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Regions Financial (RF) Q2 Earnings Miss, Revenues Beat
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Regions Financial Corporation’s (RF - Free Report) second-quarter 2023 adjusted earnings per share of 59 cents has missed the Zacks Consensus Estimate of 60 cents. The bottom line was flat with the prior-year quarter.
Shares of RF gained 1.6% in the pre-market trading on revenue growth. A full-day trading session will depict a clearer picture.
Results have been aided by a rise in net interest income (NII) and average loan balances. However, increasing expenses and provision for credit losses affected the bottom line.
Net income available to common shareholders was $556 million, down year over year from $558 million.
Revenues Improve, Expenses Rise
Total quarterly revenues were $1.96 billion, beating the Zacks Consensus Estimate of $1.94 billion. Also, the top line rose 12% from the year-ago quarter.
Quarterly NII was $1.38 billion, up 24.6% year over year. Also, the net interest margin rose 98 basis points to 4.04%.
Non-interest income dipped 10% year over year to $576 million. The downside mainly resulted from lower service charges on deposit accounts, capital market income, mortgage income, and card and ATM fees.
Non-interest expenses rose 17.2% year over year to $1.11 billion. The rise was due to an increase in salaries and employee benefits costs, equipment and software expenses, FDIC insurance assessment costs, and branch consolidation, property and equipment charges.
The efficiency ratio was 56.4% in the second quarter.
As of Jun 30, 2023, average loans increased 1% on a sequential basis to $98.58 billion. Moreover, average deposits were $125.54 billion, down 3% from the prior quarter.
Credit Quality Deteriorates
Non-performing assets (excluding 90+ past due), as a percentage of loans, foreclosed properties, and non-performing loans held for sale were up to 0.51% from the prior-year quarter’s 0.41%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.50%, up from 0.39% in the prior year.
Annualized net charge-offs, as a percentage of average loans, were 0.33% compared with 0.17% in the prior-year quarter. A provision for credit losses of $118 million was recorded in the quarter compared with $60 million in the prior-year quarter.
Capital Ratios Improve
As of Jun 30, 2023, the Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 10.1% and 11.4%, respectively, compared with 9.2% and 10.6% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the second quarter on higher loan balances and higher interest rates. RF’s attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period.
A fall in fee income and expense pressure are concerning.
Regions Financial Corporation Price, Consensus and EPS Surprise
First Horizon Corporation’s (FHN - Free Report) second-quarter 2023 adjusted earnings per share (excluding notable items) of 39 cents surpassed the Zacks Consensus Estimate. The figure also improved 14.7% year over year.
FHN’s results benefited from higher NII and non-interest income. Also, improving loan and deposit balances were tailwinds. However, higher provisions and rising expenses were undermining factors.
Zions Bancorporation’s (ZION - Free Report) second-quarter 2023 net earnings per share of $1.11 lagged the Zacks Consensus Estimate of $1.13. The bottom line decreased 14% from the year-ago quarter.
ZION’s results were adversely impacted by a decline in NII, a rise in non-interest expenses and higher provisions. However, higher rates, decent loan demand and a rise in deposit balances were the major positives. Nevertheless, non-interest income increased for the quarter.
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Regions Financial (RF) Q2 Earnings Miss, Revenues Beat
Regions Financial Corporation’s (RF - Free Report) second-quarter 2023 adjusted earnings per share of 59 cents has missed the Zacks Consensus Estimate of 60 cents. The bottom line was flat with the prior-year quarter.
Shares of RF gained 1.6% in the pre-market trading on revenue growth. A full-day trading session will depict a clearer picture.
Results have been aided by a rise in net interest income (NII) and average loan balances. However, increasing expenses and provision for credit losses affected the bottom line.
Net income available to common shareholders was $556 million, down year over year from $558 million.
Revenues Improve, Expenses Rise
Total quarterly revenues were $1.96 billion, beating the Zacks Consensus Estimate of $1.94 billion. Also, the top line rose 12% from the year-ago quarter.
Quarterly NII was $1.38 billion, up 24.6% year over year. Also, the net interest margin rose 98 basis points to 4.04%.
Non-interest income dipped 10% year over year to $576 million. The downside mainly resulted from lower service charges on deposit accounts, capital market income, mortgage income, and card and ATM fees.
Non-interest expenses rose 17.2% year over year to $1.11 billion. The rise was due to an increase in salaries and employee benefits costs, equipment and software expenses, FDIC insurance assessment costs, and branch consolidation, property and equipment charges.
The efficiency ratio was 56.4% in the second quarter.
As of Jun 30, 2023, average loans increased 1% on a sequential basis to $98.58 billion. Moreover, average deposits were $125.54 billion, down 3% from the prior quarter.
Credit Quality Deteriorates
Non-performing assets (excluding 90+ past due), as a percentage of loans, foreclosed properties, and non-performing loans held for sale were up to 0.51% from the prior-year quarter’s 0.41%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.50%, up from 0.39% in the prior year.
Annualized net charge-offs, as a percentage of average loans, were 0.33% compared with 0.17% in the prior-year quarter. A provision for credit losses of $118 million was recorded in the quarter compared with $60 million in the prior-year quarter.
Capital Ratios Improve
As of Jun 30, 2023, the Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 10.1% and 11.4%, respectively, compared with 9.2% and 10.6% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the second quarter on higher loan balances and higher interest rates. RF’s attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period.
A fall in fee income and expense pressure are concerning.
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
First Horizon Corporation’s (FHN - Free Report) second-quarter 2023 adjusted earnings per share (excluding notable items) of 39 cents surpassed the Zacks Consensus Estimate. The figure also improved 14.7% year over year.
FHN’s results benefited from higher NII and non-interest income. Also, improving loan and deposit balances were tailwinds. However, higher provisions and rising expenses were undermining factors.
Zions Bancorporation’s (ZION - Free Report) second-quarter 2023 net earnings per share of $1.11 lagged the Zacks Consensus Estimate of $1.13. The bottom line decreased 14% from the year-ago quarter.
ZION’s results were adversely impacted by a decline in NII, a rise in non-interest expenses and higher provisions. However, higher rates, decent loan demand and a rise in deposit balances were the major positives. Nevertheless, non-interest income increased for the quarter.