Delivers solid revenue and pre-tax
pre-provision income(1).
Regions Financial Corporation (NYSE:RF) today announced earnings
for the second quarter ended June 30, 2021. The company reported
net income available to common shareholders of $748 million and
earnings per diluted share of $0.77. Compared to the second quarter
of 2020, total revenue grew 2 percent while pre-tax pre-provision
income(1) increased 10 percent. Adjusted revenue(1) increased 1
percent while adjusted pre-tax pre-provision income(1) increased 3
percent. The company also generated year-to-date positive operating
leverage of 3.9 percent on a reported basis and 1.8 percent on an
adjusted basis(1) versus the comparable prior-year period.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20210723005088/en/
“Our teams delivered solid performance throughout the second
quarter, and as a result of our strategic planning and key
investments, we are well positioned to generate long-term,
sustainable growth over time,” said John Turner, President and CEO
of Regions Financial Corporation. “Regions operates in highly
attractive markets that are benefiting from favorable population
trends and strong employment opportunities. In each of these
markets, our bankers are serving new and long-term customers
through customized financial insights, enhanced technology and a
commitment to superior service. We have taken several steps –
adding talented bankers, investing in service and delivery
channels, and enhancing our capabilities through our bolt-on
acquisition strategy – to build on our momentum and create greater
value for customers, communities, and shareholders over time.”
Key factors positioning Regions for continued growth
include:
1) Digital investments
are generating returns.
- Consumers are increasingly leveraging Regions' online and
mobile banking enhancements with the bank generating 9%
year-over-year growth in active digital banking users and 13%
year-over-year growth in active mobile banking users.
- Digitized sales and capabilities in the consumer bank are
delivering greater value for customers and Regions'
operations.
- Artificial intelligence is creating the bank of tomorrow,
enhancing and evolving the ways Regions serves customers
representing all segments of the company.
2) Business segments are
proving resilient.
- Key talent hires of client-facing associates, particularly in
growth markets, position Regions to grow further amid long-term
economic recovery from the COVID-19 pandemic.
- A consistently modernized branch network, including in growth
markets such as metro Houston, Orlando, and Atlanta, combines
in-person financial consultation with enhanced technology,
supporting further account growth while creating greater
efficiencies across Regions' retail-banking footprint.
3) Strategic decisions are
delivering long-term results.
- Regions has identified high-growth markets in its existing
footprint that are benefiting from population and business growth,
such as Florida, Texas, and Tennessee, which further position
Regions to reach more consumers and businesses with high-value
financial services.
- Regions' credit quality continues to grow stronger,
demonstrating resiliency and prudent risk management amid evolving
economic conditions.
- Regions issued its inaugural Task Force on Climate-related
Financial Disclosures ("TCFD") Report demonstrating how the company
is actively working to address risks and opportunities related to
climate change through sustainable business practices.
SUMMARY OF SECOND QUARTER 2021 RESULTS:
Quarter Ended
(amounts in millions, except per share
data)
6/30/2021
3/31/2021
6/30/2020
Net income
$
790
$
642
$
(214
)
Preferred dividends and other*
42
28
23
Net income available to common
shareholders
$
748
$
614
$
(237
)
Weighted-average diluted shares
outstanding
965
968
960
Actual shares outstanding—end of
period
955
961
960
Diluted earnings per common share
$
0.77
$
0.63
$
(0.25
)
Selected items impacting
earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
(3
)
$
(10
)
$
(26
)
Adjustments to non-interest income(1)
19
4
1
Total pre-tax adjusted items(1)
$
16
$
(6
)
$
(25
)
After-tax preferred stock redemption
expense(1)*
$
(13
)
$
—
$
—
Diluted EPS impact**
$
—
$
—
$
(0.02
)
Pre-tax additional selected items***:
CECL provision less than (in excess of)
net charge-offs
$
384
$
225
$
(700
)
Capital markets income - CVA/DVA
(4
)
11
34
MSR net hedge performance
(6
)
7
2
PPP loan interest income****
43
40
18
COVID-19 related expenses
—
—
(19
)
* The second quarter 2021 amount includes
$13 million of Series A preferred stock issuance costs, which
reduced net income available to common shareholders when the shares
were redeemed.
** Based on income taxes at an approximate
25% incremental rate. Second quarter of 2021 bank-owned life
insurance claim is tax free.
*** Items impacting results or trends
during the quarter, but are not considered non-GAAP adjustments.
These items generally include market-related measures, impacts of
new accounting guidance, or event driven actions.
**** Interest income for PPP loans
includes estimated funding costs.
