Strategic execution of Regions' long-term plan
leads to solid core performance, quarterly revenue growth.
Regions Financial Corp. (NYSE:RF) today reported earnings for
the third quarter ended September 30, 2024. The company reported
third quarter net income available to common shareholders of $446
million and earnings per diluted share of $0.49. The company
reported $1.8 billion in total revenue during the quarter,
including $721 million in reported pre-tax pre-provision income(1)
and $799 million in adjusted pre-tax pre-provision income(1). Third
quarter results were impacted by the following notable items: the
impact of additional strategic securities repositioning and
issuance costs associated with the redemption of the company's
Series B Preferred Stock. The net impact of these items reduced
reported third quarter earnings per diluted share by $0.08.
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“During the third quarter, Regions continued its focus on
delivering consistent, sustainable, long-term performance as
evidenced by our solid quarterly revenue growth, including another
record within wealth management, and margin expansion despite a
challenging lending and interest rate environment. We have a great
strategic plan and a leadership team with a proven track record of
successful execution. The investments we are making in talent,
technology, products and services, along with our fast-growing
markets, position us well to continue generating top-quartile
returns," said John Turner, Chairman, President and CEO of Regions
Financial Corp.
Turner added, "To that end, I am proud of how our teams have
responded to serve and support communities impacted by the recent
hurricanes. Our branch network fared well, with minimal impacts
from the storms, and we immediately launched disaster-recovery
financial services to help customers and associates with
storm-related needs."
SUMMARY OF THIRD QUARTER 2024 RESULTS:
Quarter Ended
(amounts in millions, except per share
data)
9/30/2024
6/30/2024
9/30/2023
Net income
$
490
$
501
$
490
Preferred dividends and other*
44
24
25
Net income available to common
shareholders
$
446
$
477
$
465
Weighted-average diluted shares
outstanding
918
918
940
Actual shares outstanding—end of
period
911
915
939
Diluted earnings per common share
$
0.49
$
0.52
$
0.49
Selected items impacting
earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
—
$
28
$
(4
)
Adjustments to non-interest income(1)
(78
)
(50
)
(1
)
Total pre-tax adjusted items(1)
$
(78
)
$
(22
)
$
(5
)
After-tax preferred stock redemption
expense*
$
(15
)
$
—
$
—
Diluted EPS impact**
$
(0.08
)
$
(0.01
)
$
—
Pre-tax additional selected items***:
Incremental operational losses related to
check warranty claims
$
—
$
—
$
(53
)
Visa Class B litigation escrow funding
14
—
—
*
The third quarter 2024 amount includes $15
million of Series B preferred stock issuance costs, which reduced
net income available to common shareholders when the shares were
redeemed. Excluding the preceding adjusted item, total third
quarter 2024 preferred dividends also includes $4 million
representing a partial dividend payment for the newly issued Series
F preferred stock.
**
Based on income taxes at an approximate
25% incremental rate. The second quarter 2024 adjustment to
non-interest expense for a contingent reserve release related to a
prior acquisition included a non-taxable component.
***
Items impacting results or trends during
the period, but are not considered non-GAAP adjustments.
Non-GAAP adjusted items(1) impacting the company's earnings are
identified to assist investors in analyzing Regions' operating
results on the same basis as that applied by management and provide
a basis to predict future performance.
