01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
Regions Financial Corporation reported net income available to common shareholders of $2.4 billiona, or $2.49 per diluted share, for 2021, compared with $991 million, or $1.03 per diluted share, in 2020.
Net interest income rose to $3.9 billionb (taxable-equivalent $4.0 billion), while the net interest margin declined to 2.85 percent from 3.21 percent, driven by elevated liquidity held at the Federal Reserve. The company recorded a benefit from credit losses of $524 million in 2021, versus a provision of $1.3 billion in 2020, as the economic outlook improved and credit performance remained strong. Non-interest income increased to $2.5 billion and non-interest expense rose to $3.7 billion.
The balance sheet grew to $162.9 billionc in total assets and $139.1 billion in deposits at year-end 2021, with total loans of $87.8 billion, up $2.5 billion. Growth was supported by the EnerBank acquisition (about $3.1 billion of loans), while the company redeemed $1.6 billion of senior notes and repurchased about 20.8 million common shares for $467 million under a $2.5 billion authorization.
Regions and Regions Bank were classified as well-capitalized at year-end, with a CET1 ratio of 9.57 percent, and the company's 2022 expectations include adjusted total revenue growth of 4-5 percent and average loan growth of 4-5 percent. For investors, the filing points to a stronger earnings base and improved capital and credit profile, but also to risks from interest rate sensitivity, the transition away from LIBOR, the ongoing COVID-19 pandemic, cybersecurity, and a pending CFPB investigation into overdraft practices.
02—Key points
Key Highlights
- Net income of $2.5 billion in 2021 ($2.4 billion available to common shareholders), or $2.49 per diluted share, versus $1.03 per diluted share in 2020.
- Benefit from credit losses of $524 million in 2021 compared with a provision of $1.3 billion in 2020; allowance for credit losses fell to 1.79 percent of total loans from 2.69 percent.
- Net interest margin declined to 2.85 percent from 3.21 percent, primarily due to elevated cash held at the Federal Reserve.
- Total deposits rose to $139.1 billion and total loans to $87.8 billion, with EnerBank acquisition adding about $3.1 billion in loans.
- Common stock repurchases of about 20.8 million shares totaling $467 million under a $2.5 billion program; quarterly common dividend increased to $0.17 per share.
- Regions Financial Corporation and Regions Bank were well-capitalized at year-end, with a CET1 ratio of 9.57 percent and a stress capital buffer floored at 2.5 percent.
- 2022 expectations include adjusted total revenue up 4-5 percent, adjusted non-interest expense up 3-4 percent, and net charge-offs of approximately 25-35 basis points of average loans.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $104.00M$84.00M | +23.8% |
| Operating Income | $46.00M$1.09B | −95.8% |
| Interest Expense | $167.00M$368.00M | −54.6% |
| Net Income | $2.52B$1.09B | +130.4% |
| EPS (Basic) | $2.51$1.03 | +143.7% |
| EPS (Diluted) | $2.49$1.03 | +141.7% |
| Shares Outstanding (Basic) | 956.00M959.00M | −0.3% |
| Shares Outstanding (Diluted) | 963.00M962.00M | +0.1% |
05—Questions
Frequently Asked Questions
How did Regions' profitability change in 2021?
Net income available to common shareholders was $2.4 billion, or $2.49 per diluted share, in 2021, compared with $991 million, or $1.03 per diluted share, in 2020. The improvement was driven by a benefit from credit losses of $524 million, higher non-interest income of $2.5 billion, and net interest income of $3.9 billion, partly offset by non-interest expense of $3.7 billion.
What pressured the net interest margin?
The net interest margin fell to 2.85 percent in 2021 from 3.21 percent in 2020. The filing attributes the decline primarily to continued elevated liquidity, evidenced by higher cash levels held at the Federal Reserve, and to the repricing of fixed-rate loans and securities at lower market rates. Cash reduced the margin by 54 basis points in 2021 compared with 18 basis points in 2020.
What is the company's 2022 outlook?
Management expects adjusted total revenue to rise 4-5 percent and average loans to rise 4-5 percent, adjusted non-interest expense to rise 3-4 percent, net charge-offs of approximately 25-35 basis points of average loans, an effective tax rate of 21-23 percent, and CET1 near the midpoint of a 9.25-9.75 percent operating range.
What are the main risks flagged in the filing?
Key risks include sensitivity to interest rates, the transition away from LIBOR, the continuing COVID-19 pandemic, cybersecurity threats, concentration of operations in the South, Midwest and Texas, commercial and residential real estate exposure, and regulatory and litigation matters, including a CFPB investigation into certain overdraft practices for which a loss is considered reasonably possible but cannot currently be estimated.
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