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Delivers strong revenue and pre-tax pre-provision income(1) growth over the prior year

BIRMINGHAM, Ala.–(BUSINESS WIRE)–Regions Financial Corporation (NYSE:RF) today announced earnings for the third quarter ended September 30, 2020. The company reported net income available to common shareholders of $501 million, an increase of 30 percent compared to the third quarter of 2019. Earnings per diluted share were $0.52, a 33 percent increase. Total revenue grew 10 percent while pre-tax pre-provision income(1) increased 20 percent over the prior year. Adjusted revenue(1) grew 7 percent while adjusted pre-tax pre-provision income(1) increased 12 percent. The company also generated year-to-date positive operating leverage of 2.4 percent on a reported basis and 2.0 percent on an adjusted basis(1) versus the comparable prior year period.

“This quarter our team delivered strong results during a period of continued uncertainty by staying focused on meeting customer needs, controlling expenses and proactively managing both credit risk and interest rate risk,” said John Turner, president and CEO. “We generated our highest adjusted pre-tax pre-provision income(1) in over a decade while improving our adjusted efficiency ratio(1) to its lowest level since 2008.”

“The COVID-19 pandemic has accelerated changes in customer behavior and we continue to invest in talented bankers to provide valuable advice and guidance while modernizing our branch network and accelerating digital transformation,” continued Turner. “Our efforts to adapt our mobile and online banking platforms to meet customer needs were recently recognized by J.D. Power and our customers who ranked us first among regional banks for online banking satisfaction and second for highest mobile app satisfaction. By executing our strategic plan we will continue to be a source of economic strength for our customers and communities and will deliver sustainable, long-term performance for our shareholders.”

SUMMARY OF THIRD QUARTER 2020 RESULTS

 

 

Quarter Ended

(amounts in millions, except per share data)

 

9/30/2020

 

6/30/2020

 

9/30/2019

Net income (loss)

 

$

530

 

 

$

(214

)

 

$

409

 

Preferred dividends

 

29

 

 

23

 

 

24

 

Net income (loss) available to common shareholders

 

$

501

 

 

$

(237

)

 

$

385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding

 

962

 

 

960

 

 

991

 

Actual shares outstanding—end of period

 

960

 

 

960

 

 

964

 

Diluted earnings (loss) per common share

 

$

0.52

 

 

$

(0.25

)

 

$

0.39

 

 

 

 

 

 

 

 

Selected items impacting earnings:

 

 

 

 

 

 

Pre-tax adjusted items(1):

 

 

 

 

 

 

Branch consolidation, property and equipment charges

 

$

(3

)

 

$

(10

)

 

$

(5

)

Loss on early extinguishment of debt

 

(2

)

 

(6

)

 

 

Salaries and benefits related to severance charges

 

(2

)

 

(2

)

 

(1

)

Professional and related fees associated with the purchase of Ascentium Capital

 

 

 

(8

)

 

 

Valuation gain on equity investment

 

44

 

 

 

 

 

Securities gains (losses), net

 

3

 

 

1

 

 

 

Leveraged lease termination gains

 

 

 

 

 

1

 

Total pre-tax adjusted items(1)

 

$

40

 

 

$

(25

)

 

$

(5

)

 

 

 

 

 

 

 

Diluted EPS impact*

 

$

0.03

 

 

$

(0.02

)

 

$

 

 

 

 

 

 

 

 

Pre-tax additional selected items**:

 

 

 

 

 

 

CECL provision in excess of net charge-offs***

 

$

 

 

$

(700

)

 

$

 

Capital markets income – CVA/DVA

 

5

 

 

34

 

 

(6

)

MSR net hedge performance

 

 

 

2

 

 

15

 

PPP loans interest income****

 

35

 

 

20

 

 

 

COVID-19 related expenses

 

(3

)

 

(19

)

 

 

Total pre-tax additional selected items**

 

$

37

 

 

$

(663

)

 

$

9

 

* Based on income taxes at an approximate 25% incremental rate. Tax rates associated with leveraged lease terminations are incrementally higher based on their structure.

