Regions reports full year 2016 earnings of $1.1 billion, up 10 percent over the prior year, and earnings per share of $0.87, up 16 percent
Friday, January 20, 2017 6:00:01 AM ET Regions Financial Corporation (RF ) today announced earnings for the
fourth quarter and full year ended Dec. 31, 2016. For the fourth
quarter, the company reported net income available to common
shareholders of $279 million and earnings per diluted share of $0.23.
For the full year of 2016, Regions reported net income available to
common shareholders of $1.1 billion, an increase of 10 percent over the
prior year and earnings per diluted share of $0.87, an increase of 16
percent.
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"In a challenging operating environment, we delivered double-digit
earnings-per-share growth in 2016, and we remain on track to meet our
long-term strategic goals," said Grayson Hall, Chairman, President and
CEO. "The company remains committed to prudently growing and
diversifying revenue, rigorous expense management and managing our
capital in a disciplined manner."
"Throughout 2016 we streamlined, strengthened and diversified our
business, resulting in full-year efficiency gains and solid growth in
deposits, net interest income and other financing income and
non-interest income," continued Hall. "These results demonstrate that a
consistent focus on executing our strategic plan is benefiting our
customers and communities while creating long-term value for our
shareholders."
SUMMARY OF FULL YEAR 2016 RESULTS:
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
-------------------- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions, except per share data) 2016 2015
-------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------------------------
Income from continuing operations (A) $ 1,158 $ 1,075
Income (loss) from discontinued operations, net of tax 5 (13 )
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
Net income 1,163 1,062
Preferred dividends (B) 64 64
-------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
Net income available to common shareholders $ 1,099 $ 998
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Net income from continuing operations available to common $ 1,094 $ 1,011
shareholders (A) - (B)
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Diluted earnings per common share from continuing operations $ 0.87 $ 0.76
==================== ==================== ========== ==================== ==================== ==================== ====== ==================== ====================
Diluted earnings per common share $ 0.87 $ 0.75
==================== ==================== ========== ==================== ==================== ==================== ====== ==================== ====================
-------------------- ------------------------------------------------------------ -------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------
Full year 2016 results compared to full year
2015:
--
Net interest income and other financing income on a fully taxable
equivalent basis increased $100 million or 3 percent. The resulting
net interest margin was 3.14 percent, up one basis point.
--
Non-interest income increased 4 percent, or 7 percent on an adjusted
basis(1).
--
Non-interest expenses were relatively flat and, on an adjusted basis(1),increased 2 percent.
--
The company reported an efficiency ratio of 64.2 percent, and an
adjusted efficiency ratio(1) of 63.3 percent, in 2016,
compared to 66.2 percent and 64.9 percent in 2015, respectively.
--
Regions generated positive operating leverage of 3 percent on an
adjusted basis(1).
--
Net charge-offs increased 4 basis points to 0.34 percent of average
loans.
--
The Common Equity Tier 1 ratio(2) was estimated at 11.1
percent at December 31, 2016. The fully phased-in pro-forma Common
Equity Tier 1 ratio(1)(2) was estimated at 11.0 percent and
the loan-to-deposit ratio was 81 percent.
--
Regions returned $1.2 billion of earnings to shareholders through
dividends and share repurchases.
SUMMARY OF FOURTH QUARTER 2016 RESULTS:
-------------------- ------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------------------------------------------------- -------------------- -------------------- -------------------- -----------------------------------------------------------------------------------
Quarter Ended
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions, except per share data) 12/31/2016 9/30/2016 12/31/2015
-------------------- -------------------------------------------------------------- -------------------- -------------------------------------------------------------- -------------------- -----------------------------------------------------------------------------------
Income from continuing operations (A) $ 294 $ 319 $ 288
Income (loss) from discontinued operations, net of tax 1 1 (3 )
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net income 295 320 285
Preferred dividends (B) 16 16 16
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net income available to common shareholders $ 279 $ 304 $ 269
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Net income from continuing operations available to common $ 278 $ 303 $ 272
shareholders (A) - (B)
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Diluted earnings per common share from continuing operations $ 0.23 $ 0.24 $ 0.21
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Diluted earnings per common share $ 0.23 $ 0.24 $ 0.21
==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
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Fourth quarter 2016 results compared to third
quarter 2016:
--
Average loans and leases totaled $80.6 billion, a decrease of 1
percent.
--
Consumer lending balances increased $329 million or 1 percent on
an average basis.
--
Business lending balances decreased $1.0 billion or 2 percent on
an average basis.
--
Average deposit balances totaled $98.5 billion, an increase of $561
million or 1 percent; low-cost deposits increased $503 million or 1
percent.
--
Net interest income and other financing income on a fully taxable
equivalent basis increased $18 million or 2 percent. The resulting net
interest margin was 3.16 percent, up 10 basis points.
--
Non-interest income decreased 13 percent, or 6 percent on an adjusted
basis(1).
