Generates highest pre-tax pre-provision income since 2010
BIRMINGHAM, Ala.–(BUSINESS WIRE)–Regions Financial Corporation (NYSE:RF) today announced earnings for the third quarter ended September 30, 2019. The company reported net income from continuing operations available to common shareholders of $385 million, an increase of 9 percent compared to the third quarter of 2018. Earnings per diluted share from continuing operations were $0.39, a 22 percent increase. Total revenue grew 2 percent while pre-tax pre-provision income(1) increased 16 percent over the prior year. Adjusted revenue(1) grew 3 percent while adjusted pre-tax pre-provision income(1) increased 4 percent. The company also generated year-to-date positive operating leverage of 6 percent on a reported basis and 3 percent on an adjusted basis(1) versus the comparable prior year period.
“Regions delivered solid financial results during the third quarter, reflecting continued progress in our efforts to build a consistently performing and sustainable bank,” said John Turner, President and CEO. “Total revenue grew 2 percent, the adjusted efficiency ratio improved 70 basis points, and we generated the highest pre-tax pre-provision income in nearly a decade. Consistent with our strategic plan, we are making targeted investments in technology and talent to meet the needs of our customers and communities and provide long-term value for shareholders.”
| SUMMARY OF THIRD QUARTER 2019 RESULTS: | ||||||||||||
|
|
|
Quarter Ended |
||||||||||
|
(amounts in millions, except per share data) |
|
9/30/2019 |
|
6/30/2019 |
|
9/30/2018 |
||||||
|
Income from continuing operations (A) |
|
$ |
409 |
|
|
$ |
390 |
|
|
$ |
370 |
|
|
Income from discontinued operations, net of tax |
|
— |
|
|
— |
|
|
194 |
|
|||
|
Net income |
|
409 |
|
|
390 |
|
|
564 |
|
|||
|
Preferred dividends (B)* |
|
24 |
|
|
16 |
|
|
16 |
|
|||
|
Net income available to common shareholders |
|
$ |
385 |
|
|
$ |
374 |
|
|
$ |
548 |
|
|
Net income from continuing operations available to common shareholders (A) – (B) |
|
$ |
385 |
|
|
$ |
374 |
|
|
$ |
354 |
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Weighted-average diluted shares outstanding—during quarter |
|
991 |
|
|
1,012 |
|
|
1,095 |
|
|||
|
Actual shares outstanding—end of quarter |
|
964 |
|
|
1,004 |
|
|
1,055 |
|
|||
|
|
|
|
|
|
|
|
||||||
|
Diluted earnings per common share from continuing operations |
|
$ |
0.39 |
|
|
$ |
0.37 |
|
|
$ |
0.32 |
|
|
|
|
|
|
|
|
|
||||||
|
Diluted earnings per common share |
|
$ |
0.39 |
|
|
$ |
0.37 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
||||||
|
Non-GAAP adjusted items impacting earnings from continuing operations(1): |
|
|
|
|
|
|
||||||
|
Pre-tax adjusted items: |
|
|
|
|
|
|
||||||
|
Branch consolidation, property and equipment charges |
|
$ |
(5 |
) |
|
$ |
(2 |
) |
|
$ |
(4 |
) |
|
Salaries and benefits related to severance charges |
|
(1 |
) |
|
(2 |
) |
|
(5 |
) |
|||
|
Contribution to Regions’ charitable foundation |
|
— |
|
|
— |
|
|
(60 |
) |
|||
|
Securities gains (losses), net |
|
— |
|
|
(19 |
) |
|
— |
|
|||
|
Leveraged lease termination gains |
|
1 |
|
|
— |
|
|
4 |
|
|||
|
|
|
|
|
|
|
|
||||||
|
Diluted EPS impact** |
|
$ |
— |
|
|
$ |
(0.02 |
) |
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
||||||
|
* The first dividend for Series C preferred stock issued in April of 2019 was declared in July of 2019 resulting in third quarter dividends that exceed their expected quarterly run rate. |
||||||||||||
|
** Based on income taxes at an approximate 25% incremental rate. |
||||||||||||
During the third quarter of 2019, the company produced the highest level of pre-tax pre-provision income since 2010. Total revenue increased 2 percent on a reported basis and 3 percent on an adjusted basis(1) compared to the third quarter of 2018 as growth in non-interest income exceeded a modest decline in net interest income. The company’s net interest margin declined three basis points from the prior year, but only one basis point from the prior quarter, despite lower market interest rates. Reported non-interest expense remained well controlled during the quarter reflecting a 6 percent decline compared to the third quarter of 2018. Adjusted non-interest expense(1) increased 1 percent reflecting higher salaries and benefits associated with increased production-based incentives and one additional weekday in the current quarter, partially offset by reduced staffing levels.
