Regions Financial Corporation
) fourth-quarter 2013 adjusted earnings came in at 21 cents per
share, inching past the Zacks Consensus Estimate by a penny.
Moreover, results compared favorably with the prior-year quarter
earnings of 19 cents per share.
Despite positive market sentiment, shares of Regions declined
around 2% in the pre-market session, indicating that investors
have been bearish on the results. The price reaction during the
trading session will give a better idea about whether Regions has
been able to meet expectations.
Strong capital position and increased net interest income were
the positives for the quarter. However, reduced non-interest
income and elevated non-interest expenses partially offset the
Adjusted net income was $294 million in the final quarter, up
from $261 million reported in the prior-year quarter. For
full-year 2013, Regions reported income available to common
shareholders of $1.1 billion or 77 cents per share as compared
with $991 million or 71 cents in the prior year. However, results
lagged the Zacks Consensus Estimate of 82 cents.
Performance in Detail
Total revenue (net of interest expense) came in at $1.36 billion,
well above the Zacks Consensus Estimate of $1.32 billion.
Moreover, revenues increased slightly on a year-over-year basis.
For full-year 2013, Regions reported total revenue of $5.28
billion, well above the Zacks Consensus Estimate of $5.24
billion. However, revenues decreased 2.2% on a year-over-year
Regions reported adjusted pre-tax pre-provision income from
continuing operations of $436 million in the fourth quarter, down
11.6% year over year. Excluding net leveraged lease termination
gains, regulatory charges and branch consolidation and property
and equipment charges, pre-tax pre-provision income declined 8.8%
year over year.
Net interest income was $832 million, up 1.7% year over year. Net
interest margin rose 16 basis points year over year to 3.26% in
Regions' non-interest income was $526 million, down 1.9% year
over year. Reduced mortgage revenues and lower service charges on
deposit accounts led to the fall in non-interest income. Mortgage
production came in at $1.2 billion in the quarter, down 41.7%
year over year.
Non-interest expense increased 4.9% year over year to $946
million. Better expense management partially mitigated the
increase in salaries and benefits expenses.
Credit metrics was a mixed bag during the final quarter at
Regions. Non-performing assets as a percentage of loans,
foreclosed properties and non-performing loans held for sale
reduced to 1.74% from 2.59% in the prior-year quarter.
Further, non-accrual loans, excluding loans held for sale, as a
percentage of loans came in at 1.45%, down from 2.27% in the
prior-year quarter. Allowance for loan losses as a percentage of
loans, net of unearned income was 1.80%, down from 2.59% in the
Allowance for credit losses was $1.4 billion, down 30% year over
year. However, provision for loan losses more than doubled to $79
million as compared with the prior-year quarter figure of $37
million. Moreover, net charge-offs came in at $278 million, up
54.4% year over year.
Regions' capital position was strong at the end of the quarter.
As of Dec 31, 2013, Regions' Tier 1 capital ratio came in at
estimated 11.6% compared with 12.0% in the prior-year quarter.
Tier 1 common risk-based ratio was estimated at 11.2%, up from
10.8% in the prior-year quarter. Tangible common book value per
share came in at $7.54 in the reported quarter compared with
$7.11 in the prior-year quarter.
Total loans increased 1% year over year to $75 billion. Excluding
the transfer of residential mortgage loans to held-for-sale, loan
growth was 2% year over year, reflecting loan production even in
the challenging economic environment.
Average deposits came in at $92 billion in the final quarter,
down 3.2% year over year. Total funding costs were 34 basis
points, down 16 basis points year over year, as the mix of
deposits continued to improve in 2013.
As of Dec 31, 2013, low-cost deposits as a percent of total
deposits were 90% as compared with 86% as of Dec 31, 2012.
Further, deposit costs came in at 12 basis points in the reported
quarter, down 10 basis points year over year, reflecting a
positive change in deposit mix.
We believe the company's favorable funding mix, improved core
business performance, its expansion mode and strategies will
continue to yield profitable earnings in the upcoming quarters.
Additionally, significant improvement in its credit quality and
top-line growth would act as positive catalysts. Yet, regulatory
issues, increasing expenses and reducing fee income remain major
areas of concern.
Regions currently carries a Zacks Rank #3 (Hold). Some
better-ranked Southeast banks that are currently performing well
Pinnacle Financial Partners Inc.
United Community Banks, Inc.
HomeTrust Bancshares, Inc.
). All these banks carry a Zacks Rank #1 (Strong Buy).
HOMETRUST BNCSH (HTBI): Get Free Report
PINNACLE FIN PT (PNFP): Free Stock Analysis
REGIONS FINL CP (RF): Free Stock Analysis
UTD CMNTY BK/GA (UCBI): Free Stock Analysis
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