--
Non-interest expenses decreased 4 percent, and 4 percent on an
adjusted basis(1).
--
Allowance for loan and lease losses declined 3 basis points to 1.36
percent of total loans; the allowance for loan and lease losses
attributable to direct energy decreased from 7.9 percent of energy
loans outstanding to 7.0 percent.
--
Net charge-offs increased 15 basis points to 0.41 percent of average
loans, and non-accrual loans, excluding loans held for sale, decreased
9 basis points to 1.24 percent of loans outstanding.
Fourth quarter 2016 results compared to fourth
quarter 2015:
--
Average loans and leases were relatively stable.
--
Consumer lending balances increased $1.2 billion or 4 percent on
an average basis.
--
Business lending balances decreased $1.4 billion or 3 percent on
an average basis.
--
Average deposit balances increased $1.0 billion or 1 percent; low-cost
deposits increased $1.3 billion or 1 percent.
--
Solid customer account growth: wealth management relationships
increased 14 percent; active credit cards increased 11 percent;
checking accounts increased 2 percent; and households increased 2
percent.
--
Net interest income and other financing income on a fully taxable
equivalent basis increased $18 million or 2 percent.
--
Non-interest income increased 2 percent, and 2 percent on an adjusted
basis(1).
--
Non-interest expenses increased 3 percent, or 2 percent on an adjusted
basis(1).
--
Net charge-offs increased 3 basis points to 0.41 percent of average
loans, and non-accrual loans, excluding loans held for sale, increased
28 basis points to 1.24 percent of loans outstanding.
FOURTH QUARTER 2016 FINANCIAL RESULTS:
Selected items impacting earnings:
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Quarter Ended
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions, except per share data) 12/31/2016 9/30/2016 12/31/2015
-------------------- -------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------
Pre-tax select items:
Branch consolidation, property and equipment charges $ (17 ) $ (5 ) $ (6 )
Salaries and benefits related to severance charges (5 ) (3 ) (6 )
Gain on sale of affordable housing loans 5 -- --
Visa class B shares expense -- (11 ) (3 )
Insurance proceeds -- 47 1
Oil spill recovery -- 10 --
Loss on early extinguishment of debt -- (14 ) --
Lease adjustment -- -- (15 )
Diluted EPS impact* $ (0.01 ) $ 0.01 $ (0.01 )
-------------------- ------------------------------------------------------ -------------------- -------------------- -------------------- ------ -------------- - -------------------- -------------------- -------------------- -------------------- ------ -------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------- - --------------------
* Based on income taxes at a 38.5% incremental rate.
During the fourth quarter, the company incurred $17 million of expenses
related to the previously announced consolidation of 70 branches. The
company will consolidate an additional 27 branches, which are expected
to close in the second quarter of 2017. Since the fourth quarter of
2015, the company has consolidated or announced plans to consolidate 130
branches as part of its plan to consolidate at least 150 branches by the
end of 2017. Also related to ongoing efficiency efforts, the company
incurred $5 million of severance expense during the quarter.
During the fourth quarter, the company also made the decision to sell
$171 million of affordable housing residential mortgage loans to Freddie
Mac and recognized a gain of $5 million.
Total revenue
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Quarter Ended
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions) 12/31/2016 9/30/2016 12/31/2015 4Q16 vs. 3Q16 4Q16 vs. 4Q15
-------------------- ----------------------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net interest income and other financing income $ 853 $ 835 $ 836 $ 18 2.2 % $ 17 2.0 %
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Net interest income and other financing income - fully taxable $ 874 $ 856 $ 856 $ 18 2.1 % $ 18 2.1 %
equivalent (FTE)
Net interest margin (FTE) 3.16 % 3.06 % 3.08 %
Non-interest income:
Service charges on deposit accounts 173 166 166 7 4.2 % 7 4.2 %
Wealth management 103 107 100 (4 ) (3.7 )% 3 3.0 %
Card & ATM fees 103 105 96 (2 ) (1.9 )% 7 7.3 %
Mortgage income 43 46 37 (3 ) (6.5 )% 6 16.2 %
Capital markets fee income and other 31 42 28 (11 ) (26.2 )% 3 10.7 %
Bank-owned life insurance 20 22 19 (2 ) (9.1 )% 1 5.3 %
Commercial credit fee income 19 17 19 2 11.8 % -- NM
Insurance proceeds -- 47 1 (47 ) (100.0 )% (1 ) (100.0 )%
Net revenue from affordable housing 1 2 14 (1 ) (50.0 )% (13 ) (92.9 )%
Market value adjustments on employee benefit assets* 3 4 2 (1 ) (25.0 )% 1 50.0 %
Securities gains (losses), net 5 -- 11 5 NM (6 ) (54.5 )%
Other 21 41 21 (20 ) (48.8 )% -- NM
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Non-interest income $ 522 $ 599 $ 514 $ (77 ) (12.9 )% $ 8 1.6 %
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total revenue, taxable-equivalent basis $ 1,396 $ 1,455 $ 1,370 $ (59 ) (4.1 )% $ 26 1.9 %
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Adjusted total revenue, taxable-equivalent basis (non-GAAP)(1) $ 1,386 $ 1,400 $ 1,358 $ (14 ) (1.0 )% $ 28 2.1 %
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-------------------- -------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
* These market value adjustments relate to assets held for certain
employee benefits, and are offset within salaries and employee
benefits expense.
