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Regions Financial: Bank Stock Winner Again

Despite the margin expansion, net interest income was down to $798 million in the first quarter from $818 million the previous quarter and $827 million a year earlier. The sequential decline reflected a lower number of days in the quarter, but also a decline in average loans to $73.9 million in the first quarter from $74.6 million in the fourth quarter. Continued declines in commercial real estate (CRE) and residential mortgage loans, home equity loans and other consumer loans, were only partially offset by increases in commercial and industrial loans and indirect auto loans.

Average commercial and industrial (C&I) loans were up 2% sequentially to $27.1 billion in the first quarter.

FBR analyst Paul Miller on Wednesday reiterated his "market perform" rating for Regions, with an $8 price target, saying in a note to clients that the bank's first-quarter results implied a return on tangible common equity of 13.1%, "which represents marked improvement from the prior four quarters and demonstrates Regions' turnaround momentum."

When discussing the net interest margin, Miller wrote that "while competitive pressures will likely continue to weigh on loan yields, the company does continue to have material offsets on the funding side, something that is dissipating at most of its peers."

Still, Miller's enthusiasm was tempered. "Earnings growth outside of expense cuts should remain difficult given flat earning asset balances and relatively stable net interest income," he wrote. The analyst estimates Regions will earn 81 cents a share for all of 2013, with EPS rising to 85 cents in 2014.

RF Chart RF data by YCharts

Interested in more on Regions Financial? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.


Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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