** Items represent an outsized impact to the quarter or quarterly trends, but are not considered non-GAAP adjustments.

*** CECL was adopted January 1, 2020. Periods prior to January 1, 2020 reflect results under the incurred loss model.

**** 2nd quarter PPP loans interest income has been revised to remove estimated funding costs.

During the third quarter of 2020, total revenue increased approximately 6 percent on a reported basis and 3 percent on an adjusted basis(1) compared to the second quarter of 2020, reflecting growth in both net interest income and non-interest income. Despite lower market interest rates, net interest income benefited from the company’s significant hedging program, stronger than anticipated deposit growth, a modest increase in the securities portfolio, and one extra day in the quarter. Non-interest income benefited from continued strong mortgage production and capital markets activity, as well as improvement in service charges and card and ATM fees. Non-interest expense decreased 3 percent during the quarter on a reported basis and 1 percent on an adjusted basis(1), driven by decreases in professional fees, FDIC insurance assessments, and expenses related to the COVID-19 pandemic. Despite a challenging economic backdrop, pre-tax pre-provision income(1) increased 20 percent, and adjusted pre-tax pre-provision income(1) increased 9 percent, in each case, versus the prior quarter. The company’s third quarter efficiency ratio improved to 54.1 percent on a reported basis and 55.3 percent on an adjusted basis(1); its lowest level in over twelve years.

During the third quarter, the credit loss provision totaled $113 million reflecting continued economic risk in certain portfolios, the impact of net charge-offs and reductions in loan balances. Compared to the second quarter of 2020, annualized net charge-offs decreased 30 basis points to 0.50 percent of average loans, while total non-performing loans increased 19 basis points to 0.87 percent of total loans outstanding. Business services criticized loans decreased 59 basis points to 6.4 percent of total business services loans outstanding. The allowance for credit losses increased to 2.74 percent of total loans representing 316 percent of non-performing loans, excluding loans held for sale. Excluding the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) loans, which are fully government guaranteed, the allowance for credit losses increased to 2.90 percent(1).

Non-GAAP adjusted items(1) impacting the company’s earnings are identified 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 reflect, among other items, a $44 million valuation gain associated with an equity investment in a company which executed an initial public offering during the third quarter.

 

Total revenue

 

 

 

Quarter Ended

($ amounts in millions)

 

9/30/2020

 

6/30/2020

 

9/30/2019

 

3Q20 vs. 2Q20

 

3Q20 vs. 3Q19

Net interest income

 

$

988

 

 

$

972

 

 

$

937

 

 

$

16

 

 

1.6

%

 

$

51

 

 

5.4

%

Taxable equivalent adjustment

 

12

 

 

13

 

 

13

 

 

(1

)

 

(7.7

)%

 

(1

)

 

(7.7

)%

Net interest income, taxable equivalent basis

 

$

1,000

 

 

$

985

 

 

$

950

 

 

$

15

 

 

1.5

%

 

$

50

 

 

5.3

%

Net interest margin (FTE)

 

3.13

%

 

3.19

%

 

3.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

$

152

 

 

$

131

 

 

$

186

 

 

$

21

 

 

16.0

%

 

$

(34

)

 

(18.3

)%

Card and ATM fees

 

115

 

 

101

 

 

114

 

 

14

 

 

13.9

%

 

1

 

 

0.9

%

Wealth management income

 

85

 

 

79

 

 

83

 

 

6

 

 

7.6

%

 

2

 

 

2.4

%

Capital markets income

 

61

 

 

95

 

 

36

 

 

(34

)

 

(35.8

)%

 

25

 

 

69.4

%

Mortgage income

 

108

 

 

82

 

 

56

 

 

26

 

 

31.7

%

 

52

 

 

92.9

%

Commercial credit fee income

 

20

 

 

17

 

 

19

 

 

3

 

 

17.6

%

 

1

 

 

5.3

%

Bank-owned life insurance

 

17

 

 

18

 

 

18

 

 

(1

)

 

(5.6

)%

 

(1

)

 

(5.6

)%

Securities gains (losses), net

 

3

 

 

1

 

 

 

 

2

 

 

200.0

%

 

3

 

 

NM

Market value adjustments on employee benefit assets*

 

14

 

 

16

 

 

7

 

 

(2

)

 

(12.5

)%

 

7

 

 

100.0

%

Valuation gain on equity investment

 

44

 

 

 

 

 

 

44

 

 

NM

 

44

 

 

NM

Other

 

36

 

 

33

 

 

39

 

 

3

 

 

9.1

%

 

(3

)

 

(7.7

)%

Non-interest income

 

$

655

 

 

$

573

 

 

$

558

 

 

$

82

 

 

14.3

%

 

$

97

 

 

17.4

%

Total revenue

 

