Tuesday, July 22, 2014

Regions Financial Q2 Earnings

Before the market opened on July 2nd, Regions Financial posted strong second quarter earnings. 

They posted a profit of $292 million, up 12% from a year earlier, and met earnings estimates at 21 cents a share.   Revenue increased by 2% to $1.28 billion over prior quarter.  Net interest margin was 3.24% down two basis points from last quarter, but net interest income grew $6 million to $837 million year over year.  Net interest income was benefited from loan growth, but net interest margin declined because of lower asset yield, and loan spread retraction resulting from a persistently low rate environment and competitive pricing pressures. 

                The bank’s loan portfolio grew 1.1%, boding well for revenue growth.  The boost in consumer and business portfolios has increased to $77 billion. 

                Their Tier 1 capital ratio is 12.5%, up .09% year over year.  Their Basel 3 ratio was 11%.  Their liquidity also remained solid with a loan to deposit ratio of 82%. 

Last month Regions settled allegations that it improperly accounted for loans that soured during the crisis.  They agreed to pay $51 million.  Also, there is an ongoing investigation by the U.S Department of Housing and Urban Development related to mortgage practices. 

 The CEO commented that these results demonstrates an effective execution of their strategy, by focusing on customer needs, they have grown loans, deposits, and checking accounts.  They achieved a positive operating leverage and increased their efficiency ratio to 64.2%.  Net charge offs declined to .35% of loans, a decrease of 18% over last quarter. 

Although the strong earnings, the stock fell $.09, or .98% to $10.10.

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