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Click on individual bank names in the table below to access American Banker's coverage of each company's earnings report. Links to relevant coverage, filings, releases, and bank benchmark profile data can be found in the Related Links area of each article.
April 24 -
Regions Financial Corp.'s (RF) first-quarter earnings more than doubled as the regional lender set aside less to cover loan losses and saw noninterest income edge up.
April 24
Grayson Hall can finally boast about Regions Financial — if only his competition didn't have more to brag about.
Birmingham-based Regions (RF) surprised analysts with higher earnings and lower credit costs than expected
Hall, Regions' president and chief executive, said some data cuts were more favorable than others and pleaded with analysts to take a broad view.
"You need to look beyond the period-to-period averages," Hall said during a conference call Tuesday. "We're a little stronger on ending balances than what the average would tend to indicate, and we do anticipate that we'll continue to see growth" in certain loan segments.
Net loans fell 1.1% from the fourth quarter, and 5.7% from a year earlier, to $76.7 billion in the first quarter. Like many banks, Regions is still unwinding its troubled commercial real estate loans and finding it hard to replace them with new business loans. But for Regions, it is harder to cite continued economic difficulties when rivals such as SunTrust and BB&T reported loan growth in the first quarter.
Regions also reported a worse revenue performance than Southeast regional banks BB&T, SunTrust, Synovus Financial (SNV) and First Horizon National (FHN). Among the five, Regions was the only company whose revenue fell from a year earlier; Regions produced $1.4 billion of revenue, down 6.2%. (Those figures include securities gains and losses.)
In an early note, Citi's analyst, Josh Levin said Regions' first quarter was a "mixed bag" with a "low- quality EPS 'beat' partially offset by higher than expected expenses and weaker than expected" lending.
Expenses rose 5% from the previous quarter largely because of higher salaries and benefits. Most of the increase was seasonal, management said.
Regions' executives also contended that the biggest improvements were made in April, or after the first quarter ended. The company recently
Regions was upgraded by credit ratings agency Standard & Poor's in March after raising $900 million in capital.
Management said during the conference call that these positive events should put them on track to start making more loans and increasing revenue.
"Second quarter 2012 marks the start of a new chapter for Regions . . . where the emphasis will be on profitability and prudent growth," Hall said. Executives said Regions does not hold mortgages that it originates, which explains some of the weakness in lending.
Regions posted net income of 11 cents per share, surpassing the consensus estimate of 8 cents a share. Higher earnings were largely driven by lower credit costs and a 60% cut in its provisions for loan losses. First quarter net income was $145 million, up from a loss of $602 million in the fourth quarter when it took a $467 million impairment charge; it made $17 million in the first quarter of 2011.
Sandler O'Neill analyst Kevin Fitzsimmons noted Regions' first-quarter performance "appears to be a good core beat" with "much better than expected decline in credit costs" offsetting lower pre-tax, pre-credit income.
Nonperforming loans fell 9% and net chargeoffs fell 23% from the previous quarter. Despite the much lower provision, Regions executives were cautious in making projections about credit quality; they predicted it would be "lumpy" for the remainder of the year. When one analyst asked whether that was for "legal reasons" or other reasons, Region's chief credit officer, Barbara Godin replied:
"Think about a year ago [when] we all felt the economy was moving in the right direction or a better direction, and of course, Europe happened," she said. "We're simply being very cautious about how we view the economy and we still describe it as being in a fragile state."