Comparison of fourth quarter 2016 to third quarter
2016
Total revenue on a fully taxable equivalent basis was $1.40 billion in
the fourth quarter, a decrease of $59 million. On an adjusted basis(1),
total revenue on a fully taxable equivalent basis decreased $14 million
or 1 percent. Net interest income and other financing income on a fully
taxable equivalent basis was $874 million, an increase of $18 million or
2 percent. The resulting net interest margin was 3.16 percent, an
increase of 10 basis points. Net interest margin and net interest income
and other financing income benefited from higher market interest rates,
lower premium amortization on investment securities, a leveraged lease
residual value adjustment incurred in the third quarter that did not
repeat, and higher investment securities balances, partially offset by
lower loan balances. Net interest margin benefited further from lower
average cash balances held at the Federal Reserve.
Non-interest income totaled $522 million, a decrease of $77 million or
13 percent, primarily due to insurance proceeds recognized in the third
quarter. On an adjusted basis(1), non-interest income
decreased $32 million or 6 percent. Continued growth in checking
accounts contributed to a $7 million or 4 percent increase in service
charges during the quarter. This increase was offset by declines in
capital markets, wealth management income, mortgage income and other
non-interest income.
Following a record third quarter, capital markets income decreased $11
million or 26 percent during the quarter primarily due to lower merger
and acquisition advisory services. Also following a record third
quarter, wealth management income decreased $4 million or 4 percent
during the quarter as lower income in insurance and investment services
was partially offset by higher investment management & trust fees.
Mortgage income decreased $3 million or 7 percent driven by seasonally
lower production partially offset by increases in the market valuation
of mortgage servicing rights and related hedging activity. Within total
mortgage production, 59 percent was related to purchase activity and 41
percent was related to refinancing.
In addition, the company recognized a recovery of approximately $10
million in other non-interest income related to the 2010 Gulf of Mexico
oil spill during the third quarter that did not repeat in the fourth
quarter.
Comparison of fourth quarter 2016 to fourth
quarter 2015
Total revenue on a fully taxable equivalent basis increased $26 million
or 2 percent compared to the fourth quarter of 2015. On an adjusted basis(1),
total revenue on a fully taxable equivalent basis increased $28 million
or 2 percent. Net interest income and other financing income on a fully
taxable equivalent basis increased $18 million or 2 percent. The
resulting net interest margin was 3.16 percent, an increase of 8 basis
points. The fourth quarter of 2015 included the accounting
reclassification of certain operating leases that were previously
included in loans. The reclassification included an adjustment that
lowered net interest income and other financing income by $15 million
and reduced the net interest margin 5 basis points. Additionally, the
current quarter net interest margin and net interest income and other
financing income also benefited from higher market interest rates, a mix
shift to higher yielding consumer loans, higher investment securities
balances and the impact of hedging strategies. These benefits were
partially offset by the reinvestment of fixed rate loans and securities
at lower interest rates, higher borrowing costs and lower loan balances.
Net interest margin benefited further from lower cash balances held at
the Federal Reserve.
Non-interest income increased $8 million or 2 percent compared to the
fourth quarter of 2015. On an adjusted basis(1), non-interest
income increased $10 million or 2 percent driven by revenue
diversification initiatives with growth in almost every category. This
growth was led by mortgage income, service charges and card & ATM income
offset by lower net revenue from affordable housing investments.
Mortgage income increased $6 million or 16 percent due to higher gains
from loan sales as well as higher loan servicing income, partially
offset by declines in the market valuation of mortgage servicing rights
and related hedging activity. Also during the quarter, the company
purchased the rights to service approximately $2.2 billion of mortgage
loans bringing 2016 purchases to approximately $8.1 billion. Regions’
mortgage portfolio serviced for others has increased from approximately
$26 billion to $32 billion over the past year, which contributed to the
increase in mortgage servicing income.
Service charges increased $7 million or 4 percent aided by 2 percent
growth in checking accounts, offsetting the impact of posting order
changes implemented in early November 2015. Card & ATM income increased
$7 million or 7 percent compared to the fourth quarter of 2015,
primarily due to a 4 percent increase in debit card transactions.
Capital markets income increased $3 million or 11 percent as the company
experienced an increase in debt underwriting activity. In addition,
wealth management income improved $3 million or 3 percent due to
increased investment management and trust fees partially offset by a
decline in investment services.
