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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 | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 18.69 | 0 | 09:01:16 |
Regions Financial Corp. (NYSE:RF) today reported earnings for the third quarter ended Sept. 30, 2023. The company reported third quarter net income available to common shareholders of $465 million and earnings per diluted share of $0.49. Compared to the third quarter of 2022, net income available to common shareholders increased 15 percent while total revenue remained relatively stable at $1.9 billion on both a reported and adjusted basis(1).
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231020220960/en/
"We are pleased with our third quarter core performance," said John Turner, President and CEO of Regions Financial Corp. "Our results reflect the strength and diversity of our balance sheet, robust liquidity position, and prudent risk management. Our protective hedging strategies position us for success in any rate environment and support our commitment to generating consistent, sustainable long-term performance. While the industry continues to face economic and regulatory uncertainty, we are confident in our ability to adapt to the changing landscape while continuing to deliver top-quartile returns through the cycle. Our confidence comes from having a strategic plan to drive soundness, profitability and growth and a talented team focused on executing it."
SUMMARY OF THIRD QUARTER 2023 RESULTS:
Quarter Ended
(amounts in millions, except per share data)
9/30/2023
6/30/2023
9/30/2022
Net income
$
490
$
581
$
429
Preferred dividends and other
25
25
25
Net income available to common shareholders
$
465
$
556
$
404
Weighted-average diluted shares outstanding
940
939
940
Actual shares outstanding—end of period
939
939
934
Diluted earnings per common share
$
0.49
$
0.59
$
0.43
Selected items impacting earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
(4
)
$
(1
)
$
(182
)
Adjustments to non-interest income(1)
(1
)
—
(1
)
Net provision benefit from sale of unsecured consumer loans***
—
—
31
Total pre-tax adjusted items(1)
$
(5
)
$
(1
)
$
(152
)
Diluted EPS impact*
$
—
$
—
$
(0.13
)
Pre-tax additional selected items**:
Provision in excess of net charge-offs****
$
(44
)
$
(37
)
$
(36
)
Incremental provision for hurricane-related allowance for loan losses
—
—
(20
)
Capital markets income (loss) - CVA/DVA
(3
)
(9
)
21
Residential MSR net hedge performance
4
(4
)
2
Pension settlement charges
(7
)
—
—
Incremental operational losses related to fraud
(53
)
(82
)
—
*
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 net provision benefit of $31 million in third quarter of 2022 includes a $94 million reserve release offset by a $63 million fair value mark recorded through charge-offs. While reflected as a pre-tax adjusted item, the net provision benefit is not included in a non-GAAP reconciliation as it is not a non-GAAP metric and was not used in the determination of any non-GAAP metrics.
****
The third quarter of 2022 provision in excess of net charge-offs excludes the $31 million net provision benefit from the sale of unsecured consumer loans and the $20 million provision for hurricane-related allowance for loan losses.
Non-GAAP adjusted items(1) impacting the company's earnings are identified to assist investors in analyzing Regions' operating results on the same basis as that applied by management and provide a basis to predict future performance.