Overall asset quality remained in line with the company’s broader risk expectations during the quarter. Annualized net charge-offs increased 4 basis points to 0.44 percent of average loans, while total non-performing loans decreased 14 percent to 0.56 percent of total loans compared to the third quarter of 2018. The allowance for loan and lease losses increased to 1.05 percent of total loans and 188 percent of non-performing loans. Business services criticized loans increased 14 percent driven by increases in accruing classified loans, partially offset by decreases in non-accrual and special mention loans.
Non-GAAP adjusted items(1) impacting the company’s earnings are identified in order 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 include the company’s continued focus on increasing organizational efficiency and effectiveness. This included $1 million of severance expense and $5 million of net expenses associated with branch consolidations and property and equipment charges. In addition, the company recorded a $1 million leveraged lease termination gain during the quarter.
|
Total revenue from continuing operations |
||||||||||||||||||||||||||
|
|
|
Quarter Ended |
||||||||||||||||||||||||
|
($ amounts in millions) |
|
9/30/2019 |
|
6/30/2019 |
|
9/30/2018 |
|
3Q19 vs. 2Q19 |
|
3Q19 vs. 3Q18 |
||||||||||||||||
|
Net interest income and other financing income |
|
$ |
937 |
|
|
$ |
942 |
|
|
$ |
942 |
|
|
$ |
(5 |
) |
|
(0.5 |
)% |
|
$ |
(5 |
) |
|
(0.5 |
)% |
|
Taxable equivalent adjustment |
|
13 |
|
|
14 |
|
|
13 |
|
|
(1 |
) |
|
(7.1 |
)% |
|
— |
|
|
— |
% |
|||||
|
Net interest income and other financing income, taxable equivalent basis |
|
$ |
950 |
|
|
$ |
956 |
|
|
$ |
955 |
|
|
$ |
(6 |
) |
|
(0.6 |
)% |
|
$ |
(5 |
) |
|
(0.5 |
)% |
|
Net interest margin (FTE) |
|
3.44 |
% |
|
3.45 |
% |
|
3.47 |
% |
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Service charges on deposit accounts |
|
$ |
186 |
|
|
$ |
181 |
|
|
$ |
179 |
|
|
$ |
5 |
|
|
2.8 |
% |
|
7 |
|
|
3.9 |
% |
|
|
Card and ATM fees |
|
114 |
|
|
120 |
|
|
111 |
|
|
(6 |
) |
|
(5.0 |
)% |
|
3 |
|
|
2.7 |
% |
|||||
|
Wealth management income |
|
83 |
|
|
79 |
|
|
77 |
|
|
4 |
|
|
5.1 |
% |
|
6 |
|
|
7.8 |
% |
|||||
|
Capital markets income |
|
36 |
|
|
39 |
|
|
45 |
|
|
(3 |
) |
|
(7.7 |
)% |
|
(9 |
) |
|
(20.0 |
)% |
|||||
|
Mortgage Income |
|
56 |
|
|
31 |
|
|
32 |
|
|
25 |
|
|
80.6 |
% |
|
24 |
|
|
75.0 |
% |
|||||
|
Commercial credit fee income |
|
19 |
|
|
18 |
|
|
18 |
|
|
1 |
|
|
5.6 |
% |
|
1 |
|
|
5.6 |
% |
|||||
|
Bank-owned life insurance |
|
18 |
|
|
19 |
|
|
18 |
|
|
(1 |
) |
|
(5.3 |
)% |
|
— |
|
|
— |
% |
|||||
|
Securities gains (losses), net |
|
— |
|
|
(19 |
) |
|
— |
|
|
19 |
|
|
(100.0 |
)% |
|
— |
|
|
NM |
|
|||||
|
Market value adjustments on employee benefit assets – defined benefit |
|
— |
|
|
— |
|
|
3 |
|
|
— |
|
|
NM |
|
|
(3 |
) |
|
(100.0 |
)% |
|||||
|
Market value adjustments on employee benefit assets – other* |
|
7 |
|
|
(2 |
) |
|
4 |
|
|
9 |
|
|
NM |
|
|
3 |
|
|
75.0 |
% |
|||||
|
Other |
|
39 |
|
|
28 |
|
|
32 |
|
|
11 |
|
|
39.3 |
% |
|
7 |
|
|
21.9 |
% |
|||||
|
Non-interest income |