Highlights for the
quarter
Compared to the first quarter of 2021, total revenue decreased
approximately 2 percent on a reported basis and 3 percent on an
adjusted basis(1), driven primarily by a reduction in non-interest
income. Net interest income remained relatively stable, while
reported net interest margin decreased 21 basis points. Adjusted
net interest margin(1) decreased 9 basis points. Non-interest
income decreased 3 percent on a reported basis and 6 percent on an
adjusted basis(1) driven primarily by declines in both capital
markets and mortgage income. Wealth management income and card and
ATM fees, however, increased 5 percent and 11 percent,
respectively. Service charges income remained below pre-pandemic
levels but increased 4 percent compared to the first quarter.
Non-interest expense decreased 3 percent on both a reported and
adjusted basis(1), driven by decreases in most categories partially
offset by increased marketing expense. The company's second quarter
efficiency ratio improved to 56.4 percent on a reported basis while
increasing modestly to 56.9 percent on an adjusted basis(1).
Pre-tax pre-provision income(1) increased 1 percent on a reported
basis but decreased 3 percent on an adjusted basis(1) compared to
the first quarter of 2021.
Compared to the first quarter of 2021, annualized net
charge-offs decreased 17 basis points to 0.23 percent of average
loans, while total non-performing loans, total delinquencies and
business services criticized loans also improved. The allowance for
credit losses decreased 44 basis points to 2.00 percent of total
loans, representing 253 percent of non-performing loans, excluding
loans held for sale. Excluding PPP loans, which are fully
government guaranteed, the allowance for credit losses was 2.07
percent(1) of total loans. The impact of charge-offs previously
provided for, continued improvements in economic outlook due to
vaccine deployment, as well as lower expectations of future credit
losses due to the benefit of government stimulus programs led to a
reduction in the allowance for credit losses in the quarter. The
overall allowance reduction resulted in a net $337 million benefit
to the credit loss provision during the quarter.
Non-GAAP adjusted items(1) impacting the company's earnings are
identified to assist investors in analyzing Regions' operating
results on the same basis as that applied by management and provide
a basis to predict future performance. Non-GAAP adjusted items(1)
in the current quarter reflect, among other items, an $18 million
claim benefit in bank-owned life insurance partially offset by $2
million of severance charges within salaries and benefits. In
addition, second quarter adjustments include $13 million of Series
A preferred stock redemption expense.
Total revenue
Quarter Ended
($ amounts in millions)
6/30/2021
3/31/2021
6/30/2020
2Q21 vs. 1Q21
2Q21 vs. 2Q20
Net interest income
$
963
$
967
$
972
$
(4)
(0.4)
%
$
(9)
(0.9)
%
Taxable equivalent adjustment
12
11
13
1
9.1
%
(1)
(7.7)
%
Net interest income, taxable equivalent
basis
$
975
$
978
$
985
$
(3)
(0.3)
%
$
(10)
(1.0)
%
Net interest margin (FTE)
2.81
%
3.02
%
3.19
%
Adjusted net interest margin (FTE)
(non-GAAP)(1)
3.31
%
3.40
%
3.36
%
Non-interest income:
Service charges on deposit accounts
$
163
$
157
$
131
6
3.8
%
32
24.4
%
Card and ATM fees
128
115
101
13
11.3
%
27
26.7
%
Wealth management income
96
91
79
5
5.5
%
17
21.5
%
Capital markets income
61
100
95
(39)
(39.0)
%
(34)
(35.8)
%
Mortgage income
53
90
82
(37)
(41.1)
%
(29)
(35.4)
%
Commercial credit fee income
23
22
17
1
4.5
%
6
35.3
%
Bank-owned life insurance
33
17
18
16
94.1
%
15
83.3
%
Securities gains (losses), net
1
1
1
—
—
%
—
—
%
Market value adjustments on employee
benefit assets*
8
7
16
1
14.3
%
(8)
(50.0)
%
Gains on equity investment**
—
3
—
(3)
(100.0)
—
NM
Other
53
38
33
15
39.5
%
20
60.6
%
Non-interest income
$
619
$
641
$
573
$
(22)
(3.4)
%
$
46
8.0
%
Total revenue
$
1,582
$
1,608
$
1,545
$
(26)
(1.6)
%
$
37
2.4
%
Adjusted total revenue
(non-GAAP)(1)
$
1,563
$
1,604
$
1,544
$
(41)
(2.6)
%
$
19
1.2
%
NM - Not Meaningful
* These market value adjustments relate to assets held for employee
benefits that are offset within salaries and employee benefits
expense.
** The first quarter of 2021 amount
reflects a gain on sale of an equity investment.