Total revenue
Quarter Ended
($ amounts in millions)
9/30/2023
6/30/2023
9/30/2022
3Q23 vs. 2Q23
3Q23 vs. 3Q22
Net interest income
$
1,291
$
1,381
$
1,262
$
(90
)
(6.5
)%
$
29
2.3
%
Taxable equivalent adjustment
13
12
12
1
8.3
%
1
8.3
%
Net interest income, taxable equivalent basis
$
1,304
$
1,393
$
1,274
$
(89
)
(6.4
)%
$
30
2.4
%
Net interest margin (FTE)
3.73
%
4.04
%
3.53
%
Non-interest income:
Service charges on deposit accounts
$
142
$
152
$
156
(10
)
(6.6
)%
(14
)
(9.0
)%
Card and ATM fees
126
130
126
(4
)
(3.1
)%
—
—
%
Wealth management income
112
110
108
2
1.8
%
4
3.7
%
Capital markets income
64
68
93
(4
)
(5.9
)%
(29
)
(31.2
)%
Mortgage income
28
26
37
2
7.7
%
(9
)
(24.3
)%
Commercial credit fee income
24
28
26
(4
)
(14.3
)%
(2
)
(7.7
)%
Bank-owned life insurance
20
19
15
1
5.3
%
5
33.3
%
Securities gains (losses), net
(1
)
—
(1
)
(1
)
NM
—
—
%
Market value adjustments on employee benefit assets*
4
—
(5
)
4
NM
9
180.0
%
Other
47
43
50
4
9.3
%
(3
)
(6.0
)%
Non-interest income
$
566
$
576
$
605
$
(10
)
(1.7
)%
$
(39
)
(6.4
)%
Total revenue
$
1,857
$
1,957
$
1,867
$
(100
)
(5.1
)%
$
(10
)
(0.5
)%
Adjusted total revenue (non-GAAP)(1)
$
1,858
$
1,957
$
1,868
$
(99
)
(5.1
)%
$
(10
)
(0.5
)%
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 of approximately $1.9 billion decreased 5 percent on both a reported and adjusted basis(1) compared to the second quarter of 2023. Consistent with the company's expectations, net interest income decreased during the quarter to $1.3 billion or 6.5 percent compared to the second quarter attributable to accelerating deposit and funding costs and a portion of the company's forward starting interest rate hedges becoming active, partially offset by the impact of higher market interest rates on asset yields. Total net interest margin decreased 31 basis points to 3.73 percent.
Non-interest income decreased 2 percent on both a reported and adjusted basis(1) compared to the second quarter of 2023 primarily driven by decreases in service charges and capital markets income. Service charges income decreased 7 percent driven primarily by implementation of the no-cost Regions Overdraft Grace feature. The additional financial benefits and flexibility provided to Regions' customers from account features and enhancements over the past three years, has resulted in an approximate 45 percent reduction in both the number of occurrences and fees assessed. Capital markets income decreased 6 percent attributable primarily to lower real estate capital markets income offset partially by growth in merger and acquisitions advisory services. Excluding the impact of CVA/DVA, capital markets income decreased 13 percent. Mortgage income increased during the quarter primarily attributable to higher servicing income associated with a bulk purchase of the rights to service $6.2 billion of residential mortgage loans that closed early in the third quarter.
Non-interest expense
Quarter Ended
($ amounts in millions)
9/30/2023
6/30/2023
9/30/2022
3Q23 vs. 2Q23
3Q23 vs. 3Q22
Salaries and employee benefits
$
589
$
603
$
593
$
(14
)
(2.3
)%
$
(4
)
(0.7
)%
Equipment and software expense
107
101
98
6
5.9
%
9
9.2
%
Net occupancy expense
72
73
76
(1
)
(1.4
)%
(4
)
(5.3
)%
Outside services
39
42
40
(3
)
(7.1
)%
(1
)
(2.5
)%
Professional, legal and regulatory expenses
27
20
199
7
35.0
%
(172
)
(86.4
)%
Marketing
26
26
29
—
—
%
(3
)
(10.3
)%
FDIC insurance assessments
27
29
16
(2
)
(6.9
)%
11
68.8
%
Credit/checkcard expenses
16
15
13
1
6.7
%
3
23.1
%
Operational losses
75
95
13
(20
)
(21.1
)%
62
476.9
%
Branch consolidation, property and equipment charges
1
1
3
—
—
%
(2
)
(66.7
)%
Visa class B shares expense
5
9
3
(4
)
(44.4
)%
2
66.7
%
Other
109
97
87
12
12.4
%
22
25.3
%
Total non-interest expense
$
1,093
$
1,111
$
1,170
$
(18
)
(1.6
)%
$
(77
)
(6.6
)%
Total adjusted non-interest expense(1)
$
1,089
$
1,110
$
988
$
(21
)
(1.9
)%
$
101
10.2
%
NM - Not Meaningful
Non-interest expense decreased 2 percent on both a reported and adjusted basis(1) compared to the second quarter of 2023. Operational losses decreased 21 percent; however, during the quarter, the company continued to experience elevated fraud losses. Salaries and benefits also decreased 2 percent driven primarily by lower incentive compensation and payroll taxes.
