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Regions Financial (RF) Q1 Earnings Miss Estimates, NII Falls Y/Y
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Regions Financial Corporation’s (RF - Free Report) first-quarter 2024 adjusted earnings per share of 44 cents missed the Zacks Consensus Estimate of 46 cents. This compares unfavorably with earnings of 62 cents per share reported in the year-ago quarter.
The results were adversely affected by a decline in net interest income (NII) and a rise in expenses and provisions. Nonetheless, an improvement in non-interest income offers some support. Also, RF’s strong capital position indicates its availability of adequate capital to use in order to deal with any unexpected losses.
Net income available to common shareholders was $343 million, down 41.7% year over year.
Revenues Fall and Expenses Rise
Total quarterly revenues were $1.75 billion, which matched the Zacks Consensus Estimate. However, the top line fell 10.5% from the year-ago quarter's figure.
Quarterly NII was $1.18 billion, down 16.4% year over year. Also, the net interest margin declined 67 basis points to 3.55%.
Non-interest income increased 5.4% year over year to $563 million. The improvement was driven by an increase in income in wealth management, capital markets, mortgage banking and Bank-owned life insurance.
Non-interest expenses rose 10.1% year over year to $1.13 billion. The rise was majorly due to an increase in salaries and employee benefits, professional, legal and regulatory expenses, FDIC special assessment fees and operational losses.
The efficiency ratio was 64.3% in the first quarter compared with 52.3% in the prior-year quarter. A rise in this ratio indicates lower profitability.
As of Mar 31, 2024, total loans decreased 1.5% on a sequential basis to $96.86 billion. Nonetheless, total deposits were $129 billion, which increased nearly 1% from the previous quarter's level.
Credit Quality Deteriorates
Non-performing assets (excluding 90+ past due), as a percentage of loans, foreclosed properties and non-performing loans held for sale, increased to 0.95% from the prior-year quarter’s 0.58%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.94%, up from 0.56% reported in the prior-year quarter. A provision for credit losses of $152 million was recorded in the quarter, up 12.6% from the year-ago quarter.
Adjusted net charge-offs, as a percentage of average loans, were 0.50% compared with 0.35% in the prior-year period.
Capital Ratios Improve
As of Mar 31, 2024, the Common Equity Tier 1 ratio and the Tier 1 capital ratio were 10.3% and 11.6%, respectively, compared with 9.9% and 11.2% recorded in the year-earlier quarter.
Our Viewpoint
RF’s attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period. However, a lack of diversification in the loan portfolio and elevated expenses are major concerns.
Regions Financial Corporation Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) first-quarter 2024 net income from continuing operations per share of $1.58 surpassed the Zacks Consensus Estimate of $1.13. However, the metric declined 28% from the year-ago quarter.
Citigroup witnessed declines in total loans and deposits in the quarter. Also, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors.
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Regions Financial (RF) Q1 Earnings Miss Estimates, NII Falls Y/Y
Regions Financial Corporation’s (RF - Free Report) first-quarter 2024 adjusted earnings per share of 44 cents missed the Zacks Consensus Estimate of 46 cents. This compares unfavorably with earnings of 62 cents per share reported in the year-ago quarter.
The results were adversely affected by a decline in net interest income (NII) and a rise in expenses and provisions. Nonetheless, an improvement in non-interest income offers some support. Also, RF’s strong capital position indicates its availability of adequate capital to use in order to deal with any unexpected losses.
Net income available to common shareholders was $343 million, down 41.7% year over year.
Revenues Fall and Expenses Rise
Total quarterly revenues were $1.75 billion, which matched the Zacks Consensus Estimate. However, the top line fell 10.5% from the year-ago quarter's figure.
Quarterly NII was $1.18 billion, down 16.4% year over year. Also, the net interest margin declined 67 basis points to 3.55%.
Non-interest income increased 5.4% year over year to $563 million. The improvement was driven by an increase in income in wealth management, capital markets, mortgage banking and Bank-owned life insurance.
Non-interest expenses rose 10.1% year over year to $1.13 billion. The rise was majorly due to an increase in salaries and employee benefits, professional, legal and regulatory expenses, FDIC special assessment fees and operational losses.
The efficiency ratio was 64.3% in the first quarter compared with 52.3% in the prior-year quarter. A rise in this ratio indicates lower profitability.
As of Mar 31, 2024, total loans decreased 1.5% on a sequential basis to $96.86 billion. Nonetheless, total deposits were $129 billion, which increased nearly 1% from the previous quarter's level.
Credit Quality Deteriorates
Non-performing assets (excluding 90+ past due), as a percentage of loans, foreclosed properties and non-performing loans held for sale, increased to 0.95% from the prior-year quarter’s 0.58%. Non-performing loans, excluding loans held for sale as a percentage of net loans, were 0.94%, up from 0.56% reported in the prior-year quarter. A provision for credit losses of $152 million was recorded in the quarter, up 12.6% from the year-ago quarter.
Adjusted net charge-offs, as a percentage of average loans, were 0.50% compared with 0.35% in the prior-year period.
Capital Ratios Improve
As of Mar 31, 2024, the Common Equity Tier 1 ratio and the Tier 1 capital ratio were 10.3% and 11.6%, respectively, compared with 9.9% and 11.2% recorded in the year-earlier quarter.
Our Viewpoint
RF’s attractive core business and revenue-diversification strategies will likely yield stellar earnings in the upcoming period. However, a lack of diversification in the loan portfolio and elevated expenses are major concerns.
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
Citigroup Inc.’s (C - Free Report) first-quarter 2024 net income from continuing operations per share of $1.58 surpassed the Zacks Consensus Estimate of $1.13. However, the metric declined 28% from the year-ago quarter.
Citigroup witnessed declines in total loans and deposits in the quarter. Also, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors.