Wednesday, February 2, 2011

Regions stock falls after quarterly profit

Regions Bank's stock slid a nickel per share lower on Wednesday, a day after the Nashville market leader reported earnings that depended on a one-time gain from a securities sale in the fourth quarter.

The bank's stock closed at $6.97 per share, down 5 cents, or less than 1 percent, in New York Stock Exchange trading.
Fourth-quarter net income was $89 million, or 3 cents per diluted share, compared with a net loss of $543 million, or 51 cents, in the year-earlier period.

But the results included a $333 million gain that reflected the sale of $8.1 billion of agency mortgage-backed securities, Birmingham, Ala.-based Regions said in a financial report. Without the sale, Regions would have reported a net loss of about 14 cents a share, said Marty Mosby, a bank analyst for Guggenheim Securities LLC here.

Provisions for loan losses dropped to $682 million in the fourth quarter from $1.18 billion in the same period a year earlier, but some stock analysts were hoping for even more improvement.

"Versus some of the other banks that reported this week, the pace of credit improvement was slower," said Al Savastano, an analyst at Macquarie Group Ltd.

Net charge-offs (basically writing off loans that won't be repaid) fell 1.4 percent to $682 million in the fourth quarter.

Regions' net interest margin, the difference between what the bank pays for funds and what it pockets in interest on loans, increased to 3 percent in the fourth quarter from 2.72 percent in the year-earlier period. Bank officials said making more consumer loans should help loan yields improve and that will boost the margin over time.

"We are recognizing an improving economy in most of our markets, but we expect the Southeastern economy to recover at a somewhat slower pace, particularly in Florida, where housing and stubbornly high unemployment remain serious concerns," said Regions CEO and President Grayson Hall.

Bloomberg News contributed to this story.

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