$2.0 billion in total revenue reflects 22
percent year-over-year growth.
Regions Financial Corp. (NYSE:RF) today reported earnings for
the first quarter ended March 31, 2023. The company reported first
quarter net income available to common shareholders of $588 million
and earnings per diluted share of $0.62. Compared to the first
quarter of 2022, total revenue increased 22 percent to $2.0 billion
on both a reported and adjusted basis(1) driven by growth in net
interest income. Strong revenue growth contributed to a 39 percent
increase in pre-tax pre-provision income(1) on both a reported
basis and adjusted basis(1) compared to the first quarter of
2022.
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Regions has built a high-quality deposit base that focuses on
relationships starting with operating accounts for both consumer
customers and commercial clients. Consistent with the company's
expectations, total deposits declined approximately 2 percent, but
importantly, deposits remained stable from earlier in the month of
March through the end of the quarter. The company's liquidity
position also remains robust as of March 31, 2023, including total
available liquidity of approximately $54 billion, which exceeds
uninsured retail and non-operational wholesale deposits by
approximately 3-to-1.
"Despite the recent turmoil in the industry, we delivered
another solid quarter that underscores our commitment to generating
consistent, sustainable long-term performance," said John Turner,
President and CEO of Regions Financial Corp. "Our dedication to
prudent risk management and our relationship banking approach have
allowed us to build a balanced and diverse business. Even in an
uncertain operating environment, executing our strategic plan
allows us to be a source of strength for customers and communities
while ensuring our focus remains on three primary goals –
soundness, profitability, and then growth. Our core values,
particularly 'focus on the customer,' consistently govern how we
operate. And recent events have given us an opportunity to connect
with customers, clients, and prospects to answer questions, meet
needs, and provide valuable reassurance."
SUMMARY OF FIRST QUARTER 2023
RESULTS:
Quarter Ended
(amounts in millions, except per share
data)
3/31/2023
12/31/2022
3/31/2022
Net income
$
612
$
685
$
548
Preferred dividends and other
24
25
24
Net income available to common
shareholders
$
588
$
660
$
524
Weighted-average diluted shares
outstanding
942
941
947
Actual shares outstanding—end of
period
935
934
933
Diluted earnings per common share
$
0.62
$
0.70
$
0.55
Selected items impacting
earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
(2
)
$
(5
)
$
(1
)
Adjustments to non-interest income(1)
(1
)
50
1
Total pre-tax adjusted items(1)
$
(3
)
$
45
$
—
Diluted EPS impact*
$
—
$
0.03
$
—
Pre-tax additional selected items**:
Provision (in excess of) less than net
charge-offs***
$
(52
)
$
(63
)
$
82
Release of hurricane-related allowance for
loan losses
—
20
—
Capital markets income (loss) -
CVA/DVA
(33
)
(11
)
6
Residential MSR net hedge performance
(3
)
(6
)
(5
)
Pension settlement charges
—
(6
)
—
Ginnie Mae re-securitization gains
—
—
12
* Based on income taxes at an approximate
25% incremental rate. ** Items impacting results or trends during
the period, but are not considered non-GAAP adjustments. These
items generally include market-related measures, impacts of new
accounting guidance, or event driven actions. *** The fourth
quarter of 2022 provision (in excess of) less than net charge-offs
excludes the $20 million for the subsequent release of
hurricane-related allowance for loan losses originally established
in the third quarter of 2022.
Non-GAAP adjusted items(1) impacting the company's earnings are
identified to assist investors in analyzing Regions' operating
results on the same basis as that applied by management and provide
a basis to predict future performance.
