Regions Falls as Profit Misses Estimates: Atlanta Mover

Regions Financial Corp. (RF), Alabama’s biggest bank, fell the most in a year after reporting a drop in quarterly profit as expenses held steady and mortgage refinancings declined.

The stock was the second-worst performer among 81 firms in the Standard & Poor’s 500 Financials Index, sliding 4.9 percent to $9.55 at 1:21 p.m. in New York, the most on an intraday basis since Oct. 23, 2012.

Third-quarter net income fell 5.3 percent to $285 million, or 20 cents a share, from $301 million, or 21 cents, a year earlier, Birmingham-based Regions said today in a statement. That was 1 cent less than the average estimate of 27 analysts surveyed by Bloomberg.

“While its net interest margin came in higher than expected and loan balances increased, the company was unable to reduce expenses in the face of lower fee income,” Jason Goldberg, a Barclays Plc analyst, said in a research note.

Regions, led by Chief Executive Officer Grayson Hall, said the lender is more focused on increasing revenue through its new wealth-management business and has hired more than 100 people at the unit.

“We need to grow our revenue, which is why we’ve made the investments that we have,” Hall, 56, said in a conference call with analysts. “Our goal is to generate positive operating leverage.”

NIM Improvement

Net interest margin, the difference between what a bank pays for deposits and charges for loans, expanded to 3.24 percent in the third quarter from 3.16 percent in the preceding three-month period and 3.08 percent a year earlier, according to the statement.

Mortgage income declined $17 million from the second quarter and non-interest expenses totaled $884 million, unchanged from the previous quarter. Refinancings slumped after rates on 30-year loans jumped from historical lows of less than 3.5 percent earlier this year to an average of 4.32 percent at the end of September, data compiled by Freddie Mac show.

Zions Bancorp was today’s worst performer in the S&P 500 Financials Index, plunging as much as 8.4 percent after the Salt Lake City-based lender said yesterday that its third-quarter net interest margin narrowed.

To contact the reporter on this story: Fanni Koszeg in New York at fkoszeg@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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