BIRMINGHAM, Ala. (
) -- Shares of
plunged 9% on Tuesday after the Southern-regional bank posted weaker-than-expected quarterly results.
Regions reported a loss of $209 million, or 17 cents a share, better than the loss of $437 million, or 37 cents a share in the year-earlier period. But the loss was worse than consensus estimates of a 9 cents a share decline, according to
Investors were clearly disappointed at the results, particularly as other troubled banks, like
reported a surprising profit for the quarter.
Regions' stock was most recently down 6.1% to $6.60 on very strong trading volume of 22 million shares as investors looked to exit the stock. The bank's three-month average daily trading volume is typically around 16 million shares a day.
Regions' attributed the larger than expected loss to the disposition of problem assets and the continued de-risking of its balance sheet.
During the quarter, Regions transferred $1 billion of assets to the held for sale category, including a $350 million bulk sale of distressed assets, it said.
"Although the economic recovery in most of our markets remains slow and uneven, we remain committed to returning Regions to sustainable profitability as quickly and prudently as possible and believe this quarter's actions to dispose of problem assets will help us achieve our goal," Regions' CEO Grayson Hall said in a statement. "However, we remain cautious due to the slow pace of economic recovery."
The bank's provision for losses -- $760 million -- declined when compared to the third quarter of 2009, but rose significantly from the $651 million provision in the prior quarter.
Net charge-offs associated with all asset dispositions totaled $233 million in the quarter, the bank said. Total net charge offs rose 16% to $759 million. However, non-performing assets fell 5% during the quarter.
The company said that pre-tax pre-provision net revenue totaled $454 million in the third quarter, down 6.5% sequentially, but up 11% from the year earlier period. Regions attributed the decline to the effects of higher credit-related costs and the impact of new regulations.
Regional Banks' Future Hinges on Loans
However, Regions reported improving results in net interest income and net interest margin, while, the pace of loan decline slowed and customers opened new checking accounts at a record pace, it said.
Regions' net interest margin rose 9 basis points to 2.96, even as outstanding loans fell 2% as the bank looked to reduce its real estate exposure, it said.
Commercial and industrial balances rose $405 million sequentially, the bank said.
Regions "remains focused on generating quality, profitable loans for businesses and consumers as evidenced by the 2% percent growth in the company's middle market commercial and industrial loan portfolio," it said.
Regions, which still holds taxpayer funds, said that its Tier-1 Capital ratio was 12.1% and Tier 1 Common ratio was 7.6% at quarter end.
--Written by Laurie Kulikowski in New York.
To contact the writer of this article, click here:
To submit a news tip, send an email to:
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.