Non-interest expense
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Quarter Ended
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions) 12/31/2016 9/30/2016 12/31/2015 4Q16 vs. 3Q16 4Q16 vs. 4Q15
-------------------- ----------------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ----------------------------------------------------------------------------- -------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Salaries and employee benefits $ 472 $ 486 $ 478 $ (14 ) (2.9 )% $ (6 ) (1.3 )%
Net occupancy expense 89 87 91 2 2.3 % (2 ) (2.2 )%
Furniture and equipment expense 80 80 79 -- NM 1 1.3 %
Outside services 41 38 40 3 7.9 % 1 2.5 %
Marketing 23 25 23 (2 ) (8.0 )% -- NM
FDIC insurance assessments 28 29 22 (1 ) (3.4 )% 6 27.3 %
Professional, legal and regulatory expenses 26 29 22 (3 ) (10.3 )% 4 18.2 %
Branch consolidation, property and equipment charges 17 5 6 12 240.0 % 11 183.3 %
Credit/checkcard expenses 14 14 13 -- NM 1 7.7 %
Visa class B shares expense -- 11 3 (11 ) (100.0 )% (3 ) (100.0 )%
Loss on early extinguishment of debt -- 14 -- (14 ) (100.0 )% -- NM
Provision (credit) for unfunded credit losses (3 ) 8 (12 ) (11 ) (137.5 )% 9 (75.0 )%
Other 112 108 108 4 3.7 % 4 3.7 %
-------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ---------- --------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ---------- --------- --------------------
Total non-interest expense from continuing operations $ 899 $ 934 $ 873 $ (35 ) (3.7 )% $ 26 3.0 %
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Total adjusted non-interest expense(1) $ 877 $ 912 $ 861 $ (35 ) (3.8 )% $ 16 1.9 %
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Comparison of fourth quarter 2016 to third quarter
2016
Non-interest expense totaled $899 million in the fourth quarter, a
decrease of $35 million or 4 percent. On an adjusted basis(1),non-interest expense totaled $877 million, a decrease of $35
million or 4 percent. Total salaries and benefits decreased $14 million
primarily due to a decline in base salaries associated with one less
weekday, the impact of staffing reductions, and decreased
production-based incentives related to capital markets and commercial
banking.
Professional, legal and regulatory expenses decreased $3 million,
primarily due to lower litigation-related costs. The company also
recorded a $3 million credit for unfunded credit losses during the
quarter resulting in an $11 million benefit compared to the third
quarter. Additionally, in the third quarter the company incurred $11
million of expense related to Visa class B shares sold in a prior year
that did not repeat.
The company’s efficiency ratio in the fourth quarter was 64.4 percent,
or 63.2 percent on an adjusted basis(1),a 210
basis point improvement versus the prior quarter. The effective tax rate
for the fourth quarter was 31.2 percent compared to 32.3 percent in the
third quarter. The effective tax rate for the full year of 2016 was 30.7
percent.
Comparison of fourth quarter 2016 to fourth
quarter 2015
Non-interest expense increased $26 million or 3 percent from the fourth
quarter of last year. Non-interest expense increased $16 million or 2
percent on an adjusted basis(1). Total salaries and benefits
decreased $6 million or 1 percent as the impact of staffing reductions
more than offset increased incentives related to revenue initiatives.
Year-over-year, staffing levels have declined over 1,200 positions or 5
percent.
FDIC insurance assessments increased $6 million or 27 percent from the
prior year reflecting the implementation of the FDIC assessment
surcharge that went into effect in the third quarter of 2016.
Professional, legal and regulatory expenses increased $4 million or 18
percent. Occupancy expense decreased $2 million or 2 percent reflecting
the company’s ongoing branch consolidations. Expenses were also
negatively impacted by $9 million from reduced credits related to
unfunded commitments compared to the prior year. In addition, branch
consolidation, property and equipment charges totaled $17 million in the
fourth quarter of 2016 compared to $6 million in the fourth quarter of
2015.
Loans and Leases
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Average Balances
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions) 4Q16 3Q16 4Q15 4Q16 vs. 3Q16 4Q16 vs. 4Q15
-------------------- ------------------------------------------------ -------------------- ------------------------------------------------ -------------------- ------------------------------------------------ -------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- -----------------------------------------------------------------------------------------------------------------------------------------------------------------
Total commercial $ 42,468 $ 43,184 $ 43,601 $ (716 ) (1.7 )% $ (1,133 ) (2.6 )%
Total investor real estate 6,672 6,979 6,908 (307 ) (4.4 )% (236 ) (3.4 )%
-------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- --------------------
Business Lending 49,140 50,163 50,509 (1,023 ) (2.0 )% (1,369 ) (2.7 )%
-------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- --------------------
Residential first mortgage 13,485 13,249 12,753 236 1.8 % 732 5.7 %
Home equity 10,711 10,775 10,948 (64 ) (0.6 )% (237 ) (2.2 )%
Indirect--vehicles 4,096 4,113 3,969 (17 ) (0.4 )% 127 3.2 %
Indirect--other consumer 889 779 523 110 14.1 % 366 70.0 %
Consumer credit card 1,146 1,110 1,031 36 3.2 % 115 11.2 %
Other consumer 1,122 1,094 1,027 28 2.6 % 95 9.3 %
-------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- --------------------
Consumer Lending 31,449 31,120 30,251 329 1.1 % 1,198 4.0 %
-------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -- --------------------
Total Loans $ 80,589 $ 81,283 $ 80,760 $ (694 ) (0.9 )% $ (171 ) (0.2 )%
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NM - Not meaningful.