|
$ |
558 |
|
|
$ |
494 |
|
|
$ |
519 |
|
|
$ |
64 |
|
|
13.0 |
% |
|
$ |
39 |
|
|
7.5 |
% |
|
Total revenue |
|
$ |
1,495 |
|
|
$ |
1,436 |
|
|
$ |
1,461 |
|
|
$ |
59 |
|
|
4.1 |
% |
|
$ |
34 |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Adjusted total revenue (non-GAAP)(1) |
|
$ |
1,494 |
|
|
$ |
1,455 |
|
|
$ |
1,457 |
|
|
$ |
39 |
|
|
2.7 |
% |
|
$ |
37 |
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
NM – Not Meaningful |
||||||||||||||||||||||||||
|
* These market value adjustments relate to assets held for employee benefits that are offset within salaries and employee benefits expense. |
||||||||||||||||||||||||||
Comparison of third quarter 2019 to second quarter 2019
Total revenue of approximately $1.5 billion in the third quarter increased approximately 4 percent on a reported basis and 3 percent on an adjusted basis(1) compared to the prior quarter. Net interest income and other financing income decreased 1 percent and net interest margin decreased one basis point to 3.44 percent. Net interest margin and net interest income and other financial income were negatively impacted by lower market interest rates and lower average loan balances, partially offset by declining deposit costs and the benefits of repositioning strategies executed in the investment portfolio. Net interest income and other financing income also benefited from one additional day in the quarter, which negatively impacted net interest margin.
Non-interest income increased 13 percent on a reported basis, and 9 percent on an adjusted basis(1). Service charges increased 3 percent reflecting increased activity and continued customer account growth. Total mortgage income increased significantly, driven primarily by increased hedging and valuation adjustments on residential mortgage servicing rights. Lower interest rates also drove an increase in mortgage production and sales income during the quarter in line with an 18 percent increase in total mortgage production. Wealth management income increased 5 percent driven by growth in investment management and trust fees and includes the third quarter acquisition of Highland Associates, Inc. Favorable market value adjustments on employee benefit assets resulted in a $9 million increase during the quarter. The increase in other non-interest income included a net $11 million increase in the value of certain equity investments during the third quarter compared to a net $3 million decline during the prior quarter.
Card and ATM fees decreased 5 percent reflecting lower commercial interchange impacted by favorable rebate adjustments recorded in the prior quarter that did not repeat. Capital markets income decreased 8 percent attributable primarily to decreases in merger and acquisition advisory services and loan syndication revenue, partially offset by an increase in fees generated from the placement of permanent financing for real estate customers. Customer interest rate swap income was also negatively impacted by $6 million of market-related credit valuation adjustments during the third quarter, slightly less than the $7 million recorded during the prior quarter.