$

1,643

 

 

$

1,545

 

 

$

1,495

 

 

$

98

 

 

6.3

%

 

$

148

 

 

9.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted total revenue (non-GAAP)(1)

 

$

1,596

 

 

$

1,544

 

 

$

1,494

 

 

$

52

 

 

3.4

%

 

$

102

 

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2020 to second quarter 2020

Total revenue of approximately $1.6 billion increased 6 percent on a reported basis and 3 percent on an adjusted basis(1) compared to the prior quarter. Net interest income increased 2 percent, while net interest margin decreased 6 basis points to 3.13 percent. Net interest income was supported primarily by increased hedging benefits, stronger than anticipated deposit growth, cash deployment into securities, liability management activities, and one extra day in the quarter. Hedging benefits include a $3 billion increase in active notional from previously transacted forward starting hedges. Moreover, while market interest rates have fallen to near-zero levels, benefits from hedging and deposit cost reductions more than offset negative rate pressure on asset yields and premium amortization within the quarter. Yet, while the second quarter benefited from elevated loan balances, the current quarter was pressured by loan balance normalization, excluding the SBA’s PPP loans. Strong deposit growth trends continued in the third quarter, pushing cash balances higher which negatively impacted net interest margin.

Non-interest income increased approximately 14 percent on a reported basis and 6 percent on an adjusted basis(1) as increases in mortgage, service charges, card and ATM fees and wealth management income more than offset declines in capital markets. Mortgage income increased 32 percent driven by continued strong production and modestly higher gain on sale. Service charges and card and ATM fees increased 16 and 14 percent, respectively as consumer spending continued to normalize during the quarter. Wealth management income increased 8 percent reflecting improved sales volumes as states and local economies began reopening. Capital markets income decreased 36 percent from a record level during the prior quarter. Within capital markets, debt and equity underwriting experienced another record quarter, but this benefit was more than offset by declines in commercial swap income and reduced permanent financing placements for real estate clients. Capital markets income was also impacted by $5 million of positive market-related credit valuation adjustments, compared to $34 million of positive valuation adjustments during the prior quarter. Market value adjustments on employee benefit assets remained positive during the quarter; however, this benefit was offset through a corresponding increase in salaries and benefits. The company also recognized a $44 million valuation gain associated with an equity investment in a company which executed an initial public offering during the third quarter. These shares are subject to a 180-day lockup period which is reflected in the investment valuation.

Comparison of third quarter 2020 to third quarter 2019

Total revenue increased 10 percent on a reported basis and 7 percent on an adjusted basis(1) compared to the third quarter of 2019. Net interest income increased 5 percent, while net interest margin decreased 31 basis points. Net interest income was supported by higher loan balances attributable to the company’s Ascentium Capital equipment finance acquisition, PPP loans, and strong mortgage production as well as strong deposit growth. While these items support net interest income, elevated liquidity in the form of lower-returning assets such as excess cash held at the Federal Reserve and PPP loans reduced net interest margin. Additionally, while net interest income and net interest margin are well-protected from declines in short-term interest rates through hedging and deposit cost management, long-term interest rate reductions did introduce pressure when compared to the third quarter of 2019, through higher mortgaged-back securities premium amortization and repricing of the portfolio of fixed-rate loans and securities at lower market interest rate levels.

Non-interest income increased 17 percent on a reported basis and 9 percent on an adjusted basis(1). Mortgage income increased significantly, driven by strong production volumes and sales income reflecting a 103 percent increase in total mortgage production as lower market interest rates drove increased activity. Capital markets income also increased significantly reflecting growth across most categories and an improvement in market-related credit valuation adjustments tied to customer derivatives. Service charges declined 18 percent driven primarily by reduced overdraft fees resulting from increased customer liquidity associated with the COVID-19 pandemic. Card and ATM fees were stable with the prior period as consumers continue to resume normal spending activities.

