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Regions Financial Corp. Reports Operating Results (10-Q)

August 06, 2012 | About:
10qk

10qk

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Regions Financial Corp. (RF) filed Quarterly Report for the period ended 2012-06-30.

Regions Financial Corporation has a market cap of $9.79 billion; its shares were traded at around $7.045 with a P/E ratio of 13.6 and P/S ratio of 1.5. The dividend yield of Regions Financial Corporation stocks is 0.6%.

Highlight of Business Operations:

Securities totaled $27.2 billion at June 30, 2012, an increase of $2.8 billion from year-end 2011 levels. During the first six months of 2012, Regions received proceeds of approximately $1.4 billion primarily from sales of available for sale agency mortgage-backed securities. Proceeds from these sales were reinvested in similar securities. Additionally, during the second quarter of 2012, Regions added approximately $2.2 billion of residential agency mortgage-backed securities and $1.0 billion of high quality investment grade corporate bonds. The net purchases of agency mortgage-backed securities are an offset to the Companys strategy to sell the majority of agency eligible residential first mortgages at origination, and the corporate bonds increase diversification in the portfolio with an attractive risk and return profile.

For the second quarter of 2012, related to continuing operations net interest income (taxable-equivalent basis) totaled $850 million compared to $864 million in the second quarter of 2011. The net interest margin (taxable-equivalent basis) was 3.16 percent for the second quarter of 2012, compared to 3.07 percent for the second quarter of 2011. For both the first six months of 2012 and 2011, related to continuing operations net interest income (taxable-equivalent basis) totaled $1.7 billion. The net interest margin (taxable-equivalent basis) was 3.13 percent for the six months ended June 30, 2012, compared to 3.08 percent for the first six months of 2011. Net interest margin increased for both periods primarily as a result of declines in overall deposit costs, lower levels of non-accrual loans and a decline in low-yielding other interest earning assets, primarily cash held at the Federal Reserve.

Securities gains, netSecurities gains for the second quarter of 2012 declined to $12 million from $24 million for the second quarter of 2011. For the first six months of 2012 securities gains declined to $24 million from $106 million for the corresponding 2011 period. Lower securities gains during both 2012 periods resulted from lower volumes of securities sales, resulting from the Companys asset/liability management process.

(Gain)/loss on loans held for saleThe Company recorded a $26 million reduction in non-interest expense for the second quarter of 2012 and a $34 million reduction of non-interest expense for the first six months of 2012 related to gains on loans held for sale. The Company recorded losses on loans held for sale of $4 million and $6 million for the second quarter and first six months of 2011, respectively. The improvement for both periods relates to completed sales and paydowns of individual loans at amounts in excess of carrying value.

The Companys income tax expense from continuing operations for the three months ended June 30, 2012 was $126 million compared to an income tax benefit of $34 million for the same period in 2011, resulting in effective tax rates of 26.4 percent and (75.6) percent, respectively. Income tax expense from continuing operations for the six months ended June 30, 2012 was $208 million compared to an income tax benefit of $63 million for the same period in 2011, resulting in effective tax rates of 26.1 percent and (95.5) percent, respectively. The increase in income tax expense for the three and six months ended June 30, 2012 is due to positive consolidated pre-tax earnings offset by a net benefit of $23 million recognized in the second quarter of 2012 associated with the following items: effective settlement of the 2007, 2008 and 2009 tax years with the Internal Revenue Service (IRS), an increase in the deferred tax asset valuation allowance and an increase in unrecognized tax benefits.

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