BIRMINGHAM, Ala. — Earnings blues continued for Regions Financial Corp. as the parent of Regions Bank reported another quarter of losses last week.
The $133 billion regional banking company attributed the losses of 17 cents a diluted share largely to disposal of $1 billion in troubled assets and efforts to keep risks off the balance sheet. The bank had net per diluted share losses of 37 cents in the same quarter last year.
Net income losses for common shareholders totaled $209 million for the third quarter, Regions said.
Shedding the bad assets and continued “de-risking” of the balance sheets is key to creating a rebound, said Chairman & CEO Grayson Hall. “Our strategies are working,” he insisted in a presentation Wednesday to analysts.
That strategy included a $350 million bulk sale of distressed assets as part of the $1 billion disposed of in the quarter. It also included aggressive charge offs associated with the asset disposition that brought the total for the year to $759 million. Charge offs for the quarter, Regions said, totaled $233 million.
Regions’ efforts to reduce investor real estate exposure led to a decline of about $1.5 billion, or 2 percent, in period end loans outstanding during the third quarter, Regions said.
A further emphasis on caution, Hall said, led Regions to migrate more loans to non – performing status. The percentage of non- performing loans current on payments rose to 36 percent in the quarter from 24 percent last quarter, he said.
Non-performing loans, excluding loans held for sale, declined $101 million or 3 percent,
driving a 5 percent overall decline in non-performing assets, Regions reported in its earnings news release.
The provision for loan losses essentially equaled net charge-offs at $760 million, increasing from $651 million, and was an annualized 3.52 percent of average loans.
Regions noted some positives:
*Net interest income rose $12 million or 1 percent resulting in a 9 basis point improvement in the net interest margin to 2.96 percent.
*Funding mix continues to improve resulting in third quarter total deposit costs declining 9 basis points to 0.70 percent
*On track to open more than one million new business and consumer checking accounts this year, exceeding 2009’s record level.
*Maximum loss potential from Gulf oil spill now estimated at $20 million, sharply less than the initial $100 million estimate
*Solid capital with a Tier 1 Capital ratio estimated at 12.1 percent and a Tier 1
Common ratio estimated at 7.6 percent.
Total average of loans declined in the third quarter but at a slower pace than earlier quarters, Hall said.
Though loans were down, mortgage lending rose 31 percent, according to Hall.
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