Birmingham, Alabama-based Regions Bank trimmed down its workforce over the course of the fourth quarter of 2023 and January 2024.
Regions Financial has cut staff across divisions, including its mortgage line, as higher interest rates have squeezed the home loan business across the finance sector.
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The Birmingham, Alabama company had reduced its 20,000-person workforce by "less than 3%" over the fourth quarter of 2023 and January 2024, said Jennifer Elmore, a Regions spokesperson.
"Our focus is to operate efficiently and effectively while providing the quality service our customers expect," Elmore said in a prepared statement. "We consistently review our business models based on market demand and overall economic factors. This means a limited number of position reductions in certain divisions, including in our mortgage division, where the higher-rate environment means fewer people are refinancing or applying for new home loans."
The $152 billion-asset company, which operates as Regions Bank in states across the Southeast, also made efforts to rightsize its mortgage business last year, shutting down three mortgage production offices in Kansas City, Chicago and Cincinnati, which impacted more than two dozen employees.
Elmore said 70% of the recently eliminated jobs are outside of the Birmingham area, but aren't concentrated in one geographic hub. The company had about $28 million in severance-related costs in its fourth quarter, contributing to higher expenses than Wall Street expected, said an RBC Capital Markets analyst note.
The banking sector is seeing layoffs across the country. Regions is one of several regional banks to pare down its workforce recently, as the industry has faced compressed margins amid rising rates. Citizens Financial in Providence, Rhode Island slashed its headcount by 3.5%, and Comerica in Dallas trimmed its workforce by 3%, the banks announced during their latest earnings calls. Citizens Chairman and CEO Bruce Van Saun said during the company's earnings call that the bank hadn't cut jobs in risk and audit divisions.
"I think we have been very, very diligent in … looking at staffing levels across all the different activities in the bank and seeking efficiencies" to get to a "relatively modest" number, Van Saun said. "I think we're kind of lean and mean and in good fighting shape as we enter into 2024."
Zions and PNC Financial said last year that they would be cutting their staff by 3% and 4%, respectively. Citigroup recently announced that it would eliminate 20,000 jobs, or 10% of its workforce.
Regions expects watered-down lending in the first half of 2024, as high interest rates tamp down on appetite for borrowing. The company posted fourth-quarter net interest income of $1.2 billion, a 5% sequential decline, and net interest margin dipped 13 basis points to 3.60%.
"We remain committed to prudently managing expenses to fund investments in our business," said CFO David Turner on the company's fourth-quarter earnings call. "We will continue focusing on our largest expense categories, which include salaries and benefits, occupancy and vendor spend."
Its fourth-quarter expenses of $1.2 billion included $28 million in severance-related costs, and a one-time $119 million special assessment from the Federal Deposit Insurance Corp. related to the failures of Silicon Valley Bank and Signature Bank in the spring. Excluding the FDIC charge and severance, expenses went down 5% from the third quarter.
Regions' guidance for 2024 expenses, at $4.1 billion, will either be flat or down year-over-year, but Piper Sandler analysts wrote in a note that, "Either way, we consider it a victory." Regions brought in $391 million in net income in the fourth quarter, compared with $490 million in the previous quarter and $685 million a year prior.
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