The fourth-quarter provision for loan losses was $37 million, while the company saw net loan charge-offs of $180 million, for a reserve release of $143 million, which boosted operating earnings. The reserve release declined from $229 million in the third quarter.
Fourth-quarter noninterest income totaled $536 million, increasing from $533 million in the third quarter and $507 million in the fourth quarter of 2011. Fourth-quarter mortgage income totaled $90 million, declining from $106 million the previous quarter, but increasing from $57 million a year earlier. The sequential decline in mortgage income was offset by a $10 million increase in service charges on deposit accounts, to $254 million, as well as an increase in other noninterest income.
Regions Financial's fourth-quarter annualized ratio of net charge-offs to average loans was 0.96%, declining from 1.38% the previous quarter and 2.16% a year earlier. The company reported a Dec. 31 ratio of nonperforming assets (including nonaccrual loans, loans past due 90 days or more and foreclosed assets) to loans, foreclosed properties and nonperforming loans held for sale, of 3.19%, improving from 3.47% in September and 4.40% in December 2011. Loan loss reserves covered 2.59% of total loans as of Dec. 31.
Stifel Nicolaus analyst Christopher Mutascio rates Regions a "Hold," and said in a note that the company's "core pre-tax pre-provision earnings (excluding the REIT subsidiary costs) were $506 million versus our $481 million estimate," because of the margin expansion, "greater than anticipated fee income driven by strong deposit service charges and 'other, income, which more than offset somewhat lower than expected mortgage banking income, and... better cost containment efforts."The analyst added that "perhaps most important, credit quality continues to improve which should alleviate some concerns stemming from the sizable increase in gross nonperforming loan inflows reported in 3Q12. Gross nonperforming loan inflows decreased to $350 million in 4Q12, down from the 3Q12 level of $463 million." Mutascio estimates that Regions will earn 83 cents a share in 2013. Regions Financial's shares trades for 1.1 times their reported Dec. 31 tangible book value of $7.11, and for 9.8 times the consensus 2013 EPS estimate of 79 cents. The consensus 2014 EPS estimate is 81 cents.
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