Total revenue of approximately $1.6
billion decreased 2 percent on a reported basis and 3 percent on an
adjusted basis(1) compared to the first quarter of 2021. Net
interest income remained relatively stable but was negatively
impacted by a lower mix of higher-yielding consumer loans. The
company offset pressure on asset yields from the low interest rate
environment through its interest rate hedging program, a continued
focus on lower deposit costs and active cash management strategies.
The company also benefited from the addition of $2 billion of
securities purchases during the quarter. These additional
securities purchases benefited net interest income and reported net
interest margin; however, they reduce adjusted net interest margin.
Strong deposit growth trends continued, and cash balances rose to
new record levels, also negatively impacting net interest margin.
Excluding the impact of PPP interest income and excess cash
balances held at the Federal Reserve, the company's adjusted net
interest margin(1) decreased 9 basis points to 3.31 percent.
Non-interest income decreased 3 percent on a reported basis and
6 percent on an adjusted basis(1), compared to the first quarter of
2021. Decreases in mortgage and capital markets income were
partially offset by increases in most other categories. Mortgage
income decreased 41 percent primarily due to gain on sale
compression and hedge performance. Capital markets decreased 39
percent compared to an exceptionally strong first quarter of 2021.
Wealth management income increased 5 percent reflecting higher
sales volumes and improved market values. Reflecting increased card
spend and transaction levels, service charges and card and ATM fees
increased 4 percent and 11 percent, respectively. Additionally,
bank-owned life insurance increased to $33 million during the
quarter and included the benefit of a significant claim.
Non-interest expense
Quarter Ended
($ amounts in millions)
6/30/2021
3/31/2021
6/30/2020
2Q21 vs. 1Q21
2Q21 vs. 2Q20
Salaries and employee benefits
$
532
$
546
$
527
$
(14)
(2.6)
%
$
5
0.9
%
Equipment and software expense
89
90
86
(1)
(1.1)
%
3
3.5
%
Net occupancy expense
75
77
76
(2)
(2.6)
%
(1)
(1.3)
%
Outside services
39
38
44
1
2.6
%
(5)
(11.4)
%
Professional, legal and regulatory
expenses
15
29
28
(14)
(48.3)
%
(13)
(46.4)
%
Marketing
29
22
22
7
31.8
%
7
31.8
%
FDIC insurance assessments
11
10
15
1
10.0
%
(4)
(26.7)
%
Credit/checkcard expenses
17
14
12
3
21.4
%
5
41.7
%
Branch consolidation, property and
equipment charges
—
5
10
(5)
(100.0)
%
(10)
(100.0)
%
Visa class B shares expense
6
4
9
2
50.0
%
(3)
(33.3)
%
Loss on early extinguishment of debt
—
—
6
—
—
%
(6)
(100.0)
Other
85
93
89
(8)
(8.6)
%
(4)
(4.5)
%
Total non-interest expense
$
898
$
928
$
924
$
(30)
(3.2)
%
$
(26)
(2.8)
%
Total adjusted non-interest expense(1)
$
895
$
918
$
898
$
(23)
(2.5)
%
$
(3)
(0.3)
%
NM - Not Meaningful
Non-interest expense decreased 3 percent on both a reported and
adjusted basis(1) compared to the first quarter of 2021. Salaries
and benefits decreased 3 percent driven primarily by a reduction in
production-based incentives and payroll taxes partially offset by
merit increases that became effective April 1st. Professional fees
decreased 48 percent resulting primarily from lower legal costs.
Additionally, other expenses and occupancy expense decreased 9
percent and 3 percent, respectively. Partially offsetting these
decreases was a 32 percent increase in marketing expense driven by
the timing of marketing campaigns.
The company's second quarter efficiency ratio was 56.4 percent
on a reported basis and 56.9 percent on an adjusted basis(1). The
effective tax rate was 22.6 percent reflecting improved pre-tax
income.
Loans and Leases
Average Balances
($ amounts in millions)
2Q21
1Q21
2Q20
2Q21 vs. 1Q21
2Q21 vs. 2Q20
Commercial and industrial
$
43,140
$
42,816
$
49,296
$
324
0.8
%
$
(6,156)
(12.5)%
Commercial real estate—owner-occupied
5,634
5,678
5,804
(44)
(0.8)
%
(170)
(2.9)%
Investor real estate
7,282
7,222
7,019
60
0.8
%
263
3.7%
Business Lending
56,056
55,716
62,119
340
0.6
%
(6,063)
(9.8)%
Residential first mortgage
16,795
16,606
14,884
189
1.1
%
1,911
12.8%
Home equity
6,774
7,085
8,042
(311)
(4.4)
%
(1,268)
(15.8)%
Indirect—other consumer*
2,174
2,352
3,111
(178)
(7.6)
%
(937)
(30.1)%
Indirect—vehicles**
690
850
1,441
(160)
(18.8)
%
(751)
(52.1)%
Consumer credit card
1,108
1,151
1,230
(43)
(3.7)
%
(122)
(9.9)%
Other consumer
954
995
1,137
(41)
(4.1)
%
(183)
(16.1)%
Consumer Lending
28,495
29,039
29,845
(544)
(1.9)
%
(1,350)
(4.5)%
Total Loans
$
84,551
$
84,755
$
91,964
$
(204)
(0.2)
%
$
(7,413)
(8.1)%
Adjusted Business Lending
(non-GAAP)(1)
$
52,293
$
52,149
$
58,906
144
0.3
%
$
(6,613)
(11.2)%
Adjusted Consumer Lending
(non-GAAP)(1)
26,896
27,155
26,911
(259)
(1.0)
%
(15)
(0.1)%
Adjusted Total Loans (non-GAAP)(1)
$
79,189
$
79,304
$
85,817
$
(115)
(0.1)
%
$
(6,628)
(7.7)%
NM - Not meaningful.