Comparison of fourth quarter 2016 to third quarter
2016
Average loans and leases were $80.6 billion for the fourth quarter, a
decrease of $694 million or 1 percent. Average balances in the consumer
lending portfolio increased $329 million or 1 percent. The increase in
average consumer loans was more than offset by a decline in the business
lending portfolio as average balances decreased $1.0 billion or 2
percent.
Within the consumer lending portfolio, residential first mortgage
balances increased $236 million or 2 percent. Indirect-other increased
$110 million or 14 percent as the company continued to grow its
point-of-sale portfolio. Consumer credit card balances increased $36
million or 3 percent as active credit cards increased 2 percent. Other
consumer loans increased $28 million or 3 percent primarily due to
growth in unsecured loans through the branch network. These increases
were partially offset by declines in home equity balances of $64 million
as the pace of run-off exceeded production. Indirect-vehicle lending
balances decreased $17 million as a result of the company terminating a
third-party arrangement during the fourth quarter that accounted for
approximately one half of the company’s production. The company is
continuing to focus on its preferred dealer network.
The company remains focused on achieving appropriate balance and
diversity in its loan portfolio while improving risk-adjusted returns.
Average business lending balances were impacted by the company’s
decision to reduce exposure in select portfolios based on concerns about
increasing risk in certain industries and asset classes. Average direct
energy loans declined $132 million or 6 percent and average investor
real estate loans declined $307 million or 4 percent, driven by a $242
million or 12 percent reduction in multi-family loans. Soft demand and
increasing competition for middle market and small business loans also
impacted production. Despite these declines, the company continues to
expect low single digit average business lending loan growth in 2017,
driven in part by growth in the technology & defense, healthcare, power
& utilities and asset-based lending portfolios.
Comparison of fourth quarter 2016 to fourth
quarter 2015
Average loans and leases were relatively stable compared to the fourth
quarter of 2015 as growth in the consumer lending portfolio essentially
offset a decline in the business lending portfolio.
The consumer lending portfolio experienced growth in almost every
product category as average balances increased $1.2 billion or 4 percent
from the prior year. Residential first mortgage balances increased $732
million or 6 percent. Indirect-other increased $366 million or 70
percent, as the company continued to execute its point-of-sale
initiatives. Indirect-vehicle lending balances increased $127 million or
3 percent. Consumer credit card balances increased $115 million or 11
percent as active credit cards increased 11 percent, and the company’s
penetration rate of deposit customers increased 110 basis points over
the prior year to approximately 18.4 percent. In addition, other
consumer loans increased $95 million or 9 percent primarily due to
growth in unsecured loans through the branch network. These increases
were partially offset by home equity balances which decreased $237
million as the pace of run-off continued to exceed production.
Average business lending balances decreased $1.4 billion or 3 percent
primarily due to declines in the direct energy and multi-family
portfolios as well as owner-occupied commercial real estate loans.
Average direct energy loans decreased $491 million or 19 percent and
average multi-family investor real estate loans decreased $239 million
or 12 percent compared to the fourth quarter of 2015. The declines in
owner-occupied commercial real estate mortgage loans reflect the
softness in loan demand from middle market and small business customers,
combined with the competitive market for this asset class.
Deposits
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-------------------- ------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Average Balances
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions) 4Q16 3Q16 4Q15 4Q16 vs. 3Q16 4Q16 vs. 4Q15
-------------------- ------------------------------------------------ -------------------- ------------------------------------------------ -------------------- ------------------------------------------------ -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------
Low-cost deposits $ 90,992 $ 90,489 $ 89,670 $ 503 0.6 % $ 1,322 1.5 %
Time deposits 7,505 7,447 7,818 58 0.8 % (313 ) (4.0 )%
-------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ---- -- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -- --------------------
Total Deposits $ 98,497 $ 97,936 $ 97,488 $ 561 0.6 % $ 1,009 1.0 %
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($ amounts in millions) 4Q16 3Q16 4Q15 4Q16 vs. 3Q16 4Q16 vs. 4Q15
-------------------- ------------------------------------------------ -------------------- ------------------------------------------------ -------------------- ------------------------------------------------ -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Bank Segment $ 55,638 $ 55,186 $ 52,952 $ 452 0.8 % $ 2,686 5.1 %
Corporate Bank Segment 28,730 28,293 27,580 437 1.5 % 1,150 4.2 %
Wealth Management Segment 10,245 10,643 12,497 (398 ) (3.7 )% (2,252 ) (18.0 )%
Other 3,884 3,814 4,459 70 1.8 % (575 ) (12.9 )%
-------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- ---- -- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -- --------------------
Total Deposits $ 98,497 $ 97,936 $ 97,488 $ 561 0.6 % $ 1,009 1.0 %
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Comparison of fourth quarter 2016 to third quarter
2016
Total average deposit balances were $98.5 billion in the fourth quarter,
reflecting an increase of $561 million or 1 percent compared to the
prior quarter. Average low-cost deposits increased $503 million or 1
percent and represented 92 percent of average deposits. Deposit costs
remained near historical lows at 13 basis points, and total funding
costs were 30 basis points in the fourth quarter.
