The company's second-quarter net interest margin -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- expanded to 3.16%, from 3.09% the previous quarter, and 3.07% a year earlier. The margin expansion ran counter to the trend for most large regional U.S. banks, which have been seeing their margins squeezed as the Federal Reserve has continued making large purchases of long-term securities, in an attempt to bring long-term rates down even further, from historically low levels.
Regions felt the margin squeeze earlier than many other banks, and Guggenheim Analyst Marty Mosby says that the company "has the opportunity to continue to expand the margin as they refinance some of their debt and CDs mature at lower rates, and as they see their ratings from the ratings agencies improve."
Mosby estimates that Regions Financial's margin will expand by another nine basis points through the end of 2013.
The analyst rates Regions a "Buy," and on Monday raised his price target for the shares to $9.25 from $9.00, saying he expected the company to improve its "quarterly earnings run rate to above $0.20 before year-end, pushing potential upside substantially higher."RF data by YCharts
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