WFC - Regions Financial Likely To Remain Sleepy Until Rate Cut Expectations Fire Up Again
2024-07-02 08:42:56 ET
Summary
- Regions Financial is stuck in a tortoise-vs-hare rut today, with ongoing pressure on net interest margin and minimal loan growth momentum likely to drive comparatively weak pre-provision profit performance.
- Regions has once again proven out the strength of its deposit franchise, outperforming peers on deposit costs and reaping a wider spread between loan and deposit betas.
- Management expects credit costs to peak in Q2'24, and thus far office and multifamily are not causing major issues.
- Regions is poised to deliver above-peer growth when rates eventually fall, and 3% to 4% long-term core growth can support a mid-$20's fair value today.
When I last wrote about Regions Financial (RF), I said that this Southeast-focused bank was better-placed to outperform over the medium-to-long term rather than the short term. To that end, the shares have more or less tracked regional peers with a slight gain since then, while losing some ground to the large-caps that have more fee-driven income and capital drivers in the near term....
Regions Financial Likely To Remain Sleepy Until Rate Cut Expectations Fire Up Again