Banking: Regions Financial’s stock falls to lowest level in nearly 3 years as bank misses on profit, revenue and net interest income

Regions Financial Corp.’s stock fell sharply to its lowest levels in nearly three years on Friday after its third-quarter profit and revenue missed expectations as deposits fell.

Citing “economic and regulatory uncertainty,” the bank reported earnings of 49 cents a share, missing the FactSet consensus estimate of 58 cents a share, although its profit increased by 15%.

Regions Financial’s stock
RF,
-12.38%

was down 10.5% to $14.76 as the third-worst performer in the S&P 500
SPX
on Friday. It’s the first time the stock has fallen below $15 since late 2020.

If the losses hold until the end of the session, the stock will be at its lowest since Nov. 6, 2020, when it was at $13.05 at the closing bell, according to Dow Jones Market Data.

It’s on pace for the largest percentage drop since March 18, 2020, when it fell 17.1%. The stock has fallen about 16% in the past three days.

Citi analyst Keith Horowitz reiterated a neutral rating on Regions Financial and said that while fees and expenses were in line for the quarter, the bank signaled that its preprovision net revenue would fall short of Wall Street consensus forecasts by 11 cents a share in the fourth quarter.

Jefferies analyst Ken Usdin reiterated a hold rating on Regions Financial and said the bank expects its net interest income to stabilize in the first half of 2024 and to grow in the second half.

Regions Financial said its third-quarter net income rose 15% to $465 million, or 49 cents a share, from $404 million, or 43 cents a share, in the year-ago period.

The Birmingham, Ala.-based bank’s third-quarter revenue fell 0.5% to $1.858 billion, below the FactSet consensus of $1.887 billion.

Total deposits dropped 6.8% to $126.2 billion.

Net interest income rose 2.4% to $1.304 billion but missed the FactSet consensus of $1.325 billion, while non-interest income declined 6.4% to $566 million to match expectations.

The bank said it expected net interest income to drop from the previous quarter due to rising deposit and funding costs and to a portion of the company’s forward-starting interest-rate hedges kicking in. This was partially offset by higher market interest rates on asset yields, the bank said.

Total loans grew 4.3% to $98.79 billion, while allowance for credit losses increased 9% to $1.68 billion.

Prior to Friday’s trades, Regions’ stock had tumbled 19% over the past three months through Thursday, while the SPDR S&P Regional Banking exchange-traded fund
KRE
shed 13.3% and the S&P 500
SPX
gave up 5.7%.

source

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