Comparison of third quarter 2019 to third quarter 2018
Total revenue increased 2 percent on a reported basis and 3 percent on an adjusted basis(1) compared to the third quarter of 2018. Net interest income and other financing income decreased 1 percent, while net interest margin decreased 3 basis points. Net interest margin and net interest income and other financing income were negatively impacted by higher funding costs. This was mostly offset through the positive impacts from higher short-term market interest rates, repositioning strategies executed in the investment portfolio, higher loan balances and favorable loan remixing.
Non-interest income increased 8 percent both on a reported and adjusted basis(1). Service charges increased 4 percent reflecting continued account growth, and card and ATM fees increased 3 percent primarily due to higher interchange revenue associated with increased transactions and new account growth. Service charges also benefited from an increase in treasury management services. Wealth management income increased 8 percent reflecting growth in both investment services and investment management and trust income. Mortgage income increased 75 percent driven primarily by increased hedging and valuation adjustments on residential mortgage servicing rights. Mortgage production and sales income also increased during the quarter reflecting a 37 percent increase in total mortgage production.
Capital markets income decreased 20 percent due primarily to a reduction in merger and acquisition advisory services and lower customer interest rate swap income. The decrease in swap income was driven primarily by market-related credit valuation adjustments tied to customer derivatives.
|
Non-interest expense from continuing operations |
||||||||||||||||||||||||||
|
|
|
Quarter Ended |
||||||||||||||||||||||||
|
($ amounts in millions) |
|
9/30/2019 |
|
6/30/2019 |
|
9/30/2018 |
|
3Q19 vs. 2Q19 |
|
3Q19 vs. 3Q18 |
||||||||||||||||
|
Salaries and employee benefits |
|
$ |
481 |
|
|
$ |
469 |
|
|
$ |
473 |
|
|
$ |
12 |
|
|
2.6 |
% |
|
$ |
8 |
|
|
1.7 |
% |
|
Net occupancy expense |
|
80 |
|
|
80 |
|
|
82 |
|
|
— |
|
|
— |
% |
|
(2 |
) |
|
(2.4 |
)% |
|||||
|
Furniture and equipment expense |
|
83 |
|
|
84 |
|
|
81 |
|
|
(1 |
) |
|
(1.2 |
)% |
|
2 |
|
|
2.5 |
% |
|||||
|
Outside services |
|
48 |
|
|
52 |
|
|
46 |
|
|
(4 |
) |
|
(7.7 |
)% |
|
2 |
|
|
4.3 |
% |
|||||
|
Professional, legal and regulatory expenses |
|
21 |
|
|
26 |
|
|
32 |
|
|
(5 |
) |
|
(19.2 |
)% |
|
(11 |
) |
|
(34.4 |
)% |
|||||
|
Marketing |
|
23 |
|
|
23 |
|
|
20 |
|
|
— |
|
|
— |
% |
|
3 |
|
|
15.0 |
% |
|||||
|
FDIC insurance assessments |
|
12 |
|
|
12 |
|
|
22 |
|
|
— |
|
|
— |
% |
|
(10 |
) |
|
(45.5 |
)% |
|||||
|
Credit/checkcard expenses |
|
19 |
|
|
18 |
|
|
18 |
|
|
1 |
|
|
5.6 |
% |
|
1 |
|
|
5.6 |
% |
|||||
|
