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Regions Financial (RF) Q2 Earnings Beat, Revenues Rise Y/Y
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Regions Financial Corporation (RF - Free Report) has reported second-quarter 2022 earnings of 59 cents per share, beating the Zacks Consensus Estimate of 53 cents. However, the results compare unfavorably with the prior-year figure of 77 cents.
Results have been driven by a rise in fee income and net interest income (NII). Average loan and deposit balances also improved. However, rising expenses and provision for credit losses affected the bottom line. Capital ratios continued to deteriorate in the quarter.
Net income available to common shareholders was $558 million, declining 25% from the year-ago period.
Revenues Rise on NII Strength, Expenses Flare Up
Total revenues were $1.75 billion in the reported quarter, beating the Zacks Consensus Estimate of $1.68 billion. Also, the top line rose 10.5% from the year-ago quarter’s reported number.
On a taxable equivalent basis, NII was $1.12 billion, up 14.8% year over year. Also, the net interest margin rose 25 basis points to 3.06%.
Non-interest income increased 3.4% year over year to $640 million. The upside mainly resulted from higher capital market income and wealth management income, offset by lower mortgage income.
Non-interest expenses rose 5.6% year over year to $948 million mainly due to increased expenses related to salaries and employee benefits, and FDIC insurance assessment.
The efficiency ratio was 53.9%, down from 56.4% in the prior-year quarter.A decrease in the ratio indicates a rise in profitability.
As of Jun 30, 2022, average loans and leases increased 3.4% on a sequential basis to $90.76 billion. Moreover, total deposits were $139.59 billion, 0.6% up from the prior quarter.
Credit Quality Improves
Credit metrics improved in the second quarter. Non-performing assets, as a percentage of loans, foreclosed properties and non-performing loans held for sale, were down to 0.41% from the prior-year quarter’s 0.93%. Additionally, non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.39%, declining from 0.79% in the prior year.
Annualized net charge-offs, as a percentage of average loans, were 0.17% compared with 0.23% in the prior-year quarter. However, a provision for credit losses of $60 million was recorded in the quarter against the year-earlier quarter’s benefit of $337 million.
Capital Ratios Weak
Regions Financial’s estimated ratios remained well above the regulatory requirements under the Basel III capital rules. As of Jun 30, 2022, Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 9.2% and 10.6%, respectively, indicating declines from 10.4% and 11.9% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the second quarter on higher loans and deposit balances. RF’s favorable funding mix, attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period.
Though a fall in revenues is concerning, we are optimistic about the bank’s branch-consolidation plan and improved credit quality. Nevertheless, expense pressure is expected to prevail.
Regions Financial Corporation Price, Consensus and EPS Surprise
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $3.10 for second-quarter 2022, meeting the Zacks Consensus Estimate. However, the bottom line compares unfavorably with the $3.45 per share reported in the year-ago period.
A rise in NII on net interest margin expansion and balance sheet strength drove MTB’s results. Yet a rise in expenses was a key undermining factor.
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, TFC’s bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove NII. However, lower non-interest income and a rise in provisions were the major headwinds.
Citizens Financial Group (CFG - Free Report) reported second-quarter 2022 underlying earnings per share of $1.14, surpassing the Zacks Consensus Estimate of $1.02. However, the bottom line fell 22% from the year-ago quarter.
CFG’s results reflect NII growth on the rise in loan balances. Further, strong balance sheet growth, backed by an improving economy, was a tailwind. Citizens Financial closed the Investors Bancorp acquisition on Apr 6, 2022. However, a rise in expenses was a spoilsport.
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Regions Financial (RF) Q2 Earnings Beat, Revenues Rise Y/Y
Regions Financial Corporation (RF - Free Report) has reported second-quarter 2022 earnings of 59 cents per share, beating the Zacks Consensus Estimate of 53 cents. However, the results compare unfavorably with the prior-year figure of 77 cents.
Results have been driven by a rise in fee income and net interest income (NII). Average loan and deposit balances also improved. However, rising expenses and provision for credit losses affected the bottom line. Capital ratios continued to deteriorate in the quarter.
Net income available to common shareholders was $558 million, declining 25% from the year-ago period.
Revenues Rise on NII Strength, Expenses Flare Up
Total revenues were $1.75 billion in the reported quarter, beating the Zacks Consensus Estimate of $1.68 billion. Also, the top line rose 10.5% from the year-ago quarter’s reported number.
On a taxable equivalent basis, NII was $1.12 billion, up 14.8% year over year. Also, the net interest margin rose 25 basis points to 3.06%.
Non-interest income increased 3.4% year over year to $640 million. The upside mainly resulted from higher capital market income and wealth management income, offset by lower mortgage income.
Non-interest expenses rose 5.6% year over year to $948 million mainly due to increased expenses related to salaries and employee benefits, and FDIC insurance assessment.
The efficiency ratio was 53.9%, down from 56.4% in the prior-year quarter.A decrease in the ratio indicates a rise in profitability.
As of Jun 30, 2022, average loans and leases increased 3.4% on a sequential basis to $90.76 billion. Moreover, total deposits were $139.59 billion, 0.6% up from the prior quarter.
Credit Quality Improves
Credit metrics improved in the second quarter. Non-performing assets, as a percentage of loans, foreclosed properties and non-performing loans held for sale, were down to 0.41% from the prior-year quarter’s 0.93%. Additionally, non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.39%, declining from 0.79% in the prior year.
Annualized net charge-offs, as a percentage of average loans, were 0.17% compared with 0.23% in the prior-year quarter. However, a provision for credit losses of $60 million was recorded in the quarter against the year-earlier quarter’s benefit of $337 million.
Capital Ratios Weak
Regions Financial’s estimated ratios remained well above the regulatory requirements under the Basel III capital rules. As of Jun 30, 2022, Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 9.2% and 10.6%, respectively, indicating declines from 10.4% and 11.9% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the second quarter on higher loans and deposit balances. RF’s favorable funding mix, attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period.
Though a fall in revenues is concerning, we are optimistic about the bank’s branch-consolidation plan and improved credit quality. Nevertheless, expense pressure is expected to prevail.
Regions Financial Corporation Price, Consensus and EPS Surprise
Regions Financial Corporation price-consensus-eps-surprise-chart | Regions Financial Corporation Quote
Currently, Regions Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
M&T Bank Corporation (MTB - Free Report) reported net operating earnings per share of $3.10 for second-quarter 2022, meeting the Zacks Consensus Estimate. However, the bottom line compares unfavorably with the $3.45 per share reported in the year-ago period.
A rise in NII on net interest margin expansion and balance sheet strength drove MTB’s results. Yet a rise in expenses was a key undermining factor.
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, TFC’s bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove NII. However, lower non-interest income and a rise in provisions were the major headwinds.
Citizens Financial Group (CFG - Free Report) reported second-quarter 2022 underlying earnings per share of $1.14, surpassing the Zacks Consensus Estimate of $1.02. However, the bottom line fell 22% from the year-ago quarter.
CFG’s results reflect NII growth on the rise in loan balances. Further, strong balance sheet growth, backed by an improving economy, was a tailwind. Citizens Financial closed the Investors Bancorp acquisition on Apr 6, 2022. However, a rise in expenses was a spoilsport.