading margin position the company for consistent, sustainable performance.
Regions Financial Corp. (NYSE:RF) today reported earnings for the first quarter ended March 31, 2024. The company reported first quarter net income available to common shareholders of $343 million and earnings per diluted share of $0.37. First quarter results include the following notable items: an increase to the industry-wide FDIC special assessment accrual, severance-related charges, and the impact of certain securities repositioning. The company reported $1.7 billion in total revenue during the quarter, including $616 million in reported pre-tax pre-provision income(1) and $700 million in adjusted pre-tax pre-provision income(1).
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240419720638/en/
"We continue to focus on the successful execution of our strategic plan, and that is reflected in our core performance," said John Turner, Chairman and CEO of Regions Financial Corp.
Turner added, "Our results reflect the strength and diversity of our balance sheet, robust liquidity position, and proactive interest rate risk management practices. Our hedging strategies position us for success in a vast array of economic conditions and support our commitment to generating consistent, sustainable long-term performance as we once again generated top-quartile returns and a peer-leading net interest margin."
SUMMARY OF FIRST QUARTER 2024 RESULTS:
Quarter Ended
(amounts in millions, except per share data)
3/31/2024
12/31/2023
3/31/2023
Net income
$
368
$
391
$
612
Preferred dividends and other
25
24
24
Net income available to common shareholders
$
343
$
367
$
588
Weighted-average diluted shares outstanding
923
931
942
Actual shares outstanding—end of period
918
924
935
Diluted earnings per common share
$
0.37
$
0.39
$
0.62
Selected items impacting earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
(34
)
$
(147
)
$
(2
)
Adjustments to non-interest income(1)
(50
)
(1
)
(1
)
Net provision benefit/(expense) from sale of unsecured consumer loans***
—
(8
)
—
Total pre-tax adjusted items(1)
$
(84
)
$
(156
)
$
(3
)
Diluted EPS impact*
$
(0.07
)
$
(0.13
)
$
—
Pre-tax additional selected items**:
Incremental operational losses related to check warranty claims
$
(22
)
$
—
$
—
Capital markets income (loss) - CVA/DVA
(2
)
(5
)
(33
)
*
Based on income taxes at an approximate 25% incremental rate.
**
Items impacting results or trends during the period, but are not considered non-GAAP adjustments.
***
The fourth quarter of 2023 loan sale had an associated allowance of $27 million and incurred a $35 million fair value mark recorded through charge-offs, resulting in a net provision expense of $8 million.
Non-GAAP adjusted items(1) impacting the company's earnings are identified to assist investors in analyzing Regions' operating results on the same basis as that applied by management and provide a basis to predict future performance.
Total revenue
Quarter Ended
($ amounts in millions)
3/31/2024
12/31/2023
3/31/2023
1Q24 vs. 4Q23
1Q24 vs. 1Q23
Net interest income
$
1,184
$
1,231
$
1,417
$
(47
)
(3.8
)%
$
(233
)
(16.4
)%
Taxable equivalent adjustment
13
13
13
—
—
%
—
—
%
Net interest income, taxable equivalent basis
$
1,197
$
1,244
$
1,430
$
(47
)
(3.8
)%
$
(233
)
(16.3
)%
Net interest margin (FTE)
3.55
%
3.60
%
4.22
%
Non-interest income:
Service charges on deposit accounts
$
148
$
143
$
155
$
5
3.5
%
$
(7
)
(4.5
)%
Card and ATM fees
116
127
121
(11
)
(8.7
)%
(5
)
(4.1
)%
Wealth management income
119
117
112
2
1.7
%
7
6.3
%
Capital markets income
91
48
42
43
89.6
%
49
116.7
%
Mortgage income
41
31
24
10
32.3
%
17
70.8
%
Commercial credit fee income
27
27
26
—
NM
1
3.8
%
Bank-owned life insurance
23
22
17
1
4.5
%
6
35.3
%
Securities gains (losses), net
(50
)
(2
)
(2
)
(48
)
NM
(48
)
NM
Market value adjustments on employee benefit assets*
15
12
(1
)
3
25.0
%
16
NM
Other
33
55
40
(22
)
(40.0
)%
(7
)
(17.5
)%
Non-interest income
$
563
$
580
$
534
$
(17
)
(2.9
)%
$
29
5.4
%
Total revenue
$
1,747
$
1,811
$
1,951
$
(64
)
(3.5
)%
$
(204
)
(10.5
)%
Adjusted total revenue (non-GAAP)(1)
$
1,797
$
1,812
$
1,952
$
(15
)
(0.8
)%
$
(155
)
(7.9
)%
NM - Not Meaningful
* These market value adjustments relate to assets held for employee and director benefits that are offset within salaries and employee benefits and other non-interest expense.
