01—Abstract
Summary
Summary of the 10-Q filed May 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Regions Financial Corporation reported first-quarter 2024 net income of $368 milliona, down from $612 million in the first quarter of 2023.
Net income available to common shareholders was $343 millionb, or $0.37 per diluted share, compared with $588 million, or $0.62 per diluted share, a year earlier. Net interest income fell to $1,184 million from $1,417 million, and the net interest margin (taxable-equivalent basis) was 3.55 percent, a 67 basis point decrease. The filing attributes the decline mainly to higher deposit and funding costs from market interest rates and deposit remixing, partly offset by higher asset yields.
Credit costs rose modestly. The provision for credit losses was $152 millionc versus $135 million, and net charge-offs were $121 million, or 0.50 percent of average loans, compared with $83 million, or 0.35 percent, in the prior-year quarter. Management cited continued normalization of asset quality, adverse risk migration and higher qualitative adjustments in portfolios previously identified as under stress.
Non-performing loans, excluding loans held for sale, rose to $906 milliond from $805 million at year-end 2023. Non-interest income increased to $563 million from $534 million, while non-interest expense rose to $1,131 million from $1,027 million, including a $18 million adjustment to the FDIC special assessment accrual. On the balance sheet, total assets were $154.9 billion at March 31, 2024.
Cash increased as the company used $1.0 billion of FHLB advances, and total deposits rose to $129.0 billion. The company repurchased 6 million shares for $102 million in the quarter and declared $0.24 per share in quarterly dividends, up from $0.20.
The estimated CET1 ratio was 10.32 percent, and total liquidity sources were $60.8 billion. The company's 2024 expectations include net interest income of $4.7 to $4.8 billion and net charge-offs of 40 to 50 basis points of average loans.
02—Key points
Key Highlights
- Net income of $368 million and diluted EPS of $0.37 in Q1 2024, down from $612 million and $0.62 in Q1 2023.
- Net interest income fell to $1,184 million from $1,417 million, and net interest margin decreased 67 basis points to 3.55 percent, driven by higher deposit and funding costs.
- Provision for credit losses rose to $152 million from $135 million; net charge-offs were $121 million, or 0.50 percent of average loans, versus 0.35 percent a year earlier.
- Non-interest income increased to $563 million from $534 million, while non-interest expense rose to $1,131 million from $1,027 million.
- Securities losses of $50 million were recorded from the sale of about $1.3 billion of available-for-sale debt securities, with proceeds reinvested at yields approximately 190 basis points higher.
- Estimated CET1 ratio was 10.32 percent at March 31, 2024; the company repurchased $102 million of common stock in the quarter and declared $0.24 per share in dividends.
- Non-performing loans, excluding loans held for sale, increased to $906 million from $805 million at December 31, 2023; the allowance for credit losses was $1,731 million, or 1.79 percent of loans.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 7, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Interest Expense | $540.00M$224.00M | +141.1% |
| Net Income | $368.00M$612.00M | −39.9% |
| EPS (Basic) | $0.37$0.63 | −41.3% |
| EPS (Diluted) | $0.37$0.62 | −40.3% |
| Shares Outstanding (Basic) | 921.00M935.00M | −1.5% |
| Shares Outstanding (Diluted) | 923.00M942.00M | −2.0% |
05—Questions
Frequently Asked Questions
Why did Regions' earnings decline in the first quarter of 2024?
Net income fell to $368 million from $612 million. The filing attributes the main driver to a $233 million decrease in net interest income (taxable-equivalent basis), caused by higher deposit and funding costs from market interest rates and deposit remixing. Higher provision expense, a securities loss of $50 million, and higher non-interest expense also contributed.
How is credit quality trending?
Management described continued normalization of asset quality. Net charge-offs were $121 million, or 0.50 percent of average loans, up from $83 million, or 0.35 percent. Criticized commercial and investor real estate balances increased about $319 million from the fourth quarter of 2023, and non-performing loans rose $101 million, due to downgrades in portfolios previously identified as under stress, such as office, professional services, transportation and manufacturing.
What is Regions' capital and shareholder return position?
The estimated CET1 ratio was 10.32 percent at March 31, 2024, compared with 10.26 percent at December 31, 2023. Regions repurchased 6 million shares for $102 million in the first quarter and, after March 31, 2024, purchased 3.7 million more shares for $72 million through May 6, 2024. Quarterly cash dividends were $0.24 per share, up from $0.20 a year earlier.
What are management's 2024 expectations?
Regions expects 2024 net interest income of $4.7 to $4.8 billion, adjusted non-interest income of $2.3 to $2.4 billion, adjusted non-interest expense of approximately $4.1 billion, and net charge-offs of 40 to 50 basis points of average loans. Average loans and deposits are expected to be stable to down modestly, and the effective tax rate approximately 21 percent. The net interest income expectation assumes stable or lower short-term interest rates.
06—Continue