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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 | |
---|---|---|---|---|---|---|---|---|
0.23 | 1.02% | 22.78 | 22.80 | 22.485 | 22.61 | 7,326,877 | 22:38:41 |
Solid core performance, favorable credit trends combine to further position the company for consistent, sustainable results.
Regions Financial Corp. (NYSE:RF) today reported earnings for the second quarter ended June 30, 2024. The company reported second quarter net income available to common shareholders of $477 million and earnings per diluted share of $0.52. The company reported $1.7 billion in total revenue during the quarter, including $727 million in reported pre-tax pre-provision income(1) and $749 million in adjusted pre-tax pre-provision income(1). Second quarter results include the following notable items: an addition to the industry-wide FDIC special assessment accrual, severance-related charges, a contingent reserve release related to a prior acquisition, and the impact of additional securities repositioning.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240719333683/en/
“Our teams delivered solid second quarter results driven by the successful execution of Regions' business strategies. We have a great plan, and the investments we are making in talent, technology, products and services will continue to benefit us as macroeconomic conditions improve," said John Turner, Chairman, President and CEO of Regions Financial Corp.
Turner added, "The company exceeded all minimum capital levels and maintained a preliminary stress capital buffer at the 2.5 percent floor in the recent Federal Reserve Supervisory Stress Test. These results further underscore the value of our strong and diverse balance sheet, solid capital and liquidity levels, and prudent risk management strategies. We have a strong foundation from which to generate consistent, sustainable, long-term performance and top-quartile returns as we remain focused on execution."
SUMMARY OF SECOND QUARTER 2024 RESULTS:
Quarter Ended
(amounts in millions, except per share data)
6/30/2024
3/31/2024
6/30/2023
Net income
$
501
$
368
$
581
Preferred dividends and other
24
25
25
Net income available to common shareholders
$
477
$
343
$
556
Weighted-average diluted shares outstanding
918
923
939
Actual shares outstanding—end of period
915
918
939
Diluted earnings per common share
$
0.52
$
0.37
$
0.59
Selected items impacting earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
28
$
(34
)
$
(1
)
Adjustments to non-interest income(1)
(50
)
(50
)
—
Total pre-tax adjusted items(1)
$
(22
)
$
(84
)
$
(1
)
Diluted EPS impact*
$
(0.01
)
$
(0.07
)
$
—
Pre-tax additional selected items**:
Incremental operational losses related to check warranty claims
$
—
$
(22
)
$
(82
)
*
Based on income taxes at an approximate 25% incremental rate. The 2Q24 adjustment to non-interest expense for a contingent reserve release related to a prior acquisition included a non-taxable component.
**
Items impacting results or trends during the period, but are not considered non-GAAP adjustments.
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)
6/30/2024
3/31/2024
6/30/2023
2Q24 vs. 1Q24
2Q24 vs. 2Q23
Net interest income
$
1,186
$
1,184
$
1,381
$
2
0.2
%
$
(195
)
(14.1
)%
Taxable equivalent adjustment
12
13
12
(1
)
(7.7
)%
—
—
%
Net interest income, taxable equivalent basis
$
1,198
$
1,197
$
1,393
$
1
0.1
%
$
(195
)
(14.0
)%
Net interest margin (FTE)
3.51
%
3.55
%
4.04
%
Non-interest income:
Service charges on deposit accounts
$
151
$
148
$
152
$
3
2.0
%
$
(1
)
(0.7
)%
Card and ATM fees
120
116
130
4
3.4
%
(10
)
(7.7
)%
Wealth management income
122
119
110
3
2.5
%
12
10.9
%
Capital markets income
68
91
68
(23
)
(25.3
)%
—
—
%
Mortgage income
34
41
26
(7
)
(17.1
)%
8
30.8
%
Commercial credit fee income
28
27
28
1
3.7
%
—
—
%
Bank-owned life insurance
30
23
19
7
30.4
%
11
57.9
%
Market value adjustments on employee benefit assets*
2
15
—
(13
)
(86.7
)%
2
NM
Securities gains (losses), net
(50
)
(50
)
—
—
—
%
(50
)
NM
Other miscellaneous income
40
33
43
7
21.2
%
(3
)
(7.0
)%
Non-interest income
$
545
$
563
$
576
$
(18
)
(3.2
)%
$
(31
)
(5.4
)%
Total revenue
$
1,731
$
1,747
$
1,957
$
(16
)
(0.9
)%
$
(226
)
(11.5
)%
Adjusted total revenue (non-GAAP)(1)
$
1,781
$
1,797
$
1,957
$
(16
)
(0.9
)%
$
(176
)
(9.0
)%
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 remained relatively stable at approximately $1.7 billion on a reported basis and $1.8 billion on an adjusted basis(1) compared to the first quarter of 2024. Net interest income remained stable at $1.2 billion compared to the first quarter as deposit cost pressures eased and asset yields benefited from the maturity and replacement of lower-yielding, fixed rate loans and securities at current levels. Total net interest margin decreased 4 basis points to 3.51 percent, largely attributable to holding higher cash balances. Management expects net interest income to modestly increase over the second half of 2024.
