Regions Financial Corp. on Tuesday reported a surprise profit for the first quarter, reversing a year-ago loss, reflecting a much smaller amount reserved to cover loan defaults and a big drop in loans written off as uncollectible.
The Birmingham, Ala.-based bank, the parent company of Regions Bank, posted net income for common shareholders of $17 million, or a penny per share, for the three months ended March 31. In the same time a year ago, Regions reported a loss of $255 million, or 21 cents per share.
Analysts were expecting a loss of 10 cents per share, according to data provided by FactSet.
Net interest income, or money earned from deposits and loans, rose 4 percent to $863 million, from $831 million last year. Total deposits slipped to $96.4 billion, from $98.3 billion last year. Total loans dropped 8 percent to $81.4 million at March 31, from $88.2 million a year ago.
Noninterest income, or earnings from fees, charges and its Morgan Keegan brokerage operations, also rose 4 percent to $843 million, from $812 million last year.
The bank, based in Birmingham, Ala., slashed the amount of money set aside to cover souring loans, known in the industry as the provision for loan losses, to $482 million, a 37 percent drop from $770 million last year.
Net charge-offs, or loans written off as uncollectible, plunged 46 percent to $481 million, from $700 million in the year-ago quarter.
Non-performing assets, or loans considered past due and in danger of default, fell 14 percent to $3.93 billion, from $4.57 billion a year ago.
Jefferies & Co. analyst Ken Usdin said the Regions report surprised in several areas, including better-than-expected charge-offs and net interest income.
He was concerned about the decline in loans, particularly in commercial real estate, but said commercial and industrial loan growth was a bright spot.
With 23 offices and $1.4 billion in assets in metropolitan Chattanooga, Regions Bank is the third biggest bank operating in Chattanooga.