Morningstar | Regions Financial Executes a Successful 2018. See Updated Analyst Note from 20 Jan 2019
No-moat Regions Financial reported fourth-quarter results that were consistent with our long-term view of the company. Annual diluted earnings per share grew 39% year over year to $1.36, capping an operationally successful year for the bank. Commercial growth was the driving factor behind the 1.12% asset growth. Regions' largely commercial loan book was lucrative in 2018 as commercial loans repriced upward quickly with interest rates, expanding net interest margin 18 basis points to 3.39%, with net interest income growing 5.5%. We were impressed by the fact that Regions did not increase deposit rates much in the face of rising interest rates. We expect Regions will be able to marginally increase their NIM in 2019 but higher deposit costs will likely prevent sizable expansion thereafter. The bank's cost-controlling efforts were successful this year, helping the added interest income fall to the bottom line. We are maintaining our fair value estimate for Regions of $16 per share, which represents 1.7 times end of 2018 tangible book value per share.Regions continues to execute on its stated goals, which gives us confidence going forward. We were impressed to see the bank's efficiency ratio drop 270 basis points to just under 61%. This performance represents some of the best operating efficiency we've seen from Regions, and we anticipate that the bank's fee income growth will allow the ratio to drop even further in coming years. Regions' efficiency ratio progress represents a substantial improvement from the bank's historically weak operating efficiency, and we applaud the successes in revenue generation and cost controls. Credit quality remains strong, with net charge-offs growing three basis points to 45 basis points. Regions' continued improvement with regards to underwriting gives us confidence that the bank has materially improved from their poor historical credit costs.
Regions Financial is a banking holding company. Through its subsidiaries, the company has the following segments: Corporate Bank, which represents its commercial banking functions including commercial and industrial, commercial real estate and investor real estate lending; Consumer Bank, which represents its branch network, including consumer banking products and services related to residential first mortgages, home equity lines and loans, branch small business loans, indirect loans, consumer credit cards and other consumer loans; and Wealth Management, which provides credit related products, trust and investment management, asset management, retirement and savings solutions and estate planning.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.