Total revenue decreased approximately 4 percent on a reported basis and 1 percent on an adjusted basis(1) compared to the fourth quarter of 2023. Consistent with the company's expectations, net interest income decreased 4 percent to $1.2 billion compared to the fourth quarter attributable to higher deposit and funding costs, partially offset by the impact of higher market interest rates on new fixed-rate asset originations. Total net interest margin decreased 5 basis points to 3.55 percent.
Non-interest income decreased 3 percent on a reported basis but increased 6 percent on an adjusted basis(1) compared to the fourth quarter of 2023. The reported difference was attributable to a $50 million pre-tax loss on securities repositioning executed during the quarter. Service charges increased 3 percent as seasonally higher treasury management fees offset 1 less business day in the quarter. Capital markets income increased 90 percent to $91 million, attributable to increased real estate transactions, merger and acquisitions advisory services, and increased debt capital markets activity. A portion of both real estate capital markets activity and merger and acquisitions advisory services initiated in the prior year were delayed by clients due to market conditions and ultimately closed in the first quarter. Mortgage income also increased during the quarter primarily due to a $6 million update to the company's mortgage pipeline valuation, as well as improved volumes and margins. Wealth management increased 2 percent attributable to better production and improved market conditions. Partially offsetting these increases were decreases in card and ATM fees, which were negatively impacted by higher costs associated with a rewards liability as well as seasonally lower transaction volume, and other non-interest income which was attributable primarily to prior quarter leasing gains and current quarter negative valuation adjustments on certain equity investments.
Non-interest expense
Quarter Ended
($ amounts in millions)
3/31/2024
12/31/2023
3/31/2023
1Q24 vs. 4Q23
1Q24 vs. 1Q23
Salaries and employee benefits
$
658
$
608
$
616
$
50
8.2
%
$
42
6.8
%
Equipment and software expense
101
102
102
(1
)
(1.0
)%
(1
)
(1.0
)%
Net occupancy expense
74
71
73
3
4.2
%
1
1.4
%
Outside services
39
43
39
(4
)
(9.3
)%
—
NM
Professional, legal and regulatory expenses
28
19
19
9
47.4
%
9
47.4
%
Marketing
27
31
27
(4
)
(12.9
)%
—
NM
FDIC insurance assessments
43
147
25
(104
)
(70.7
)%
18
72.0
%
Credit/checkcard expenses
14
15
14
(1
)
(6.7
)%
—
NM
Operational losses(1)
42
29
13
13
44.8
%
29
223.1
%
Branch consolidation, property and equipment charges
1
3
2
(2
)
(66.7
)%
(1
)
(50.0
)%
Visa class B shares expense
4
6
8
(2
)
(33.3
)%
(4
)
(50.0
)%
Gain on early extinguishment of debt
—
(4
)
—
4
100.0
%
—
NM
Other
100
115
89
(15
)
(13.0
)%
11
12.4
%
Total non-interest expense
$
1,131
$
1,185
$
1,027
$
(54
)
(4.6
)%
$
104
10.1
%
Total adjusted non-interest expense(1)
$
1,097
$
1,038
$
1,025
$
59
5.7
%
$
72
7.0
%
NM - Not Meaningful
(1) The incremental increase in operational losses primarily due to check-related warranty claims totaled $22 million in the first quarter of 2024.