Total
revenue
Quarter Ended
($ amounts in millions)
3/31/2023
12/31/2022
3/31/2022
1Q23 vs. 4Q22
1Q23 vs. 1Q22
Net interest income
$
1,417
$
1,401
$
1,015
$
16
1.1
%
$
402
39.6
%
Taxable equivalent adjustment
13
13
11
—
NM
2
18.2
%
Net interest income, taxable equivalent
basis
$
1,430
$
1,414
$
1,026
$
16
1.1
%
$
404
39.4
%
Net interest margin (FTE)
4.22
%
3.99
%
2.85
%
Non-interest income:
Service charges on deposit accounts
$
155
$
152
$
168
3
2.0
%
(13
)
(7.7
)%
Card and ATM fees
121
130
124
(9
)
(6.9
)%
(3
)
(2.4
)%
Wealth management income
112
108
101
4
3.7
%
11
10.9
%
Capital markets income
42
61
73
(19
)
(31.1
)%
(31
)
(42.5
)%
Mortgage income
24
24
48
—
NM
(24
)
(50.0
)%
Commercial credit fee income
26
25
22
1
4.0
%
4
18.2
%
Bank-owned life insurance
17
17
14
—
NM
3
21.4
%
Securities gains (losses), net
(2
)
—
—
(2
)
NM
(2
)
NM
Market value adjustments on employee
benefit assets*
(1
)
(9
)
(14
)
8
88.9
%
13
92.9
%
Insurance proceeds
—
50
—
(50
)
(100.0
)
—
NM
Other
40
42
48
(2
)
(4.8
)%
(8
)
(16.7
)%
Non-interest income
$
534
$
600
$
584
$
(66
)
(11.0
)%
$
(50
)
(8.6
)%
Total revenue
$
1,951
$
2,001
$
1,599
$
(50
)
(2.5
)%
$
352
22.0
%
Adjusted total revenue
(non-GAAP)(1)
$
1,952
$
1,951
$
1,598
$
1
0.1
%
$
354
22.2
%
NM - Not Meaningful
* These market value adjustments relate to
assets held for employee and director benefits that are offset
within salaries and employee benefits and other non-interest
expense.
Total revenue of approximately $2 billion decreased 2 percent on
a reported basis but remained stable on an adjusted basis(1)
compared to the fourth quarter of 2022. Net interest income
increased during the quarter to a record $1.4 billion or 1 percent
compared to the fourth quarter attributable to the company's asset
sensitive balance sheet and stable funding profile. Lower cash
balances also supported the net interest margin, which increased 23
basis points to 4.22 percent.
Non-interest income decreased 11 percent on a reported basis
compared to the fourth quarter of 2022 primarily driven by an
insurance reimbursement in the prior quarter that did not repeat.
Adjusted non-interest income(1) decreased 3 percent compared to the
fourth quarter of 2022. Capital markets income decreased 31 percent
driven by negative CVA/DVA valuation adjustments reflecting lower
long-term interest rates and volatility in credit spreads.
Excluding the impact of CVA/DVA, capital markets income increased 4
percent as growth, primarily in securities underwriting and
placement and real estate capital markets, was partially offset by
declines in advisory transaction markets. Card & ATM fees
decreased 7 percent driven primarily by seasonally lower
interchange as well as a card rewards liability adjustment. Service
charges increased 2 percent as seasonally higher treasury
management fees helped offset 2 fewer business days in the quarter.
Wealth management income increased 4 percent compared to the prior
quarter despite volatile market conditions. Market value
adjustments on employee benefit assets (which are offset in
salaries and benefits and other non-interest expense) decreased
modestly during the quarter.