Average deposits in the Consumer segment increased $452 million or 1
percent from the prior quarter. Average Corporate segment deposits
increased $437 million or 2 percent, while average deposits in the
Wealth Management segment declined $398 million or 4 percent as a result
of ongoing strategic reductions of certain collateralized deposits.
Comparison of fourth quarter 2016 to fourth
quarter 2015
Total average deposit balances increased $1.0 billion or 1 percent from
the prior year. Average low-cost deposits increased $1.3 billion or 1
percent. Average deposits in the Consumer segment increased $2.7 billion
or 5 percent from the prior year and average Corporate segment deposits
increased $1.2 billion or 4 percent. Average deposits in the Wealth
Management segment declined $2.3 billion or 18 percent.
Asset quality
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As of and for the Quarter Ended
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ amounts in millions) 12/31/2016 9/30/2016 12/31/2015
-------------------- --------------------------------------------------- -------------------- --------------------------------------------------- -------------------- ---------------------------------------------------
ALL/Loans, net* 1.36 % 1.39 % 1.36 %
Net loan charge-offs as a % of average loans, annualized 0.41 % 0.26 % 0.38 %
Non-accrual loans, excluding loans held for sale/Loans, net 1.24 % 1.33 % 0.96 %
NPAs (ex. 90+ past due)/Loans, foreclosed properties and 1.37 % 1.47 % 1.13 %
non-performing loans held for sale
NPAs (inc. 90+ past due)/Loans, foreclosed properties and 1.58 % 1.69 % 1.39 %
non-performing loans held for sale**
Total TDRs, excluding loans held for sale $ 1,385 $ 1,319 $ 1,295
Total Criticized Loans--Business Services*** $ 3,612 $ 3,742 $ 3,371
-------------------- ----------------------------------------------------------- -------------------- -------------------- -------------------- --- ----- -------------------- -------------------- -------------------- -------------------- -------------------- --- ----- -------------------- -------------------- -------------------- -------------------- -------------------- --- ----- -------------------- --------------------
* ALL excludes operating leases. ** 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.
Comparison of fourth quarter 2016 to third quarter
2016
Net charge-offs totaled $83 million or 0.41 percent of average loans
during the quarter compared to $54 million or 0.26 percent of average
loans in the previous quarter. The provision for loan losses was $35
million less than net charge-offs primarily attributable to improvement
in the energy portfolio, the majority of fourth quarter commercial
charge-offs having reserves established in prior quarters, and a
reduction in loans outstanding. The resulting allowance for loan and
lease losses decreased 3 basis points to 1.36 percent of total loans
outstanding. Total non-accrual loans, excluding loans held for sale,
decreased 9 basis points to 1.24 percent of loans outstanding, and total
business services criticized loans decreased 3 percent. Troubled debt
restructured loans and total delinquencies increased 5 percent and 10
percent, respectively.
Charge-offs related to the company’s direct energy portfolio totaled $14
million in the quarter. The allowance for loan and lease losses
associated with the direct energy loan portfolio decreased to 7.0
percent in the fourth quarter compared to 7.9 percent in the third
quarter as the company’s exposure to direct energy continued to decline
ending the year at 2.6 percent of total loans outstanding. Given the
current phase of the credit cycle, volatility in certain credit metrics
can be expected, especially related to large-dollar commercial credits
and fluctuating commodity prices.
The allowance for loan losses as a percentage of total non-accrual loans
was approximately 110 percent at quarter end. Excluding direct energy,
the allowance for loan losses, as a percent of non-accrual loans, or the
adjusted coverage ratio(1), was 138 percent.
Comparison of fourth quarter 2016 to fourth
quarter 2015
Net charge-offs increased 6 percent compared to the fourth quarter of
2015 and represented 0.41 percent of average loans compared to 0.38
percent in the prior year. The allowance for loan and lease losses as a
percent of total loans remained unchanged at 1.36 percent of total loans.
Total non-accrual loans, excluding loans held for sale, increased from
0.96 percent to 1.24 percent of loans outstanding, and total business
lending criticized loans increased 7 percent compared to the fourth
quarter of 2015. These increases were driven primarily by downward risk
rating migration in the energy portfolio. Troubled debt restructured
loans increased 7 percent during the year primarily due to increases in
direct energy and energy-related credits.
