Regions Financial Has Capital To Spare, But What About Quality?
Stephen Simpson, CFA
Stephen Simpson, CFA
Fri, Aug. 5, 2:44 PM
- Regions Financial (RF +4%) has agreed on settlement terms to resolve a Justice Dept. probe of its mortgage loans.
- The agreement won't have a material impact on results or cash flows, the company says.
- The lender joins more than a dozen others who settled claims with the DOJ related to FHA-insured home loans. Wells Fargo reached a settlement worth $1.2B on the matter in February.
- The Justice Dept. had been looking into Regions' origination, underwriting and quality control practices.
Tue, Jul. 19, 7:38 AM
- Q2 net income of $256M or $0.20 per share vs. $273M and $0.20 one year ago. Special items shaved $0.01 off of this year's result and added a penny to last year's.
- Average loans and leases up 4% Y/Y, with business lending balances up 3% and consumer lending balances up 5%.
- Net interest income of $848M up 3.4% Y/Y, with NIM of 3.15% down one basis point.
- Noninterest income of $526M down 10.8% Y/Y thanks to $90M of insurance proceeds in the year-ago quarter. Service charges of $166M down 1.2%; Wealth Management of $103M up 6.2%; Card and ATM fees of $99M up 10%.
- Adjusted noninterest expense of $889M up 3.5% Y/Y. Salaries and employee benefits of $480M up 0.6%.
- Net loan charge-offs of $72M up 5% from Q1, up 56% Y/Y.
- CET 1 ratio of 10.9% down from 11.3% a year ago. Tangible common book value per share of $9.22 up from $8.37.
- CC at 11 ET
- Previously: Regions Financial EPS in-line, beats on revenue (July 19)
- RF flat premarket
Tue, Jul. 19, 6:02 AM
Mon, Jul. 18, 5:30 PM
Thu, Jul. 14, 3:35 PM| Thu, Jul. 14, 3:35 PM | 1 Comment
Mon, Jul. 11, 3:40 PM
- While nearly all major U.S. banks cruised through the stress tests last month, writes David Schawel, those exams are about determining if lenders have enough capital to get through a crisis, not whether they can earn the sort of risk-adjusted returns of the past.
- On this front (for insurers as well as banks), there's plenty more for investors to worry about, he says, thanks to the vanishing spread between short rates (what the companies pay on their liabilities), and long rates (what they earn on their assets).
- A new Fed study finds the adverse effect of weaker net interest margins is materially larger when rates are low. The reason: The lower bound of funding costs is zero as institutions are reticent to charge negative rates.
- Investors interested in buying banks or insurers because of seemingly cheap valuations might want to look again. Bank multiples, says Schawel, typically move alongside ROE, and serious improvement in ROE is unlikely with rates remaining low.
- Interested parties include: BAC, C, JPM, WFC, MET, PRU, LNC, PNC, USB, RF, KEY, KRE, KBE
Tue, Jul. 5, 4:17 PM
- Interest rates continue to plummet, with U.S. government yields on the long end hitting new all-time lows. At least they remain positive (for now). Yields on French government paper are now negative all the way out to nine years, and Swiss 50-year bonds now sport yields below zero.
- Some hawkish words today from San Francisco Fed President Williams weren't enough to lift the share prices of yield-starved financials (XLF -1.5%).
- The SPDR KBW Bank ETF (KBE -3%), the SPDR KBW Regional Bank ETF (KRE -3%)
- Citigroup (C -3.3%), Morgan Stanley (MS -3.5%), Regions Financial (RF -3.9%), Fifth Third (FITB -4.2%), Capital One (COF -3.3%), Legg Mason (LM -3.3%), E*Trade (ETFC -3.2%), Schwab (SCHW -3%), MetLife (MET -4.2%), Prudential (PRU -3.2%), Lincoln (LNC -4.5%)
Wed, Jun. 29, 11:18 PM
Wed, Jun. 29, 9:41 AM
- The details aren't available, but one can be pretty sure a common theme through all of the downgrades is a "lower for longer" interest rate scenario, and for any Texas or energy-exposed banks a possible topping in oil prices.
