Regions Financial Corp. (NYSE:RF) today announced earnings for
the first quarter ended March 31, 2022. The company reported first
quarter net income available to common shareholders of $524 million
and earnings per diluted share of $0.55. Total revenue of $1.6
billion and pre-tax pre-provision income(1) of $666 million
reflected a 5 percent increase in net interest income compared to
the first quarter of 2021 attributable to higher interest rates as
well as loan and deposit growth.
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“Our solid first-quarter results are a reflection of Regions'
sound business strategy. Factors positioning us for further growth
include our passion for delivering a first-class banking
experience, an innovative mindset in digital banking and other
services, our enhanced specialty capabilities, and exceptional
teams that are building and deepening customer relationships in
many of the fastest-growing markets in the country,” said John
Turner, President and CEO of Regions Financial Corp. “We are proud
that our results reflect Regions' strong credit profile, our
commitment to prudently managing expenses, and our growth in loan
commitments, balances, and pipelines, as well as deposit accounts
and balances. We will continue to differentiate Regions through a
seamless customer experience, an always-on focus toward evolving
and enhancing our services, and exceptional banking teams that are
empowered through competitive tools and resources to expand our
customer base and build even greater client loyalty.”
Regions' Strategic Plan in Action:
With results including a year-to-year increase in net interest
income, well-controlled expenses, solid credit metrics, and more,
Regions is delivering quality fundamentals supported by key
advantages. Those advantages include:
- Strong in-market migration converting legacy "core" markets
into growth markets:
- Nineteen of Regions' top 25 MSAs are projected to grow faster
than the U.S. national average.
- Twenty of the top 25 U.S. markets with net migration inflows
are within Regions' footprint, which includes vibrant markets
across the Southeast, Texas, and portions of the Midwest.
- Regions' deposit-weighted population growth by MSA for
2022-2027 is projected at 3.6% vs. the national average of
3.2%.
- Consistently onboarding talented and highly experienced,
revenue-generating personnel in growth markets, further introducing
the Regions brand to more businesses and consumers
- Digital and data supporting a better banking experience:
- 5.5% increase in overall digital users in 1Q22 compared to
1Q21
- 9.5% increase specifically in mobile users in 1Q22 compared to
1Q21
- 4.6% increase in digital transactions as a percentage of total
consumer customer transactions in 1Q22 compared to 1Q21
- Expansion of Regions' Relationship Platform: Regions Bridge
provides a single client relationship view to better serve
customers across Wealth Management and Mortgage.
- New Fulfillment & Servicing Platforms for Real Estate
Loans: Part of Regions' path to a more omnichannel experience
- Centralization of Data/Modernization: Leveraging modern Big
Data Platforms to accelerate data-driven decision-making
processes
SUMMARY OF FIRST QUARTER 2022
RESULTS:
Quarter Ended
(amounts in millions, except per share
data)
3/31/2022
12/31/2021
3/31/2021
Net income
$
548
$
438
$
642
Preferred dividends and other
24
24
28
Net income available to common
shareholders
$
524
$
414
$
614
Weighted-average diluted shares
outstanding
947
958
968
Actual shares outstanding—end of
period
933
942
961
Diluted earnings per common share
$
0.55
$
0.43
$
0.63
Selected items impacting
earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
(1
)
$
(16
)
$
(10
)
Adjustments to non-interest income(1)
1
—
4
Total pre-tax adjusted items(1)
$
—
$
(16
)
$
(6
)
Diluted EPS impact*
$
—
$
(0.01
)
$
—
Pre-tax additional selected items**:
CECL provision (in excess of) less than
net charge-offs***
$
82
$
(66
)
$
225
Capital markets income - CVA/DVA
6
—
11
MSR net hedge performance
(5
)
(5
)
7
PPP loan interest income****
12
39
40
Pension settlement charges
—
(3
)
—
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.
*** Fourth quarter 2021 amount includes
$145 million for the initial allowance for non-purchased credit
deteriorated acquired EnerBank loans.
**** Interest income for the Small
Business Administration's Paycheck Protection Program (PPP) loans
includes estimated funding costs.
Non-GAAP adjusted items(1) impacting the company's earnings are
identified to assist investors in analyzing Regions' operating
results on the same basis as that applied by management and provide
a basis to predict future performance. Non-GAAP adjusted items(1)
in the current quarter had minimal impact.
