DOW JONES NEWSWIRES
Regions Financial Corp. (RF) swung to a third-quarter loss amid higher loan loss provisions as the Southeast regional bank also recorded charges tied to branch consolidation.
"The operating environment remains challenging and credit-related costs continue to be elevated," said Chairman and Chief Executive Dowd Ritter. "However, the economy appears to have bottomed and that bodes well for customers and for us."
Shares in recent premarket trading were up 2.3% to $5.83. The stock has lost more than a quarter of its value this year.
Regions, which swung to its third quarterly loss over the past year, has been struggling for some time with its real estate exposure to Florida and other Southern markets. Regions needed to raise the most capital relative to risk-weighted assets following the government-induced stress test for the top 19 banks.
Regions reported a loss of $377 million, or 32 cents a share, compared with a year-ago profit of $79 million, or 11 cents a share. Excluding merger-related charges, but including preferred dividend costs, the loss would have been 37 cents. Analysts polled by Thomson Reuters predicted a 25-cent loss.
The latest results also included charges of $41 million tied to a consolidation of 121 branches across its 1,900-branch footprint. The branches will be closed in early 2010, and Regions said it expects to realize further cost savings of $21 million annually.
Loan-loss provisions grew to $1.03 billion from $912 million in the previous quarter and $417 million a year earlier. Net charge-offs--loans the bank doesn't expect to collect--jumped to 2.86% of average net loans from 2.06% and 1.68%, respectively. Nonperforming assets, which are seen near default, grew to 4.4% from 3.55% and 1.79%.
Net interest margin jumped to 2.73% from the second quarter's 2.62%. The prior year was 3.1%.
Deposits increased $1.3 billion from the prior quarter, driven by a 3% jump in noninterest accounts. Regions said 762,000 retail and business checking accounts were opened so far this year. Meanwhile, loan balances fell 1% from a year ago.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com