* A portion of indirect other consumer is
an exit portfolio due to the company's decision not to renew a 3rd
party relationship in the fourth quarter of 2019.
** Indirect vehicles is an exit
portfolio.
Average loans and leases remained stable compared to the prior
quarter. Excluding the company's indirect auto and indirect-other
consumer exit portfolios, and outstanding PPP loans, adjusted
average loans and leases(1) also remained stable; however, adjusted
ending loans and leases increased approximately $740 million or 1
percent. Adjusted average business lending(1) remained stable as
growth in corporate lending across asset-based lending, healthcare,
transportation, energy, and financial services was offset by
declines in middle market lending. While still well below
pre-pandemic levels, commercial loan line utilization levels ended
the quarter modestly higher at approximately 39.6 percent.
Excluding exit portfolios, adjusted average consumer lending(1)
decreased 1 percent as growth in residential first mortgage was
offset by declines in other categories.
Deposits
Average Balances
($ amounts in millions)
2Q21
1Q21
2Q20
2Q21 vs. 1Q21
2Q21 vs. 2Q20
Customer low-cost deposits
$
126,315
$
117,775
$
104,159
$
8,540
7.3%
$
22,156
21.3%
Customer time deposits
4,813
5,158
6,690
(345)
(6.7)%
(1,877)
(28.1)%
Corporate treasury time deposits
1
4
72
(3)
(75.0)%
(71)
(98.6)%
Corporate treasury other deposits
3
—
—
3
NM
3
NM
Total Deposits
$
131,132
$
122,937
$
110,921
$
8,195
6.7%
$
20,211
18.2%
($ amounts in millions)
2Q21
1Q21
2Q20
2Q21 vs. 1Q21
2Q21 vs. 2Q20
Consumer Bank Segment
$
78,200
$
72,949
$
65,722
$
5,251
7.2%
$
12,478
19.0%
Corporate Bank Segment
42,966
40,285
36,409
2,681
6.7%
6,557
18.0%
Wealth Management Segment
9,519
9,281
8,382
238
2.6%
1,137
13.6%
Other
447
422
408
25
5.9%
39
9.6%
Total Deposits
$
131,132
$
122,937
$
110,921
$
8,195
6.7%
$
20,211
18.2%
Total average deposit balances increased 7 percent to a new
record high in the second quarter of 2021. All three business
segments experienced deposit growth with the largest contribution
within the Consumer segment reflecting the impact of government
stimulus payments as well as new account growth.
Asset quality
As of and for the Quarter
Ended
($ amounts in millions)
6/30/2021
3/31/2021
6/30/2020
ACL/Loans, net
2.00%
2.44%
2.68%
ALL/Loans, net
1.90%
2.33%
2.51%
Allowance for credit losses to
non-performing loans, excluding loans held for sale
253%
280%
395%
Allowance for loan losses to
non-performing loans, excluding loans held for sale
240%
268%
370%
Provision for (benefit from) credit
losses
$(337)
$(142)
$882
Net loans charged-off
$47
$83
$182
Net loan charge-offs as a % of average
loans, annualized
0.23%
0.40%
0.80%
Non-accrual loans, excluding loans held
for sale/Loans, net
0.79%
0.87%
0.68%
NPAs (ex. 90+ past due)/Loans, foreclosed
properties, non-marketable investments and non-performing loans
held for sale
0.93%
0.90%
0.74%
NPAs (inc. 90+ past due)/Loans, foreclosed
properties, non-marketable investments and non-performing loans
held for sale*
1.09%
1.09%
0.91%
Total TDRs, excluding loans held for
sale
$620
$577
$626
Total Criticized Loans—Business
Services**
$3,222
$3,756
$4,225
* Excludes guaranteed residential first
mortgages that are 90+ days past due and still accruing.
