Regions Financial Corp. swung to a first-quarter loss as the regional bank boosted its provisions for loan losses by 81%, though the figure marked an improvement from the fourth quarter.
During the prior-year period, Regions had posted a surprise profit with the help of record new account openings and mortgage applications. However, the latest loss was narrower than expected by analysts.
The company's new Chief Executive Grayson Hall on Tuesday said asset quality continued to stabilize in the quarter and deposit growth remained strong. However, the lenders substantial credit costs continued to more than offset the strength of its core business.
"We are not satisfied with our financial performance," he said. Hall, the company's former chief operating officer succeeded C. Dowd Ritter, who retired as CEO last month.
Many banks began reporting that their bad-loan losses began abating late last year, but the Birmingham, Ala., lender hasn't been one of them. Regions posted losses in five of the past six quarters as it struggles with its real-estate exposure in hard hit Florida and other Southern markets.
Regions has lost a combined $6.83 billion since the start of 2008 and still hasn't received approval to pay back $3.5 billion in public support from the U.S. Treasury's Troubled Asset Relief Program, making it one of the few banks of its size yet to do so.
Standard & Poor's Ratings Service downgraded the lender to the brink of junk in March on expectations that Regions' performance will remain weak this year owing to its troubled loans, with more downgrades possible in the future.
Regions reported a first-quarter loss of $196 million, or 21 cents a share, compared with a prior-year profit of $77 million, or 4 cents a share. The latest period included a $59 million gain on the sale of collateralized mortgage obligations. Revenue decreased 13% to $1.64 billion.
Analysts polled by Thomson Reuters most recently forecast earnings of loss of 27 cents on revenue of $1.59 billion.
The company boosted its loan-loss provision to $770 million from $425 million a year earlier, though that was an improvement from $1.18 billion in the prior quarter. Net charge-offs--loans the bank doesn't expect to collect--rose to 3.16% of average loans from 1.64% and 2.99%, respectively. Nonperforming assets, which are viewed as near default, were climbed to 5.15% from 2.43% and 4.83%.
Shares closed Monday at $8.33 and were inactive premarket. The stock is up 58% this year.
