01—Abstract
Summary
Summary of the 8-K filed January 19, 2024. Cited figures are marked; the original filing is the authoritative source.
Regions Financial Corporation reported preliminary results for the fourth quarter and full year ended December 31, 2023, with 2023 earnings of $2.0 billiona and diluted earnings per share of $2.11.
Fourth-quarter net income available to common shareholders was $367 millionb, or $0.39 per diluted share, compared with $0.49 in the third quarter and $0.70 a year earlier. Management attributes the quarter's results to the industry-wide FDIC special assessment, increased severance-related charges, and a net provision expense tied to the sale of an unsecured consumer loan portfolio. Total revenue rose 5 percent for the full year to a record $7.6 billion, driven by net interest income, and pre-tax pre-provision income reached a record $3.2 billion.
Quarter-over-quarter, net interest income fell 4.6 percent to $1.231 billionc and net interest margin declined 13 basis points to 3.60 percent, as deposit costs rose and forward-starting hedges became active. Non-performing loans rose to $805 million (0.82 percent of loans) from $642 million, and the allowance for credit losses increased to $1.7 billion, or 1.73 percent of loans. Common Equity Tier 1 was an estimated 10.2 percent, and the company repurchased $252 million of common stock and declared $223 million in common dividends during the quarter.
Management guided to 2024 net interest income of $4.7 to $4.8 billiond, a net interest margin of about 3.50 percent, and net charge-offs of 40 to 50 basis points. The filing furnishes these results under Items 2.02 and 7.01 and states that the exhibits are not deemed filed for purposes of Section 18 of the Exchange Act. The attached exhibits include the earnings press release, a supplemental financial package, and a visual presentation for the January 19, 2024 webcast.
02—Key points
Key Highlights
- Full-year 2023 net income available to common shareholders of $2.0 billion; diluted EPS of $2.11 versus $2.28 in 2022.
- Fourth-quarter diluted EPS of $0.39, including $119 million FDIC special assessment and $28 million of severance charges; adjusted efficiency ratio was 56.9 percent.
- Record full-year total revenue of $7.6 billion, up 5 percent, and record pre-tax pre-provision income of $3.2 billion.
- Net interest margin fell 13 basis points to 3.60 percent in the fourth quarter; management expects 2024 net interest margin of about 3.50 percent.
- Non-performing loans increased to $805 million (0.82 percent of loans) from $642 million in the prior quarter; net charge-offs were 54 basis points, or 39 basis points excluding the loan sale mark.
- Common Equity Tier 1 ratio of 10.2 percent (estimated); tangible common book value per share rose to $10.77 from $9.16.
- 2024 guidance: net interest income of $4.7 to $4.8 billion, adjusted non-interest expense of about $4.1 billion, and net charge-offs of 40 to 50 basis points.
03—Questions
Frequently Asked Questions
How did Regions perform in the fourth quarter of 2023?
Regions reported fourth-quarter net income available to common shareholders of $367 million and diluted EPS of $0.39, down from $0.49 in the third quarter and $0.70 in the fourth quarter of 2022. Results included the FDIC special assessment, severance charges, and a net provision expense tied to an unsecured consumer loan portfolio sale.
What drove the decline in net interest income and margin?
Net interest income fell 4.6 percent to $1.231 billion, and net interest margin dropped 13 basis points to 3.60 percent. The filing attributes this to higher deposit and funding costs and forward-starting interest rate hedges becoming active, partly offset by higher rates on new fixed-rate asset originations.
What is management's outlook for 2024?
Management expects 2024 net interest income of $4.7 to $4.8 billion and a net interest margin of about 3.50 percent, with net interest income stabilizing in the first half and growing in the second half. It also expects adjusted non-interest expense of about $4.1 billion, average loan growth in the low-single digits, and net charge-offs of 40 to 50 basis points.
How is asset quality trending?
Asset quality continued to normalize. Non-performing loans rose to $805 million, or 0.82 percent of loans, and the allowance for credit losses increased to $1.7 billion, or 1.73 percent of loans. Management cited downgrades in previously identified stressed categories, including office and transportation lending.
What capital actions did Regions take in the fourth quarter?
Regions repurchased 16 million common shares for $252 million through open market purchases and declared $223 million in common dividends. The estimated Common Equity Tier 1 ratio was 10.2 percent, and management said it expects to manage CET1 around 10 percent over the near term.
04—Continue