- Comerica (CMA -0.1%) is cut to Underperform from Neutral, Franklin Financial (FSB) to Neutral from Buy, Lincoln National (LNC -0.8%) to Neutral, Principal Financial (PFG +0.5%) to Neutral, Prudential (PRU -0.4%) to Underperform, Regions Financial (RF +0.5%) to Neutral, Synovus (SNV +0.4%) to Neutral, Unum Group (UNM -1.2%) to Underperform, and Zions (ZION -0.3%) to Underperform.
- Previously: Texas Capital downgraded at BAML (June 29)
Fri, Jun. 24, 5:36 PM
Fri, Jun. 24, 11:58 AM
- The Too Big To Fail lenders are naturally among the day's big losers following the U.K. vote to leave the EU, but losses in the financial sector are wide and deep as - among other things - interest rates look to be a lot lower for a lot longer.
- Among asset managers, Invesco (IVZ -10.8%) - with a sizable U.K. exposure - is faring about the worst. WisdomTree (WETF -7.8%) takes a hit as the yen is the solo currency surging against the dollar, reducing demand for its popular hedged Japan ETF.
- It's wait till next year (or even 2018 if you believe short-term rate futures markets) for rate hikes, meaning regional lenders can't celebrate their passing of the Fed stress tests last night. Regions (RF -7.8%), KeyCorp (KEY -6.4%), PNC Financial (PNC -5.5%), U.S. Bancorp (USB -4.2%), BB&T (BBT -5.1%).
- Even lower rates put even more pressure on the business models of the life insurers: MetLife (MET -8.8%), Prudential (PRU -7.7%), Lincoln National (LNC -9.9%), Voya (VOYA -7%). Online brokers too: E*Trade (ETFC -9.4%), Schwab (SCHW -9.5%).
- ETFs: KRE, KBE, IAT, KBWB, QABA, KBWR, KRU, KRS, WDRW, DPST
Thu, Jun. 23, 4:51 PM
- Ally Financial (NYSE:ALLY): Actual end of 2015 CET1 ratio of 9.2%, Q1 2018 CET1 ratio under severely adverse scenario of 6.1%, minimum 6.1%.
- American Express (NYSE:AXP): Actual 12.4%, Q1 2018 12.3%, minimum 11.4%.
- Bank of America (NYSE:BAC): Actual 11.6%, Q1 2018 8.1%, minimum 8.1%.
- BNY Mellon (NYSE:BK): Actual 11.5%, Q1 2018 11.2%; minimum 10.5%.
- BB&T (NYSE:BBT): 10.3%, 6.9%, 6.9%
- BBVA Compass (NYSE:BBVA): 10.7%, 6.5%, 6.5%.
- BMO Financial (NYSE:BMO): 11.9%, 5.9%, 5.9%.
- Capital One (NYSE:COF): 11.1%, 8.2%, 8.2%.
- Citigroup (NYSE:C): 15.3%, 9.2%, 9.2%.
- Citizens Financial (NYSE:CFG): 11.7%, 8.8%, 8.8%.
- Comerica (NYSE:CMA): 10.5%, 8.3%, 8.3%.
- Discover (NYSE:DFS): 13.9%, 12.4%, 11.9%.
- Fifth Third (NASDAQ:FITB): 9.8%, 6.8%, 6.8%.
- Goldman Sachs (NYSE:GS): 13.6%, 10.2%, 8.4%.
- HSBC N.A. (NYSE:HSBC): 15.7%, 9.1%, 9.1%.
- Huntington Bancshares (NASDAQ:HBAN): 9.8%, 5%, 5%.
- JPMorgan (NYSE:JPM): 12%, 8.3%, 8.3%.
- KeyCorp (NYSE:KEY): 10.9%, 6.4%, 6.4%.
- M&T (NYSE:MTB): 11.1%, 6.9%, 6.9%.
- Morgan Stanley (NYSE:MS): 16.4%, 10%, 9.1%.
- Northern Trust (NASDAQ:NTRS): 10.8%, 9.6%, 9.6%.
- PNC Financial (NYSE:PNC): 10.6%, 7.6%, 7.6%.
- Regions (NYSE:RF): 10.9%, 7.3%, 7.3%.
- Santander Holdings (NYSE:SAN): 12%, 11.8%, 11.8%
- State Street (NYSE:STT): 13%, 9.6%, 9.6%
- SunTrust (NYSE:STI): 10%, 7.5%, 7.5%.