Total revenue
Quarter Ended
($ amounts in millions)
9/30/2024
6/30/2024
9/30/2023
3Q24 vs. 2Q24
3Q24 vs. 3Q23
Net interest income
$
1,218
$
1,186
$
1,291
$
32
2.7
%
$
(73
)
(5.7
)%
Taxable equivalent adjustment
12
12
13
—
—
%
(1
)
(7.7
)%
Net interest income, taxable equivalent
basis
$
1,230
$
1,198
$
1,304
$
32
2.7
%
$
(74
)
(5.7
)%
Net interest margin (FTE)
3.54
%
3.51
%
3.73
%
Non-interest income:
Service charges on deposit accounts
$
158
$
151
$
142
$
7
4.6
%
$
16
11.3
%
Card and ATM fees
118
120
126
(2
)
(1.7
)%
(8
)
(6.3
)%
Wealth management income
128
122
112
6
4.9
%
16
14.3
%
Capital markets income
92
68
64
24
35.3
%
28
43.8
%
Mortgage income
36
34
28
2
5.9
%
8
28.6
%
Commercial credit fee income
28
28
24
—
—
%
4
16.7
%
Bank-owned life insurance
28
30
20
(2
)
(6.7
)%
8
40.0
%
Market value adjustments on employee
benefit assets*
13
2
4
11
NM
9
225.0
%
Securities gains (losses), net**
(78
)
(50
)
(1
)
(28
)
(56.0
)%
(77
)
NM
Other miscellaneous income
49
40
47
9
22.5
%
2
4.3
%
Non-interest income
$
572
$
545
$
566
$
27
5.0
%
$
6
1.1
%
Adjusted non-interest income
(non-GAAP)
$
650
$
595
$
567
$
55
9.2
%
$
83
14.6
%
Total revenue
$
1,790
$
1,731
$
1,857
$
59
3.4
%
$
(67
)
(3.6
)%
Adjusted total revenue
(non-GAAP)(1)
$
1,868
$
1,781
$
1,858
$
87
4.9
%
$
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.
** The third quarter 2024 includes $75
million of securities losses associated with an additional
securities repositioning transaction, and $3 million associated
with the sale of certain employee benefit assets.
Total revenue increased 3 percent to approximately $1.8 billion
on a reported basis and 5 percent to approximately $1.9 billion on
an adjusted basis(1) compared to the second quarter of 2024. Net
interest income increased 3 percent to slightly over $1.2 billion
compared to the second quarter as deposit cost pressures eased and
asset yields benefited from the maturity and replacement of
lower-yielding, fixed rate loans and securities at higher levels.
Total net interest margin increased 3 basis points to 3.54
percent.
Non-interest income increased 5 percent on a reported basis and
9 percent on an adjusted basis(1) compared to the second quarter of
2024. With respect to adjusted items, the company incurred $78
million in securities losses, largely attributable to the execution
of additional securities repositioning trades. Service charges
increased 5 percent attributable primarily to an increase in
treasury management revenue and an additional business day in the
quarter. Wealth Management increased 5 percent driven by increased
sales activity and continued strength in financial markets. Capital
markets income increased 35 percent to $92 million, attributable
primarily to increased merger and acquisition advisory services and
debt capital markets activity. Favorable market value adjustments
on employee assets and gains from the sale of certain low income
housing tax credit investments also contributed to the third
quarter increase.
Non-interest expense
Quarter Ended
($ amounts in millions)
9/30/2024
6/30/2024
9/30/2023
3Q24 vs. 2Q24
3Q24 vs. 3Q23
Salaries and employee benefits
$
645
$
609
$
589
$
36
5.9
%
$
56
9.5
%
Equipment and software expense
101
100
107
1
1.0
%
(6
)
(5.6
)%
Net occupancy expense
69
68
72
1
1.5
%
(3
)
(4.2
)%
Outside services
41
40
39
1
2.5
%
2
5.1
%
Marketing
28
27
26
1
3.7
%
2
7.7
%
Professional, legal and regulatory
expenses
21
25
27
(4
)
(16.0
)%
(6
)
(22.2
)%
Credit/checkcard expenses
14
15
16
(1
)
(6.7
)%
(2
)
(12.5
)%
FDIC insurance assessments
17
29
27
(12
)
(41.4
)%
(10
)
(37.0
)%
Visa class B shares expense
17
5
5
12
240.0
%
12
240.0
%
Operational losses
19
18
75
1
5.6
%
(56
)
(74.7
)%
Branch consolidation, property and
equipment charges
—
1
1
(1
)
(100.0
)%
(1
)
(100.0
)%
Other
97
67
109
30
44.8
%
(12
)
(11.0
)%
Total non-interest expense
$
1,069
$
1,004
$
1,093
$
65
6.5
%
$
(24
)
(2.2
)%
Total adjusted non-interest expense(1)
$
1,069
$
1,032
$
1,089
$
37
3.6
%
$
(20
)
(1.8
)%
NM - Not Meaningful
Non-interest expense increased 6 percent and 4 percent on a
reported and adjusted basis(1), respectively, compared to the
second quarter of 2024. Third quarter adjusted items offset each
other, while the second quarter included a $37 million expense
reduction associated with a contingent reserve release from a prior
acquisition that did not repeat. Salaries and benefits increased 6
percent driven primarily by one additional day in the quarter,
higher incentive compensation associated with revenue growth, and
the offsetting impact of increased market value adjustments on
employee benefit assets recorded in non-interest income. The
company also recognized $14 million of expense during the quarter
associated with its proportionate share of ongoing Visa litigation
escrow related to their class B shares.