Non-interest
expense
Quarter Ended
($ amounts in millions)
3/31/2023
12/31/2022
3/31/2022
1Q23 vs. 4Q22
1Q23 vs. 1Q22
Salaries and employee benefits
$
616
$
604
$
546
$
12
2.0
%
$
70
12.8
%
Equipment and software expense
102
102
95
—
NM
7
7.4
%
Net occupancy expense
73
74
75
(1
)
(1.4
)%
(2
)
(2.7
)%
Outside services
39
41
38
(2
)
(4.9
)%
1
2.6
%
Professional, legal and regulatory
expenses
19
23
17
(4
)
(17.4
)%
2
11.8
%
Marketing
27
27
24
—
NM
3
12.5
%
FDIC insurance assessments
25
18
14
7
38.9
%
11
78.6
%
Credit/checkcard expenses
14
14
26
—
NM
(12
)
(46.2
)%
Branch consolidation, property and
equipment charges
2
5
1
(3
)
(60.0
)%
1
100.0
%
Visa class B shares expense
8
7
5
1
14.3
%
3
60.0
%
Other
102
102
92
—
NM
10
10.9
%
Total non-interest expense
$
1,027
$
1,017
$
933
$
10
1.0
%
$
94
10.1
%
Total adjusted non-interest expense(1)
$
1,025
$
1,012
$
932
$
13
1.3
%
$
93
10.0
%
NM - Not Meaningful
Non-interest expense increased 1 percent on both a reported and
adjusted(1) basis compared to the fourth quarter of 2022. Salaries
and benefits increased 2 percent primarily due to merit increases
and a seasonal increase in payroll taxes. FDIC insurance
assessments increased 39 percent attributable to an increase in the
assessment rate charged to all financial institutions.
The company's first quarter efficiency ratio was 52.3 percent on
a reported basis and 52.2 percent on an adjusted basis(1). The
effective tax rate was 22.4 percent in the first quarter.
Loans and
Leases
Average Balances
($ amounts in millions)
1Q23
4Q22
1Q22
1Q23 vs. 4Q22
1Q23 vs. 1Q22
Commercial and industrial
$
51,158
$
50,135
$
43,993
$
1,023
2.0
%
$
7,165
16.3
%
Commercial real estate—owner-occupied
5,305
5,362
5,506
(57
)
(1.1
)%
(201
)
(3.7
)%
Investor real estate
8,404
8,290
7,082
114
1.4
%
1,322
18.7
%
Business Lending
64,867
63,787
56,581
1,080
1.7
%
8,286
14.6
%
Residential first mortgage
18,957
18,595
17,496
362
1.9
%
1,461
8.4
%
Home equity
5,921
6,017
6,163
(96
)
(1.6
)%
(242
)
(3.9
)%
Consumer credit card
1,214
1,207
1,142
7
0.6
%
72
6.3
%
Other consumer—exit portfolios
527
613
987
(86
)
(14.0
)%
(460
)
(46.6
)%
Other consumer*
5,791
5,533
5,445
258
4.7
%
346
6.4
%
Consumer Lending
32,410
31,965
31,233
445
1.4
%
1,177
3.8
%
Total Loans
$
97,277
$
95,752
$
87,814
$
1,525
1.6
%
$
9,463
10.8
%
NM - Not meaningful. * Other consumer
loans includes EnerBank (Regions' point of sale home improvement
portfolio).
Average loans and leases increased 2 percent compared to the
prior quarter driven primarily by growth in commercial and
industrial lending, investor real estate, residential first
mortgages and EnerBank. Growth in average business lending was
broad-based across the utilities, retail trade, and financial
services industries. Commercial loan line utilization levels ended
the quarter at approximately 43.7 percent, increasing 27 basis
points over the prior quarter, while line commitments grew
approximately $1.5 billion during the quarter.