Non-interest income decreased 3 percent on both a reported and adjusted basis(1) compared to the first quarter of 2024. With respect to adjusted items, the company executed modest securities repositioning trades incurring $50 million in losses during both the first and second quarters. Service charges increased modestly attributable primarily to an additional business day in the quarter. Card and ATM fees increased 3 percent due to higher debit and credit card transaction volumes. Wealth Management increased 3 percent driven by increased sales activity and continued strength in financial markets. Bank-owned life insurance increased 30 percent attributable to higher claims income. As expected, capital markets income decreased 25 percent to $68 million, attributable to decreased merger and acquisition advisory services, real estate transactions, and debt capital markets activity. Mortgage income decreased during the quarter primarily due to a $6 million favorable adjustment to the company's mortgage pipeline valuation in the prior quarter that did not repeat. Other non-interest income increased 21 percent during the quarter attributable primarily to negative valuation adjustments on certain equity investments in the prior quarter that did not repeat.
Non-interest expense
Quarter Ended
($ amounts in millions)
6/30/2024
3/31/2024
6/30/2023
2Q24 vs. 1Q24
2Q24 vs. 2Q23
Salaries and employee benefits
$
609
$
658
$
603
$
(49
)
(7.4
)%
$
6
1.0
%
Equipment and software expense
100
101
101
(1
)
(1.0
)%
(1
)
(1.0
)%
Net occupancy expense
68
74
73
(6
)
(8.1
)%
(5
)
(6.8
)%
Outside services
40
39
42
1
2.6
%
(2
)
(4.8
)%
Marketing
27
27
26
—
—
%
1
3.8
%
Professional, legal and regulatory expenses
25
28
20
(3
)
(10.7
)%
5
25.0
%
Credit/checkcard expenses
15
14
15
1
7.1
%
—
—
%
FDIC insurance assessments
29
43
29
(14
)
(32.6
)%
—
—
%
Visa class B shares expense
5
4
9
1
25.0
%
(4
)
(44.4
)%
Operational losses(1)
18
42
95
(24
)
(57.1
)%
(77
)
(81.1
)%
Branch consolidation, property and equipment charges
1
1
1
—
—
%
—
—
%
Other
67
100
97
(33
)
(33.0
)%
(30
)
(30.9
)%
Total non-interest expense
$
1,004
$
1,131
$
1,111
$
(127
)
(11.2
)%
$
(107
)
(9.6
)%
Total adjusted non-interest expense(1)
$
1,032
$
1,097
$
1,110
$
(65
)
(5.9
)%
$
(78
)
(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 11 percent and 6 percent on a reported and adjusted basis(1), respectively, compared to the first quarter of 2024. Second quarter adjusted items included a $37 million contingent reserve release related to a prior acquisition reflected in other expenses, an additional $4 million for Regions' FDIC insurance special assessment accrual, and $4 million of additional severance charges. Salaries and benefits decreased 7 percent driven primarily by seasonal factors such as payroll tax and 401(k) match resets and higher incentive compensation in the prior quarter. Operational losses also decreased compared to the prior quarter as losses continue to normalize from elevated levels experienced in recent quarters. Incident levels have normalized to expected levels and the company continues to expect operational losses to be approximately $100 million for full-year 2024. Occupancy expense decreased 8 percent as the company continues to focus on reducing occupied square footage.
