Regions Financial (RF) Q2 2024 earnings summary

Executive summary

• Net income available to common shareholders was $477 million ($0.52 per diluted share) for Q2 2024, up 39% sequentially but down from $556 million ($0.59 per share) in Q2 2023, reflecting lower net interest income and higher charge-offs.

• Total revenue was $1.7 billion reported and $1.8 billion adjusted; efficiency ratio was 57.6%, with adjusted pre-tax pre-provision income of $749 million.

• Asset quality improved, with lower non-performing and criticized loans and net charge-offs, reflecting successful execution of the strategic plan and investments in talent, technology, and products.

• Management highlighted strong capital and liquidity levels, exceeding all minimum capital requirements in the Federal Reserve Supervisory Stress Test.

• Digital engagement, product innovation, and operational efficiency continue to drive customer growth.

Financial highlights

• Net interest income was $1.2 billion, flat sequentially but down 14% year-over-year; net interest margin declined to 3.51%.

• Non-interest income was $545 million, down 3% sequentially and 14% year-over-year, impacted by $50 million pre-tax securities repositioning loss.

• Non-interest expense decreased 11% sequentially and 10% year-over-year to $1.0 billion, aided by a $37 million contingent reserve release.

• Net charge-offs were $101 million (0.42% of average loans), down 8 bps sequentially.

• Allowance for credit losses was $1.7 billion, representing 1.78% of loans; CET1 capital ratio was 10.4%.

Outlook and guidance

• 2024 net interest income expected at $4.7–$4.8 billion, toward the upper end of the range, with modest growth in H2 2024.

• Adjusted non-interest income forecasted at $2.3–$2.4 billion, also at the upper end.

• Adjusted non-interest expense expected at $4.15–$4.2 billion; average loans and deposits projected to remain stable to down modestly.

• Net charge-offs expected at the upper end of the 40–50 bps range, fully reserved; effective tax rate anticipated at 20–21%.

• CET1 ratio to be managed at current levels; ACL ratio expected to remain flat to declining in H2 2024.