On Dec 19, 2013, we maintained our long-term recommendation on
Regions Financial Corporation
) at Neutral based on the company's favorable funding mix,
improved core business performance and healthy capital deployment
initiatives. However, regulatory issues coupled with fundamental
pressures on the banking sector might act as deterrents to the
Despite the stressed macroeconomic environment, Regions' credit
quality continues to normalize. Further, we are impressed to see
the overall improving trend in delinquencies rates and net
charge-offs. The growth is expected to continue, thereby aiding
increase in earnings.
We are also encouraged by the company's measures to cut costs and
enhance profitability. Additionally, Regions' healthy capital
position will support the company's active capital deployment.
Though Regions is taking initiatives to increase revenues,
non-interest income has witnessed a downward trend over the last
four years. The continuation of such a trend will affect the
company's top-line growth.
We are also concerned about the new and more stringent
regulations, which will be a challenge to the company's growth
prospects. Such regulations are likely to limit the rise in fee
income, increase compliance costs and subject the company to
For Regions, the Zacks Consensus Estimate for 2013 and 2014
remained at 82 cents and 85 cents, respectively, over the past 30
days. Therefore, Regions' carries a Zacks Rank #3 (Hold).
Other Banks to Consider
Some Southeast banks that are worth a look include
First NBC Bank Holding Company
Simmons First National Corporation
). All these stocks carry a Zacks Rank #1 (Strong Buy).
FIRST BCP-NC (FBNC): Free Stock Analysis
FIRST NBC BANK (NBCB): Free Stock Analysis
REGIONS FINL CP (RF): Free Stock Analysis
SIMMONS FIRST A (SFNC): Free Stock Analysis
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