- TD Group (NYSE:TD): 13.1%, 8.4%, 8.4%.
- U.S. Bancorp (NYSE:USB): 9.6%, 7.5%, 7.5%.
- Wells Fargo (NYSE:WFC): 11.1%, 7.2%, 7.2%.
- Zions (NASDAQ:ZION): 12.2%, 6.6%, 6.6%.
- Previously: All 33 banks pass this year's stress tests (June 23)
Tue, Jun. 14, 3:48 PM
- The S&P 500 is down just 0.25%, but the financial sector (XLF -1.5%) is taking a far larger beating as the idea of higher interest rates fades, with German 10-year yields falling below zero, and the U.S. 10-year Treasury yield within sight of its all-time low. KBE -2.3%, KRE -2.3%
- The FOMC concludes its two-day policy meeting tomorrow, at which updated economic projections and dots will be unveiled, along with a Janet Yellen press conference.
- How much of the panic into fixed-income is due to concern about the U.K. exiting the EU will become evident next Thursday night as that country's Brexit votes are tallied.
- Bank of America (BAC -2.5%), Citigroup (C -3.1%), Wells Fargo (WFC -2.5%), Regions Financial (RF -2.9%), KeyCorp (KEY -3.7%), PNC Financial (PNC -2.4%), Fifth Third (FITB -2.6%), SunTrust (STI -2.8%), E*Trade (ETFC -2.6%), MetLife (MET -1.6%), Prudential (PRU -1.8%), BNY Mellon (BK -2%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, FNCL, SEF, FXO, RYF, FINU, RWW, XLFS, FINZ, JHMF, FAZZ, FNCF
Mon, Jun. 13, 2:25 PM
- Not very excited about the prospects for bank stocks given the significant flattening in the yield curve as potentially signaling a deteriorating H2 and 2017 environment, a bank stock analyst nevertheless needs to recommend bank stocks.
- Given low expectations as reflected in its cheap valuation, its highly asset-sensitive balance sheet, and the chance for good news from CCAR, Bank of America (BAC -1.3%) is the team's top bank idea.
- Looking at regionals, they like the M&A optionality in Comerica (CMA -1.1%), but don't see much value in names like Citizens Financial Group (CFG -1.1%), Regions Financial (RF -1.1%), SunTrust (STI -0.9%), and Zions Bancorp (ZION -0.9%). Baird also sticks with its Underperform rating on M&T Bank (MTB +0.3%), which trades at 13.5x 2017E EPS vs. about 11x for the peer group.
Fri, Jun. 3, 5:36 PM
Fri, Jun. 3, 9:47 AM
- At the moment, it's looking like "wait till next year," for the higher interest rates much of the yield-starved financial sector has been waiting for. This morning's disappointing jobs numbers has traders quickly reversing bets on a rate hike this summer.
- Meanwhile, the 10-year Treasury yield has crumbled to a two-month low of 1.70%.
- The XLF is down 1.9%, leading the S&P 500's 0.5% decline. The SPDR KBW Bank ETF (KBE -3.5%), the SPDR Regional Banking ETF (KRE -3.4%).
- Among the Too Big To Fail names, Bank of America (BAC -4.7%) and Citigroup (C -4.8%) are hardest hit. In regionals, Regions Financial (RF -4.4%), KeyCorp (KEY -4%), BB&T (BBT -3.3%), Fifth Third (FITB -4.4%).
- State Street (STT -3.5%), Northern Trust (NTRS -3.8%), Schwab (SCHW -5.4%), E*Trade (ETFC -5.8%), Ameritrade (AMTD -5.5%), MetLife (MET -3.6%), Prudential (PRU -3.2%), Lincoln Financial (LNC -4.1%)
- ETFs: XLF, FAS, FAZ, KRE, UYG, VFH, KBE, IYF, BTO, IAT, IYG, FNCL, SEF, FXO, KBWB, QABA, KBWR, RYF, FINU, KRU, RWW, XLFS, FINZ, KRS, JHMF, WDRW, FAZZ, DPST, FNCF
Regions Financial Corp. operates as a bank holding company for Regions Bank. The company through its bank provides traditional commercial, retail and mortgage banking services, as well as other financial services in the fields of investment banking, asset management, trust, mutual funds,... More
Industry: Regional - Southeast Banks
Country: United States