Regions Financial (RF – Research Report), the Financial sector company, was revisited by a Wall Street analyst on January 19. Analyst Ebrahim Poonawala from Bank of America Securities remains neutral on the stock and has a $19.00 price target.
Geoff Meacham has given his Hold rating due to a combination of factors including Regions Financial’s fourth-quarter earnings that outperformed expectations and a generally stable pre-provision net revenue (PPNR) forecast. The fourth-quarter core earnings per share (EPS) of $0.51 surpassed both Bank of America’s and consensus estimates, driven by higher PPNR and a reduced tax rate. However, the forecast for full-year 2024 net interest income (NII) was somewhat disappointing, coming in lower than anticipated. Despite this, reductions in expenses are expected to align PPNR with previous predictions. Meacham also points out that the desire to maintain a common equity tier 1 (CET1) ratio around 10% suggests continued capital deployment, likely through share buybacks. With the stock trading at multiples that reflect a balanced risk/reward profile, the Neutral rating is maintained.
The report also delves into the expected rebound in net interest margin (NIM) and how it will impact financial performance. While NII is projected to drop in the first quarter of 2024, the NIM is anticipated to average around 3.50% for the year, with management expecting an exit rate closer to 3.60%. These estimates take into account various strategic financial maneuvers, including a reshuffling of low-cost deposits and hedging strategies. On the credit side, there has been a normalization with a rise in non-performing loans (NPLs), but the core net charge-offs (NCOs) remain relatively stable. Meacham forecasts credit provisioning costs for 2024 and believes that Regions Financial’s capital position could distinguish it positively from its peers, aiding in buybacks and providing opportunities for strategic initiatives such as mortgage servicing rights acquisitions.
In another report released yesterday, KBW also maintained a Hold rating on the stock with a $21.00 price target.
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Based on the recent corporate insider activity of 28 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RF in relation to earlier this year.
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Regions Financial (RF) Company Description:
Regions Financial Corp. operates as a bank holding company. It 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, securities brokerage, insurance and other specialty financing. The company operates through the following segments: Corporate Bank, Consumer Bank, and Wealth Management. The Corporate Bank segment represents the company’s commercial banking functions including commercial and industrial, commercial real estate and investor real estate lending. The Consumer Bank segment holds the company’s branch network, including consumer banking products and services related to residential first mortgages, home equity lines and loans, small business loans, indirect loans, consumer credit cards and other consumer loans. The Wealth Management segment offers individuals, businesses, governmental institutions and non-profit entities a range of solutions to help protect grow and transfer wealth. Regions Financial was founded in 1971 and is headquartered in Birmingham, AL.
Read More on RF:
- Regions Financial Preliminary Earnings Webcast Summary
- Options Volatility and Implied Earnings Moves Today, January 19, 2024
- Regions Financial (NYSE:RF) Delivers Resilient Q4 Performance
- Regions Financial sees FY24 NII $4.7B-$4.8B, adjusted NII $2.3B-$2.4B
- Regions Financial reports Q4 net interest margin 3.60% vs. 3.99% last year