Capital and liquidity
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
-------------------- -------------------- ------------------------------------------------------------------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
As of and for Quarter Ended
-------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
12/31/2016 9/30/2016 12/31/2015
-------------------- -------------------------------------------------- -------------------- -------------------------------------------------- -------------------- --------------------------------------------------
Basel III Common Equity Tier 1 ratio(2) 11.1 % 11.2 % 10.9 %
Basel III Common Equity Tier 1 ratio -- Fully Phased-In Pro-Forma 11.0 % 11.0 % 10.7 %
(non-GAAP)(1)(2)
Tier 1 capital ratio(2) 11.9 % 11.9 % 11.7 %
Tangible common stockholders’ equity to tangible assets (non-GAAP)(1) 8.99 % 9.64 % 9.13 %
Tangible common book value per share (non-GAAP)(1) $ 8.95 $ 9.38 $ 8.52
-------------------- ------------------------------------------------------------------------------------------------ -------------------- -------------------- -------------------- --- ---- -------------------- -------------------- -------------------- -------------------- -------------------- --- ---- -------------------- -------------------- -------------------- -------------------- -------------------- --- ---- -------------------- --------------------
Under the Basel III capital rules, Regions’ estimated capital ratios
remain well above current regulatory requirements. The Tier 1(2)
and Common Equity Tier 1(2) ratios were estimated at 11.9
percent and 11.1 percent, respectively, at quarter-end under the
phase-in provisions. In addition, the Common Equity Tier 1 ratio(1)(2)
was estimated at 11.0 percent on a fully phased-in basis.
During 2016, the company returned $1.2 billion to shareholders through
the combination of share repurchases and dividends to common
shareholders. The company’s liquidity position remained solid with its
loan-to-deposit ratio at the end of the quarter at 81 percent, and, as
of quarter-end, the company remained fully compliant with the liquidity
coverage ratio rule.
(1) Non-GAAP, refer to pages 12, 13, 16, and 24 of the financial
supplement to this earnings release (2) Current quarter Basel III
common equity Tier 1, and Tier 1 capital ratios are estimated.
Conference Call
A replay of the earnings call will be available from Friday, Jan. 20,
2017, at 2 p.m. ET through Monday, Feb. 20, 2017. To listen by
telephone, please dial 1-855-859-2056, and use access code 40610503. An
archived webcast will also be available until Feb. 20, 2017 on the
Investor Relations page of www.regions.com.
About Regions Financial Corporation
Regions Financial Corporation (RF ), with $126 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, mortgage, and insurance products and services. Regions
serves customers across the South, Midwest and Texas, and through its
subsidiary, Regions Bank, operates approximately 1,500 banking offices
and 1,900 ATMs. 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, which reflect Regions’
current views with respect to future events and financial performance.
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 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, uncertainties and other factors that
may cause actual results to differ materially from the views, beliefs
and projections expressed in such 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, including the effects of
declines in property values, unemployment rates 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.
--
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.
--
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.
--
Any impairment of our goodwill or other intangibles, or any adjustment
of valuation allowances on our deferred tax assets due to adverse
changes in the economic environment, declining operations of the
reporting unit, or other factors.
--
Possible changes in the creditworthiness of customers and the possible
impairment of the collectability of loans.
--
Changes in the speed of loan prepayments, loan origination and sale
volumes, charge-offs, loan loss provisions or actual loan losses where
our allowance for loan 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.
--
Our ability to effectively compete with other financial services
companies, some of whom possess greater financial resources than we do
and are subject to different regulatory standards than we are.
--
Loss of customer checking and savings account deposits as customers
pursue other, higher-yield investments, which could increase our
funding costs.
--
Our inability to develop and gain acceptance from current and
prospective customers for new products and services in a timely manner
could have a negative impact on our revenue.
--
The effects of any developments, changes or actions relating to any
litigation or regulatory proceedings brought against us or any of our
subsidiaries.
--
Changes in laws and regulations affecting our businesses, such as the
Dodd-Frank Act and other 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, 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 ability to obtain a regulatory non-objection (as part of the CCAR)
process or otherwise) to take certain capital actions, including
paying dividends and any plans to increase common stock dividends,
repurchase common stock under current or future programs, or redeem
preferred stock or other regulatory capital instruments, may impact
our ability to return capital to stockholders and market perceptions
of us.
--
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 and intensity of such tests and requirements.
--
Our ability to comply with applicable capital and liquidity
requirements (including, among other things, the Basel III capital
standards and the LCR rule), including our ability to generate capital
internally or raise capital on favorable terms, and if we fail to meet
requirements, our financial condition could be negatively impacted.
--
The Basel III framework calls for additional risk-based capital
surcharges for globally systemically important banks. Although we are
not subject to such surcharges, it is possible that in the future we
may become subject to similar surcharges.