** Business services represents the
combined total of commercial and investor real estate loans.
The impact of expected charge-offs previously provided for,
continued improvements in the economic outlook due to vaccine
deployment, as well as lower expectations of future credit losses
due to the benefit of stimulus programs, resulted in a net $337
million benefit from credit losses during the second quarter of
2021. The resulting allowance for credit losses was equal to 2.00
percent of total loans and 253 percent of total non-accrual loans,
excluding loans held for sale. Excluding PPP loans, which are fully
government guaranteed, the allowance for credit losses amounted to
2.07 percent(1) of total loans. Annualized net charge-offs
decreased 17 basis points to 0.23 percent of average loans,
matching the company's lowest level in over a decade. The decrease
reflects broad-based improvement across the commercial and consumer
loan portfolios, as well as recoveries associated with strong
collateral asset values. Total non-accrual loans, excluding loans
held for sale, total delinquencies, and total business services
criticized loans all improved during the quarter.
Capital and liquidity
As of and for Quarter
Ended
6/30/2021
3/31/2021
6/30/2020
Common Equity Tier 1 ratio(2)
10.4%
10.3%
8.9%
Tier 1 capital ratio(2)
11.9%
11.9%
10.4%
Tangible common stockholders’ equity to
tangible assets (non-GAAP)(1)
7.58%
7.43%
7.72%
Tangible common book value per share
(non-GAAP)(1)*
$11.94
$11.46
$11.16
Loans, net of unearned income, to total
deposits
63.9%
65.4%
77.5%
* Tangible common book value per share
includes the impact of quarterly earnings and changes to market
value adjustments within accumulated other comprehensive income as
well as continued capital returns.
Regions maintains a solid capital position as estimated capital
ratios remain well above current regulatory requirements. The Tier
1(2) and Common Equity Tier 1(2) ratios were estimated at 11.9
percent and 10.4 percent, respectively, at quarter-end.
During the second quarter, the company repurchased 8 million
shares of common stock for a total of $179 million and declared
$147 million in dividends to common shareholders. Earlier this
week, the Board of Directors declared a 10 percent increase to the
company's quarterly common stock dividend to $0.17 per share.
The company voluntarily participated in the Federal Reserve
Supervisory Stress Test administered during the first half of 2021
and exceeded all minimum capital levels under the provided
scenarios. As a result, Regions' preliminary Stress Capital Buffer
requirement will be 2.5 percent. Regions' robust capital planning
process is designed to ensure the efficient use of capital to
support lending activities, business growth opportunities and
appropriate shareholder returns.
(1)
Non-GAAP; refer to pages 6, 7, 11, 12, 13,
15, 19, 21, 22, 23 and 26 of the financial supplement to this
earnings release.
(2)
Current quarter Common Equity Tier 1, and
Tier 1 capital ratios are estimated.
Conference Call
In addition to the live audio webcast at 10 a.m. ET on July 23,
2021, an archived recording of the webcast will be available at the
Investor Relations page of www.regions.com following the live
event. A replay of the earnings call will also be available
beginning Friday, July 23, 2021, at 2:30 p.m. ET through Monday,
August 23, 2021. To listen by telephone, please dial 855-859-2056,
and use access code 9147309.
About Regions Financial Corporation
Regions Financial Corporation (NYSE:RF), with $156 billion in
assets, is a member of the S&P 500 Index and is one of the
nation’s largest full-service providers of consumer and commercial
banking, wealth management, and mortgage products and services.
Regions serves customers across the South, Midwest and Texas, and
through its subsidiary, Regions Bank, operates more than 1,300
banking offices and approximately 2,000 ATMs. Regions Bank is an
Equal Housing Lender and Member FDIC. Additional information about
Regions and its full line of products and services can be found at
www.regions.com.
Forward-Looking Statements
This release may include forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are not based on historical information,
but rather are related to future operations, strategies, financial
results or other developments. Forward-looking statements are based
on management’s current expectations as well as certain assumptions
and estimates made by, and information available to, management at
the time the statements are made. Those statements are based on
general assumptions and are subject to various risks, and because
they also relate to the future they are likewise subject to
inherent uncertainties and other factors that may cause actual
results to differ materially from the views, beliefs and
projections expressed in such statements. Therefore, we caution you
against relying on any of these forward-looking statements. These
risks, uncertainties and other factors include, but are not limited
to, those described below:
- Current and future economic and market conditions in the United
States generally or in the communities we serve (in particular the
Southeastern United States), including the effects of possible
declines in property values, increases in unemployment rates,
financial market disruptions and potential reductions of economic
growth, which may adversely affect our lending and other businesses
and our financial results and conditions.