The company's third quarter efficiency ratio was 58.5 percent on a reported and 58.2 percent on an adjusted basis(1). The effective tax rate was 20.9 percent in the third quarter.
Loans and Leases
Average Balances
($ amounts in millions)
3Q23
2Q23
3Q22
3Q23 vs. 2Q23
3Q23 vs. 3Q22
Commercial and industrial
$
51,721
$
52,039
$
49,120
$
(318
)
(0.6
)%
$
2,601
5.3
%
Commercial real estate—owner-occupied
5,100
5,197
5,441
(97
)
(1.9
)%
(341
)
(6.3
)%
Investor real estate
8,617
8,482
7,879
135
1.6
%
738
9.4
%
Business Lending
65,438
65,718
62,440
(280
)
(0.4
)%
2,998
4.8
%
Residential first mortgage
19,914
19,427
18,125
487
2.5
%
1,789
9.9
%
Home equity
5,688
5,785
6,050
(97
)
(1.7
)%
(362
)
(6.0
)%
Consumer credit card
1,245
1,217
1,176
28
2.3
%
69
5.9
%
Other consumer—exit portfolios
384
450
716
(66
)
(14.7
)%
(332
)
(46.4
)%
Other consumer*
6,116
5,984
6,177
132
2.2
%
(61
)
(1.0
)%
Consumer Lending
33,347
32,863
32,244
484
1.5
%
1,103
3.4
%
Total Loans
$
98,785
$
98,581
$
94,684
$
204
0.2
%
$
4,101
4.3
%
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. Average business loans decreased modestly, offset by a 1 percent increase in consumer loans. Commercial loan line utilization levels ended the quarter at approximately 43.3 percent, decreasing 20 basis points over the prior quarter, while line commitments decreased 1 percent. The growth in consumer loans was driven by both residential first mortgage and EnerBank.
Deposits
Average Balances
($ amounts in millions)
3Q23
2Q23
3Q22
3Q23 vs. 2Q23
3Q23 vs. 3Q22
Total interest-bearing deposits
$
80,472
$
78,361
$
79,712
$
2,111
2.7
%
$
760
1.0
%
Non-interest-bearing deposits
44,748
47,178
55,806
(2,430
)
(5.2
)%
(11,058
)
(19.8
)%
Total Deposits
$
125,220
$
125,539
$
135,518
$
(319
)
(0.3
)%
$
(10,298
)
(7.6
)%
($ amounts in millions)
3Q23
2Q23
3Q22
3Q23 vs. 2Q23
3Q23 vs. 3Q22
Consumer Bank Segment
$
80,036
$
80,999
$
84,741
$
(963
)
(1.2
)%
$
(4,705
)
(5.6
)%
Corporate Bank Segment
34,924
34,860
39,058
64
0.2
%
(4,134
)
(10.6
)%
Wealth Management Segment
7,451
7,470
9,467
(19
)
(0.3
)%
(2,016
)
(21.3
)%
Other
2,809
2,210
2,252
599
27.1
%
557
24.7
%
Total Deposits
$
125,220
$
125,539
$
135,518
$
(319
)
(0.3
)%
$
(10,298
)
(7.6
)%
Ending Balances as of
9/30/2023
9/30/2023
($ amounts in millions)
9/30/2023
6/30/2023
9/30/2022
vs. 6/30/2023
vs. 9/30/2022
Consumer Bank Segment
$
80,980
$
81,554
$
85,455
$
(574
)
(0.7
)%
$
(4,475
)
(5.2
)%
Corporate Bank Segment
34,650
35,332
38,293
(682
)
(1.9
)%
(3,643
)
(9.5
)%
Wealth Management Segment
7,791
7,176
9,400
615
8.6
%
(1,609
)
(17.1
)%
Other
2,778
2,897
2,230
(119
)
(4.1
)%
548
24.6
%
Total Deposits
$
126,199
$
126,959
$
135,378
$
(760
)
(0.6
)%
$
(9,179
)
(6.8
)%
The company's deposit base continues to be a source of strength and a differentiator in liquidity and margin performance. Consistent with the company's expectations, total ending and average deposits remained relatively stable during the third quarter of 2023 compared to the second quarter of 2023, while also experiencing continued remixing out of non-interest-bearing products into interest-bearing products. Declines in average Consumer deposits were partially offset by stability or growth in the other segments.
