Regions Tops EPS Estimate - Analyst Blog
22 Janvier 2013 - 12:27PM
Zacks
Regions Financial Corporation’s (RF) fourth
quarter 2012 earnings from continuing operations came in at 22
cents per share, marginally beating the Zacks Consensus Estimate by
a penny. Results were in line with the prior quarter.
Quarterly results benefited from a rise in non-interest income
backed by improved funding mix and HARP II loan production.
Moreover, expansion in net interest margin depicts interest
recovery to some extent. Yet, increased non-interest expenses and
higher provision for loan losses were the dampeners.
Net income available to common shareholders was $261 million or 18
cents per share, down from $301 million or 21 cents per share
reported in the prior quarter.
For full year 2012, Regions reported income from continuing
operations available to common shareholders of $1.1 billion or 76
cents per share. Moreover, this outpaced the Zacks Consensus
Estimate by a penny.
Performance in Detail
Total revenues (net of interest expense) came in at $1.4 billion,
in line with the Zacks Consensus Estimate. However, revenue
increased slightly on a sequential basis.
Regions reported adjusted pre-tax pre-provision income from
continuing operations of $493 million in the reported quarter, up
5% sequentially.
Net interest income was $818 million, up 0.1% sequentially.
Moreover, net interest margin expanded 2 basis points sequentially
to 3.10% in the quarter, attributed to interest recoveries and
lower deposit costs. Funding mix showed an improvement as average
low-cost deposits inched up as a percentage of total deposits from
84% in the prior quarter to 86%.
Regions’ non-interest income was $536 million, up 1% sequentially.
Non-interest income included $12 million in securities gains.
Excluding securities gains, non-interest income surged 0.6%
sequentially, as service charges income and mortgage revenue
improved. Year-to-date, HARP II loan production was $1.6 billion,
surpassing the full-year target of $1 billion. Moreover, Now
Banking suite of products benefited the non-interest income.
However, non-interest expense increased 3.8% sequentially to $902
million. Excluding one-time items, adjusted non-interest expenses
were $849 million, down 2.3% sequentially.
Credit Quality
Credit quality was a mixed bag during the fourth quarter at
Regions. Net charge-offs decreased 31% sequentially to $180
million. Additionally, net charge-offs as a percentage of average
net loans stood at 0.96%, down 42 basis points sequentially.
Further, non-performing assets reduced 13% sequentially to $1.9
billion. Inflows of non-performing loans dipped 24% sequentially to
$350 million. Yet, provision for loan losses was up by 12.1%
sequentially to $37 million.
Capital Ratios
Capital ratios remained strong for Regions. As of Dec 31, 2012,
Regions’ Tier 1 capital ratio came in at 12.0% compared with 11.5%
in the prior quarter. Tier 1 common capital ratio was 10.8%, up
from 10.5% in the prior quarter.
The company’s loan-to-deposit ratio was 78.0% as of the same
date, down from 79% in the prior quarter. Tangible common book
value per share came in at $7.11 in the reported quarter, up from
$7.02 in the prior quarter.
Our Viewpoint
We believe the company’s favorable funding mix, improved core
business performance, its expansion mode and strategies will
continue to yield profitable earnings in the upcoming quarters.
Additionally, significant improvement in its credit quality would
act as a positive catalyst. Yet, regulatory issues and elevated
non-interest expenses remain major areas of concern.
Regions currently carries a Zacks Rank #3 (Hold).
Among Regions’ peers -- Virginia Commerce Bancorp,
Inc. (VCBI) reported fourth quarter 2012 adjusted
operating earnings of 16 cents per share, marginally beating the
Zacks Consensus Estimate by 2 cents. However, results compare
unfavorably with 17 cents per share reported in the prior quarter.
Elevated net interest margin, loan and deposit growth and credit
quality improvement were the positives for the quarter.
Among other peers - BancorpSouth Inc. (BXS) with
Zacks Rank #2 (Buy) is expected to release its fourth-quarter 2012
earnings on Jan 23, while IberiaBank Corp. (IBKC)
with Zacks Rank #1 (Strong Buy) will report on Jan 24.
BANCORPSOUTH (BXS): Free Stock Analysis Report
IBERIABANK CORP (IBKC): Free Stock Analysis Report
REGIONS FINL CP (RF): Free Stock Analysis Report
VIRGINIA COMMRC (VCBI): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Virginia Commerce Bancorp (MM) (NASDAQ:VCBI)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Virginia Commerce Bancorp (MM) (NASDAQ:VCBI)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024