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Regions Financial (RF) Q3 Earnings & Revenues Miss, Loans Rise
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Regions Financial Corporation’s (RF - Free Report) third-quarter 2023 adjusted earnings per share of 49 cents missed the Zacks Consensus Estimate of 59 cents. The bottom line improved from 43 cents in the prior-year quarter.
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 $465 million, down year over year from $404 million.
Revenues Fall, Expenses Rise
Total quarterly revenues were $1.86 billion, missing the Zacks Consensus Estimate of $1.89 billion. Also, the top line fell 0.5% from the year-ago quarter.
Quarterly NII was $1.26 billion, up 2.3% year over year. Also, the net interest margin rose 20 basis points to 3.73%.
Non-interest income dipped 6.4% year over year to $566 million. The downside mainly resulted from lower service charges on deposit accounts, capital market income and mortgage income.
Non-interest expenses rose 6.6% year over year to $1.09 billion. The rise was due to an increase in equipment and software expenses, and other expenses.
The efficiency ratio was 58.4% in the third quarter compared with 62.3% in the prior-year quarter.
As of Sep 30, 2023, average loans increased marginally on a sequential basis to $98.78 billion. Moreover, average deposits were $125.22 billion, increasing marginally 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 0.67% from the prior-year quarter’s 0.54%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.65%, up from 0.52% in the prior year. A provision for credit losses of $145 million was recorded in the quarter compared with $135 million in the prior-year quarter.
Annualized net charge-offs, as a percentage of average loans, were 0.40% compared with 0.46% in the prior-year quarter.
Capital Ratios Improve
As of Sep 30, 2023, the Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 10.3% and 11.6%, respectively, compared with 9.3% and 10.6% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the third 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
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2023 adjusted earnings per share of $1.39 outpaced the Zacks Consensus Estimate of $1.25. The figure improved 6.9% year over year. The adjusted figure excludes the impacts of discrete tax benefits related to the resolution of the prior-year period’s tax matters.
WFC’s results benefited from higher NII and non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, C witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.
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Regions Financial (RF) Q3 Earnings & Revenues Miss, Loans Rise
Regions Financial Corporation’s (RF - Free Report) third-quarter 2023 adjusted earnings per share of 49 cents missed the Zacks Consensus Estimate of 59 cents. The bottom line improved from 43 cents in the prior-year quarter.
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 $465 million, down year over year from $404 million.
Revenues Fall, Expenses Rise
Total quarterly revenues were $1.86 billion, missing the Zacks Consensus Estimate of $1.89 billion. Also, the top line fell 0.5% from the year-ago quarter.
Quarterly NII was $1.26 billion, up 2.3% year over year. Also, the net interest margin rose 20 basis points to 3.73%.
Non-interest income dipped 6.4% year over year to $566 million. The downside mainly resulted from lower service charges on deposit accounts, capital market income and mortgage income.
Non-interest expenses rose 6.6% year over year to $1.09 billion. The rise was due to an increase in equipment and software expenses, and other expenses.
The efficiency ratio was 58.4% in the third quarter compared with 62.3% in the prior-year quarter.
As of Sep 30, 2023, average loans increased marginally on a sequential basis to $98.78 billion. Moreover, average deposits were $125.22 billion, increasing marginally 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 0.67% from the prior-year quarter’s 0.54%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.65%, up from 0.52% in the prior year. A provision for credit losses of $145 million was recorded in the quarter compared with $135 million in the prior-year quarter.
Annualized net charge-offs, as a percentage of average loans, were 0.40% compared with 0.46% in the prior-year quarter.
Capital Ratios Improve
As of Sep 30, 2023, the Common Equity Tier 1 ratio and the Tier 1 capital ratio were estimated at 10.3% and 11.6%, respectively, compared with 9.3% and 10.6% recorded in the year-earlier quarter.
Our Viewpoint
Regions Financial put up a decent performance in the third 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 Major Banks
Wells Fargo & Company’s (WFC - Free Report) third-quarter 2023 adjusted earnings per share of $1.39 outpaced the Zacks Consensus Estimate of $1.25. The figure improved 6.9% year over year. The adjusted figure excludes the impacts of discrete tax benefits related to the resolution of the prior-year period’s tax matters.
WFC’s results benefited from higher NII and non-interest income. An improvement in capital ratios and a decline in expenses were other positives. However, the worsening credit quality and a dip in loan balances were the undermining factors.
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, C witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.