- Possible changes in trade, monetary and fiscal policies of, and
other activities undertaken by, governments, agencies, central
banks and similar organizations, which could have a material
adverse effect on our earnings.
- Possible changes in market interest rates or capital markets
could adversely affect our revenue and expense, the value of assets
and obligations, and the availability and cost of capital and
liquidity.
- The impact of pandemics, including the ongoing COVID-19
pandemic, on our businesses, operations, and financial results and
conditions. The duration and severity of the ongoing COVID-19
pandemic, which has disrupted the global economy, has and could
continue to adversely affect our capital and liquidity position,
impair the ability of borrowers to repay outstanding loans and
increase our allowance for credit losses, impair collateral values,
and result in lost revenue or additional expenses. The pandemic
could also result in goodwill impairment charges and the impairment
of other financial and nonfinancial assets, and increase our cost
of capital.
- Any impairment of our goodwill or other intangibles, any
repricing of assets, or any adjustment of valuation allowances on
our deferred tax assets due to changes in law, adverse changes in
the economic environment, declining operations of the reporting
unit or other factors.
- The effect of changes in tax laws, including the effect of any
future interpretations of existing tax law or any enactment of new
domestic tax legislation and corporate tax rates, which may impact
our earnings, capital ratios and our ability to return capital to
shareholders.
- Possible changes in the creditworthiness of customers and the
possible impairment of the collectability of loans and leases,
including operating leases.
- Changes in the speed of loan prepayments, loan origination and
sale volumes, charge-offs, credit loss provisions or actual credit
losses where our allowance for credit losses may not be adequate to
cover our eventual losses.
- Possible acceleration of prepayments on mortgage-backed
securities due to low interest rates, and the related acceleration
of premium amortization on those securities.
- Loss of customer checking and savings account deposits as
customers pursue other, higher-yield investments, which could
increase our funding costs.
- Possible changes in consumer and business spending and saving
habits and the related effect on our ability to increase assets and
to attract deposits, which could adversely affect our net
income.
- Our ability to effectively compete with other traditional and
non-traditional financial services companies, including fintechs,
some of whom possess greater financial resources than we do or are
subject to different regulatory standards than we are.
- Our inability to develop and gain acceptance from current and
prospective customers for new products and services and the
enhancement of existing products and services to meet customers’
needs and respond to emerging technological trends in a timely
manner could have a negative impact on our revenue.
- Our inability to keep pace with technological changes,
including those related to the offering of digital banking and
financial services, could result in losing business to
competitors.
- Changes in laws and regulations affecting our businesses,
including legislation and regulations relating to bank products and
services, as well as changes in the enforcement and interpretation
of such laws and regulations by applicable governmental and
self-regulatory agencies, including as a result of the recent
change in U.S. presidential administration and control of the U.S.
Congress, which could require us to change certain business
practices, increase compliance risk, reduce our revenue, impose
additional costs on us, or otherwise negatively affect our
businesses.
- Our capital actions, including dividend payments, common stock
repurchases, or redemptions of preferred stock or other regulatory
capital instruments, must not cause us to fall below minimum
capital ratio requirements, with applicable buffers taken into
account, and must comply with other requirements and restrictions
under law or imposed by our regulators, which may impact our
ability to return capital to shareholders.
- Our ability to comply with stress testing and capital planning
requirements (as part of the CCAR process or otherwise) may
continue to require a significant investment of our managerial
resources due to the importance of such tests and
requirements.
- Our ability to comply with applicable capital and liquidity
requirements (including, among other things, the Basel III capital
standards), including our ability to generate capital internally or
raise capital on favorable terms, and if we fail to meet
requirements, our financial condition and market perceptions of us
could be negatively impacted.
- The effects of any developments, changes or actions relating to
any litigation or regulatory proceedings brought against us or any
of our subsidiaries.
- The costs, including possibly incurring fines, penalties, or
other negative effects (including reputational harm) of any adverse
judicial, administrative, or arbitral rulings or proceedings,
regulatory enforcement actions, or other legal actions to which we
or any of our subsidiaries are a party, and which may adversely
affect our results.
- Our ability to manage fluctuations in the value of assets and
liabilities and off-balance sheet exposure so as to maintain
sufficient capital and liquidity to support our business.
- Our ability to execute on our strategic and operational plans,
including our ability to fully realize the financial and
nonfinancial benefits relating to our strategic initiatives.
- The risks and uncertainties related to our acquisition or
divestiture of businesses, including our pending acquisition of
EnerBank and risks related to such acquisition including: the
possibility that regulatory and other approvals and conditions are
not received or satisfied on a timely basis or at all, or contain
unanticipated terms and conditions; delays in closing the proposed
transaction; expected synergies, cost savings and other financial
or other benefits might not be realized within the expected
timeframes or might be less than projected; difficulties in
integrating the business; and the inability of Regions to
effectively cross-sell products to EnerBank's customers.
