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).
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"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:
- Current and future economic and market conditions in the United
States generally or in the communities we serve (in particular the
Southeastern United States), including the effects of possible
declines in property values, increases in interest rates and
unemployment rates, inflation, financial market disruptions and
potential reductions of economic growth, which may adversely affect
our lending and other businesses and our financial results and
conditions.
- Possible changes in trade, monetary and fiscal policies of, and
other activities undertaken by, governments, agencies, central
banks and similar organizations, which could have a material
adverse effect on our businesses and our financial results and
conditions.
- Changes in market interest rates or capital markets could
adversely affect our revenue and expense, the value of assets (such
as our portfolio of investment securities) and obligations, as well
as the availability and cost of capital and liquidity.
- Volatility and uncertainty about the direction of interest
rates and the timing of any changes, which may lead to increased
costs for businesses and consumers and potentially contribute to
poor business and economic conditions generally.
- Possible changes in the creditworthiness of customers and the
possible impairment of the collectability of loans and leases,
including operating leases.
- Changes in the speed of loan prepayments, loan origination and
sale volumes, charge-offs, credit loss provisions or actual credit
losses where our allowance for credit losses may not be adequate to
cover our eventual losses.
- Possible acceleration of prepayments on mortgage-backed
securities due to declining interest rates, and the related
acceleration of premium amortization on those securities.
- Possible changes in consumer and business spending and saving
habits and the related effect on our ability to increase assets and
to attract deposits, which could adversely affect our net
income.
- Loss of customer checking and savings account deposits as
customers pursue other, higher-yield investments, or the need to
price interest-bearing deposits higher due to competitive forces.
Either of these activities could increase our funding costs.
- Possible downgrades in our credit ratings or outlook could,
among other negative impacts, increase the costs of funding from
capital markets.
- The loss of value of our investment portfolio could negatively
impact market perceptions of us.
- Our ability to manage fluctuations in the value of assets and
liabilities and off-balance sheet exposure so as to maintain
sufficient capital and liquidity to support our businesses.
- The effects of social media on market perceptions of us and
banks generally.
- Market replacement of LIBOR and the related effect on our
LIBOR-based financial products and contracts, including, but not
limited to, derivative products, debt obligations, deposits,
investments, and loans.
- The effects of problems encountered by other financial
institutions that adversely affect us or the banking industry
generally could require us to change certain business practices,
reduce our revenue, impose additional costs on us, or otherwise
negatively affect our businesses.
- Volatility in the financial services industry (including
failures or rumors of failures of other depository institutions),
along with actions taken by governmental agencies to address such
turmoil, could affect the ability of depository institutions,
including us, to attract and retain depositors and to borrow or
raise capital.
- Our ability to effectively compete with other traditional and
non-traditional financial services companies, including fintechs,
some of which possess greater financial resources than we do or are
subject to different regulatory standards than we are.
- Our inability to develop and gain acceptance from current and
prospective customers for new products and services and the
enhancement of existing products and services to meet customers’
needs and respond to emerging technological trends in a timely
manner could have a negative impact on our revenue.
- Our inability to keep pace with technological changes,
including those related to the offering of digital banking and
financial services, could result in losing business to
competitors.
- Our ability to execute on our strategic and operational plans,
including our ability to fully realize the financial and
nonfinancial benefits relating to our strategic initiatives.
- The risks and uncertainties related to our acquisition or
divestiture of businesses and risks related to such acquisitions,
including that the expected synergies, cost savings and other
financial or other benefits may not be realized within expected
timeframes, or might be less than projected; and difficulties in
integrating acquired businesses.
- The success of our marketing efforts in attracting and
retaining customers.
- Our ability to achieve our expense management initiatives.
- Changes in commodity market prices and conditions could
adversely affect the cash flows of our borrowers operating in
industries that are impacted by changes in commodity prices
(including businesses indirectly impacted by commodities prices
such as businesses that transport commodities or manufacture
equipment used in the production of commodities), which could
impair the ability of those borrowers to service any loans
outstanding to them and/or reduce demand for loans in those
industries.
- The effects of geopolitical instability, including wars,
conflicts, civil unrest, and terrorist attacks and the potential
impact, directly or indirectly, on our businesses.
- Fraud, theft or other misconduct conducted by external parties,
including our customers and business partners, or by our
employees.
- Any inaccurate or incomplete information provided to us by our
customers or counterparties.
- Inability of our framework to manage risks associated with our
businesses, such as credit risk and operational risk, including
third-party vendors and other service providers, which inability
could, among other things, result in a breach of operating or
security systems as a result of a cyber-attack or similar act or
failure to deliver our services effectively.
- Our ability to identify and address operational risks
associated with the introduction of or changes to products,
services, or delivery platforms.
