On Jul 1, 2013, we reiterated our long-term recommendation on
Regions Financial Corp.
) at Outperform based on its favorable funding mix, improved core
business performance, its expansion mode and strategies along
with the encouraging capital deployment activities. Additionally,
significant improvement in its credit quality and control over
non-interest expenses acted as positive catalysts.
Despite the macro pressure, Regions' credit quality continues to
normalize. In spite of the slow and uneven pace of the economic
recovery, the company experienced significant improvement in both
2011 and 2012 and thereafter. Further, the overall improving
trend in delinquency rates and net charge-offs is impressive and
the same is expected in the coming quarters.
Regions is in a relatively good shape from the capital
perspective. As of Mar 31, 2013, the company's Tier 1 capital
ratio was 12.38%, Tier 1 common ratio was 11.23% and leverage
ratio was 10.1%, well above the regulatory requirements.
We view Regions as a sound asset for yield-seeking investors. In
Apr 2013, the company increased its quarterly common stock
dividend by 200% to 3 cents per share, following the Federal
Reserve's approval. Further, it announced a share repurchase
program under which it would be able to buy back shares worth up
to $350 million through Mar 31, 2014.
Moreover, Regions' first-quarter 2013 earnings from continuing
operations came in at 23 cents per share, marginally beating the
Zacks Consensus Estimate by 3 cents. Results benefited from a
fall in non-interest expenses, reflecting effective cost control
For Regions, the Zacks Consensus Estimate for 2013 jumped 7.4% to
87 cents per share, over the last 90 days. For 2014, the Zacks
Consensus Estimate advanced 4.8% to 88 cents per share, over the
same time frame. Hence, Regions carries a Zacks Rank #2 (Buy).
Other Major Banks to Consider
Some other Southeast banks that are worth considering include
Home Bancshares, Inc. (Conway, AR)
Farmers Capital Bank Corporation
). All the 3 banks carry a Zacks Rank #1 (Strong Buy).
AMERIS BANCORP (ABCB): Free Stock Analysis
FARMERS CAP KY (FFKT): Free Stock Analysis
HOME BANCSHARES (HOMB): Free Stock Analysis
REGIONS FINL CP (RF): Free Stock Analysis
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