- The success of our marketing efforts in attracting and
retaining customers.
- Our ability to recruit and retain talented and experienced
personnel to assist in the development, management and operation of
our products and services may be affected by changes in laws and
regulations in effect from time to time.
- Fraud or misconduct by our customers, employees or business
partners.
- Any inaccurate or incomplete information provided to us by our
customers or counterparties.
- Inability of our framework to manage risks associated with our
business such as credit risk and operational risk, including
third-party vendors and other service providers, which could, among
other things, result in a breach of operating or security systems
as a result of a cyber attack or similar act or failure to deliver
our services effectively.
- Dependence on key suppliers or vendors to obtain equipment and
other supplies for our business on acceptable terms.
- The inability of our internal controls and procedures to
prevent, detect or mitigate any material errors or fraudulent
acts.
- The effects of geopolitical instability, including wars,
conflicts, civil unrest, and terrorist attacks and the potential
impact, directly or indirectly, on our businesses.
- The effects of man-made and natural disasters, including fires,
floods, droughts, tornadoes, hurricanes, and environmental damage
(specifically in the Southeastern United States), which may
negatively affect our operations and/or our loan portfolios and
increase our cost of conducting business. The severity and impact
of future earthquakes, fires, hurricanes, tornadoes, droughts,
floods and other weather-related events are difficult to predict
and may be exacerbated by global climate change.
- Changes in commodity market prices and conditions could
adversely affect the cash flows of our borrowers operating in
industries that are impacted by changes in commodity prices
(including businesses indirectly impacted by commodities prices
such as businesses that transport commodities or manufacture
equipment used in the production of commodities), which could
impair their ability to service any loans outstanding to them
and/or reduce demand for loans in those industries.
- Our ability to identify and address cyber-security risks such
as data security breaches, malware, ransomware, “denial of service”
attacks, “hacking” and identity theft, including account
take-overs, a failure of which could disrupt our business and
result in the disclosure of and/or misuse or misappropriation of
confidential or proprietary information, disruption or damage to
our systems, increased costs, losses, or adverse effects to our
reputation.
- Our ability to achieve our expense management initiatives.
- Market replacement of LIBOR and the related effect on our
LIBOR-based financial products and contracts, including, but not
limited to, derivative products, debt obligations, deposits,
investments, and loans.
- Possible downgrades in our credit ratings or outlook could,
among other negative impacts, increase the costs of funding from
capital markets.
- The effects of a possible downgrade in the U.S. government’s
sovereign credit rating or outlook, which could result in risks to
us and general economic conditions that we are not able to
predict.
- The effects of problems encountered by other financial
institutions that adversely affect us or the banking industry
generally could require us to change certain business practices,
reduce our revenue, impose additional costs on us, or otherwise
negatively affect our businesses.
- The effects of the failure of any component of our business
infrastructure provided by a third party could disrupt our
businesses, result in the disclosure of and/or misuse of
confidential information or proprietary information, increase our
costs, negatively affect our reputation, and cause losses.
- Our ability to receive dividends from our subsidiaries, in
particular Regions Bank, could affect our liquidity and ability to
pay dividends to shareholders.
- Changes in accounting policies or procedures as may be required
by the FASB or other regulatory agencies could materially affect
our financial statements and how we report those results, and
expectations and preliminary analyses relating to how such changes
will affect our financial results could prove incorrect.
- Other risks identified from time to time in reports that we
file with the SEC.
- Fluctuations in the price of our common stock and inability to
complete stock repurchases in the time frame and/or on the terms
anticipated.
- The effects of any damage to our reputation resulting from
developments related to any of the items identified above.
The foregoing list of factors is not exhaustive. For discussion
of these and other factors that may cause actual results to differ
from expectations, look under the captions “Forward-Looking
Statements” and “Risk Factors” of Regions’ Annual Report on Form
10-K for the year ended December 31, 2020 and the "Risk Factors" of
Regions' Quarterly Report on Form 10-Q for the quarter ended March
31, 2021 as filed with the SEC.
Further, statements about the potential effects of the COVID-19
pandemic on our businesses, operations, and financial results and
conditions may constitute forward-looking statements and are
subject to the risk that the actual effects may differ, possibly
materially, from what is reflected in those forward-looking
statements due to factors and future developments that are
uncertain, unpredictable and in many cases beyond our control,
including the scope and duration of the COVID-19 pandemic
(including any resurgences), actions taken by governmental
authorities in response to the COVID-19 pandemic and their success,
the effectiveness and degree of acceptance of any vaccines, and the
direct and indirect impact of the COVID-19 pandemic on our
customers, third parties and us.