Non-interest expense decreased 5 percent on a reported basis, but increased 6 percent on an adjusted basis(1) compared to the fourth quarter of 2023. First quarter adjusted items included an $18 million increase for Regions' FDIC insurance special assessment accrual and $13 million associated with severance charges. Salaries and benefits increased 8 percent driven primarily by seasonal factors such as payroll tax and 401(k) match resets, one month of merit increases, and higher incentive compensation. Recognized severance charges are expected to lead to lower overall salaries and benefits expense beginning in the second quarter. Operational losses increased compared to the prior quarter attributable to check-related warranty claims from deposits that occurred last year. Despite this increase, current activity has normalized to expected levels and the company continues to expect operational losses to be approximately $100 million for all of 2024.
The company's first quarter efficiency ratio was 64.3 percent on a reported basis and 60.6 percent on an adjusted basis(1). The effective tax rate was 20.7 percent in the first quarter.
Loans and Leases
Average Balances
($ amounts in millions)
1Q24
4Q23
1Q23
1Q24 vs. 4Q23
1Q24 vs. 1Q23
Commercial and industrial
$
50,090
$
50,939
$
51,158
$
(849
)
(1.7
)%
$
(1,068
)
(2.1
)%
Commercial real estate—owner-occupied
5,131
5,136
5,305
(5
)
(0.1
)%
(174
)
(3.3
)%
Investor real estate
8,833
8,772
8,404
61
0.7
%
429
5.1
%
Business Lending
64,054
64,847
64,867
(793
)
(1.2
)%
(813
)
(1.3
)%
Residential first mortgage
20,188
20,132
18,957
56
0.3
%
1,231
6.5
%
Home equity
5,605
5,663
5,921
(58
)
(1.0
)%
(316
)
(5.3
)%
Consumer credit card
1,315
1,295
1,214
20
1.5
%
101
8.3
%
Other consumer—exit portfolios
35
110
527
(75
)
(68.2
)%
(492
)
(93.4
)%
Other consumer*
6,223
6,246
5,791
(23
)
(0.4
)%
432
7.5
%
Consumer Lending
33,366
33,446
32,410
(80
)
(0.2
)%
956
2.9
%
Total Loans
$
97,420
$
98,293
$
97,277
$
(873
)
(0.9
)%
$
143
0.1
%
NM - Not meaningful.
*
Other consumer loans includes EnerBank (Regions' point of sale home improvement portfolio).
Average loans and leases declined by 1 percent compared to the prior quarter. Average business loans decreased 1 percent, while average consumer loans remained relatively stable. Approximately $870 million of commercial loans were refinanced off the company's balance sheet during the quarter through the debt capital markets. Within consumer, growth included residential first mortgage, EnerBank and consumer credit card loan categories.
Deposits
Average Balances
($ amounts in millions)
1Q24
4Q23
1Q23
1Q24 vs. 4Q23
1Q24 vs. 1Q23
Total interest-bearing deposits
$
86,200
$
83,247
$
79,450
$
2,953
3.5
%
$
6,750
8.5
%
Non-interest-bearing deposits
40,926
43,167
49,592
(2,241
)
(5.2
)%
(8,666
)
(17.5
)%
Total Deposits
$
127,126
$
126,414
$
129,042
$
712
0.6
%
$
(1,916
)
(1.5
)%
($ amounts in millions)
1Q24
4Q23
1Q23
1Q24 vs. 4Q23
1Q24 vs. 1Q23
Consumer Bank Segment
$
79,150
$
79,384
$
82,200
$
(234
)
(0.3
)%
$
(3,050
)
(3.7
)%
Corporate Bank Segment
37,064
36,291
36,273
773
2.1
%
791
2.2
%
Wealth Management Segment
7,766
7,690
8,463
76
1.0
%
(697
)
(8.2
)%
Other
3,146
3,049
2,106
97
3.2
%
1,040
49.4
%
Total Deposits
$
127,126
$
126,414
$
129,042
$
712
0.6
%
$
(1,916
)
(1.5
)%
Ending Balances as of
3/31/2024
3/31/2024
($ amounts in millions)
3/31/2024
12/31/2023
3/31/2023
vs. 12/31/2023
vs. 3/31/2023
Consumer Bank Segment
$
81,129
$
80,031
$
83,296
$
1,098
1.4
%
$
(2,167
)
(2.6
)%
Corporate Bank Segment
37,043
36,883
35,185
160
0.4
%
1,858
5.3
%
Wealth Management Segment
7,792
7,694
7,941
98
1.3
%
(149
)
(1.9
)%
Other
3,018
3,180
2,038
(162
)
(5.1
)%
980
48.1
%
Total Deposits
$
128,982
$
127,788
$
128,460
$
1,194
0.9
%
$
522
0.4
%
The company's deposit base continues to be a source of strength and a differentiator in liquidity and margin performance. Total ending and average deposits increased modestly during the first quarter and included continued remixing out of non-interest-bearing products into interest-bearing products. Declines in average Consumer deposits were offset by stability or growth in the other segments.