Deposits
Average Balances
($ amounts in millions)
1Q23
4Q22
1Q22
1Q23 vs. 4Q22
1Q23 vs. 1Q22
Customer low-cost deposits
$
122,228
$
127,544
$
132,829
$
(5,316
)
(4.2
)%
$
(10,601
)
(8.0
)%
Customer time deposits
6,813
5,462
5,905
1,351
24.7
%
908
15.4
%
Corporate treasury other deposits
1
1
—
—
NM
1
NM
Total Deposits
$
129,042
$
133,007
$
138,734
$
(3,965
)
(3.0
)%
$
(9,692
)
(7.0
)%
($ amounts in millions)
1Q23
4Q22
1Q22
1Q23 vs. 4Q22
1Q23 vs. 1Q22
Consumer Bank Segment
$
82,200
$
83,555
$
83,054
$
(1,355
)
(1.6
)%
$
(854
)
(1.0
)%
Corporate Bank Segment
36,273
38,176
42,609
(1,903
)
(5.0
)%
(6,336
)
(14.9
)%
Wealth Management Segment
8,463
9,065
10,407
(602
)
(6.6
)%
(1,944
)
(18.7
)%
Other
2,106
2,211
2,664
(105
)
(4.7
)%
(558
)
(20.9
)%
Total Deposits
$
129,042
$
133,007
$
138,734
$
(3,965
)
(3.0
)%
$
(9,692
)
(7.0
)%
Ending Balances as of
3/31/2023
3/31/2023
($ amounts in millions)
3/31/2023
12/31/2022
3/31/2022
vs. 12/31/2022
vs. 3/31/2022
Consumer Bank Segment
$
83,296
$
83,487
$
85,219
$
(191
)
(0.2
)%
$
(1,923
)
(2.3
)%
Corporate Bank Segment
35,185
37,145
42,836
(1,960
)
(5.3
)%
(7,651
)
(17.9
)%
Wealth Management Segment
7,941
9,111
10,420
(1,170
)
(12.8
)%
(2,479
)
(23.8
)%
Other
2,038
2,000
2,547
38
1.9
%
(509
)
(20.0
)%
Total Deposits
$
128,460
$
131,743
$
141,022
$
(3,283
)
(2.5
)%
$
(12,562
)
(8.9
)%
Consistent with the company's expectations, total ending
deposits declined approximately 2 percent, while total average
deposit balances decreased 3 percent in the first quarter of 2023
compared to the fourth quarter of 2022. Following primarily
seasonal patterns, average Consumer deposits declined 2 percent,
while Corporate and Wealth Management deposits experienced declines
of 5 and 7 percent, respectively.
Asset
quality
As of and for the Quarter
Ended
($ amounts in millions)
3/31/2023
12/31/2022
3/31/2022
Allowance for credit losses (ACL) at
period end
$1,596
$1,582
$1,492
ACL/Loans, net
1.63%
1.63%
1.67%
ALL/Loans, net
1.50%
1.51%
1.59%
Allowance for credit losses to
non-performing loans, excluding loans held for sale
288%
317%
446%
Allowance for loan losses to
non-performing loans, excluding loans held for sale
266%
293%
423%
Provision for credit losses
$135
$112
$(36)
Net loans charged-off
$83
$69
$46
Net loans charged-off as a % of average
loans, annualized
0.35%
0.29%
0.21%
Non-performing loans, excluding loans held
for sale/Loans, net
0.56%
0.52%
0.37%
NPAs (ex. 90+ past due)/Loans, foreclosed
properties, and non-performing loans held for sale
0.58%
0.53%
0.39%
NPAs (inc. 90+ past due)/Loans, foreclosed
properties, and non-performing loans held for sale*
0.71%
0.75%
0.53%
Total Criticized Loans—Business
Services**
$3,725
$3,149
$2,539
* 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.
Overall asset quality continued to normalize during the quarter.
Non-performing loans increased to 0.56 percent of total loans and
business services criticized loans increased 18 percent, while
total delinquencies decreased 16 percent. Total net charge-offs for
the quarter were $83 million, or 35 basis points of average loans.
Provision expense totaled $135 million for the quarter.
The increase to the allowance for credit losses compared to the
fourth quarter was attributable primarily to economic conditions
and continued normalization of credit quality partially offset by a
reduction in the allowance associated with the elimination of the
accounting for troubled debt restructured loans.
The allowance for credit loss ratio remains at 1.63 percent of
total loans, while the allowance as a percentage of nonperforming
loans was 288 percent.
Capital and
liquidity
As of and for Quarter
Ended
3/31/2023
12/31/2022
3/31/2022
Common Equity Tier 1 ratio(2)
9.8%
9.6%
9.4%
Tier 1 capital ratio(2)
11.2%
10.9%
10.8%
Tangible common stockholders’ equity to
tangible assets (non-GAAP)(1)
6.31%
5.63%
5.93%
Tangible common book value per share
(non-GAAP)(1)*
$10.01
$9.00
$10.06
Loans, net of unearned income, to total
deposits
76.3%
73.6%
63.3%
* 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 with estimated
capital ratios remaining well above current regulatory
requirements. The Common Equity Tier 1(2) and Tier 1(2) ratios were
estimated at 9.8 percent and 11.2 percent, respectively, at
quarter-end.
