Delivers solid revenue and pre-tax
pre-provision income(1).
Regions Financial Corporation (NYSE:RF) today announced earnings
for the third quarter ended September 30, 2021. The company
reported net income available to common shareholders of $624
million and earnings per diluted share of $0.65. Compared to the
second quarter of 2021, total revenue grew 2 percent while pre-tax
pre-provision income(1) decreased 1 percent. Adjusted revenue(1)
increased 3 percent while adjusted pre-tax pre-provision income(1)
increased 4 percent. The company also generated modest year-to-date
positive operating leverage on a reported and adjusted
basis.(1)
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the full release here:
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“Our ability to deliver solid third quarter results comes from
having both a strong foundation and a strategic plan that positions
us to grow effectively and efficiently,” said John Turner,
President and CEO of Regions Financial Corp. “Strong relationships
with customers across all segments drive our performance, and our
track record of exceptional service continues to deepen those
relationships while also bringing in new customers. We’re operating
in markets that are attractive and growing, and those are the
places where we’ll continue to make investments while consistently
strengthening the core of our business throughout our
footprint.
“Our focus on sustainable growth continues with bolt-on
acquisitions – EnerBank aligns with our strategy to be the premier
lender to homeowners, and our agreement to acquire Sabal Capital
Partners is designed to further expand our range of specialized
services for business clients,” Turner added. “Regions' investments
in digital and data are also positioning us for growth. Through a
technology-enabled, seamless experience in branches and across all
platforms, customers are responding to the personalized service,
advice and guidance they're getting from Regions.
“We have the plan, the team, and the experience to compete with
purpose and passion, and we are focused every day on delivering
results for our customers, communities, and shareholders,” Turner
concluded.
Key factors positioning Regions for continued growth
include:
1) Attractive core markets and growth
markets:
- Regions has identified high-growth markets in its existing
footprint that are benefiting from population and business growth,
such as Florida, Georgia, Texas, and Tennessee, which further
position the company to reach more consumers and businesses with
high-value financial services.
- A consistently modernized branch network, which includes key
investments in markets such as Houston, Orlando, and Atlanta,
combines in-person financial consultation with enhanced technology.
This supports further account growth while creating greater
efficiencies across Regions' retail-banking footprint.
2) Focus on digital, data, and
innovation:
- Regions’ customer experience is powered not only by exceptional
bankers who know their customers – but also technology that is
constantly evolving to better connect consumers and businesses with
custom-tailored, convenient solutions. For example, we are
leveraging artificial intelligence in our Contact Centers to
further improve the customer experience and have handled 1 million
customer calls this year.
- Consumers are increasingly leveraging Regions' enhanced online
and mobile banking options. More than two-thirds of our customer
transactions are digital. Over the last two years, active mobile
banking users are up 23% and Zelle transactions have more than
tripled.
- Digitized sales in the consumer bank are up 38% year-to-date,
reflecting our ability to deliver greater value for our customers
and become more efficient in how we operate.
- In addition, product innovation across our business groups will
continue to support a positive customer experience. For example,
Regions recently launched Regions Now Checking - a Bank
On-certified account that combines the convenience of modern
banking with no overdraft fees.
3) Specialty lending
capabilities:
- Regions has continued to pursue beneficial bolt-on
acquisitions, including the acquisition of home improvement
point-of-sale lender EnerBank that was completed Oct. 1 and the
recently announced agreement to acquire Sabal Capital Partners,
LLC.
- Regions is focused on serving as the premier lender to
homeowners. By adding EnerBank’s suite of home improvement
financing, Regions is able to expand options for homeowners
throughout the company’s footprint while establishing new
relationships with clients served by EnerBank across the U.S.
- The agreement to acquire Sabal Capital Partners announced in
early October serves as the latest example of Regions expanding
fee-based businesses that enable the bank to deliver additional
services that complement the company’s existing suite of financial
solutions.