Total
revenue
Quarter Ended
($ amounts in millions)
3/31/2022
12/31/2021
3/31/2021
1Q22 vs. 4Q21
1Q22 vs. 1Q21
Net interest income
$
1,015
$
1,019
$
967
$
(4
)
(0.4
)%
$
48
5.0
%
Taxable equivalent adjustment
11
10
11
1
10.0
%
—
NM
Net interest income, taxable equivalent
basis
$
1,026
$
1,029
$
978
$
(3
)
(0.3
)%
$
48
4.9
%
Net interest margin (FTE)
2.85
%
2.83
%
3.02
%
Adjusted net interest margin (FTE)
(non-GAAP)(1)
3.43
%
3.34
%
3.40
%
Non-interest income:
Service charges on deposit accounts
$
168
$
166
$
157
2
1.2
%
11
7.0
%
Card and ATM fees
124
127
115
(3
)
(2.4
)%
9
7.8
%
Wealth management income
101
100
91
1
1.0
%
10
11.0
%
Capital markets income
73
83
100
(10
)
(12.0
)%
(27
)
(27.0
)%
Mortgage income
48
49
90
(1
)
(2.0
)%
(42
)
(46.7
)%
Commercial credit fee income
22
23
22
(1
)
(4.3
)%
—
—
%
Bank-owned life insurance
14
14
17
—
—
%
(3
)
(17.6
)%
Securities gains (losses), net
—
—
1
—
—
%
(1
)
(100.0
)%
Market value adjustments on employee
benefit assets*
(14
)
—
7
(14
)
NM
(21
)
(300.0
)%
Gains on equity investment
—
—
3
—
—
(3
)
(100.0
)%
Other
48
53
38
(5
)
(9.4
)%
10
26.3
%
Non-interest income
$
584
$
615
$
641
$
(31
)
(5.0
)%
$
(57
)
(8.9
)%
Total revenue
$
1,599
$
1,634
$
1,608
$
(35
)
(2.1
)%
$
(9
)
(0.6
)%
Adjusted total revenue
(non-GAAP)(1)
$
1,598
$
1,634
$
1,604
$
(36
)
(2.2
)%
$
(6
)
(0.4
)%
NM - Not Meaningful
* These market value adjustments relate to
assets held for employee benefits that are offset within salaries
and employee benefits expense.
Total revenue of approximately $1.6 billion decreased 2 percent
on both a reported and an adjusted basis(1) compared to the fourth
quarter of 2021. Net interest income was relatively stable compared
to the fourth quarter and benefited from average loan growth and
rising interest rates but was offset by a lower contribution from
the Paycheck Protection Program (PPP) forgiveness income and two
fewer days. Deposit growth trends continued during the quarter, and
average cash balances increased to new record levels, negatively
impacting the reported net interest margin, which increased 2 basis
points to 2.85 percent. Excluding the impact of PPP interest income
and excess cash balances held at the Federal Reserve, the company's
adjusted net interest margin(1) increased 9 basis points to 3.43
percent.
Non-interest income decreased 5 percent on both a reported and
an adjusted basis(1) compared to the fourth quarter of 2021.
Service charges, mortgage income, and wealth management income
remained relatively stable. Mortgage income includes approximately
$12 million in gains associated with previously repurchased Ginnie
Mae loans sold during the first quarter. Capital markets income
decreased 12 percent as merger and acquisition advisory fees were
muted by seasonality as well as timing of transactions.
Additionally, debt and real estate capital markets were impacted by
interest rate uncertainty, geopolitical tensions and volatility in
credit spreads. Card & ATM fees decreased 2 percent due to
seasonally lower spend and fewer days in the quarter. Other
non-interest income declined 9 percent primarily due to an increase
in the value of equity investments in the prior quarter that did
not repeat. Additionally, market value adjustments on employment
benefit assets that are offset in salaries and benefits decreased
during the quarter.
Non-interest
expense
Quarter Ended
($ amounts in millions)
3/31/2022
12/31/2021
3/31/2021
1Q22 vs. 4Q21
1Q22 vs. 1Q21
Salaries and employee benefits
$
546
$
575
$
546
$
(29
)
(5.0
)%
$
—
—
%
Equipment and software expense
95
96
90
(1
)
(1.0
)%
5
5.6
%
Net occupancy expense
75
76
77
(1
)
(1.3
)%
(2
)
(2.6
)%
Outside services
38
41
38
(3
)
(7.3
)%
—
—
%
Professional, legal and regulatory
expenses
17
33
29
(16
)
(48.5
)%
(12
)
(41.4
)%
Marketing
24
32
22
(8
)
(25.0
)%
2
9.1
%
FDIC insurance assessments
14
13
10
1
7.7
%
4
40.0
%
Credit/checkcard expenses
26
15
14
11
73.3
%
12
85.7
%
Branch consolidation, property and
equipment charges
1
—
5
1
NM
(4
)
(80.0
)%
Visa class B shares expense
5
8
4
(3
)
(37.5
)%
1
25.0
%
Other
92
94
93
(2
)
(2.1
)%
(1
)
(1.1
)%
Total non-interest expense
$
933
$
983
$
928
$
(50
)
(5.1
)%
$
5
0.5
%
Total adjusted non-interest expense(1)
$
932
$
967
$
918
$
(35
)
(3.6
)%
$
14
1.5
%
NM - Not Meaningful
Non-interest expense decreased 5 percent on a reported basis and
4 percent on an adjusted basis(1) compared to the fourth quarter of
2021. Salaries and benefits decreased 5 percent driven primarily by
lower incentive compensation, which was offset by a seasonal
increase in payroll taxes and 401(k) expenses. Professional and
legal fees decreased $16 million due primarily to elevated expenses
associated with the company's fourth quarter acquisitions.
Marketing expenses decreased 25 percent attributable primarily to
the timing of marketing campaigns. Partially offsetting these
reductions, credit and checkcard expenses increased $11 million
during the quarter.
The company's first quarter efficiency ratio was 57.9 percent on
both a reported and adjusted basis(1). The effective tax rate was
approximately 22 percent.
Loans and
Leases
Average Balances
($ amounts in millions)
1Q22
4Q21
1Q21
1Q22 vs. 4Q21
1Q22 vs. 1Q21
Commercial and industrial
$
43,993
$
42,254
$
42,816
$
1,739
4.1
%
$
1,177
2.7
%
Commercial real estate—owner-occupied
5,506
5,649
5,678
(143
)
(2.5
) %
(172
)
(3.0
)%
Investor real estate
7,082
7,185
7,222
(103
)
(1.4
) %
(140
)
(1.9
)%
Business Lending
56,581
55,088
55,716
1,493
2.7
%
865
1.6
%
Residential first mortgage
17,496
17,413
16,606
83
0.5
%
890
5.4
%
Home equity
6,163
6,334
7,085
(171
)
(2.7
) %
(922
)
(13.0
)%
Consumer credit card
1,142
1,155
1,151
(13
)
(1.1
) %
(9
)
(0.8
)%
Other consumer—exit portfolios
987
1,160
1,884
(173
)
(14.9
) %
(897
)
(47.6
)%
Other consumer
5,445
5,398
2,313
47
0.9
%
3,132
135.4
%
Consumer Lending
31,233
31,460
29,039
(227
)
(0.7
) %
2,194
7.6
%
Total Loans
$
87,814
$
86,548
$
84,755
$
1,266
1.5
%
$
3,059
3.6
%
NM - Not Meaningful
Average loans and leases increased 1 percent compared to the
prior quarter driven primarily by growth in commercial and
industrial lending. Average business lending increased 3 percent
reflecting broad-based growth in corporate, middle market, and real
estate lending across the company's diversified and specialized
portfolios. While still below pre-pandemic levels, commercial loan
line utilization levels ended the quarter at approximately 43.9
percent, increasing 160 basis points over the prior quarter. Loan
production continues to be strong with loan commitment growth of
approximately $1.6 billion during the quarter. Average consumer
lending decreased 1 percent attributable to lower exit portfolios,
home equity and credit card balances, partially offset by growth in
residential first mortgage and other consumer credit which includes
EnerBank. Additionally, during the quarter, residential first
mortgage was impacted by the re-securitization and sale of
approximately $285 million of Ginnie Mae loans that had been
previously repurchased from their pools.
Deposits
Average Balances
($ amounts in millions)
1Q22
4Q21
1Q21
1Q22 vs. 4Q21
1Q22 vs. 1Q21
Customer low-cost deposits
$
132,829
$
130,177
$
117,775
$
2,652
2.0
%
$
15,054
12.8
%
Customer time deposits
5,905
6,505
5,158
(600
)
(9.2
)%
747
14.5
%
Corporate treasury time deposits
—
—
4
—
NM
(4
)
(100.0
)%
Corporate treasury other deposits
—
—
—
—
NM
—
NM
Total Deposits
$
138,734
$
136,682
$
122,937
$
2,052
1.5
%
$
15,797
12.8
%
($ amounts in millions)
1Q22
4Q21
1Q21
1Q22 vs. 4Q21
1Q22 vs. 1Q21
Consumer Bank Segment
$
83,054
$
80,930
$
72,949
$
2,124
2.6
%
$
10,105
13.9
%
Corporate Bank Segment
42,609
42,659
40,285
(50
)
(0.1
)%
2,324
5.8
%
Wealth Management Segment
10,407
10,054
9,281
353
3.5
%
1,126
12.1
%
Other
2,664
3,039
422
(375
)
(12.3
)%
2,242
NM
Total Deposits
$
138,734
$
136,682
$
122,937
$
2,052
1.5
%
$
15,797
12.8
%
Total average deposit balances increased 2 percent to a new
record high in the first quarter of 2022. Consumer and Wealth
Management deposits increased compared to the fourth quarter, while
corporate deposits remained relatively stable.