 

Non-interest expense

 

 

 

Quarter Ended

($ amounts in millions)

 

9/30/2020

 

6/30/2020

 

9/30/2019

 

3Q20 vs. 2Q20

 

3Q20 vs. 3Q19

Salaries and employee benefits

 

$

525

 

 

$

527

 

 

$

481

 

 

$

(2

)

 

(0.4

)%

 

$

44

 

 

9.1

%

Net occupancy expense

 

80

 

 

76

 

 

80

 

 

4

 

 

5.3

%

 

 

 

%

Furniture and equipment expense

 

89

 

 

86

 

 

83

 

 

3

 

 

3.5

%

 

6

 

 

7.2

%

Outside services

 

44

 

 

44

 

 

48

 

 

 

 

%

 

(4

)

 

(8.3

)%

Professional, legal and regulatory expenses

 

22

 

 

28

 

 

21

 

 

(6

)

 

(21.4

)%

 

1

 

 

4.8

%

Marketing

 

22

 

 

22

 

 

23

 

 

 

 

%

 

(1

)

 

(4.3

)%

FDIC insurance assessments

 

10

 

 

15

 

 

12

 

 

(5

)

 

(33.3

)%

 

(2

)

 

(16.7

)%

Credit/checkcard expenses

 

12

 

 

12

 

 

19

 

 

 

 

%

 

(7

)

 

(36.8

)%

Branch consolidation, property and equipment charges

 

3

 

 

10

 

 

5

 

 

(7

)

 

(70.0

)%

 

(2

)

 

(40.0

)%

Visa class B shares expense

 

5

 

 

9

 

 

5

 

 

(4

)

 

(44.4

)%

 

 

 

%

Provision (credit) for unfunded credit losses

 

 

 

 

 

(2

)

 

 

 

%

 

2

 

 

100.0

%

Loss on early extinguishment of debt

 

2

 

 

6

 

 

 

 

(4

)

 

(66.7

)%

 

2

 

 

NM

 

Other

 

82

 

 

89

 

 

96

 

 

(7

)

 

(7.9

)%

 

(14

)

 

(14.6

)%

Total non-interest expense

 

$

896

 

 

$

924

 

 

$

871

 

 

$

(28

)

 

(3.0

)%

 

$

25

 

 

2.9

%

Total adjusted non-interest expense(1)

 

$

889

 

 

$

898

 

 

$

865

 

 

$

(9

)

 

(1.0

)%

 

$

24

 

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM – Not Meaningful

Comparison of third quarter 2020 to second quarter 2020

Non-interest expense decreased 3 percent on a reported basis and 1 percent on an adjusted basis(1) compared to the prior quarter. Salaries and benefits decreased modestly due to higher COVID-19 related special pay in the second quarter as well as the timing of production-based incentives tied to elevated mortgage and capital markets income. Professional fees decreased 21 percent driven primarily by costs associated with the company’s equipment finance acquisition that did not repeat. FDIC insurance assessments decreased 33 percent attributable primarily to higher levels of cash at the Federal Reserve. In addition, the company incurred a $2 million loss associated with $401 million of early extinguishment of FHLB advances and a $1 billion bank debt tender. These liability management actions were executed in response to excess liquidity levels resulting from this quarter’s significant deposit growth.

The company’s third quarter efficiency ratio was 54.1 percent on a reported basis and 55.3 percent on an adjusted basis(1). The effective tax rate was 16.5 percent.

Comparison of third quarter 2020 to third quarter 2019

Non-interest expense increased 3 percent on a reported and adjusted basis(1) compared to the third quarter of 2019. Salaries and benefits increased 9 percent driven primarily by higher production-based incentives and the addition of associates through the company’s equipment finance acquisition. Furniture and equipment expense increased 7 percent driven primarily by increased investment in technology. Outside services decreased 8 percent driven primarily by reductions in servicing costs related to third-party consumer unsecured loan balances. In addition, other non-interest expense decreased driven primarily by reductions in travel expenses and operational losses.

 

Loans and Leases

 

 

 

Average Balances

 

 

 

 

 

 

 

 

 

 

 

($ amounts in millions)

 

3Q20

 

2Q20

 

3Q19

 

3Q20 vs. 2Q20

 

3Q20 vs. 3Q19

Commercial and industrial*

 

$

46,405

 

 

$

49,296

 

 

$

40,200

 

 

$

(2,891

)

 

(5.9

)%

 

$

6,205

 

 

15.4%

Commercial real estate—owner-occupied

 

5,816

 

 

5,804

 

 

5,871

 

 

12

 

 

0.2

%

 

(55

)

 

(0.9)%

Investor real estate

 

7,298

 

 

7,019

 

 

6,388

 

 

279

 

 

4.0

%

 

910

 

 

14.2%

Business Lending

 

59,519

 

 

62,119

 

 

52,459

 

 

(2,600

)

 

(4.2

)%

 

7,060

 

 

13.5%

Residential first mortgage

 

