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What's in Store for Regions Financial (RF) in Q1 Earnings?
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Regions Financial Corporation (RF - Free Report) is scheduled to report first-quarter 2023 results on Apr 21, before the opening bell. The bank’s earnings and revenues are expected to have improved from the year-ago reported figure.
This Birmingham, AL-based player’s fourth-quarter 2022 earnings beat the Zacks Consensus Estimate on the back of a rise in net interest income (NII). Average loan balances also improved on a sequential basis. However, rising expenses and provision for credit losses affected the bottom line.
Regions Financial has a decent earnings surprise history. RF's earnings surpassed estimates in three of the trailing four quarters, missed once, the average beat being 5.98%.
Regions Financial Corporation Price and EPS Surprise
RF’s activities in the to-be-reported quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for first-quarter earnings of 65 cents per share has moved marginally south in the past month. Nonetheless, the figure indicates an 18.18% rise from the year-ago reported number.
The consensus estimate for revenues is pegged at $1.96 billion, suggesting 22.84% growth from the year-ago reported figure.
Factors at Play
Loans: Per the Fed’s latest data, residential real estate loans, commercial real estate loans, consumer loans as well as commercial and industrial loan growth declined in the quarter under review. The pace of loan growth slowed from the prior few quarters due to an uncertain economic environment, the collapse of the Silicon Valley Bank and heightening recession fears.
Given RF’s significant exposure to commercial loans, the company is likely to have witnessed a decline in loan growth in the quarter under review. The Zacks Consensus Estimate of $139.2 billion for average interest-earning assets indicates a marginal decline from the last reported figure.
NII: Federal Reserve hiked rates by 50 basis points in the to-be-reported quarter and 25 bps in fourth-quarter 2022. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. Such successive rate hikes are likely to have limited positive impact on the company’s NII.
Thus, weakening lending scenario and lower-to-no positive impact of higher rates, are likely to have affected the company’s net interest margin (NIM) and NII. The Zacks Consensus Estimate for NII suggests a marginal fall on a sequential basis to $1.39 billion. Nonetheless, management expects first-quarter NII to grow in the range of 1-3%.
However, given the expectations of higher funding costs during the quarter, NIM is anticipated to have declined.
Non-Interest Income: The rising rates and high inflation are expected to have increased transactions and spend volumes, thereby supporting card and ATM fees in the quarter.
However, uncertainty due to recession fears have dampened the equity market performance. Wealth management income is likely to have declined due to this.
The removal of overdraft protection transfer charges and non-sufficient funds fees in 2022 are likely to have an adverse impact on revenues from service charges on deposits during the quarter under review.
The purchase mortgage originations are expected to have continued to decline in the first quarter whereas the refinancing originations might have remained almost stable sequentially. Also, mortgage rates during the quarter jumped from the prior-year quarter, with the rate on 30-year fixed mortgage reaching 6.32% in March. The rates have jumped from around 3% in the prior-year quarter.
The climb in mortgage rates has taken a toll on the origination market. These factors are expected to have lowered Regions Financial’s mortgage income in the to-be-reported quarter. Nonetheless, the Zacks Consensus Estimate for the same is pegged at $26 million, indicating an 8.3% sequential rise.
The macro-environment for deal-making is expected to have deteriorated in first-quarter 2023. Raging inflation, weaker equity markets and fears of a recession dealt a blow to business sentiments as well as plans for expansion through acquisitions. Thus, deal volume and total value numbers declined during the quarter.
With a decrease in global mergers and acquisition volumes, the company’s capital market income is likely to have been affected. Nonetheless, the Zacks Consensus Estimate for capital market income is pegged at $75 million, indicating a 23% rise from the quarter-ago reported figure.
The Zacks Consensus Estimate for total non-interest income is pegged at $570 million, indicating 5% fall sequentially.
Expenses: A rising expense base primarily due to inflationary pressures along with higher salaries and benefits, and investment in equipment and software are likely to have continued hurting the bottom line in the to-be-reported quarter.
Asset Quality: With heightening recession fears along with inflationary pressures, the company is anticipated to have built reserves in the first quarter.
What Our Quantitative Model Predicts:
Our proven model does not conclusively predict an earnings beat for Regions Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Regions Financial has an Earnings ESP of 0.00%.
Here we present a few finance stocks, which you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
Independent Bank (IBCP - Free Report) is scheduled to release first-quarter 2023 earnings on Apr 27. IBCP, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.4%.
Peoples Bancorp (PEBO - Free Report) is slated to report first-quarter 2023 results on Apr 25. PEBO has an Earnings ESP of +1.02% and carries a Zacks Rank #3 at present.
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What's in Store for Regions Financial (RF) in Q1 Earnings?