The company's third quarter efficiency ratio was 59.3 percent on
a reported and 56.9 percent on an adjusted basis(1). The effective
tax rate was 19.4 percent in the third quarter.
Loans and Leases
Average Balances
($ amounts in millions)
3Q24
2Q24
3Q23
3Q24 vs. 2Q24
3Q24 vs. 3Q23
Commercial and industrial
$
49,847
$
50,046
$
51,721
$
(199
)
(0.4
)%
$
(1,874
)
(3.6
)%
Commercial real estate—owner-occupied
5,212
5,115
5,100
97
1.9
%
112
2.2
%
Investor real estate
8,759
8,839
8,617
(80
)
(0.9
)%
142
1.6
%
Business Lending
63,818
64,000
65,438
(182
)
(0.3
)%
(1,620
)
(2.5
)%
Residential first mortgage
20,147
20,191
19,914
(44
)
(0.2
)%
233
1.2
%
Home equity
5,530
5,557
5,688
(27
)
(0.5
)%
(158
)
(2.8
)%
Consumer credit card
1,359
1,331
1,245
28
2.1
%
114
9.2
%
Other consumer—exit portfolios
13
22
384
(9
)
(40.9
)%
(371
)
(96.6
)%
Other consumer*
6,173
6,180
6,116
(7
)
(0.1
)%
57
0.9
%
Consumer Lending
33,222
33,281
33,347
(59
)
(0.2
)%
(125
)
(0.4
)%
Total Loans
$
97,040
$
97,281
$
98,785
$
(241
)
(0.2
)%
$
(1,745
)
(1.8
)%
NM - Not meaningful.
* Other consumer loans includes Regions'
Home Improvement Financing portfolio (formerly EnerBank).
Average loans and leases remained relatively stable compared to
the prior quarter. Within the business portfolio, average loans
remained relatively stable, while ending loans decreased 1 percent.
Within the consumer portfolio, average loans remained relatively
stable as modest growth in consumer credit card was offset by
modest declines in other categories.
Deposits
Average Balances
($ amounts in millions)
3Q24
2Q24
3Q23
3Q24 vs. 2Q24
3Q24 vs. 3Q23
Total interest-bearing deposits
$
86,260
$
86,385
$
80,472
$
(125
)
(0.1
)%
$
5,788
7.2
%
Non-interest-bearing deposits
39,690
40,516
44,748
(826
)
(2.0
)%
(5,058
)
(11.3
)%
Total Deposits
$
125,950
$
126,901
$
125,220
$
(951
)
(0.7
)%
$
730
0.6
%
($ amounts in millions)
3Q24
2Q24
3Q23
3Q24 vs. 2Q24
3Q24 vs. 3Q23
Consumer Bank Segment
$
78,904
$
79,809
$
80,036
$
(905
)
(1.1
)%
$
(1,132
)
(1.4
)%
Corporate Bank Segment
36,867
36,669
34,924
198
0.5
%
1,943
5.6
%
Wealth Management Segment
7,374
7,534
7,451
(160
)
(2.1
)%
(77
)
(1.0
)%
Other
2,805
2,889
2,809
(84
)
(2.9
)%
(4
)
(0.1
)%
Total Deposits
$
125,950
$
126,901
$
125,220
$
(951
)
(0.7
)%
$
730
0.6
%
Ending Balances as of
9/30/2024
9/30/2024
($ amounts in millions)
9/30/2024
6/30/2024
9/30/2023
vs. 6/30/2024
vs. 9/30/2023
Consumer Bank Segment
$
78,858
$
80,126
$
80,980
$
(1,268
)
(1.6
)%
$
(2,122
)
(2.6
)%
Corporate Bank Segment
36,955
36,529
34,650
426
1.2
%
2,305
6.7
%
Wealth Management Segment
7,520
7,383
7,791
137
1.9
%
(271
)
(3.5
)%
Other
3,043
2,578
2,778
465
18.0
%
265
9.5
%
Total Deposits
$
126,376
$
126,616
$
126,199
$
(240
)
(0.2
)%
$
177
0.1
%
The company's deposit base continues to be a source of strength
and a differentiator in liquidity and margin performance. Total
deposits continued to follow expected patterns in the third
quarter. Ending deposits remained relatively stable with the second
quarter, while average deposits decreased approximately 1 percent,
consistent with normal summer spending patterns primarily among
consumers.