The words "future," “anticipates,” "assumes," “intends,”
“plans,” “seeks,” “believes,” "predicts," "potential,"
"objectives," “estimates,” “expects,” “targets,” “projects,”
“outlook,” “forecast,” "would," “will,” “may,” “might,” “could,”
“should,” “can,” and similar terms and expressions often signify
forward-looking statements. You should not place undue reliance on
any forward-looking statements, which speak only as of the date
made. Factors or events that could cause our actual results to
differ may emerge from time to time, and it is not possible to
predict all of them. We assume no obligation and do not intend to
update or revise any forward-looking statements that are made from
time to time, either as a result of future developments, new
information or otherwise, except as may be required by law.
Regions’ Investor Relations contact is Dana Nolan at (205)
264-7040; Regions’ Media contact is Jeremy King at (205)
264-4551.
Use of non-GAAP financial measures
Management uses pre-tax pre-provision income (non-GAAP) and
adjusted pre-tax pre-provision income (non-GAAP), as well as the
adjusted efficiency ratio (non-GAAP) and the adjusted fee income
ratio (non-GAAP) to monitor performance and believes these measures
provide meaningful information to investors. Non-interest expense
(GAAP) is presented excluding certain adjustments to arrive at
adjusted non-interest expense (non-GAAP), which is the numerator
for the efficiency ratio. Non-interest income (GAAP) is presented
excluding certain adjustments to arrive at adjusted non-interest
income (non-GAAP), which is the numerator for the fee income ratio.
Adjusted non-interest income (non-GAAP) and adjusted non-interest
expense (non-GAAP) are used to determine adjusted pre-tax
pre-provision income (non-GAAP). Net interest income (GAAP) on a
taxable-equivalent basis and non-interest income are added together
to arrive at total revenue on a taxable-equivalent basis.
Adjustments are made to arrive at adjusted total revenue on a
taxable-equivalent basis (non-GAAP), which is the denominator for
the fee income and efficiency ratios. Regions believes that the
exclusion of these adjustments provides a meaningful basis for
period-to-period comparisons, which management believes will assist
investors in analyzing the operating results of the Company and
predicting future performance. These non-GAAP financial measures
are also used by management to assess the performance of Regions’
business. It is possible that the activities related to the
adjustments may recur; however, management does not consider the
activities related to the adjustments to be indications of ongoing
operations. Regions believes that presentation of these non-GAAP
financial measures will permit investors to assess the performance
of the Company on the same basis as that applied by management.
The allowance for credit losses (ACL) as a percentage of total
loans is an important ratio, especially during periods of economic
stress. Management believes this ratio provides investors with
meaningful additional information about credit loss allowance
levels when the impact of SBA's Paycheck Protection Program loans,
which are fully backed by the U.S. government, and any related
allowance are excluded from total loans and total allowance which
are the denominator and numerator, respectively, used in the ACL
ratio. This adjusted ACL ratio represents a non-GAAP financial
measure.
Tangible common stockholders’ equity ratios have become a focus
of some investors and management believes they may assist investors
in analyzing the capital position of the Company absent the effects
of intangible assets and preferred stock. Analysts and banking
regulators have assessed Regions’ capital adequacy using the
tangible common stockholders’ equity measure. Because tangible
common stockholders’ equity is not formally defined by GAAP or
prescribed in any amount by federal banking regulations it is
currently considered to be a non-GAAP financial measure and other
entities may calculate it differently than Regions’ disclosed
calculations. Since analysts and banking regulators may assess
Regions’ capital adequacy using tangible common stockholders’
equity, management believes that it is useful to provide investors
the ability to assess Regions’ capital adequacy on this same
basis.
Non-GAAP financial measures have inherent limitations, are not
required to be uniformly applied and are not audited. Although
these non-GAAP financial measures are frequently used by
stakeholders in the evaluation of a company, they have limitations
as analytical tools, and should not be considered in isolation, or
as a substitute for analyses of results as reported under GAAP. In
particular, a measure of earnings that excludes selected items does
not represent the amount that effectively accrues directly to
stockholders.
Management and the Board of Directors utilize non-GAAP measures
as follows:
- Preparation of Regions' operating budgets
- Monthly financial performance reporting
- Monthly close-out reporting of consolidated results (management
only)
- Presentation to investors of company performance
- Metrics for incentive compensation
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210723005088/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
Regions Financial (NYSE:RF)
Historical Stock Chart
From Mar 2024 to Apr 2024
Regions Financial (NYSE:RF)
Historical Stock Chart
From Apr 2023 to Apr 2024