Regions Financial Corporation (RF - Free Report) is scheduled to report first-quarter 2023 results on Apr 21, before the opening bell. The bank’s earnings and revenues are expected to have improved from the year-ago reported figure.
This Birmingham, AL-based player’s fourth-quarter 2022 earnings beat the Zacks Consensus Estimate on the back of a rise in net interest income (NII). Average loan balances also improved on a sequential basis. However, rising expenses and provision for credit losses affected the bottom line.
Regions Financial has a decent earnings surprise history. RF's earnings surpassed estimates in three of the trailing four quarters, missed once, the average beat being 5.98%.
Regions Financial Corporation Price and EPS Surprise
Regions Financial Corporation price-eps-surprise | Regions Financial Corporation Quote
RF’s activities in the to-be-reported quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for first-quarter earnings of 65 cents per share has moved marginally south in the past month. Nonetheless, the figure indicates an 18.18% rise from the year-ago reported number.
The consensus estimate for revenues is pegged at $1.96 billion, suggesting 22.84% growth from the year-ago reported figure.
Factors at Play
Loans: Per the Fed’s latest data, residential real estate loans, commercial real estate loans, consumer loans as well as commercial and industrial loan growth declined in the quarter under review. The pace of loan growth slowed from the prior few quarters due to an uncertain economic environment, the collapse of the Silicon Valley Bank and heightening recession fears.
Given RF’s significant exposure to commercial loans, the company is likely to have witnessed a decline in loan growth in the quarter under review. The Zacks Consensus Estimate of $139.2 billion for average interest-earning assets indicates a marginal decline from the last reported figure.
NII: Federal Reserve hiked rates by 50 basis points in the to-be-reported quarter and 25 bps in fourth-quarter 2022. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. Such successive rate hikes are likely to have limited positive impact on the company’s NII.
Thus, weakening lending scenario and lower-to-no positive impact of higher rates, are likely to have affected the company’s net interest margin (NIM) and NII. The Zacks Consensus Estimate for NII suggests a marginal fall on a sequential basis to $1.39 billion. Nonetheless, management expects first-quarter NII to grow in the range of 1-3%.
However, given the expectations of higher funding costs during the quarter, NIM is anticipated to have declined.
Non-Interest Income: The rising rates and high inflation are expected to have increased transactions and spend volumes, thereby supporting card and ATM fees in the quarter.
However, uncertainty due to recession fears have dampened the equity market performance. Wealth management income is likely to have declined due to this.
The removal of overdraft protection transfer charges and non-sufficient funds fees in 2022 are likely to have an adverse impact on revenues from service charges on deposits during the quarter under review.
The purchase mortgage originations are expected to have continued to decline in the first quarter whereas the refinancing originations might have remained almost stable sequentially. Also, mortgage rates during the quarter jumped from the prior-year quarter, with the rate on 30-year fixed mortgage reaching 6.32% in March. The rates have jumped from around 3% in the prior-year quarter.
The climb in mortgage rates has taken a toll on the origination market. These factors are expected to have lowered Regions Financial’s mortgage income in the to-be-reported quarter. Nonetheless, the Zacks Consensus Estimate for the same is pegged at $26 million, indicating an 8.3% sequential rise.
The macro-environment for deal-making is expected to have deteriorated in first-quarter 2023. Raging inflation, weaker equity markets and fears of a recession dealt a blow to business sentiments as well as plans for expansion through acquisitions. Thus, deal volume and total value numbers declined during the quarter.
With a decrease in global mergers and acquisition volumes, the company’s capital market income is likely to have been affected. Nonetheless, the Zacks Consensus Estimate for capital market income is pegged at $75 million, indicating a 23% rise from the quarter-ago reported figure.
The Zacks Consensus Estimate for total non-interest income is pegged at $570 million, indicating 5% fall sequentially.
Expenses: A rising expense base primarily due to inflationary pressures along with higher salaries and benefits, and investment in equipment and software are likely to have continued hurting the bottom line in the to-be-reported quarter.
Asset Quality: With heightening recession fears along with inflationary pressures, the company is anticipated to have built reserves in the first quarter.
What Our Quantitative Model Predicts:
Our proven model does not conclusively predict an earnings beat for Regions Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Regions Financial has an Earnings ESP of 0.00%.
Zacks Rank: Regions Financial currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank Stocks Worth a Look
Here we present a few finance stocks, which you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
Independent Bank (IBCP - Free Report) is scheduled to release first-quarter 2023 earnings on Apr 27. IBCP, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.4%.
Peoples Bancorp (PEBO - Free Report) is slated to report first-quarter 2023 results on Apr 25. PEBO has an Earnings ESP of +1.02% and carries a Zacks Rank #3 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.