Branch consolidation, property and equipment charges |
|
5 |
|
|
2 |
|
|
4 |
|
|
3 |
|
|
150.0 |
% |
|
1 |
|
|
25.0 |
% |
|||||
|
Visa class B shares expense |
|
5 |
|
|
3 |
|
|
— |
|
|
2 |
|
|
66.7 |
% |
|
5 |
|
|
NM |
|
|||||
|
Provision (credit) for unfunded credit losses |
|
(2 |
) |
|
— |
|
|
2 |
|
|
(2 |
) |
|
NM |
|
|
(4 |
) |
|
(200.0 |
)% |
|||||
|
Other |
|
96 |
|
|
92 |
|
|
142 |
|
|
4 |
|
|
4.3 |
% |
|
(46 |
) |
|
(32.4 |
)% |
|||||
|
Total non-interest expense |
|
$ |
871 |
|
|
$ |
861 |
|
|
$ |
922 |
|
|
$ |
10 |
|
|
1.2 |
% |
|
$ |
(51 |
) |
|
(5.5 |
)% |
|
Total adjusted non-interest expense(1) |
|
$ |
865 |
|
|
$ |
857 |
|
|
$ |
853 |
|
|
$ |
8 |
|
|
0.9 |
% |
|
$ |
12 |
|
|
1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
NM – Not Meaningful |
||||||||||||||||||||||||||
Comparison of third quarter 2019 to second quarter 2019
Non-interest expense increased 1 percent on both a reported and adjusted basis(1) compared to the second quarter. Salaries and benefits increased 3 percent driven primarily by an increase in the market value on employee benefit plan assets, as well as higher production-based incentives, one additional weekday in the quarter, and the acquisition of Highland Associates, partially offset by continued overall staffing reductions.
Professional, legal and regulatory expenses decreased 19 percent primarily due to a reduction in legal fees. Outside services decreased 8 percent reflecting the company’s success in reducing overall third-party spend.
The company’s third quarter efficiency ratio was 57.7 percent on a reported basis and 57.4 percent on an adjusted basis(1). This represents a decrease of 170 basis points on a reported basis and 90 basis points on an adjusted basis(1). The effective tax rate was approximately 20.6 percent.
Comparison of third quarter 2019 to third quarter 2018
Non-interest expense decreased 6 percent on a reported basis, but increased 1 percent on an adjusted basis(1) compared to the third quarter of 2018. The prior year period included a $60 million contribution to the company’s charitable foundation reflected in other non-interest expense. Salaries and benefits increased 2 percent driven primarily by an increase in production-based incentives and one additional weekday in the quarter, partially offset by continued staffing reductions. Staffing levels declined 2 percent or 320 full-time equivalent positions from the third quarter of 2018. Excluding the prior year charitable foundation contribution, other non-interest expense increased $14 million due primarily to an increase in non-service related pension costs associated with a lower discount rate, as well as higher operational losses.
FDIC insurance assessments decreased 45 percent reflecting the discontinuation of the FDIC’s surcharge, and professional fees decreased 34 percent driven primarily by lower consulting fees.