- Dependence on key suppliers or vendors to obtain equipment and
other supplies for our businesses on acceptable terms.
- The inability of our internal controls and procedures to
prevent, detect or mitigate any material errors or fraudulent
acts.
- Our ability to identify and address cyber-security risks such
as data security breaches, malware, ransomware, “denial of service”
attacks, “hacking” and identity theft, including account
take-overs, a failure of which could disrupt our businesses and
result in the disclosure of and/or misuse or misappropriation of
confidential or proprietary information, disruption or damage to
our systems, increased costs, losses, or adverse effects to our
reputation.
- The effects of the failure of any component of our business
infrastructure provided by a third party could disrupt our
businesses, result in the disclosure of and/or misuse of
confidential information or proprietary information, increase our
costs, negatively affect our reputation, and cause losses.
- The effects of any developments, changes or actions relating to
any litigation or regulatory proceedings brought against us or any
of our subsidiaries.
- The costs, including possibly incurring fines, penalties, or
other negative effects (including reputational harm) of any adverse
judicial, administrative, or arbitral rulings or proceedings,
regulatory enforcement actions or other legal actions to which we
or any of our subsidiaries are a party, and which may adversely
affect our results.
- Changes in laws and regulations affecting our businesses,
including legislation and regulations relating to bank products and
services, such as changes to debit card interchange fees, special
FDIC assessments, any new long-term debt requirements, as well as
changes in the enforcement and interpretation of such laws and
regulations by applicable governmental and self-regulatory
agencies, including as a result of the changes in U.S. presidential
administration, control of the U.S. Congress, and changes in
personnel at the bank regulatory agencies, which could require us
to change certain business practices, increase compliance risk,
reduce our revenue, impose additional costs on us, or otherwise
negatively affect our businesses.
- Our capital actions, including dividend payments, common stock
repurchases, or redemptions of preferred stock, must not cause us
to fall below minimum capital ratio requirements, with applicable
buffers taken into account, and must comply with other requirements
and restrictions under law or imposed by our regulators, which may
impact our ability to return capital to shareholders.
- Our ability to comply with stress testing and capital planning
requirements (as part of the CCAR process or otherwise) may
continue to require a significant investment of our managerial
resources due to the importance of such tests and
requirements.
- Our ability to comply with applicable capital and liquidity
requirements (including, among other things, the Basel III capital
standards), including our ability to generate capital internally or
raise capital on favorable terms, and if we fail to meet
requirements, our financial condition and market perceptions of us
could be negatively impacted.
- Our ability to recruit and retain talented and experienced
personnel to assist in the development, management and operation of
our products and services may be affected by changes in laws and
regulations in effect from time to time.
- Our ability to receive dividends from our subsidiaries, in
particular Regions Bank, could affect our liquidity and ability to
pay dividends to shareholders.
- Fluctuations in the price of our common stock and inability to
complete stock repurchases in the time frame and/or on the terms
anticipated.
- The effects of anti-takeover laws and exclusive forum provision
in our certificate of incorporation and bylaws.
- The effect of new tax legislation and/or interpretation of
existing tax law, which may impact our earnings, capital ratios and
our ability to return capital to shareholders.
- Changes in accounting policies or procedures as may be required
by the FASB or other regulatory agencies could materially affect
our financial statements and how we report those results, and
expectations and preliminary analyses relating to how such changes
will affect our financial results could prove incorrect.
- Any impairment of our goodwill or other intangibles, any
repricing of assets or any adjustment of valuation allowances on
our deferred tax assets due to changes in tax law, adverse changes
in the economic environment declining operations of the reporting
unit or other factors.
- The effects of man-made and natural disasters, including fires,
floods, droughts, tornadoes, hurricanes and environmental damage
(especially in the Southeastern United States), which may
negatively affect our operations and/or our loan portfolios and
increase our cost of conducting business. The severity and
frequency of future earthquakes, fires, hurricanes, tornadoes,
droughts, floods and other weather-related events are difficult to
predict and may be exacerbated by global climate change.
- The impact of pandemics on our businesses, operations and
financial results and conditions. The duration and severity of any
pandemic as well as government actions or other restrictions in
connection with such events could disrupt the global economy,
adversely affect our capital and liquidity position, impair the
ability of borrowers to repay outstanding loans and increase our
allowance for credit losses, impair collateral values and result in
lost revenue or additional expenses.
- The effects of any damage to our reputation resulting from
developments related to any of the items identified above.
- Other risks identified from time to time in reports that we
file with the SEC.
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:
- Preparation of Regions' operating budgets
- Monthly financial performance reporting
- Monthly close-out reporting of consolidated results (management
only)
- Presentation to investors of company performance
- Metrics for incentive compensation
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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