The company's second quarter efficiency ratio was 57.6 percent on both a reported and adjusted basis(1). The effective tax rate was 19.8 percent in the second quarter.
Loans and Leases
Average Balances
($ amounts in millions)
2Q24
1Q24
2Q23
2Q24 vs. 1Q24
2Q24 vs. 2Q23
Commercial and industrial
$
50,046
$
50,090
$
52,039
$
(44
)
(0.1
)%
$
(1,993
)
(3.8
)%
Commercial real estate—owner-occupied
5,115
5,131
5,197
(16
)
(0.3
)%
(82
)
(1.6
)%
Investor real estate
8,839
8,833
8,482
6
0.1
%
357
4.2
%
Business Lending
64,000
64,054
65,718
(54
)
(0.1
)%
(1,718
)
(2.6
)%
Residential first mortgage
20,191
20,188
19,427
3
—
%
764
3.9
%
Home equity
5,557
5,605
5,785
(48
)
(0.9
)%
(228
)
(3.9
)%
Consumer credit card
1,331
1,315
1,217
16
1.2
%
114
9.4
%
Other consumer—exit portfolios
22
35
450
(13
)
(37.1
)%
(428
)
(95.1
)%
Other consumer*
6,180
6,223
5,984
(43
)
(0.7
)%
196
3.3
%
Consumer Lending
33,281
33,366
32,863
(85
)
(0.3
)%
418
1.3
%
Total Loans
$
97,281
$
97,420
$
98,581
$
(139
)
(0.1
)%
$
(1,300
)
(1.3
)%
NM - Not meaningful.
* Other consumer loans includes EnerBank (Regions' point of sale home improvement portfolio).
Average loans and leases remained relatively stable compared to the prior quarter. Within the business portfolio, average loans remained relatively stable, while ending loans increased 1 percent. Despite near-term macroeconomic and political uncertainty, pipelines are beginning to rebuild. Commercial loans refinanced off balance sheet through the debt capital markets normalized after experiencing elevated levels during the prior quarter.
Deposits
Average Balances
($ amounts in millions)
2Q24
1Q24
2Q23
2Q24 vs. 1Q24
2Q24 vs. 2Q23
Total interest-bearing deposits
$
86,385
$
86,200
$
78,361
$
185
0.2
%
$
8,024
10.2
%
Non-interest-bearing deposits
40,516
40,926
47,178
(410
)
(1.0
)%
(6,662
)
(14.1
)%
Total Deposits
$
126,901
$
127,126
$
125,539
$
(225
)
(0.2
)%
$
1,362
1.1
%
($ amounts in millions)
2Q24
1Q24
2Q23
2Q24 vs. 1Q24
2Q24 vs. 2Q23
Consumer Bank Segment
$
79,809
$
79,150
$
80,999
$
659
0.8
%
$
(1,190
)
(1.5
)%
Corporate Bank Segment
36,669
37,064
34,860
(395
)
(1.1
)%
1,809
5.2
%
Wealth Management Segment
7,534
7,766
7,470
(232
)
(3.0
)%
64
0.9
%
Other
2,889
3,146
2,210
(257
)
(8.2
)%
679
30.7
%
Total Deposits
$
126,901
$
127,126
$
125,539
$
(225
)
(0.2
)%
$
1,362
1.1
%
Ending Balances as of
6/30/2024
6/30/2024
($ amounts in millions)
6/30/2024
3/31/2024
6/30/2023
vs. 3/31/2024
vs. 6/30/2023
Consumer Bank Segment
$
80,126
$
81,129
$
81,554
$
(1,003
)
(1.2
)%
$
(1,428
)
(1.8
)%
Corporate Bank Segment
36,529
37,043
35,332
(514
)
(1.4
)%
1,197
3.4
%
Wealth Management Segment
7,383
7,792
7,176
(409
)
(5.2
)%
207
2.9
%
Other
2,578
3,018
2,897
(440
)
(14.6
)%
(319
)
(11.0
)%
Total Deposits
$
126,616
$
128,982
$
126,959
$
(2,366
)
(1.8
)%
$
(343
)
(0.3
)%
The company's deposit base continues to be a source of strength and a differentiator in liquidity and margin performance. Total ending deposits decreased 2 percent while average deposits decreased modestly during the second quarter, consistent with seasonal, tax-related outflows. Growth in average Consumer deposits was offset by declines in the other segments.
