Regions Financial Corp. said second-quarter profit slipped 3.7%,
as higher expenses and a larger provision for loan losses offset
revenue growth.
Still, earnings met Wall Street expectations and revenue came in
slightly above forecasts.
The Birmingham-based bank, one of the largest in the Southeast,
reported a profit of $285 million, down from $296 million a year
earlier. On a per-share basis, earnings slipped a penny to 20
cents. Revenue grew 8.6% to $1.4 billion.
Analysts anticipated 20 cents in earnings per share on $1.3
billion in revenue.
Regions, with a network of about 1,650 branches across 16
states, said loans grew 3.6% as business lending rose 5.9% and
consumer lending increased 2.9%. The bank focuses on business
lending, which represents a little more than 60% of its total
portfolio.
During the quarter, Regions raised its provision for loan losses
to $63 million from $36 million in the year-ago period, though it
reduced its exposure to the energy sector by about 2%. Last week,
Texas-based lender Comerica said exposure to the energy sector, hit
by lower prices, prompted a much bigger loan loss provision that
caused revenue to drop.
Region said its net interest margin, or NIM, a key gauge of
lending profitability, fell to 3.16% from 3.24% a year-earlier and
3.18% in the first quarter. The metric has been under pressure for
banks grappling with still-low interest rates, though some have
recently said NIM is stabilizing.
Meanwhile, noninterest income during the quarter jumped 24% to
$290 million, driven by sharp increases in capital markets and
commercial credit fee income. Many lenders have made strides to
boost fee-based income to help buffer against declining interest
income.
Noninterest expenses increased 14% to $934 million, thanks
largely to a more than doubling of legal and regulatory costs and a
charge stemming from properties identified for sale. The lender's
efficiency ratio rose to 64.5% from 63.2% a year earlier. An
efficiency ratio measures how much it costs a bank to produce
revenue-the lower the ratio, the more efficient the bank is.
Shares in the bank, down about 4% this year, were inactive
premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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