SUMMARY OF THIRD QUARTER 2021 RESULTS:
Quarter Ended
(amounts in millions, except per share
data)
9/30/2021
6/30/2021
9/30/2020
Net income
$
651
$
790
$
530
Preferred dividends and other*
27
42
29
Net income available to common
shareholders
$
624
$
748
$
501
Weighted-average diluted shares
outstanding
962
965
962
Actual shares outstanding—end of
period
955
955
960
Diluted earnings per common share
$
0.65
$
0.77
$
0.52
Selected items impacting
earnings:
Pre-tax adjusted items(1):
Adjustments to non-interest expense(1)
$
(20
)
$
(3
)
$
(7
)
Adjustments to non-interest income(1)
3
19
47
Total pre-tax adjusted items(1)
$
(17
)
$
16
$
40
After-tax preferred stock redemption
expense(1)*
$
—
$
(13
)
$
—
Diluted EPS impact**
$
(0.01
)
$
—
$
0.03
Pre-tax additional selected items***:
CECL provision less than (in excess of)
net charge-offs
$
185
$
384
$
—
Capital markets income - CVA/DVA
1
(4
)
5
MSR net hedge performance
(15
)
(6
)
—
PPP loan interest income****
31
43
31
COVID-19 related expenses
—
—
(3
)
Pension settlement charges
(8
)
—
—
*
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.
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, $2 million in
leveraged lease termination gains and $1 million in securities
gains more than offset by $20 million in charges for the early
extinguishment of debt.
Total revenue
Quarter Ended
($ amounts in millions)
9/30/2021
6/30/2021
9/30/2020
3Q21 vs. 2Q21
3Q21 vs. 3Q20
Net interest income
$
965
$
963
$
988
$
2
0.2
%
$
(23
)
(2.3
)%
Taxable equivalent adjustment
11
12
12
(1
)
(8.3
)%
(1
)
(8.3
)%
Net interest income, taxable equivalent
basis
$
976
$
975
$
1,000
$
1
0.1
%
$
(24
)
(2.4
)%
Net interest margin (FTE)
2.76
%
2.81
%
3.13
%
Adjusted net interest margin (FTE)
(non-GAAP)(1)
3.30
%
3.31
%
3.41
%
Non-interest income:
Service charges on deposit accounts
$
162
$
163
$
152
(1
)
(0.6
)%
10
6.6
%
Card and ATM fees
129
128
115
1
0.8
%
14
12.2
%
Wealth management income
95
96
85
(1
)
(1.0
)%
10
11.8
%
Capital markets income
87
61
61
26
42.6
%
26
42.6
%
Mortgage income
50
53
108
(3
)
(5.7
)%
(58
)
(53.7
)%
Commercial credit fee income
23
23
20
—
—
%
3
15.0
%
Bank-owned life insurance
18
33
17
(15
)
(45.5
)%
1
5.9
%
Securities gains (losses), net
1
1
3
—
—
%
(2
)
(66.7
)%
Market value adjustments on employee
benefit assets*
5
8
14
(3
)
(37.5
)%
(9
)
(64.3
)%
Gains on equity investment
—
—
44
—
NM
(44
)
(100.0
)
Other
79
53
36
26
49.1
%
43
119.4
%
Non-interest income
$
649
$
619
$
655
$
30
4.8
%
$
(6
)
(0.9
)%
Total revenue
$
1,614
$
1,582
$
1,643
$
32
2.0
%
$
(29
)
(1.8
)%
Adjusted total revenue
(non-GAAP)(1)
$
1,611
$
1,563
$
1,596
$
48
3.1
%
$
15
0.9
%
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 increased 2 percent
on a reported basis and 3 percent on an adjusted basis(1) compared
to the second quarter of 2021. Net interest income increased
modestly in aggregate and 1 percent after adjusting for lower PPP
income linked-quarter. The company offset pressure on asset yields
from the low interest rate environment through its interest rate
hedging program, a continued focus on lower funding costs, and
active cash management strategies. This includes securities
purchases in the second quarter, as well as a net reduction of
holding company debt in the third quarter. Loan growth, one
additional day in the quarter, and a large interest recovery drove
net interest income higher. Strong deposit growth trends continued,
and cash balances rose to new record levels, negatively impacting
the reported 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) remained
relatively stable at 3.30 percent.
Non-interest income increased 5 percent on a reported basis and
8 percent on an adjusted basis(1) compared to the second quarter of
2021. Capital markets income increased 43 percent, driven by record
loan syndication revenue and strong M&A advisory fees. Other
income increased 49 percent attributable primarily to an increase
in the value of certain equity investments as well as increased
gains associated with the sale of certain small dollar equipment
loans and leases. Mortgage income decreased 6 percent primarily due
to mortgage servicing rights valuation adjustments, partially
offset by improved secondary market gains. Service charges and
wealth management income experienced modest declines compared to
the prior quarter. Additionally, bank-owned life insurance income
decreased $15 million during the quarter compared to the second
quarter, which included the benefit of a significant claim.
Non-interest expense
Quarter Ended
($ amounts in millions)
9/30/2021
6/30/2021
9/30/2020
3Q21 vs. 2Q21
3Q21 vs. 3Q20
Salaries and employee benefits
$
552
$
532
$
525
$
20
3.8
%
$
27
5.1
%
Equipment and software expense
90
89
89
1
1.1
%
1
1.1
%
Net occupancy expense
75
75
80
—
—
%
(5
)
(6.3
)%
Outside services
38
39
44
(1
)
(2.6
)%
(6
)
(13.6
)%
Professional, legal and regulatory
expenses
21
15
22
6
40.0
%
(1
)
(4.5
)%
Marketing
23
29
22
(6
)
(20.7
)%
1
4.5
%
FDIC insurance assessments
11
11
10
—
NM
1
10.0
%
Credit/checkcard expenses
16
17
12
(1
)
(5.9
)%
4
33.3
%
Branch consolidation, property and
equipment charges
—
—
3
—
—
%
(3
)
(100.0
)%
Visa class B shares expense
4
6
5
(2
)
(33.3
)%
(1
)
(20.0
)%
Loss on early extinguishment of debt
20
—
2
20
NM
18
NM
Other
88
85
82
3
3.5
%
6
7.3
%
Total non-interest expense
$
938
$
898
$
896
$
40
4.5
%
$
42
4.7
%
Total adjusted non-interest expense(1)
$
918
$
895
$
889
$
23
2.6
%
$
29
3.3
%
NM - Not Meaningful
Non-interest expense increased 4 percent on a reported basis and
3 percent on an adjusted basis(1) compared to the second quarter of
2021. Salaries and benefits increased 4 percent, driven primarily
by higher variable-based compensation associated with elevated fee
income as well as one additional work day in the third quarter.
Full-time equivalent associate headcount increased by 149 positions
with the vast majority located in revenue-producing businesses.
Further, strong financial performance contributed to higher
incentive compensation. Professional fees increased 40 percent
reflecting the benefit of a legal reserve release in the prior
quarter that did not repeat. Most other expense categories
increased slightly or remained relatively stable. Partially
offsetting these increases was a 21 percent decrease in marketing
expense due to the timing of campaigns. The company also incurred a
$20 million charge associated with the early extinguishment of debt
during the quarter.
The company's third quarter efficiency ratio was 57.7 percent on
a reported basis and 56.6 percent on an adjusted basis(1). The
effective tax rate was 21.7 percent.
Loans and Leases
Average Balances
($ amounts in millions)
3Q21
2Q21
3Q20
3Q21 vs. 2Q21
3Q21 vs. 3Q20
Commercial and industrial
$
41,892
$
43,140
$
46,405
$
(1,248
)
(2.9
)%
$
(4,513
)
(9.7
)%
Commercial real estate—owner-occupied
5,682
5,634
5,816
48
0.9
%
(134
)
(2.3
)%
Investor real estate
7,311
7,282
7,298
29
0.4
%
13
0.2
%
Business Lending
54,885
56,056
59,519
(1,171
)
(2.1
)%
(4,634
)
(7.8
)%
Residential first mortgage
17,198
16,795
15,786
403
2.4
%
1,412
8.9
%
Home equity
6,523
6,774
7,727
(251
)
(3.7
)%
(1,204
)
(15.6
)%
Indirect—other consumer*
2,097
2,174
2,835
(77
)
(3.5
)%
(738
)
(26.0
)%
Indirect—vehicles**
557
690
1,223
(133
)
(19.3
)%
(666
)
(54.5
)%
Consumer credit card
1,128
1,108
1,194
20
1.8
%
(66
)
(5.5
)%
Other consumer
962
954
1,086
8
0.8
%
(124
)
(11.4
)%
Consumer Lending
28,465
28,495
29,851
(30
)
(0.1
)%
(1,386
)
(4.6
)%
Total Loans
$
83,350
$
84,551
$
89,370
$
(1,201
)
(1.4
)%
$
(6,020
)
(6.7
)%
Adjusted Business Lending
(non-GAAP)(1)
$
52,747
$
52,293
$
54,961
454
0.9
%
$
(2,214
)
(4.0
)%
Adjusted Consumer Lending
(non-GAAP)(1)
27,102
26,896
27,310
206
0.8
%
(208
)
(0.8
)%
Adjusted Total Loans (non-GAAP)(1)
$
79,849
$
79,189
$
82,271
$
660
0.8
%
$
(2,422
)
(2.9
)%
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 decreased 1 percent compared to the
prior quarter. Excluding the company's indirect auto and
indirect-other consumer exit portfolios, as well as outstanding PPP
loans, adjusted average and ending loans and leases(1) both
increased approximately 1 percent. Adjusted average business
lending(1) increased 1 percent led by growth in corporate and
middle market lending across asset-based lending, healthcare,
transportation, technology and defense, as well as essential
business equipment lending through Ascentium. While still well
below pre-pandemic levels, commercial loan line utilization levels
ended the quarter at approximately 39.9 percent. Utilization levels
have also been impacted by strong year-to-date loan commitment
growth of $2 billion. Excluding exit portfolios, adjusted average
consumer lending(1) increased 1 percent as growth in residential
first mortgage and consumer credit card was offset by declines in
other categories.
Deposits
Average Balances
($ amounts in millions)
3Q21
2Q21
3Q20
3Q21 vs. 2Q21
3Q21 vs. 3Q20
Customer low-cost deposits
$
127,369
$
126,315
$
110,493
$
1,054
0.8
%
$
16,876
15.3
%
Customer time deposits
4,527
4,813
6,150
(286
)
(5.9
)%
(1,623
)
(26.4
)%
Corporate treasury time deposits
1
1
13
—
—
%
(12
)
(92.3
)%
Corporate treasury other deposits
—
3
—
(3
)
(100.0
)
—
NM
Total Deposits
$
131,897
$
131,132
$
116,656
$
765
0.6
%
$
15,241
13.1
%
($ amounts in millions)
3Q21
2Q21
3Q20
3Q21 vs. 2Q21
3Q21 vs. 3Q20
Consumer Bank Segment
$
79,098
$
78,200
$
68,842
$
898
1.1
%
$
10,256
14.9
%
Corporate Bank Segment
42,525
42,966
38,755
(441
)
(1.0
)%
3,770
9.7
%
Wealth Management Segment
9,873
9,519
8,658
354
3.7
%
1,215
14.0
%
Other
401
447
401
(46
)
(10.3
)%
—
—
%
Total Deposits
$
131,897
$
131,132
$
116,656
$
765
0.6
%
$
15,241
13.1
%
Total average deposit balances increased 1 percent to a new
record high in the third quarter of 2021. Consumer and Wealth
Management deposits both increased compared to the second quarter
while Corporate deposits decreased modestly.
