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Regions Financial (RF) Q3 Earnings Lag, Revenues Top Estimates
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Regions Financial Corporation (RF - Free Report) has reported third-quarter 2022 adjusted earnings per share of 56 cents, missing the Zacks Consensus Estimate of 59 cents. Also, the results compare unfavorably with the prior-year figure of 66 cents.
Results have been driven by a rise in net interest income (NII) and average loan balances. However, rising expenses and the provision for credit losses affected the bottom line.
Net income available to common shareholders was $404 million, declining 35% from the year-ago period.
Revenues Rise on NII Strength, Expenses Flare Up
Total revenues were $1.87 billion in the reported quarter, beating the Zacks Consensus Estimate of $1.81 billion. Also, the top line rose 15.7% from the year-ago quarter’s reported number.
NII was $1.26 billion, up 30.8% year over year. Also, the net interest margin rose 77 basis points to 3.53%.
Non-interest income dipped 6.8% year over year to $605 million. The downside mainly resulted from lower service charges on deposit accounts and mortgage income, partially offset by higher capital market income and wealth management income.
Non-interest expenses rose 24.7% year over year to $1.17 billion mainly due to increased expenses related to salaries and employee benefits, and FDIC insurance assessment.
The efficiency ratio was 62.3% for the third quarter.
As of Sep 30, 2022, average loans and leases increased 4.3% on a sequential basis to $94.68 billion. Moreover, total deposits were $135.51 billion, 2.9% down from the prior quarter.
Credit Quality Improves
Credit metrics improved in the third quarter. Non-performing assets, as a percentage of loans, foreclosed properties and non-performing loans held for sale, were down to 0.54% from the prior-year quarter’s 0.66%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.52%, declining from 0.64% in the prior year.
Annualized net charge-offs, as a percentage of average loans, were 0.46% compared with 0.14% in the prior-year quarter. However, a provision for credit losses of $135 million was recorded in the quarter against the year-earlier quarter’s benefit of $155 million.
Capital Ratios Weak
Regions Financial’s estimated ratios remained well above the regulatory requirements under the Basel III capital rules. As of Sep 30, 2022, Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 9.3% and 10.6%, respectively, indicating declines from 10.8% and 12.3% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the third quarter on higher loan balances. RF’s attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period.
Though a fall in fee income 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
Northern Trust Corporation’s (NTRS - Free Report) third-quarter 2022 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.82. Nonetheless, the bottom line was flat year over year.
Higher revenues, aided by a rise in net interest income NII, were the driving factors for NTRS. However, a rising expense base and weak capital ratios were headwinds.
Citizens Financial Group (CFG - Free Report) reported third-quarter 2022 underlying earnings per share of $1.30, surpassing the Zacks Consensus Estimate of $1.20. Also, CFG’s bottom line rose from $1.22 in the year-ago quarter.
Results reflected NII growth on the rise in loan balances. However, an escalation in expenses was a spoilsport for Citizens Financial’s third-quarter results.
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Regions Financial (RF) Q3 Earnings Lag, Revenues Top Estimates
Regions Financial Corporation (RF - Free Report) has reported third-quarter 2022 adjusted earnings per share of 56 cents, missing the Zacks Consensus Estimate of 59 cents. Also, the results compare unfavorably with the prior-year figure of 66 cents.
Results have been driven by a rise in net interest income (NII) and average loan balances. However, rising expenses and the provision for credit losses affected the bottom line.
Net income available to common shareholders was $404 million, declining 35% from the year-ago period.
Revenues Rise on NII Strength, Expenses Flare Up
Total revenues were $1.87 billion in the reported quarter, beating the Zacks Consensus Estimate of $1.81 billion. Also, the top line rose 15.7% from the year-ago quarter’s reported number.
NII was $1.26 billion, up 30.8% year over year. Also, the net interest margin rose 77 basis points to 3.53%.
Non-interest income dipped 6.8% year over year to $605 million. The downside mainly resulted from lower service charges on deposit accounts and mortgage income, partially offset by higher capital market income and wealth management income.
Non-interest expenses rose 24.7% year over year to $1.17 billion mainly due to increased expenses related to salaries and employee benefits, and FDIC insurance assessment.
The efficiency ratio was 62.3% for the third quarter.
As of Sep 30, 2022, average loans and leases increased 4.3% on a sequential basis to $94.68 billion. Moreover, total deposits were $135.51 billion, 2.9% down from the prior quarter.
Credit Quality Improves
Credit metrics improved in the third quarter. Non-performing assets, as a percentage of loans, foreclosed properties and non-performing loans held for sale, were down to 0.54% from the prior-year quarter’s 0.66%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.52%, declining from 0.64% in the prior year.
Annualized net charge-offs, as a percentage of average loans, were 0.46% compared with 0.14% in the prior-year quarter. However, a provision for credit losses of $135 million was recorded in the quarter against the year-earlier quarter’s benefit of $155 million.
Capital Ratios Weak
Regions Financial’s estimated ratios remained well above the regulatory requirements under the Basel III capital rules. As of Sep 30, 2022, Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 9.3% and 10.6%, respectively, indicating declines from 10.8% and 12.3% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the third quarter on higher loan balances. RF’s attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period.
Though a fall in fee income 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
Northern Trust Corporation’s (NTRS - Free Report) third-quarter 2022 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.82. Nonetheless, the bottom line was flat year over year.
Higher revenues, aided by a rise in net interest income NII, were the driving factors for NTRS. However, a rising expense base and weak capital ratios were headwinds.
Citizens Financial Group (CFG - Free Report) reported third-quarter 2022 underlying earnings per share of $1.30, surpassing the Zacks Consensus Estimate of $1.20. Also, CFG’s bottom line rose from $1.22 in the year-ago quarter.
Results reflected NII growth on the rise in loan balances. However, an escalation in expenses was a spoilsport for Citizens Financial’s third-quarter results.