Asset quality
As of and for the Quarter Ended
($ amounts in millions)
6/30/2024
3/31/2024
6/30/2023
Allowance for credit losses (ACL) at period end
$1,732
$1,731
$1,633
ACL/Loans, net
1.78%
1.79%
1.65%
ALL/Loans, net
1.66%
1.67%
1.53%
Allowance for credit losses to non-performing loans, excluding loans held for sale
204%
191%
332%
Allowance for loan losses to non-performing loans, excluding loans held for sale
191%
179%
308%
Provision for credit losses
$102
$152
$118
Net loans charged-off
$101
$121
$81
Net loans charged-off as a % of average loans, annualized
0.42%
0.50%
0.33%
Non-performing loans, excluding loans held for sale/Loans, net
0.87%
0.94%
0.50%
NPAs (ex. 90+ past due)/Loans, foreclosed properties, and non-performing loans held for sale
0.88%
0.95%
0.51%
NPAs (inc. 90+ past due)/Loans, foreclosed properties, and non-performing loans held for sale*
1.06%
1.10%
0.64%
Total Criticized Loans—Business Services**
$4,863
$4,978
$4,039
* 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.
The company experienced broad-based improvement in overall asset quality during the quarter. Non-performing and business services criticized loans decreased compared to the prior quarter. Net charge-offs improved sequentially, totaling $101 million, or 42 basis points of average loans. Net charge-offs are expected to be towards the upper end of the 40 to 50 basis point range attributable to a few large credits within areas previously identified as under stress. However, these expected losses are reflected within the allowance for credit losses as of quarter-end.
The allowance for credit loss ratio decreased 1 basis point to 1.78 percent of total loans, while the allowance as a percentage of nonperforming loans increased to 204 percent.
Capital and liquidity
As of and for Quarter Ended
6/30/2024
3/31/2024
6/30/2023
Common Equity Tier 1 ratio(2)
10.4%
10.3%
10.1%
Tier 1 capital ratio(2)
11.7%
11.6%
11.4%
Tangible common stockholders’ equity to tangible assets (non-GAAP)(1)
6.55%
6.42%
6.09%
Tangible common book value per share (non-GAAP)(1)*
$10.61
$10.42
$9.72
Loans, net of unearned income, to total deposits
77.0%
75.1%
78.1%
* 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 10.4 percent and 11.7 percent, respectively, at quarter-end.
During the second quarter, the company repurchased approximately 4.5 million shares of common stock for a total of $87 million through open market purchases and declared $220 million in dividends to common shareholders. Earlier this week, the Board of Directors declared a quarterly common stock dividend of $0.25 per share, a 4 percent increase over the second quarter. This increase is in addition to the 20 percent increase last year, representing three consecutive years of robust dividend growth well-supported by underlying financial performance.
The company received its results from the Federal Reserve Supervisory Stress Test and exceeded all minimum capital levels under the provided scenarios. As a result, Regions' preliminary Stress Capital Buffer requirement will remain at 2.5 percent. Regions' robust capital planning process is designed to ensure the efficient use of capital to support lending activities, business growth opportunities and appropriate shareholder returns.
The company's liquidity position also remains robust as of June 30, 2024, with total available liquidity of approximately $57 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 172 percent as of quarter end (this ratio excludes intercompany and secured deposits).
(1)
Non-GAAP; refer to pages 12, 16, 17 and 18 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 Jul. 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 $154 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/20240719333683/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
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