15,786

 

 

14,884

 

 

14,298

 

 

902

 

 

6.1

%

 

1,488

 

 

10.4%

Home equity

 

7,727

 

 

8,042

 

 

8,683

 

 

(315

)

 

(3.9

)%

 

(956

)

 

(11.0)%

Indirect—vehicles**

 

1,223

 

 

1,441

 

 

2,247

 

 

(218

)

 

(15.1

)%

 

(1,024

)

 

(45.6)%

Indirect—other consumer***

 

2,835

 

 

3,111

 

 

2,750

 

 

(276

)

 

(8.9

)%

 

85

 

 

3.1%

Consumer credit card

 

1,194

 

 

1,230

 

 

1,310

 

 

(36

)

 

(2.9

)%

 

(116

)

 

(8.9)%

Other consumer

 

1,086

 

 

1,137

 

 

1,239

 

 

(51

)

 

(4.5

)%

 

(153

)

 

(12.3)%

Consumer Lending

 

29,851

 

 

29,845

 

 

30,527

 

 

6

 

 

%

 

(676

)

 

(2.2)%

Total Loans

 

$

89,370

 

 

$

91,964

 

 

$

82,986

 

 

$

(2,594

)

 

(2.8

)%

 

$

6,384

 

 

7.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Business Lending (non-GAAP)(1)

 

$

54,961

 

 

$

58,906

 

 

$

52,459

 

 

(3,945

)

 

(6.7

)%

 

$

2,502

 

 

4.8%

Adjusted Consumer Lending (non-GAAP)(1)

 

27,310

 

 

26,911

 

 

26,374

 

 

399

 

 

1.5

%

 

936

 

 

3.5%

Adjusted Total Loans (non-GAAP)(1)

 

$

82,271

 

 

$

85,817

 

 

$

78,833

 

 

$

(3,546

)

 

(4.1

)%

 

$

3,438

 

 

4.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM – Not meaningful.

* Includes ~$4.5B of average PPP loans that are excluded from adjusted loans.

** Indirect vehicles is an exit portfolio.

*** A portion of indirect other consumer is an exit portfolio due to the company’s decision not to renew a 3rd party relationship in the fourth quarter of 2019.

Comparison of third quarter 2020 to second quarter 2020

Average loans and leases decreased approximately 3 percent compared to the prior quarter. Excluding the company’s indirect auto and indirect-other consumer exit portfolios, as well as outstanding PPP loans, adjusted average loans and leases(1) decreased approximately 4 percent. Adjusted business lending(1) decreased 7 percent driven by clients building liquidity and reducing leverage by paying down lines of credit. Loans originated through the SBA’s PPP added $1.3 billion to average loans during the quarter. Commercial loan utilization levels ended the quarter at approximately 41 percent, below pre-pandemic trends. Excluding exit portfolios, adjusted consumer lending(1) increased 1 percent as growth in residential first mortgage was partially offset by declines in other categories. Third quarter average mortgage loan growth was also benefited by the company’s decision to repurchase approximately $340 million of delinquent residential mortgage loans from Ginnie Mae during the quarter.

Comparison of third quarter 2020 to third quarter 2019

Average loans and leases increased 8 percent compared to the third quarter of 2019. Adjusted average loans and leases(1) increased 4 percent. Average balances in the business lending portfolio increased 13 percent led by growth in commercial and industrial loans resulting primarily from the company’s equipment finance acquisition and PPP loans. Owner-occupied commercial real estate loans declined 1 percent, while investor real estate loans increased 14 percent. Growth in investor real estate was a mix of construction and term lending primarily within the office, industrial and multi-family property types. Excluding exit portfolios, adjusted consumer lending(1) increased 4 percent as growth in residential first mortgage and indirect-other consumer was partially offset by declines in consumer credit card, home equity lending and other consumer loans.

