Safe and Sound

Regions Bank

Birmingham, AL
4
Star Rating
Birmingham, AL-based Regions Bank is an FDIC-insured bank started in 1928. As of June 30, 2017, the bank held equity of $16.41 billion on assets of $123.72 billion.

With 21,350 full-time employees in 1,503 offices in multiple states, the bank has amassed loans and leases worth $79.66 billion, including real estate loans of $38.52 billion. U.S. bank customers currently have $99.19 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Regions Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Here's a look at how the bank faired on the three major criteria Bankrate used to score American banks.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital acts as a buffer against losses and affords protection for accountholders during times of financial trouble for the bank. Therefore, when it comes to measuring an a bank's financial strength, capital is essential. When looking at safety and soundness, more capital is preferred.
Regions Bank scored below the national average of 13.38 on our test to measure the adequacy of a bank's capital, achieving a score of 10 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Regions Bank's Tier 1 capital ratio was 12.49 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to weather financial challenges.

Overall, Regions Bank held equity amounting to 13.26 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to estimate how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as past-due loans.

A bank with extensive holdings of these types of assets may eventually be required to use capital to absorb losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, reducing earnings and elevating the chances of a failure in the future.

Regions Bank fell below the national average of 37.62 on Bankrate's test of asset quality, racking up 36 out of a possible 40 points .

A handy indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.32 percent of Regions Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the that reserve's size to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Regions Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's ability to earn money affects its long-term survivability. Earnings may be retained by the bank, increasing its capital buffer, or be used to address problematic loans, potentially making the bank more resilient in tough times. Conversely, losses take away from a bank's ability to do those things.

Regions Bank beat the national average on Bankrate's test of earnings, achieving a score of 18 out of a possible 30.

One key way to measure a bank's earnings is return on equity, calculated by dividing net income (essentially profit) by total equity. Regions Bank's most recent annualized quarterly return on equity was 8.24 percent, below the national average of 9.28 percent.

The bank earned net income of $668.7 million on total equity of $16.41 billion for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.08 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.