Asset quality
As of and for the Quarter
Ended
($ amounts in millions)
9/30/2021
6/30/2021
9/30/2020
ACL/Loans, net
1.80%
2.00%
2.74%
ALL/Loans, net
1.71%
1.90%
2.58%
Allowance for credit losses to
non-performing loans, excluding loans held for sale
283%
253%
316%
Allowance for loan losses to
non-performing loans, excluding loans held for sale
269%
240%
297%
Provision for (benefit from) credit
losses
$(155)
$(337)
$113
Net loans charged-off
$30
$47
$113
Net loan charge-offs as a % of average
loans, annualized
0.14%
0.23%
0.50%
Non-accrual loans, excluding loans held
for sale/Loans, net
0.64%
0.79%
0.87%
NPAs (ex. 90+ past due)/Loans, foreclosed
properties, non-marketable investments and non-performing loans
held for sale
0.66%
0.93%
0.90%
NPAs (inc. 90+ past due)/Loans, foreclosed
properties, non-marketable investments and non-performing loans
held for sale*
0.80%
1.09%
1.08%
Total TDRs, excluding loans held for
sale
$546
$620
$645
Total Criticized Loans—Business
Services**
$3,054
$3,222
$3,734
*
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.
Continued improvements in the economic outlook and positive
credit performance during the quarter resulted in a net $155
million benefit from credit losses during the third quarter of
2021. The resulting allowance for credit losses was equal to 1.80
percent of total loans and 283 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
1.83 percent(1) of total loans. Annualized net charge-offs
decreased 9 basis points to 0.14 percent of average loans, the
company's lowest level on record post its 2006 merger of equals.
The decrease reflects broad-based improvement across most
commercial and consumer loan portfolios, as well as recoveries
associated with strong collateral asset values. Total non-accrual
loans, excluding loans held for sale, and total business services
criticized loans both improved during the quarter, while total
delinquencies remained unchanged.
Capital and liquidity
As of and for Quarter
Ended
9/30/2021
6/30/2021
9/30/2020
Common Equity Tier 1 ratio(2)
10.8%
10.4%
9.3%
Tier 1 capital ratio(2)
12.3%
11.9%
10.8%
Tangible common stockholders’ equity to
tangible assets (non-GAAP)(1)
7.79%
7.58%
7.88%
Tangible common book value per share
(non-GAAP)(1)*
$12.32
$11.94
$11.49
Loans, net of unearned income, to total
deposits
63.1%
63.9%
74.6%
*
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 12.3
percent and 10.8 percent, respectively, at quarter-end.
During the third quarter, the company declared $164 million in
dividends to common shareholders.
(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 October
22, 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, October 22, 2021, at 2:30 p.m. ET through Monday,
November 22, 2021. To listen by telephone, please dial
855-859-2056, and use access code 2058432.
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 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 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 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
acquisition of EnerBank and risks related to such acquisition,
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 business; and the inability of Regions to
effectively cross-sell products to EnerBank’s customers; as well as
our pending acquisition of Sabal and risks related to such
acquisition, including delays in closing the transaction; that the
expected synergies, cost savings, and other financial or other
benefits of the transaction might not be realized within the
expected timeframes, or might be less than projected; and
difficulties in integrating Sabal’s business.
- 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 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 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 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 June
30, 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 pandemic (including any
resurgences), actions taken by governmental authorities in response
to the pandemic and their success, the effectiveness and acceptance
of any vaccines, and the direct and indirect impact of the 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211022005054/en/
Media Contact: Jeremy King (205) 264-4551
Investor Relations Contact: Dana Nolan (205) 264-7040
Grafico Azioni Regions Financial (NYSE:RF)
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Grafico Azioni Regions Financial (NYSE:RF)
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