BIRMINGHAM, ALA. (
) -- Shares of
surged Tuesday after the bank reported a narrower than expected loss for the second quarter.
The stock jumped 5.1% to $7.45 in early action on volume of more than 10.5 million. The issue's three-month trailing daily average churn is 24.7 million. The
KBW Bank Index
, which had a 4.4% weighting for Regions through Monday, was up 1.7% in morning trades.
Before the opening bell, Regions reported a loss of $335 million, or 28 cents a share, for the second quarter, wider than its year-ago loss of $244 million, or 22 cents a share.
Excluding a charge of $200 million, however, related to the bank's estimate of a probable loss from an investigation of its Morgan Keegan unit for violations of securities laws, Regions lost $135 million, or 11 cents a share, for the three months ended June 30.
The average estimate of analysts polled by
was for a loss of 21 cents a share in the second quarter.
Regions said it based the amount of the charge "on the current status of settlement negotiations" and said it expects a loss related to the investigation is probable. The bank disclosed the probe, which involves the
Securities and Exchange Commission
Financial Industry Regulatory Authority
, and a joint task force of state regulators in Alabama, Kentucky, Mississippi and South Carolina, in late April.
Revenue -- as measured by net interest income plus non-interest income -- totaled $1.61 billion, slightly ahead of Wall Street expectations. Regions said that pre-tax, pre-provision revenue rose 22%, or $89 million, sequentially.
Loan growth contracted by 3% "reflecting challenging loan demand and the company's efforts to reduce investor real estate lending," Regions said.
The regional bank said its provision for loan losses dropped $119 million sequentially to $651 million.
"We remain intensely focused on returning the company to sustainable profitability as our core business performance and risk profile incrementally continue to improve," said Grayson Hall, Region's CEO and president.
Regions said its non-performing assets, excluding loans held for sale, declined for the first time in six quarters in the June period, falling by $297 million, or 7 percent, on a sequential basis.
The bank also weighed in on financial reform, saying many aspects of the new legislation should benefit the industry but adding that this will require "a substantial number of rules to be written."
is one of the largest banks based in the Southeast U.S. and it commented on its expectations of the impact of the
oil spill on its business, giving an estimate for a maximum of $100 million in potential future losses after conducting a preliminary internal stress test.
"This loss estimate conservatively assumes no benefit from private insurance payments, government support or stimulus money that BP has committed, any of which would reduce potential losses," Regions noted. "Historically, Regions has experienced strong resilience from the Gulf coast markets in responding to environmental and economic challenges."
Through Monday's close, Regions' shares were up 34% year-to-date.
--Written by Laurie Kulikowski in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.