Regions Financial Corp. (RF), Alabama’s biggest bank, said first-quarter profit rose 68 percent, beating analysts’ estimates on cost cuts and lower provisions for loan losses. The shares rose the most in three months.
Net income climbed to $335 million, or 23 cents a share, from $199 million, or 11 cents, a year earlier, the Birmingham- based company said today in a statement. The average estimate of analysts surveyed by Bloomberg was profit of 20 cents a share.
Regions’ 7.8 percent decline in non-interest expense to $842 million exceeded a 2.4 percent drop at PNC Financial Services Group Inc., the No. 2 U.S. regional bank, and a 3.5 percent cut at U.S. Bancorp, the nation’s largest regional lender. Regions expects 2013 costs to be lower than last year, the bank said in a slide presentation on its website.
“Building on this foundation while prudently managing expenses, Regions is moving forward to take advantage of growth opportunities in all of our businesses as the economy improves,” Chief Executive Officer Grayson Hall, 55, said in the statement.
Regions rose 3.6 percent to $8.01 at 4:15 p.m. in New York trading, the biggest gain on the 24-company KBW Bank Index.
Regional banks are reducing the amount they reserve for bad loans, boosting net income as revenue growth stalls. Regions set aside $10 million for soured loans in the quarter, compared with $117 million a year earlier.
Total revenue fell 3.8 percent to $1.3 billion, according to the statement.
Revenue from fees fell 4.4 percent to $501 million in the period as service charges on deposit accounts, credit-card income and commercial credit fee income declined.
Total loans fell 3.6 percent to $73.9 billion in the first quarter from a year earlier, driven by a 28 percent drop in total investor real estate loans, Regions said in a supplement posted on its website.
Loan production should outpace attrition this year, leading to growth in the low single digits in 2013, Chief Financial Officer David Turner said today on a conference call following the results. Hall said he’s seeing more diversity of loan demand, which he called an encouraging sign.
The bank will continue to consolidate branches this year, a process it goes through annually, Turner said on the call. Regions has reduced its branch count by 16 percent since 2007, the fastest of any other bank, he said.
Regions said last month it plans to raise the quarterly dividend to 3 cents and buy back as much as $350 million in shares. It said it may also repurchase or redeem as much as about $500 million in trust-preferred securities after the Federal Reserve didn’t object to its capital plan.
To contact the reporter on this story: Laura Marcinek in New York at firstname.lastname@example.org.