 

Deposits

 

 

 

Average Balances

 

 

 

 

 

 

 

 

 

 

 

($ amounts in millions)

 

3Q20

 

2Q20

 

3Q19

 

3Q20 vs. 2Q20

 

3Q20 vs. 3Q19

Customer low-cost deposits

 

$

110,493

 

 

$

104,159

 

 

$

85,367

 

 

$

6,334

 

 

6.1%

 

$

25,126

 

 

29.4%

Customer time deposits

 

6,150

 

 

6,690

 

 

7,712

 

 

(540

)

 

(8.1)%

 

(1,562

)

 

(20.3)%

Corporate treasury time deposits

 

13

 

 

72

 

 

436

 

 

(59

)

 

(81.9)%

 

(423

)

 

(97.0)%

Corporate treasury other deposits

 

 

 

 

 

541

 

 

 

 

NM

 

(541

)

 

(100.0)%

Total Deposits

 

$

116,656

 

 

$

110,921

 

 

$

94,056

 

 

$

5,735

 

 

5.2%

 

$

22,600

 

 

24.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ amounts in millions)

 

3Q20

 

2Q20

 

3Q19

 

3Q20 vs. 2Q20

 

3Q20 vs. 3Q19

Consumer Bank Segment

 

$

68,842

 

 

$

65,722

 

 

$

59,217

 

 

$

3,120

 

 

4.7%

 

$

9,625

 

 

16.3%

Corporate Bank Segment

 

38,755

 

 

36,409

 

 

25,690

 

 

2,346

 

 

6.4%

 

13,065

 

 

50.9%

Wealth Management Segment

 

8,658

 

 

8,382

 

 

7,843

 

 

276

 

 

3.3%

 

815

 

 

10.4%

Other

 

401

 

 

408

 

 

1,306

 

 

(7

)

 

(1.7)%

 

(905

)

 

(69.3)%

Total Deposits

 

$

116,656

 

 

$

110,921

 

 

$

94,056

 

 

$

5,735

 

 

5.2%

 

$

22,600

 

 

24.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparison of third quarter 2020 to second quarter 2020

Total average deposit balances increased 5 percent to $117 billion in the third quarter. Average Consumer segment deposit growth was driven by government stimulus payments as well as reduced spending related to the COVID-19 pandemic. Corporate segment deposit growth reflects clients bringing excess deposits back to Regions. In addition, many corporate clients are building liquidity by focusing on supply chain efficiencies and turnover of receivables. Similarly, Wealth segment deposit growth was driven primarily by clients’ desire to hold additional liquidity during the pandemic.

Comparison of third quarter 2020 to third quarter 2019

Total average deposit balances increased 24 percent compared to the third quarter of 2019 as growth in low-cost deposits was partially offset by a decrease in average time deposits. Growth in average Consumer, Wealth and Corporate segment deposits was partially offset by declines in average Other segment deposits.

 

Asset quality

 

 

 

As of and for the Quarter Ended

($ amounts in millions)

 

9/30/2020

 

6/30/2020

 

9/30/2019

ACL/Loans, net

 

2.74%

 

2.68%

 

1.11%

ALL/Loans, net

 

2.58%

 

2.51%

 

1.05%

Allowance for credit losses to non-performing loans, excluding loans held for sale

 

316%

 

395%

 

198%

Allowance for loan losses to non-performing loans, excluding loans held for sale

 

297%

 

370%

 

188%

Provision for credit losses*

 

$113

 

$882

 

$108

Net loans charged-off

 

$113

 

$182

 

$92

Net loan charge-offs as a % of average loans, annualized

 

0.50%

 

0.80%

 

0.44%

Non-accrual loans, excluding loans held for sale/Loans, net

 

0.87%

 

0.68%

 

0.56%

NPAs (ex. 90+ past due)/Loans, foreclosed properties, non-marketable investments and non-performing loans held for sale

 

0.90%

 

0.74%

 

0.65%

NPAs (inc. 90+ past due)/Loans, foreclosed properties, non-marketable investments and non-performing loans held for sale**

 

1.08%

 

0.91%

 

0.82%

Total TDRs, excluding loans held for sale

 

$645

 

$626

 

$657

Total Criticized Loans—Business Services***

 

$3,734

 

$4,225

 

$2,319

* CECL was adopted January 1, 2020. Periods prior to January 1, 2020 reflect results under the incurred loss model. Upon adoption of CECL, the provision for credit losses is the sum of the provision for loan losses and the provision for unfunded credit commitments. Prior to the adoption of CECL, the provision for unfunded commitments was included in other non-interest expense.

** 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 2020 to second quarter 2020

The credit loss provision for the third quarter totaled $113 million representing a significant decrease from the second quarter. The provision reflects continued economic risk in certain portfolios as well as the impact of $113 million in net charge-offs and reductions in loan balances.

Contacts

Media Contact:
Evelyn Mitchell

(205) 264-4551

Investor Relations Contact:
Dana Nolan

(205) 264-7040

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