|
Loans and Leases |
|||||||||||||||||||||||||
|
|
|
Average Balances |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
($ amounts in millions) |
|
3Q19 |
|
2Q19 |
|
3Q18 |
|
3Q19 vs. 2Q19 |
|
3Q19 vs. 3Q18 |
|||||||||||||||
|
Commercial and industrial |
|
$ |
40,200 |
|
|
$ |
40,707 |
|
|
$ |
37,410 |
|
|
$ |
(507 |
) |
|
(1.2 |
)% |
|
$ |
2,790 |
|
|
7.5% |
|
Commercial real estate—owner-occupied* |
|
5,871 |
|
|
5,895 |
|
|
6,311 |
|
|
(24 |
) |
|
(0.4 |
)% |
|
(440 |
) |
|
(7.0)% |
|||||
|
Investor real estate* |
|
6,388 |
|
|
6,496 |
|
|
5,892 |
|
|
(108 |
) |
|
(1.7 |
)% |
|
496 |
|
|
8.4% |
|||||
|
Business Lending |
|
52,459 |
|
|
53,098 |
|
|
49,613 |
|
|
(639 |
) |
|
(1.2 |
)% |
|
2,846 |
|
|
5.7% |
|||||
|
Residential first mortgage** |
|
14,298 |
|
|
14,150 |
|
|
14,162 |
|
|
148 |
|
|
1.0 |
% |
|
136 |
|
|
1.0% |
|||||
|
Home equity |
|
8,683 |
|
|
8,910 |
|
|
9,543 |
|
|
(227 |
) |
|
(2.5 |
)% |
|
(860 |
) |
|
(9.0)% |
|||||
|
Indirect—vehicles*** |
|
2,247 |
|
|
2,578 |
|
|
3,190 |
|
|
(331 |
) |
|
(12.8 |
)% |
|
(943 |
) |
|
(29.6)% |
|||||
|
Indirect—other consumer |
|
2,750 |
|
|
2,662 |
|
|
2,042 |
|
|
88 |
|
|
3.3 |
% |
|
708 |
|
|
34.7% |
|||||
|
Consumer credit card |
|
1,310 |
|
|
1,286 |
|
|
1,271 |
|
|
24 |
|
|
1.9 |
% |
|
39 |
|
|
3.1% |
|||||
|
Other consumer |
|
1,239 |
|
|
1,221 |
|
|
1,201 |
|
|
18 |
|
|
1.5 |
% |
|
38 |
|
|
3.2% |
|||||
|
Consumer Lending |
|
30,527 |
|
|
30,807 |
|
|
31,409 |
|
|
(280 |
) |
|
(0.9 |
)% |
|
(882 |
) |
|
(2.8)% |
|||||
|
Total Loans |
|
$ |
82,986 |
|
|
$ |
83,905 |
|
|
$ |
81,022 |
|
|
$ |
(919 |
) |
|
(1.1 |
)% |
|
$ |
1,964 |
|
|
2.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Adjusted Business Lending (non-GAAP) |
|
$ |
52,459 |
|
|
$ |
53,098 |
|
|
$ |
49,852 |
|
|
$ |
(639 |
) |
|
(1.2 |
)% |
|
$ |
2,607 |
|
|
5.2% |
|
Adjusted Consumer Lending (non-GAAP)(1) |
|
28,280 |
|
|
28,229 |
|
|
28,219 |
|
|
51 |
|
|
0.2 |
% |
|
61 |
|
|
0.2% |
|||||
|
Adjusted Total Loans (non-GAAP)(1) |
|
$ |
80,739 |
|
|
$ |
81,327 |
|
|
$ |
78,071 |
|
|
$ |
(588 |
) |
|
(0.7 |
)% |
|
$ |
2,668 |
|
|
3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
NM – Not meaningful. |
|||||||||||||||||||||||||
|
* Approximately $345 million of senior assisted living balances were reclassified from owner-occupied commercial real estate loans into investor real estate loans at the end of 2018. |
|||||||||||||||||||||||||
|
** Average residential first mortgage balances include the impact of a $167 million loan sale at the end of the first quarter of 2019. |
|||||||||||||||||||||||||
|
*** Indirect vehicles is an exit portfolio. |
|||||||||||||||||||||||||
Comparison of third quarter 2019 to second quarter 2019
Average loans and leases decreased approximately 1 percent in the third quarter, on both a reported and adjusted basis(1). Average balances in the business lending portfolio decreased modestly reflecting continued focus on client selectivity and overall relationship profitability. Business lending loans were also impacted by lower line utilization and increased capital markets activities. Adjusted(1) average balances in the consumer lending portfolio remained relatively stable as growth in residential first mortgage, indirect-other consumer, consumer credit card, and other consumer loans was partially offset by declines in home equity lending.
