What drove the change in earnings compared with the first quarter of 2024?

Net income available to common shareholders rose to $477 million from $343 million, mainly because non-interest expense fell 11 percent to $1.004 billion and the provision for credit losses dropped to $102 million from $152 million. The filing attributes the expense decline partly to seasonal payroll tax and 401(k) match resets and higher incentive compensation in the prior quarter, and to a $37 million contingent reserve release.

What are management's 2024 expectations?

The company expects 2024 net interest income of $4.7 to $4.8 billion, operating toward the upper end of the range; adjusted non-interest income of $2.3 to $2.4 billion, at the upper end; and adjusted non-interest expense of $4.15 to $4.2 billion. It expects net charge-offs toward the upper end of the 40 to 50 basis point range and an effective tax rate of about 20 to 21 percent.

How did asset quality and credit reserves change?

Asset quality improved broadly. Net charge-offs totaled $101 million, down from $121 million, and the allowance for credit losses was $1.732 billion, or 1.78 percent of loans, versus 1.79 percent in the prior quarter. The allowance covered non-performing loans at 204 percent. Management says expected losses from a few large credits in stressed portfolios are already reflected in the allowance.

What did Regions say about capital and shareholder returns?

The company repurchased about 4.5 million shares for $87 million and declared $220 million in common dividends during the quarter. Tangible common book value per share rose to $10.61 from $10.42. The preliminary Stress Capital Buffer will remain at the 2.5 percent floor, and the company exceeded all minimum capital levels in the Federal Reserve stress test.

RF 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

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

Regions Financial Corporation reported second quarter 2024 net income available to common shareholders of $477 million^a, or $0.52 per diluted share, compared with $343 million ($0.37 per diluted share) in the first quarter of 2024 and $556 million ($0.59 per diluted share) in the second quarter of 2023.

Total revenue was $1.7 billion^b on a reported basis and $1.8 billion on an adjusted basis. Reported pre-tax pre-provision income was $727 million and adjusted pre-tax pre-provision income was $749 million. Results included notable items: an addition to the FDIC special assessment accrual, severance-related charges, a $37 million contingent reserve release related to a prior acquisition, and $50 million in securities repositioning losses.

Net interest income was $1.186 billion^c, stable with the prior quarter, and net interest margin declined 4 basis points to 3.51 percent. Non-interest expense fell 11 percent on a reported basis to $1.004 billion, and the efficiency ratio was 57.6 percent. Asset quality improved broadly.

Net charge-offs were $101 million^d, or 42 basis points of average loans, versus 50 basis points in the prior quarter, and the allowance for credit losses was $1.732 billion, or 1.78 percent of loans. Management expects full-year 2024 net charge-offs toward the upper end of the 40 to 50 basis point range, driven by a few large credits. Total ending deposits decreased 2 percent to $126.6 billion.

The Common Equity Tier 1 ratio was an estimated 10.4 percent, and the Board declared a quarterly common dividend of $0.25 per share, a 4 percent increase over the second quarter. The company stated that its preliminary Stress Capital Buffer will remain at the 2.5 percent floor.

The filing furnishes the earnings press release, supplemental financial information, and a visual presentation for a webcast on July 19, 2024. Management's 2024 outlook includes 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 $4.15 to $4.2 billion.

02—Key points

Key Highlights

Second quarter net income available to common shareholders of $477 million, or $0.52 per diluted share, up from $343 million ($0.37) in the first quarter but down from $556 million ($0.59) a year earlier.
Adjusted total revenue of $1.8 billion; adjusted pre-tax pre-provision income of $749 million, versus $727 million reported.
Net interest income stable at $1.186 billion; net interest margin decreased 4 basis points to 3.51 percent. Management expects net interest income to grow in the second half of 2024, with third-quarter growth expected at flat to up 2 percent versus the second quarter.
Non-interest expense decreased 11 percent to $1.004 billion, including a $37 million contingent reserve release; efficiency ratio was 57.6 percent.
Net charge-offs improved to 42 basis points of average loans from 50 basis points in the prior quarter; non-performing loans decreased to 0.87 percent of loans from 0.94 percent.
Common Equity Tier 1 ratio estimated at 10.4 percent; quarterly common dividend declared at $0.25 per share, a 4 percent increase over the second quarter.
Total ending deposits decreased 2 percent to $126.6 billion, consistent with seasonal tax-related outflows.

03—Questions

Frequently Asked Questions

What drove the change in earnings compared with the first quarter of 2024?
Net income available to common shareholders rose to $477 million from $343 million, mainly because non-interest expense fell 11 percent to $1.004 billion and the provision for credit losses dropped to $102 million from $152 million. The filing attributes the expense decline partly to seasonal payroll tax and 401(k) match resets and higher incentive compensation in the prior quarter, and to a $37 million contingent reserve release.
What are management's 2024 expectations?
The company expects 2024 net interest income of $4.7 to $4.8 billion, operating toward the upper end of the range; adjusted non-interest income of $2.3 to $2.4 billion, at the upper end; and adjusted non-interest expense of $4.15 to $4.2 billion. It expects net charge-offs toward the upper end of the 40 to 50 basis point range and an effective tax rate of about 20 to 21 percent.
How did asset quality and credit reserves change?
Asset quality improved broadly. Net charge-offs totaled $101 million, down from $121 million, and the allowance for credit losses was $1.732 billion, or 1.78 percent of loans, versus 1.79 percent in the prior quarter. The allowance covered non-performing loans at 204 percent. Management says expected losses from a few large credits in stressed portfolios are already reflected in the allowance.
What did Regions say about capital and shareholder returns?
The company repurchased about 4.5 million shares for $87 million and declared $220 million in common dividends during the quarter. Tangible common book value per share rose to $10.61 from $10.42. The preliminary Stress Capital Buffer will remain at the 2.5 percent floor, and the company exceeded all minimum capital levels in the Federal Reserve stress test.

04—Continue

← View all 8-K filings