Asset quality
As of and for the Quarter Ended
($ amounts in millions)
9/30/2023
6/30/2023
9/30/2022
Allowance for credit losses (ACL) at period end
$1,677
$1,633
$1,539
ACL/Loans, net
1.70%
1.65%
1.63%
ALL/Loans, net
1.56%
1.53%
1.50%
Allowance for credit losses to non-performing loans, excluding loans held for sale
261%
332%
311%
Allowance for loan losses to non-performing loans, excluding loans held for sale
241%
308%
287%
Provision for credit losses
$145
$118
$135
Net loans charged-off
$101
$81
$110
Adjusted net loan charge-offs (non-GAAP)(1)
$101
$81
$47
Net loans charged-off as a % of average loans, annualized
0.40%
0.33%
0.46%
Adjusted net loan charge-offs as a % of average loans, annualized (non-GAAP) (1)
0.40%
0.33%
0.19%
Non-performing loans, excluding loans held for sale/Loans, net
0.65%
0.50%
0.52%
NPAs (ex. 90+ past due)/Loans, foreclosed properties, and non-performing loans held for sale
0.67%
0.51%
0.54%
NPAs (inc. 90+ past due)/Loans, foreclosed properties, and non-performing loans held for sale*
0.81%
0.64%
0.65%
Total Criticized Loans—Business Services**
$4,167
$4,039
$2,771
*
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 normalized further during the quarter. Business services criticized loans increased 3 percent, while total delinquencies and non-performing loans as a percentage of total loans increased 15 basis points each. Total net charge-offs for the quarter were $101 million, or 40 basis points of average loans, due to elevated losses associated with a consumer point of sale program the company has previously discontinued, as well as lower commercial recoveries relative to the second quarter.
The increase to the allowance for credit losses compared to the second quarter was attributable primarily to adverse risk migration and continued credit quality normalization, as well as a build in model or qualitative adjustments for incremental risk in certain portfolios.
The allowance for credit loss ratio increased 5 basis points to 1.70 percent of total loans, while the allowance as a percentage of nonperforming loans decreased to 261 percent.
Capital and liquidity
As of and for Quarter Ended
9/30/2023
6/30/2023
9/30/2022
Common Equity Tier 1 ratio(2)
10.3%
10.1%
9.3%
Tier 1 capital ratio(2)
11.6%
11.4%
10.6%
Tangible common stockholders’ equity to tangible assets (non-GAAP)(1)
5.82%
6.09%
5.01%
Tangible common book value per share (non-GAAP)(1)*
$9.16
$9.72
$8.15
Loans, net of unearned income, to total deposits
78.4%
78.1%
70.0%
*
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 third quarter, the company declared $225 million in dividends to common shareholders and did not repurchase any shares of Regions' common stock.
The company's liquidity position also remains robust as of Sept. 30, 2023, with total available liquidity of approximately $56.8 billion, which includes cash held at the Federal Reserve, FHLB borrowing capacity, unencumbered securities, borrowing capacity at the Federal Reserve's discount window, and the Federal Reserve's Bank Term Lending Plan facility. The loan-to-deposit ratio totaled 78 percent at the end of the quarter.
(1)
Non-GAAP; refer to pages 12, 16, 17, 18 and 20 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 Oct. 20, 2023, 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, 2022 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/20231020220960/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
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