Comparison of third quarter 2019 to third quarter 2018
Average loans and leases increased 2 percent on a reported basis and 3 percent on an adjusted basis(1) compared to the third quarter of 2018. Adjusted(1) average balances in the business lending portfolio increased 5 percent led by 7 percent adjusted(1) growth in commercial and industrial loans. Owner-occupied commercial real estate loans declined 7 percent, while investor real estate loans increased 8 percent. Excluding the impact of approximately $345 million of senior assisted living loans reclassified to investor real estate from owner-occupied commercial real estate at the end of 2018, the increase in investor real estate loans was approximately 2 percent driven primarily by growth in term real estate lending. This growth reflects the company’s strategy to achieve better balance across term and construction lending. Adjusted(1) average balances in the consumer lending portfolio remained relatively stable as growth in indirect-other consumer, residential first mortgage, consumer credit card, and other consumer loans was partially offset by declines in home equity lending.
|
Deposits |
||||||||||||||||||||||||
|
|
|
Average Balances |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
($ amounts in millions) |
|
3Q19 |
|
2Q19 |
|
3Q18 |
|
3Q19 vs. 2Q19 |
|
3Q19 vs. 3Q18 |
||||||||||||||
|
Customer low-cost deposits |
|
$ |
85,367 |
|
|
$ |
85,908 |
|
|
$ |
87,312 |
|
|
$ |
(541 |
) |
|
(0.6)% |
|
$ |
(1,945 |
) |
|
(2.2)% |
|
Customer time deposits |
|
7,712 |
|
|
7,800 |
|
|
6,501 |
|
|
(88 |
) |
|
(1.1)% |
|
1,211 |
|
|
18.6% |
|||||
|
Corporate treasury time deposits |
|
436 |
|
|
657 |
|
|
21 |
|
|
(221 |
) |
|
(33.6)% |
|
415 |
|
|
NM |
|||||
|
Corporate treasury other deposits |
|
541 |
|
|
553 |
|
|
108 |
|
|
(12 |
) |
|
(2.2)% |
|
433 |
|
|
400.9% |
|||||
|
Total Deposits |
|
$ |
94,056 |
|
|
$ |
94,918 |
|
|
$ |
93,942 |
|
|
$ |
(862 |
) |
|
(0.9)% |
|
$ |
114 |
|
|
0.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
($ amounts in millions) |
|
3Q19 |
|
2Q19 |
|
3Q18 |
|
3Q19 vs. 2Q19 |
|
3Q19 vs. 3Q18 |
||||||||||||||
|
Consumer Bank Segment |
|
$ |
59,217 |
|
|
$ |
59,277 |
|
|
$ |
57,684 |
|
|
$ |
(60 |
) |
|
(0.1)% |
|
$ |
1,533 |
|
|
2.7% |
|
Corporate Bank Segment |
|
25,690 |
|
|
26,154 |
|
|
26,563 |
|
|
(464 |
) |
|
(1.8)% |
|
(873 |
) |
|
(3.3)% |
|||||
|
Wealth Management Segment |
|
7,843 |
|
|
7,924 |
|
|
8,235 |
|
|
(81 |
) |
|
(1.0)% |
|
(392 |
) |
|
(4.8)% |
|||||
|
Other |
|
1,306 |
|
|
1,563 |
|
|
1,460 |
|
|
(257 |
) |
|
(16.4)% |
|
(154 |
) |
|
(10.5)% |
|||||
|
Total Deposits |
|
$ |
94,056 |
|
|
$ |
94,918 |
|
|
$ |
93,942 |
|
|
$ |
(862 |
) |
|
(0.9)% |
|
$ |
114 |
|
|
0.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comparison of third quarter 2019 to second quarter 2019
Total average deposit balances decreased 1 percent to $94 billion in the third quarter. Average deposits remained relatively stable in the Consumer segment while the Corporate and Wealth Management segments experienced modest declines of 2 percent and 1 percent, respectively. The decrease in Corporate segment deposits was primarily due to seasonal declines in public fund accounts. Average deposits in the Other segment deposits decreased 16 percent primarily within the wholesale corporate treasury time deposit category.