Asset quality
As of and for the Quarter
Ended
($ amounts in millions)
3/31/2022
12/31/2021
3/31/2021
ACL/Loans, net
1.67%
1.79%
2.44%
ALL/Loans, net
1.59%
1.69%
2.33%
Allowance for credit losses to
non-performing loans, excluding loans held for sale
446%
349%
280%
Allowance for loan losses to
non-performing loans, excluding loans held for sale
423%
328%
268%
Provision for (benefit from) credit
losses
$(36)
$110
$(142)
Net loans charged-off
$46
$44
$83
Net loan charge-offs as a % of average
loans, annualized
0.21%
0.20%
0.40%
Non-performing loans, excluding loans held
for sale/Loans, net
0.37%
0.51%
0.87%
NPAs (ex. 90+ past due)/Loans, foreclosed
properties, and non-performing loans held for sale
0.39%
0.54%
0.90%
NPAs (inc. 90+ past due)/Loans, foreclosed
properties, and non-performing loans held for sale*
0.53%
0.70%
1.09%
Total Criticized Loans—Business
Services**
$2,539
$2,905
$3,756
* 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.
Positive asset quality performance and waning pandemic concerns
partially offset by loan growth and general economic volatility
associated primarily with inflation and geopolitical unrest
resulted in a net $36 million benefit to the provision for credit
losses during the first quarter of 2022. The resulting allowance
for credit losses was equal to 1.67 percent of total loans and 446
percent of total non-performing loans, excluding loans held for
sale. Annualized net charge-offs increased 1 basis point to 0.21
percent of average loans during the first quarter. Total
non-performing loans, excluding loans held for sale, and total
business services criticized loans improved during the quarter.
Overall asset quality continues to reflect broad-based improvement
across most commercial and consumer loan portfolios, as well as
elevated recoveries associated with strong collateral asset
values.
Capital and
liquidity
As of and for Quarter
Ended
3/31/2022
12/31/2021
3/31/2021
Common Equity Tier 1 ratio(2)
9.4%
9.6%
10.3%
Tier 1 capital ratio(2)
10.8%
11.0%
11.9%
Tangible common stockholders’ equity to
tangible assets (non-GAAP)(1)
5.93%
6.83%
7.43%
Tangible common book value per share
(non-GAAP)(1)*
$10.06
$11.38
$11.46
Loans, net of unearned income, to total
deposits
63.3%
63.1%
65.4%
* 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 10.8
percent and 9.4 percent respectively at quarter-end.
During the first quarter, the company repurchased 9 million
shares of common stock for a total of $215 million through open
market purchases and declared $159 million in dividends to common
shareholders.
(1) Non-GAAP; refer to pages 5, 6, 9, 10 and 19 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 22,
2022, 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, April 22, 2022, at 1:30 p.m. ET through Sunday,
May 22, 2022. To listen by telephone, please dial 855-859-2056, and
use access code 8966427.
About Regions Financial Corporation
Regions Financial Corporation (NYSE:RF), with $164 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 approximately 1,300
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.
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 any pandemic, including
the COVID-19 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 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 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, including our recently completed
acquisitions of EnerBank, Sabal, and Clearsight, and risks related
to such acquisitions, including that the expected synergies, cost
savings and other financial or other benefits may not be realized
within the expected timeframes, or might be less than projected;
difficulties in integrating the businesses; and the inability of
Regions to effectively cross-sell products following these
acquisitions.
- 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.
- 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 and exclusive forum laws and
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” of Regions’ Annual Report on Form
10-K for the year ended December 31, 2021 as filed with the
SEC.
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, including the scope and duration of the
COVID-19 pandemic (including the impact of additional variants and
resurgences), the effectiveness, availability and acceptance of any
vaccines or therapies, 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.
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
Regions’ Investor Relations contact is Dana Nolan at (205)
264-7040; Regions’ Media contact is Jeremy King at (205)
264-4551.
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version on businesswire.com: https://www.businesswire.com/news/home/20220422005094/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
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