The company's liquidity position also remains robust as of March
31, 2023, including total available liquidity of approximately $54
billion, including cash held at the Federal Reserve, FHLB borrowing
capacity, unencumbered securities, borrowing capacity at the
Federal Reserve's discount window, and the Federal Reserve's new
Bank Term Lending Plan facility. The loan to deposit ratio ended
the quarter at 76 percent.
During the first quarter, the company declared $187 million in
dividends to common shareholders and did not repurchase any shares
of Regions' common stock.
(1)
Non-GAAP; refer to pages 11, 14, 15 and 17
of the financial supplement to this earnings release for
reconciliations.
(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 April 21,
2023, an archived recording of the webcast will be available at the
Investor Relations page of www.regions.com following the live
event.
About Regions Financial Corporation
Regions Financial Corporation (NYSE:RF), with $154 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 1,250
banking offices and more than 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.
About Regions Foundation
Regions Foundation supports community investments that
positively impact the communities served by Regions Bank. The
Foundation engages in a grant making program focused on priorities
including economic and community development; education and
workforce readiness; and financial wellness. The Foundation is a
nonprofit 501(c)(3) corporation funded primarily through
contributions from Regions Bank.
Forward-Looking Statements
This release may include forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. 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.
Forward-looking statements 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. 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 interest rates and
unemployment rates, inflation, 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 businesses and our financial results and
conditions.
- 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.
- Volatility and uncertainty related to inflation and the effects
of inflation, which may lead to increased costs for businesses and
consumers and potentially contribute to poor business and economic
conditions generally.
- The impact of pandemics, including the COVID-19 pandemic, on
our businesses, operations, and financial results and conditions.
The duration and severity of any pandemic could disrupt the global
economy, 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.
- 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 tax law, adverse changes
in the economic environment, declining operations of the reporting
unit or other factors.
- The effect of new tax legislation and/or interpretation of
existing tax law, 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 declining 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.
- Rising interest rates could negatively impact the value of our
portfolio of investment securities.
- The loss of value of our investment portfolio could negatively
impact market perceptions of us.
- The effects of social media on market perceptions of us and
banks generally.
- Volatility in the financial services industry (including
failures or rumors of failures of other depository institutions),
along with actions taken by governmental agencies to address such
turmoil, could affect the ability of depository institutions,
including us, to attract and retain depositors and to borrow or
raise capital.
- 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, such as special FDIC assessments, 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 changes in U.S. presidential administration,
control of the U.S. Congress, and changes in personnel at the bank
regulatory agencies, 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, 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 businesses.
- 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 and risks related to such acquisitions,
including that the expected synergies, cost savings and other
financial or other benefits may not be realized within expected
timeframes, or might be less than projected; and difficulties in
integrating acquired businesses.
- 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
businesses, 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.
- Our ability to identify and address operational risks
associated with the introduction of or changes to products,
services, or delivery platforms.
- Dependence on key suppliers or vendors to obtain equipment and
other supplies for our businesses 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
frequency 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 businesses 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 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.
- 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 anti-takeover laws and exclusive forum provision
in our certificate of incorporation and bylaws.
- The effects of any damage to our reputation resulting from
developments related to any of the items identified above.
- Other risks identified from time to time in reports that we
file with the SEC.
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” in Regions’ Annual Report on Form
10-K for the year ended December 31, 2022 and in Regions’
subsequent filings with the SEC.
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.
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 adjusted 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
adjusted 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 adjusted fee income and adjusted
efficiency ratios. Net loan charge-offs (GAAP) are presented
excluding adjustments to arrive at adjusted net loan-charge offs
(non-GAAP). Adjusted net loan charge-offs as a percentage of
average loans (non-GAAP) are calculated as adjusted net loan
charge-offs (non-GAAP) divided by average loans (GAAP) and
annualized. 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.
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/20230421005077/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
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