Tuesday, October 28, 2014

Regions Financial Corp Beats Earnings through Expense Reductions

Regions Financial Corporation reported Q3 EPS of $0.22, beating consensus estimates by $0.01. Total revenue increased by $20MM (2%) from the prior quarter to $1.3B, however revenue is down 1.5% YoY.
Total loan balances at quarter end were $77BB, representing an increase of $94 million from the previous quarter. The consumer-lending portfolio showed consistent growth, with auto lending & credit cards receiving the greatest gains. The indirect auto loan portfolio grew at 4% from the prior quarter and credit card balances increased by 2%. Unfortunately, these increases were partially offset by a $96MM decline in home equity balances.

Regions Financial Corporation’s net interest margin & net interest income were negatively affected by lower asset yields driven mainly by the low interest rate environment and competitive pricing pressures. Low interest rates caused by weakening global economic growth continue to hurt banks’ interest income, forcing them to turn to non-interest income from fee based services. Additionally, Regions continued to manage its expenses, which totaled $326MM for the quarter, while continuing to invest in talent and technology to spur future expansion.

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