Regions Profit Almost Doubles on Bad-Loan Provision Drop

Regions Financial Corp. (RF), the 10th- largest U.S. bank by deposits, said third-quarter profit almost doubled, matching analysts’ estimates as provisions for loan losses declined.

Net income rose to $301 million, or 21 cents a share, from $155 million, or 8 cents, a year earlier, the Birmingham, Alabama-based bank said today in a statement. That matched the average estimate of 29 analysts surveyed by Bloomberg.

Regions, led by Chief Executive Officer Grayson Hall, 55, has been profitable every quarter except one since the end of 2010. The bank has cut its bad-loan provision for eight consecutive quarters and the shares surged 65 percent this year, the second-best performer in the 24-company KBW Bank Index (BKX) behind Charlotte, North Carolina-based Bank of America Corp. (BAC)

Regions set aside $33 million for bad loans during the third quarter, compared with $355 million in the same period last year.

Regions is considering a preferred stock offering in “the near future” if market conditions are favorable, according to a separate statement today. The proceeds would be used for general corporate purposes, which may include the redemption of certain trust-preferred securities, Regions said.

Total revenue declined 1 percent to $1.35 billion in the third quarter as net interest income fell to $817 million from $850 million. Non-interest income rose 3.9 percent to $533 million as mortgage income climbed to a record $106 million from $68 million last year.

Low Rates

Historically low interest rates and government incentive programs are fueling demand for home loans. JPMorgan Chase & Co. (JPM), the biggest U.S. bank by assets, reported a third-quarter profit increase this month that included a 72 percent surge in mortgage revenue. CEO Jamie Dimon said at the time that the housing market has “turned the corner.”

Bank of America Chief Financial Officer Bruce Thompson said this month that housing prices are “no question” moving in the right direction.

Net charge-offs at Regions declined 49 percent to $262 million. Total loans fell 5.3 percent to $75.3 billion. That was driven by a 12 percent drop in consumer credit-card loans to $901 million and a 27 percent decrease in investor real estate loans to $8.71 billion.

Regions’s net interest margin widened to 3.08 percent from 3.04 percent in the same period last year and narrowed from 3.16 percent in the second quarter.

To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net