Asset quality
As of and for the Quarter Ended
($ amounts in millions)
3/31/2024
12/31/2023
3/31/2023
Allowance for credit losses (ACL) at period end
$1,731
$1,700
$1,596
ACL/Loans, net
1.79%
1.73%
1.63%
ALL/Loans, net
1.67%
1.60%
1.50%
Allowance for credit losses to non-performing loans, excluding loans held for sale
191%
211%
288%
Allowance for loan losses to non-performing loans, excluding loans held for sale
179%
196%
266%
Provision for credit losses
$152
$155
$135
Net loans charged-off
$121
$132
$83
Adjusted net loan charge-offs (non-GAAP)(1)
$121
$97
$83
Net loans charged-off as a % of average loans, annualized
0.50%
0.54%
0.35%
Adjusted net loan charge-offs as a % of average loans, annualized (non-GAAP) (1)
0.50%
0.39%
0.35%
Non-performing loans, excluding loans held for sale/Loans, net
0.94%
0.82%
0.56%
NPAs (ex. 90+ past due)/Loans, foreclosed properties, and non-performing loans held for sale
0.95%
0.84%
0.58%
NPAs (inc. 90+ past due)/Loans, foreclosed properties, and non-performing loans held for sale*
1.10%
1.01%
0.71%
Total Criticized Loans—Business Services**
$4,978
$4,659
$3,725
*
Excludes guaranteed residential first mortgages that are 90+ days past due and still accruing.
**
Business services represents the combined total of commercial and investor real estate loans.
Overall asset quality continued to normalize during the quarter. Business services criticized loans and non-performing loans increased driven primarily by downgrades within loan categories previously identified as under stress. The increase in non-performing loans in the first quarter was primarily attributable to office, professional services, transportation, and manufacturing industries. Total reported and adjusted(1) net charge-offs for the quarter were $121 million, or 50 basis points of average loans. The increase in adjusted net charge-offs versus the prior quarter was attributable primarily to a large restaurant credit and a commercial manufacturing credit.
The increase to the allowance for credit losses compared to the fourth quarter was attributable primarily to adverse risk migration and continued credit quality normalization, as well as higher qualitative adjustments for incremental risk in certain portfolios previously identified as under stress.
The allowance for credit loss ratio increased 6 basis points to 1.79 percent of total loans, while the allowance as a percentage of nonperforming loans decreased to 191 percent.
Capital and liquidity
As of and for Quarter Ended
3/31/2024
12/31/2023
3/31/2023
Common Equity Tier 1 ratio(2)
10.3%
10.3%
9.9%
Tier 1 capital ratio(2)
11.6%
11.6%
11.2%
Tangible common stockholders’ equity to tangible assets (non-GAAP)(1)
6.42%
6.79%
6.31%
Tangible common book value per share (non-GAAP)(1)*
$10.42
$10.77
$10.01
Loans, net of unearned income, to total deposits
75.1%
77.0%
76.3%
*Tangible common book value per share includes the impact of quarterly earnings and changes to market value adjustments within accumulated other comprehensive income, as well as continued capital returns.
Regions maintains a solid capital position with estimated capital ratios remaining well above current regulatory requirements. The Common Equity Tier 1(2) and Tier 1(2) ratios were estimated at 10.3 percent and 11.6 percent, respectively, at quarter-end.
During the first quarter, the company repurchased 5.5 million shares of common stock for a total of $102 million through open market purchases and declared $220 million in dividends to common shareholders.