--
The costs, including possibly incurring fines, penalties, or other
negative effects (including reputational harm) of any adverse
judicial, administrative, or arbitral rulings or proceedings,
regulatory enforcement actions, or other legal actions to which we or
any of our subsidiaries are a party, and which may adversely affect
our results.
--
Our ability to manage fluctuations in the value of assets and
liabilities and off-balance sheet exposure so as to maintain
sufficient capital and liquidity to support our business.
--
Our ability to execute on our strategic and operational plans,
including our ability to fully realize the financial and non-financial
benefits relating to our strategic initiatives.
--
The success of our marketing efforts in attracting and retaining
customers.
--
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 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.
--
The risks and uncertainties related to our acquisition and integration
of other companies.
--
Inability of our framework to manage risks associated with our
business such as credit risk and operational risk, including
third-party vendors and other service providers, which could, among
other things, result in a breach of operating or security systems as a
result of a cyber attack or similar act.
--
The inability of our internal disclosure controls and procedures to
prevent, detect or mitigate any material errors or fraudulent acts.
--
The effects of geopolitical instability, including wars, conflicts 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,
which may negatively affect our operations and/or our loan portfolios
and increase our cost of conducting business.
--
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 inability to keep pace with technological changes could result in
losing business to competitors.
--
Our ability to identify and address cyber-security risks such as data
security breaches, "denial of service" attacks, "hacking" and identity
theft, a failure of which could disrupt our business and result in the
disclosure of and/or misuse or misappropriation of confidential or
proprietary information; increased costs; losses; or adverse effects
to our reputation.
--
Our ability to realize our adjusted efficiency ratio target as part of
our expense management initiatives.
--
Significant disruption of, or loss of public confidence in, the
Internet and services and devices used to access the Internet could
affect the ability of our customers to access their accounts and
conduct banking transactions.
--
Possible downgrades in our credit ratings or outlook could 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 could affect
our liquidity and ability to pay dividends to stockholders.
--
Changes in accounting policies or procedures as may be required by the
FASB or other regulatory agencies could materially affect how we
report our financial results.
--
Other risks identified from time to time in reports that we file with
the SEC.
--
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, 2015, as filed with the Securities and Exchange Commission.
The words "anticipates," "intends," "plans," "seeks," "believes,"
"estimates," "expects," "targets," "projects," "outlook," "forecast,"
"will," "may," "could," "should," "can," and similar 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.
We assume no obligation to update or revise any forward-looking
statements that are made from time to time.
Regions’ Investor Relations contact is Dana Nolan at (205) 264-7040;
Regions’ Media contact is Evelyn Mitchell at (205) 264-4551.
Use of non-GAAP financial measures
Management uses 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. Net
interest income and other financing income 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 base 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 Company’s allowance for loan losses as a percentage of non-accrual
loans, or coverage ratio is an important credit metric to many
investors. Much of the Company’s energy exposure is collateralized and
therefore requires a lower specific allowance. Adjusting the Company’s
total allowance for loan losses to exclude the portion attributable to
energy and excluding non-accrual energy loans produces an adjusted
coverage ratio that management believes could be meaningful to investors.
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.
The calculation of the fully phased-in pro-forma "Common equity Tier 1"
(CET1) is based on Regions’ understanding of the Final Basel III
requirements. For Regions, the Basel III framework became effective on a
phased-in approach starting in 2015 with full implementation beginning
in 2019. The calculation includes estimated pro-forma amounts for the
ratio on a fully phased-in basis. Regions’ current understanding of the
final framework includes certain assumptions, including the Company’s
interpretation of the requirements, and informal feedback received
through the regulatory process. Regions’ understanding of the framework
is evolving and will likely change as analysis and discussions with
regulators continue. Because Regions is not currently subject to the
fully-phased in capital rules, this pro-forma measure is considered to
be a non-GAAP financial measure, and other entities may calculate it
differently from Regions’ disclosed calculation.
A company’s regulatory capital is often expressed as a percentage of
risk-weighted assets. Under the risk-based capital framework, a
company’s balance sheet assets and credit equivalent amounts of
off-balance sheet items are assigned to broad risk categories. The
aggregated dollar amount in each category is then multiplied by the
prescribed risk-weighted percentage. The resulting weighted values from
each of the categories are added together and this sum is the
risk-weighted assets total that, as adjusted, comprises the denominator
of certain risk-based capital ratios. CET1 capital is then divided by
this denominator (risk-weighted assets) to determine the CET1 capital
ratio. The amounts disclosed as risk-weighted assets are calculated
consistent with banking regulatory requirements on a fully phased-in
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
http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170120005048r1&sid=cmtx6&distro=nx&lang=en
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SOURCE: Regions Financial Corporation
Regions Financial Corporation
Media Contact:
Evelyn Mitchell, 205-264-4551
or
Investor Relations Contact:
Dana Nolan, 205-264-7040
