Regions Financial posts smaller 1st-qtr loss than expected; bad loans weigh on results

Regions Financial 1Q loss smaller than expected

BIRMINGHAM, Ala. — Souring loans continued to weigh on Regions Financial Corp. in the first quarter, but the bank said it sees signs of improvement as customers open new accounts and the growth of bad loans slows.

After paying preferred dividends, the regional bank posted a loss available to common shareholders of $255 million, or 21 cents per share, reversing a year-ago profit of $26,000, or 4 cents per share.

Analysts polled by Thomson Reuters, on average, expected a loss of 27 cents per share.

The better-than-expected results drove the stock higher. Regions Financial shares added 47 cents, or 5.6 percent, to $8.80 on very heavy volume.

Net interest income, or earnings from deposits, rose 3 percent to $831 million, from $809 million last year. Total deposits rose 5 percent to $98.33 billion, from $93.54 billion a year ago.

Non-interest income, or money earned from fees and charges, dropped 24 percent to $812 million, from $1.07 billion a year ago. Income at its brokerage business, Morgan Keegan, rose 9 percent to $236 million. Mortgage income fell 8 percent to $67 million.

Regions increased its provision for loan losses, or money set aside to cover souring loans, by 81 percent to $770 million from last year’s $425 million, however that was an improvement from $1.18 billion in the prior quarter.

Net loan charge-offs, or loans written off as uncollectable, rose to $700 million from $390 million a year ago.

Non-performing assets, excluding loans held for sale, increased to $4.32 billion from $1.94 billion last year.

“Despite the strong fundamentals of our business, we are not satisfied with our financial performance and we remain intensely focused on returning the company to profitability,” said President and CEO Grayson Hall in a statement.