Rise in Fee Income to Support Regions Financial in Q3 Earnings

Regions Financial Corporation RF is scheduled to report third-quarter 2024 results on Oct. 18, before the opening bell. Quarterly revenues are expected to have registered growth in the to-be-reported quarter, while earnings are likely to have declined on a year-over-year basis.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.This Birmingham, AL-based player’s second-quarter 2024 earnings beat the Zacks Consensus Estimate, driven by a decline in expenses and provisions. However, a decrease in net interest income (NII) was a spoilsport.Regions Financial has a disappointing earnings surprise history. Its earnings surpassed estimates in two of the trailing four quarters and missed twice, the average negative surprise being 1.71%.Regions Financial Corporation Price and EPS Surprise  Regions Financial Corporation price-eps-surprise | Regions Financial Corporation QuoteKey Factors & Estimates for RF's Q3 ResultsNII & Loans: On Sept.18, the Federal Reserve cut the interest rates by 50 basis points to 4.75-5% for the first time since March 2020. While the rate cut is not expected to have significantly affected RF’s NII in the quarter under review, greater clarity on the Fed’s rate cut path and a stabilizing macroeconomic environment are likely to have aided the lending outlook. Management expects NII to be flat to rise 2% from the $1.2 billion reported in the second quarter of 2024. The Zacks Consensus Estimate is the same as the management guidance.Region Financial’s overall lending activities are likely to have been moderate in the third quarter. The demand for consumer loans, and commercial and industrial loans was decent in the third quarter, while commercial real estate loan demand was subdued in the quarter under review compared with the prior quarters.Given RF’s significant exposure to commercial loans, this is likely to have positively impacted the company’s average interest-earning assets in the third quarter of 2024 to some extent. The Zacks Consensus Estimate of $1.37 billion for average earning assets indicates a marginal sequential increase. Non-Interest Income: Global mergers and acquisitions in the third quarter of 2024 showed improvements after subdued 2023 and 2022. Both deal value and volume were decent in the quarter, driven by a solid financial performance, higher chances of a soft landing of the U.S. economy, buoyant markets and interest rate cuts. Also, green shoots were observed in the capital markets. The Zacks Consensus Estimate for capital markets income is pegged at $80.1 million, indicating a sequential increase of 17.8%.As the central bank lowered the interest rates, mortgage rates started to come down. The rates declined to 6.2% by the end of the third quarter. This resulted in a significant surge in refinancing activities while origination volumes remained subdued. The Zacks Consensus Estimate for mortgage income is pegged at $32.30 million, indicating a 5% decrease from the prior quarter’s reported figure. The Zacks Consensus Estimate for card and ATM fees of $119.8 million implies a sequential marginal decline.The consensus estimate for revenues from service charges on deposit accounts for Regions Financial of $144.6 million indicates a decline of 4.3% on a sequential basis.The Zacks Consensus Estimate for wealth management income is pegged at $121.9 million, implying a marginal decline from the prior quarter’s reported number.Overall, the Zacks Consensus Estimate for total non-interest income is pinned at $593.8 million, indicating an 8.9% sequential rise.Expenses: RF’s expenses are expected to have been high in the quarter under discussion due to an increase in salaries, employee benefit expenses and other expenses. Although the company is implementing expense management actions, its ongoing investment in technology advancement and franchise strengthening is likely to have kept the expense base elevated.Asset Quality: Region Financial is likely to have set aside a substantial amount of money for potential bad loans, given the expectations of an economic slowdown.The Zacks Consensus Estimate for non-performing assets is pegged at $877.5 million, indicating a 1.8% rise from the prior quarter's reported figure.What Our Quantitative Model Predicts for RFAccording to our quantitative model, the chances of Regions Financial beating the Zacks Consensus Estimate this time are high. This is because it does have the right combination of two key ingredients, a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Earnings ESP: Regions Financial has an Earnings ESP of +0.01%.Zacks Rank: The company currently carries a Zacks Rank #2.The Zacks Consensus Estimate for third-quarter earnings of 53 cents per share has moved 1.9% upward in the past 30 days. The figure indicates an 8.2% rise from the year-ago reported number.The consensus estimate for revenues is pegged at $1.79 billion, indicating a 3.9% decrease from the prior-year reported figure.Other Stocks to ConsiderHere are some other bank stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post earnings beat this time around.The Earnings ESP for PNC Financial PNC is +0.89% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2024 results on Oct. 15. You can see the complete list of today’s Zacks #1 Rank stocks here.PNC’s quarterly earnings estimates have revised upward by 1.5% to $3.29 per share over the past month.First Horizon Corporation FHN has an Earnings ESP of +3.18% and a Zacks Rank #3 at present. The company is scheduled to release its third-quarter 2024 earnings on Oct. 16.  FHN’s quarterly earnings estimates have been unchanged at 38 cents over the past month.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Regions Financial Corporation (RF): Free Stock Analysis Report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report First Horizon Corporation (FHN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks