-
Net Income: $446 million for the third quarter.
-
Earnings Per Share (EPS): $0.49 for the third quarter.
-
Total Revenue Growth: Increased on both reported and adjusted basis quarter-over-quarter.
-
Net Interest Income: Increased by 3% linked quarter.
-
Adjusted Noninterest Income: Increased by 9% driven by service charges, capital markets, and wealth management.
-
Adjusted Noninterest Expense: Increased by 4% compared to the prior quarter.
-
Average Loans: Remained stable quarter-over-quarter.
-
Ending Loans: Declined slightly quarter-over-quarter.
-
Average Deposits: Declined slightly, while ending deposits remained stable.
-
Net Charge-Offs: $113 million, with a net charge-off ratio of 48 basis points.
-
Common Equity Tier 1 Ratio: Estimated at 10.6% for the quarter.
-
Share Repurchases: $101 million executed during the quarter.
-
Common Dividends: $229 million paid during the quarter.
Release Date: October 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Regions Financial Corp (NYSE:RF) reported strong third quarter earnings of $446 million, with earnings per share of $0.49.
-
Total revenue grew on both a reported and adjusted basis, driven by improvements in net interest income and fee revenue.
-
Net interest income increased by 3% quarter-over-quarter, outperforming expectations due to stable deposit trends and asset yield expansion.
-
Adjusted noninterest income rose by 9%, with notable growth in service charges, capital markets, and wealth management.
-
The company maintained a strong capital position with an estimated common equity Tier 1 ratio of 10.6%, allowing for share repurchases and dividend payments.
Negative Points
-
Average loans remained stable, but ending loans declined slightly quarter-over-quarter due to modest customer demand and paydowns.
-
Average deposits declined slightly, reflecting normal summer spending and competitive rate pressures.
-
Certain portfolios within the corporate bank continue to experience stress, although overall credit metrics have stabilized.
-
Adjusted noninterest expense increased by 4% compared to the prior quarter, driven by higher salaries and benefits.
-
Net charge-offs increased to 48 basis points, with expectations for full-year 2024 net charge-offs to be at the upper end of the 40 to 50 basis point range.
Q & A Highlights
Q: Can you provide insights into the NII momentum and margin expectations for the upcoming quarters? A: David Turner, CFO, stated that the margin is expected to remain intact, with a slight increase in NII anticipated. The margin is projected to be in the lower part of the 3.50% range in the fourth quarter, with growth expected in 2025 due to asset growth, controlled deposit costs, and beneficial derivatives resetting.
Q: What is the outlook for loan growth, and what factors could drive a pickup in demand? A: John Turner, CEO, mentioned that while customers are cautiously optimistic, loan demand is currently stable with some growth in middle market commercial and energy portfolios. A more significant pickup in loan growth is expected in 2025 as economic and political uncertainties resolve.
Q: How confident are you in managing expenses, and what are the expectations for positive operating leverage? A: David Turner, CFO, expressed confidence in managing expenses, emphasizing a focus on controlling salaries and benefits. The company is committed to generating positive operating leverage in 2025 by prudently managing expenses and reinvesting in growth opportunities.
Q: What is the outlook for credit performance and charge-offs? A: John Turner, CEO, indicated that charge-offs are expected to remain within the 40 to 50 basis point range, consistent with historical performance. The company anticipates stable credit performance, with consumer credit showing strong results.
Q: How do you plan to manage deposit pricing in light of potential rate cuts? A: David Turner, CFO, stated that deposit costs are expected to decline even without additional rate cuts, due to maturing CDs and competitive pricing strategies. The company is well-positioned to manage deposit costs and continue growing net interest income.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
