Regions Profit Falls as Mortgage Fees Drop, Expenses Rise

July 23 (Bloomberg) -- Regions Financial Corp., Alabama’s largest bank, said second-quarter profit fell as mortgage revenue declined and expenses increased on costs related to early debt repayment.

Net income slid 25 percent to $267 million, or 18 cents a share, from $355 million, or 20 cents, a year earlier, the Birmingham-based lender said today in a statement.

Mortgage revenue fell 23 percent to the lowest in six quarters, while non-interest expenses rose 5 percent to $884 million, including $56 million in early debt-repayment costs. The bank, led by Chief Executive Officer Grayson Hall, said it expects full-year expenses to be lower than 2012, according to a slide presentation today.

“We realize in this environment, given the economy and given reduced demand for some of our products and services, we really have to be disciplined around expense management, and we will continue to do that,” Hall, 56, said on a conference call with analysts.

Twenty-seven analysts surveyed by Bloomberg estimated per-share earnings of 21 cents. Regions said “several liability management activities” reduced earnings by 3 cents, according to the statement.

Shares of the company, which have gained 46 percent this year, were unchanged at $10.42 at 4:15 p.m. in New York.

Non-Interest Expenses

Excluding the costs related to the early termination of debt, non-interest expenses fell 2 percent from a year earlier and from the first quarter.

“We are looking very hard at every expense category,” Chief Financial Officer David Turner said on the call. “We do continue to look at and make sure we have the right number of people and the right people doing what we need them to do.”

Revenue declined 3 percent from a year earlier to $1.31 billion, led by the slump in mortgage income, which fell to $69 million, and a decrease in net interest income, which dropped 3.6 percent to $808 million.

Regions’ net interest margin, the difference between what a bank pays on deposits and charges for loans, widened to 3.16 percent from 3.13 percent in the first quarter and was unchanged from a year earlier.

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

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