Comparison of third quarter 2019 to third quarter 2018
Total average deposit balances remained relatively stable compared to the third quarter of 2018 as reductions in low-cost deposits, particularly non-interest-bearing deposits, were offset by growth in time and corporate treasury deposits. Growth in average Consumer segment deposits was offset by reductions in Corporate, Wealth Management, and Other segment deposits.
|
Asset quality |
||||||
|
|
|
As of and for the Quarter Ended |
||||
|
($ amounts in millions) |
|
9/30/2019 |
|
6/30/2019 |
|
9/30/2018 |
|
ALL/Loans, net |
|
1.05% |
|
1.02% |
|
1.03% |
|
Allowance for loan losses to non-performing loans, excluding loans held for sale |
|
188% |
|
160% |
|
156% |
|
Provision for loan losses |
|
$108 |
|
$92 |
|
$84 |
|
Net loans charged-off |
|
$92 |
|
$92 |
|
$82 |
|
Net loan charge-offs as a % of average loans, annualized |
|
0.44% |
|
0.44% |
|
0.40% |
|
Non-accrual loans, excluding loans held for sale/Loans, net |
|
0.56% |
|
0.64% |
|
0.66% |
|
NPAs (ex. 90+ past due)/Loans, foreclosed properties, non-marketable investments and non-performing loans held for sale |
|
0.65% |
|
0.72% |
|
0.76% |
|
NPAs (inc. 90+ past due)/Loans, foreclosed properties, non-marketable investments and non-performing loans held for sale* |
|
0.82% |
|
0.89% |
|
0.93% |
|
Total TDRs, excluding loans held for sale |
|
$657 |
|
$703 |
|
$852 |
|
Total Criticized Loans—Business Services** |
|
$2,319 |
|
$2,124 |
|
$2,029 |
|
* 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 third quarter 2019 to second quarter 2019
Asset quality performed in line with the company’s broader risk expectations reflecting improvements in several credit metrics and some continued normalization of others. Total non-accrual loans, excluding loans held for sale, decreased 8 basis points to 0.56 percent of loans outstanding. The decrease in non-accrual loans was primarily due to reductions in transportation, wholesale and restaurant within business services, and residential first mortgage and home equity within consumer. Total troubled debt restructured loans, excluding loans held for sale, decreased 7 percent driven primarily by reductions in commercial loans. Annualized net charge-offs were unchanged at 0.44 percent of average loans. The provision for loan losses exceeded net charge-offs resulting in an allowance for loan losses equal to 1.05 percent of total loans outstanding and 188 percent of total non-accrual loans. The increase in the allowance for loan losses during the quarter was primarily due to a 9 percent increase in business services criticized loans. The increase in business services criticized loans was driven primarily by higher classified loans within the energy, retail trade and manufacturing sectors, partially offset by reductions in non-accrual and special mention loans. The company’s third quarter credit metrics include the results of the recently completed bi-annual industry-wide shared national credit examination. While overall asset quality remains within the company’s broader risk expectations, volatility in certain credit metrics can be expected.
Comparison of third quarter 2019 to third quarter 2018
Annualized net charge-offs increased 4 basis points compared to the third quarter of 2018, and the allowance for loan and lease losses as a percent of total loans increased 2 basis points. Total non-accrual loans, excluding loans held for sale, decreased 10 basis points as a percent of loans outstanding. The decrease in non-accrual loans was driven primarily by improvements within the restaurant and transportation sectors. Total business services criticized loans increased 14 percent driven primarily by an increase in accruing classified loans partially offset by reductions in non-accrual and special mention loans. In addition, total troubled debt restructured loans, excluding loans held for sale, decreased 23 percent driven primarily by reductions in commercial loans.
Contacts
Media Contact:
Evelyn Mitchell
(205) 264-4551
Investor Relations Contact:
Dana Nolan
(205) 264-7040