The company's liquidity position also remains robust as of March 31, 2024, with total available liquidity of approximately $60.8 billion, which includes cash held at the Federal Reserve, FHLB borrowing capacity, unencumbered securities, and capacity at the Federal Reserve's Discount Window. These sources are sufficient to cover uninsured deposits at a ratio of 182 percent as of quarter end (this ratio excludes intercompany and secured deposits).
(1)Non-GAAP; refer to pages 11, 14, 15 and 17 of the financial supplement to this earnings release for reconciliations.
(2)Current quarter Common Equity Tier 1, and Tier 1 capital ratios are estimated.
Conference Call In addition to the live audio webcast at 10 a.m. ET on Apr. 19, 2024, an archived recording of the webcast will be available at the Investor Relations page of ir.regions.com following the live event.
About Regions Financial Corporation Regions Financial Corporation (NYSE:RF), with $155 billion in assets, is a member of the S&P 500 Index and is one of the nation’s largest full-service providers of consumer and commercial banking, wealth management, and mortgage products and services. Regions serves customers across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates approximately 1,250 banking offices and more than 2,000 ATMs. Regions Bank is an Equal Housing Lender and Member FDIC. Additional information about Regions and its full line of products and services can be found at www.regions.com.
Forward-Looking Statements This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The words “future,” “anticipates,” “assumes,” “intends,” “plans,” “seeks,” “believes,” “predicts,” “potential,” “objectives,” “estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,” “would,” “will,” “may,” “might,” “could,” “should,” “can,” and similar terms and expressions often signify forward-looking statements. Forward-looking statements are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results or other developments. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, and because they also relate to the future they are likewise subject to inherent uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements. Therefore, we caution you against relying on any of these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, those described below:
The foregoing list of factors is not exhaustive. For discussion of these and other factors that may cause actual results to differ from expectations, look under the captions “Forward-Looking Statements” and “Risk Factors” in Regions’ Annual Report on Form 10-K for the year ended December 31, 2023 and in Regions’ subsequent filings with the SEC.
You should not place undue reliance on any forward-looking statements, which speak only as of the date made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible to predict all of them. We assume no obligation and do not intend to update or revise any forward-looking statements that are made from time to time, either as a result of future developments, new information or otherwise, except as may be required by law.
Use of non-GAAP financial measures
Management uses pre-tax pre-provision income (non-GAAP) and adjusted pre-tax pre-provision income (non-GAAP), as well as the adjusted efficiency ratio (non-GAAP) and the adjusted fee income ratio (non-GAAP) to monitor performance and believes these measures provide meaningful information to investors. Non-interest expense (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for the adjusted efficiency ratio. Non-interest income (GAAP) is presented excluding certain adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the adjusted fee income ratio. Adjusted non-interest income (non-GAAP) and adjusted non-interest expense (non-GAAP) are used to determine adjusted pre-tax pre-provision income (non-GAAP). Net interest income (GAAP) on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the adjusted fee income and adjusted efficiency ratios. Net loan charge-offs (GAAP) are presented excluding adjustments to arrive at adjusted net loan-charge offs (non-GAAP). Adjusted net loan charge-offs as a percentage of average loans (non-GAAP) are calculated as adjusted net loan charge-offs (non-GAAP) divided by average loans (GAAP) and annualized. Regions believes that the exclusion of these adjustments provides a meaningful basis for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business. It is possible that the activities related to the adjustments may recur; however, management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management.
Tangible common stockholders’ equity ratios have become a focus of some investors and management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Analysts and banking regulators have assessed Regions’ capital adequacy using the tangible common stockholders’ equity measure. Because tangible common stockholders’ equity is not formally defined by GAAP or prescribed in any amount by federal banking regulations it is currently considered to be a non-GAAP financial measure and other entities may calculate it differently than Regions’ disclosed calculations. Since analysts and banking regulators may assess Regions’ capital adequacy using tangible common stockholders’ equity, management believes that it is useful to provide investors the ability to assess Regions’ capital adequacy on this same basis.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to stockholders.
Management and the Board of Directors utilize non-GAAP measures as follows:
Regions’ Investor Relations contact is Dana Nolan at (205) 264-7040; Regions’ Media contact is Jeremy King at (205) 264-4551.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240419720638/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
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