Asset quality
As of and for the Quarter
Ended
($ amounts in millions)
9/30/2024
6/30/2024
9/30/2023
Allowance for credit losses (ACL) at
period end
$1,728
$1,732
$1,677
ACL/Loans, net
1.79%
1.78%
1.70%
ALL/Loans, net
1.66%
1.66%
1.56%
Allowance for credit losses to
non-performing loans, excluding loans held for sale
210%
204%
261%
Allowance for loan losses to
non-performing loans, excluding loans held for sale
196%
191%
241%
Provision for credit losses
$113
$102
$145
Net loans charged-off
$117
$101
$101
Net loans charged-off as a % of average
loans, annualized
0.48%
0.42%
0.40%
Non-performing loans, excluding loans held
for sale/Loans, net
0.85%
0.87%
0.65%
NPAs (ex. 90+ past due)/Loans, foreclosed
properties, and non-performing loans held for sale
0.87%
0.88%
0.67%
NPAs (inc. 90+ past due)/Loans, foreclosed
properties, and non-performing loans held for sale*
1.06%
1.06%
0.81%
Total Criticized Loans—Business
Services**
$4,692
$4,863
$4,167
* 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.
Net charge-offs were $117 million or 48 basis points of average
loans during the quarter. As expected, this represents an increase
of 6 basis points from the prior quarter and reflects losses from
previously identified portfolios of interest. Underlying asset
quality metrics continue to show signs of stabilization.
Non-performing loans as a percentage of total loans declined 2
basis points to 85 basis points and business services criticized
loans declined $171 million or 4 percent compared to the prior
quarter. Net charge-offs are expected to remain towards the upper
end of the company's 40 to 50 basis point range attributable to a
few large credits within those same portfolios. However, these
expected losses are substantially reserved for within the allowance
for credit losses as of quarter-end.
The allowance for credit loss ratio increased 1 basis point to
1.79 percent, while the allowance as a percentage of nonperforming
loans increased 6 percentage points to 210 percent.
Capital and liquidity
As of and for Quarter
Ended
9/30/2024
6/30/2024
9/30/2023
Common Equity Tier 1 ratio(2)
10.6%
10.4%
10.3%
Tier 1 capital ratio(2)
11.9%
11.7%
11.6%
Tangible common stockholders’ equity to
tangible assets (non-GAAP)(1)
7.37%
6.55%
5.82%
Tangible common book value per share
(non-GAAP)(1)*
$12.26
$10.61
$9.16
Loans, net of unearned income, to total
deposits
76.6%
77.0%
78.4%
* 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 10.6 percent and 11.9 percent, respectively, at
quarter-end.
Tangible common book value per share ended the quarter at
$12.26, a 16 percent increase quarter over quarter and a 34 percent
increase year over year.
During the third quarter, the company repurchased approximately
4 million shares of common stock for a total of $101 million
through open market purchases and declared $229 million in
dividends to common shareholders.
On July 29, 2024, the company issued $500 million of Series F
non-cumulative perpetual preferred stock. On September 16, 2024,
the company used the proceeds from the Series F issuance to redeem
its $500 million Series B preferred stock.
The company's liquidity position also remains robust as of
September 30, 2024, with total available liquidity of approximately
$62 billion, which includes cash held at the Federal Reserve, FHLB
borrowing capacity, unencumbered securities, and capacity at the
Federal Reserve's facilities such as the Discount window or
Standing Repo Facility. These sources are sufficient to cover
uninsured deposits at a ratio of approximately 180 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 Oct. 18,
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 $157 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
legacy 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.
- Political uncertainty in the United States, including
uncertainty around elections, could directly or indirectly impact
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/20241018488720/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
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