01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
Regions Financial Corporation (RF) reported net income available to common shareholders of $2.1 billiona, or $2.28 per diluted share, in 2022, compared to $2.4 billion, or $2.49 per diluted share, in 2021.
Net interest income (taxable-equivalent basis) rose to $4.8 billionb from $4.0 billion, and net interest margin increased 51 basis points to 3.36 percent, driven primarily by higher market interest rates and the EnerBank home improvement loan acquisition. Non-interest income declined to $2.4 billion from $2.5 billion, mainly due to lower mortgage income, while non-interest expense rose to $4.1 billion from $3.7 billion, including professional, legal and regulatory expenses tied to the CFPB settlement. Loans grew $9.2 billion, or 10.5 percent, to $97.0 billion, led by a $7.0 billion increase in commercial loans.
Deposits declined approximately $7.3 billion to $131.7 billionc, and non-performing loans increased to $503 million from $464 million. The allowance for credit losses was $1.6 billion, or 1.63 percent of total loans, down from 1.79 percent a year earlier. Regions reported that it was well-capitalized at year-end, with a CET1 ratio of 9.60 percent and an SCB floored at 2.5 percent, and it repurchased about 8 million shares in 2022 under its capital plans.
The filing's 2023 expectations include total adjusted revenue up 8-10 percent, adjusted non-interest expense up 4.5-5.5 percent, ending loans up about 4 percent, ending deposits down $3d-$5 billion in the first half of 2023, and net charge-offs of 25-35 basis points of average loans. The company also flagged risks from elevated interest rates, deposit outflows, LIBOR transition, and cybersecurity.
02—Key points
Key Highlights
- Net income available to common shareholders was $2.1 billion, or $2.28 per diluted share, in 2022, versus $2.4 billion, or $2.49 per diluted share, in 2021.
- Net interest income (taxable-equivalent) rose to $4.8 billion from $4.0 billion, and net interest margin increased 51 basis points to 3.36 percent.
- Total loans increased $9.2 billion, or 10.5 percent, to $97.0 billion, with commercial loans up $7.0 billion.
- Total deposits decreased approximately $7.3 billion to $131.7 billion, with non-interest-bearing demand deposits down $7.0 billion.
- The CET1 ratio was 9.60 percent at December 31, 2022, and Regions was classified as well-capitalized; the stress capital buffer is floored at 2.5 percent.
- Non-interest expense rose to $4.1 billion from $3.7 billion, including professional, legal and regulatory expenses related to a $50 million CFPB civil penalty and about $141 million in customer redress.
- The allowance for credit losses was $1.6 billion, or 1.63 percent of total loans, down from 1.79 percent at year-end 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Operating Income | $56.00M$46.00M | +21.7% |
| Interest Expense | $316.00M$167.00M | +89.2% |
| Net Income | $2.25B$2.52B | −10.9% |
| EPS (Basic) | $2.29$2.51 | −8.8% |
| EPS (Diluted) | $2.28$2.49 | −8.4% |
| Shares Outstanding (Basic) | 935.00M956.00M | −2.2% |
| Shares Outstanding (Diluted) | 942.00M963.00M | −2.2% |
05—Questions
Frequently Asked Questions
What drove the increase in net interest income in 2022?
The filing attributes the increase primarily to higher market interest rates, average loan growth, and higher-yielding consumer home improvement loans from the fourth-quarter 2021 acquisition of EnerBank. The Federal Reserve increased the fed funds rate by 425 basis points during 2022.
Why did non-interest income decline in 2022?
Non-interest income fell to $2.4 billion from $2.5 billion, primarily due to lower mortgage income, which dropped to $156 million from $242 million on lower production and sales, and unfavorable market valuation adjustments on employee benefit assets. These declines were partly offset by $50 million of insurance proceeds related to the CFPB settlement.
What were the main changes in deposits and funding during 2022?
Total deposits declined about $7.3 billion to $131.7 billion, mainly from corporate and wealth management customers reducing excess balances accumulated during the pandemic. Regions reported a cost of deposits of 14 basis points for 2022, compared with 5 basis points in 2021, and had $9.2 billion in cash on deposit with the Federal Reserve.
What does the filing say about 2023 expectations?
Regions expects total adjusted revenue to increase 8-10 percent, adjusted non-interest expense to rise 4.5-5.5 percent, ending loans to rise about 4 percent, and net charge-offs to be 25-35 basis points of average loans. It also expects ending deposits to decline $3-$5 billion in the first half of 2023, with an effective tax rate of 22-23 percent.
What capital returns did Regions make in 2022?
Regions paid $692 million in cash dividends on common stock and $99 million on preferred stock, and repurchased approximately 8 million shares for $230 million under its share repurchase programs. The Board authorized up to $2.5 billion in repurchases from the second quarter of 2022 through the fourth quarter of 2024.
06—Continue