April 16 (Bloomberg) -- Regions Financial Corp., Alabama’s biggest bank, gained as much as 32 percent after Chief Executive Officer Dowd Ritter said the company would report a profit for the first quarter.

Regions was expected to report a loss of 41 cents a share, according to the average estimate of 15 analysts compiled by Bloomberg. Ritter’s comment was included in a regulatory filing today.

Regions has reported profit declines for seven of the past eight quarters because of defaults on home loans and writedowns on the value of acquisitions. The bank cut its quarterly dividend by 74 percent last July, received $3.5 billion in the U.S. Treasury’s Troubled Asset Relief Program and is among 19 institutions undergoing government-mandated “stress tests” to determine their financial strength.

“Regions’ demise has been prematurely advertised by some,” said Jeff Davis, an analyst at Howe Barnes Hoefer & Arnett, who had expected the bank to lose 21 cents a share. The bank probably benefited from “incredibly robust” mortgage revenue and by gains in the bond-trading and securities portfolio, he said.

The Birmingham-based bank gained $1.43, or 29 percent, to $6.43 at 1:35 p.m. in New York Stock Exchange composite trading, after rising as high as $6.61. The shares have declined 68 percent over the past year.

“Mr. Ritter didn’t go into the business fundamentals this morning” at the company’s annual meeting, bank spokesman Tim Deighton said. “The elaboration will come next week when we release earnings” on April 21.

Selling Loans

The lender has sold or plans to sell $1.6 billion in loans for which it isn’t receiving full payment, the company said in a presentation for today’s shareholders meeting in Birmingham. While housing prices in its Florida markets, which represent about 16 percent of its deposits, continue to decline, prices remain stable in the rest of its regions, the bank said.

Regions has $14.3 billion of deposits in Florida, ranking fourth in market share, the company said. Regions acquired AmSouth Bancorp for $10.5 billion in November 2006, just before U.S. housing prices plunged in the worst real-estate decline since the Great Depression. The bank wrote down its acquisitions by $6 billion in January.

Regions is experiencing record mortgage applications and opening of new accounts, which has boosted deposit growth, the bank said.

“We know the fixed-income markets business is off the charts right now,” Davis said. Regions owns Morgan Keegan, a Memphis, Tennessee-based securities firm that derives as much as 45 percent of its revenue from bond trading, he said.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: April 16, 2009 14:00 EDT