What drove the decline in earnings this quarter?

Net interest income fell 4% to $1.2 billion as deposit and funding costs rose, partly offset by higher rates on new fixed-rate asset originations. Reported results also included a $50 million pre-tax loss on securities repositioning, an $18 million increase to the FDIC special assessment accrual, $13 million in severance charges, and $22 million in incremental operational losses tied to check warranty claims.

How did credit quality trend?

Credit quality continued to normalize. Net charge-offs were $121 million, or 0.50% of average loans, compared with $132 million in the prior quarter. Non-performing loans excluding loans held for sale rose to 0.94% of loans from 0.82%, driven mainly by office, professional services, transportation, and manufacturing. The allowance for credit losses increased to $1.73 billion, or 1.79% of loans.

How strong is the company's capital and liquidity position?

The estimated Common Equity Tier 1 ratio was 10.3% and the Tier 1 capital ratio was 11.6%, both unchanged from the prior quarter. Total available liquidity was approximately $60.8 billion, and the filing states this covers uninsured deposits at a ratio of 182%.

What does management expect for the rest of 2024?

The presentation projects 2024 net interest income of $4.7 to $4.8 billion, adjusted non-interest income of $2.3 to $2.4 billion, and adjusted non-interest expense of about $4.1 billion. It expects net interest income and net interest margin to bottom in the second quarter, with a 2024 net interest margin of about 3.50%, and net charge-offs of 40 to 50 basis points for the year.

RF 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed April 19, 2024. Cited figures are marked; the original filing is the authoritative source.

Regions Financial Corporation reported first quarter 2024 net income available to common shareholders of $343 million^a and diluted earnings per share of $0.37, compared with $367 million and $0.39 in the fourth quarter of 2023 and $588 million and $0.62 in the first quarter of 2023.

Results included notable items: an increase to the industry-wide FDIC special assessment accrual, severance-related charges, and the impact of securities repositioning. Reported total revenue was $1.7 billion^b, and pre-tax pre-provision income was $616 million on a reported basis and $700 million on an adjusted basis. Management cited top-quartile returns and a peer-leading net interest margin of 3.55%, though net interest income declined 4% from the prior quarter as deposit and funding costs rose.

Credit quality continued to normalize. Net charge-offs were $121 million^c, or 0.50% of average loans, and the allowance for credit losses rose to 1.79% of loans. Non-performing loans rose to 0.94% of loans from 0.82% in the fourth quarter.

Capital and liquidity remained solid, with an estimated Common Equity Tier 1 ratio of 10.3%, total available liquidity of approximately $60.8 billion^d, and a liquidity-to-uninsured-deposits ratio of 182%. The company repurchased 5.5 million shares for $102 million and declared $220 million in common dividends during the quarter.

The filing furnishes earnings materials under Item 2.02 and Item 7.01, including a press release, a supplemental financial package, and a visual presentation for the earnings webcast. The presentation sets 2024 outlook ranges, including 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 of average loans.

02—Key points

Key Highlights

Net income available to common shareholders of $343 million and diluted EPS of $0.37, down from $0.39 in Q4 2023 and $0.62 in Q1 2023
Net interest margin of 3.55%, down 5 basis points from the prior quarter, with net interest income down 4% to $1.2 billion
Reported pre-tax pre-provision income of $616 million and adjusted pre-tax pre-provision income of $700 million
Non-interest income of $563 million, including a $50 million pre-tax loss on securities repositioning; adjusted non-interest income rose 6%
Net charge-offs of $121 million (0.50% of average loans); allowance for credit losses at 1.79% of loans
Common Equity Tier 1 ratio of 10.3%; repurchased $102 million of stock and declared $220 million in common dividends
2024 outlook includes net interest income of $4.7 to $4.8 billion and net charge-offs of 40 to 50 basis points

03—Questions

Frequently Asked Questions

What drove the decline in earnings this quarter?
Net interest income fell 4% to $1.2 billion as deposit and funding costs rose, partly offset by higher rates on new fixed-rate asset originations. Reported results also included a $50 million pre-tax loss on securities repositioning, an $18 million increase to the FDIC special assessment accrual, $13 million in severance charges, and $22 million in incremental operational losses tied to check warranty claims.
How did credit quality trend?
Credit quality continued to normalize. Net charge-offs were $121 million, or 0.50% of average loans, compared with $132 million in the prior quarter. Non-performing loans excluding loans held for sale rose to 0.94% of loans from 0.82%, driven mainly by office, professional services, transportation, and manufacturing. The allowance for credit losses increased to $1.73 billion, or 1.79% of loans.
How strong is the company's capital and liquidity position?
The estimated Common Equity Tier 1 ratio was 10.3% and the Tier 1 capital ratio was 11.6%, both unchanged from the prior quarter. Total available liquidity was approximately $60.8 billion, and the filing states this covers uninsured deposits at a ratio of 182%.
What does management expect for the rest of 2024?
The presentation projects 2024 net interest income of $4.7 to $4.8 billion, adjusted non-interest income of $2.3 to $2.4 billion, and adjusted non-interest expense of about $4.1 billion. It expects net interest income and net interest margin to bottom in the second quarter, with a 2024 net interest margin of about 3.50%, and net charge-offs of 40 to 50 basis points for the year.

04—Continue

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