01—Abstract
Summary
Summary of the 10-K filed February 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Regions Financial Corporation reported 2023 net income of $2.07 billiona, with net income available to common shareholders of $1.98 billion, or $2.11 per diluted share, versus $2.1 billion, or $2.28 per diluted share, in 2022.
Net interest income rose to $5.32 billionb from $4.79 billion, and the net interest margin widened 54 basis points to 3.90 percent, driven by higher market rates and average loan growth. Non-interest income declined to $2.26 billion from $2.43 billion, while non-interest expense rose to $4.42 billion from $4.07 billion, including a $119 million FDIC special assessment and higher operational losses. The provision for credit losses increased to $553 million from $271 million, and net charge-offs were $397 million, or 0.40 percent of average loans.
Deposits fell to $127.8 billionc from $131.7 billion, with non-interest-bearing demand deposits dropping $9.0 billion as customers shifted into higher-yielding products such as time deposits, which rose to $15.0 billion. Total shareholders' equity reached $17.4 billion, and the Common Equity Tier 1 ratio was an estimated 10.26 percent at year-end.
Regions Bank was well capitalized, and the Company's stress capital buffer remained floored at 2.5 percent. Management expects 2024 net interest income of $4.7 to $4.8 billiond, reflecting an anticipated decline from 2023 levels, along with net charge-offs of 40 to 50 basis points of average loans.
02—Key points
Key Highlights
- Net income of $2.07 billion in 2023, down from $2.25 billion in 2022; diluted EPS of $2.11 versus $2.28.
- Net interest margin rose 54 basis points to 3.90 percent, and net interest income increased to $5.32 billion from $4.79 billion.
- Provision for credit losses more than doubled to $553 million from $271 million; the allowance for credit losses reached 1.73 percent of total loans, up from 1.63 percent.
- Deposits declined $4.0 billion to $127.8 billion, with non-interest-bearing deposits down $9.0 billion and time deposits up $9.2 billion to $15.0 billion.
- Non-interest expense increased 8.6 percent to $4.42 billion, driven by the $119 million FDIC special assessment and operational losses of $212 million.
- Common Equity Tier 1 ratio was an estimated 10.26 percent; both Regions and Regions Bank were classified as well capitalized at year-end 2023.
- Management's 2024 expectations include net interest income of $4.7 to $4.8 billion, adjusted non-interest expense of approximately $4.1 billion, and net charge-offs of 40 to 50 basis points of average loans.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 23, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Operating Income | $212.00M$56.00M | +278.6% |
| Interest Expense | $1.58B$316.00M | +399.1% |
| Net Income | $2.07B$2.25B | −7.6% |
| EPS (Basic) | $2.11$2.29 | −7.9% |
| EPS (Diluted) | $2.11$2.28 | −7.5% |
| Shares Outstanding (Basic) | 936.00M935.00M | +0.1% |
| Shares Outstanding (Diluted) | 938.00M942.00M | −0.4% |
05—Questions
Frequently Asked Questions
Why did Regions' net income decline in 2023 despite a higher net interest margin?
Net interest income rose to $5.32 billion, but the provision for credit losses more than doubled to $553 million and non-interest expense increased to $4.42 billion. Non-interest income also fell to $2.26 billion from $2.43 billion, primarily due to lower capital markets income, service charges and mortgage income. Together these factors reduced net income to $2.07 billion from $2.25 billion.
What drove the increase in Regions' non-interest expense?
The filing attributes the increase to higher FDIC insurance assessments, primarily the special assessment recorded in 2023, operational losses, and salaries and employee benefits. FDIC insurance assessments rose to $228 million from $61 million, and operational losses rose to $212 million from $56 million, largely from elevated check-related fraud losses in the second and third quarters of 2023.
How much of Regions' deposit base is uninsured, and how has the deposit mix changed?
Estimated uninsured deposits totaled $47.8 billion at December 31, 2023, and the filing states that over 60 percent of total deposits are insured by the FDIC. Non-interest-bearing demand deposits represented 33 percent of total deposits, down from 39 percent a year earlier, while time deposits increased to 12 percent from 4 percent as customers moved into higher-rate products.
What is Regions' capital position and what are its capital return constraints?
At December 31, 2023, the CET1 ratio was an estimated 10.26 percent, the Tier 1 capital ratio was 11.57 percent, and the total capital ratio was 13.35 percent, all above the well-capitalized thresholds. The stress capital buffer is floored at 2.5 percent, and dividend and repurchase capacity is subject to Federal Reserve capital plan oversight. During 2023, Regions repurchased shares for $252 million and paid $822 million in common dividends.
06—Continue