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

February 24, 2012 | About:

Regions Financial Corp. (NYSE:RF) filed Annual Report for the period ended 2011-12-31.

Regions Finl Cp has a market cap of $7.55 billion; its shares were traded at around $5.8 with a P/E ratio of 27.3 and P/S ratio of 1.2. The dividend yield of Regions Finl Cp stocks is 0.7%.

Highlight of Business Operations:

The cost of our deposits and short-term wholesale borrowings is largely based on short-term interest rates, the level of which is driven primarily by the FOMCs actions. However, the yields generated by our loans and securities are typically driven by longer-term interest rates, which are set by the market through benchmark interest rates such as the London Interbank Offered Rates (LIBOR) or, at times the FOMCs actions, and generally vary from day to day. The level of net interest income is therefore influenced by movements in such interest rates and the pace at which such movements occur. Interest rate volatility can reduce unrealized gains or create unrealized losses in our portfolios. If the interest rates on our interest-bearing liabilities increase at a faster pace than the interest rates on our interest-earning assets, our net interest income may decline and, with it, a decline in our earnings may occur. Our net interest income and earnings would be similarly affected if the interest rates on our interest-earning assets declined at a faster pace than the interest rates on our interest-bearing liabilities. In particular, short-term interest rates are currently very low by historical standards, with many benchmark rates, such as the federal funds rate and the one- and three-month LIBOR near zero. These low rates have reduced our cost of funding which has caused our net interest margin to increase.

The major rating agencies regularly evaluate us and their ratings of our long-term debt are based on a number of factors, including our financial strength and conditions affecting the financial services industry generally. Over the past three years, all of the major ratings agencies downgraded Regions and Regions Banks credit ratings and many issued negative outlooks. Negative watch, negative outlook or other similar terms mean that a future downgrade is possible. Recently, however, three major rating agencies have revised their outlooks of Regions upward from negative to stable. Citing improvements in loan loss performance and profitability, Standard & Poors revised its outlook of Regions to stable in August 2011. Fitch Ratings followed suit in November 2011, noting that Regions overall risk profile had improved. In February 2012, Moodys Investor Services also changed its outlook from negative to stable citing that Regions had decreased its risk concentrations and is showing signs of stability in its asset quality. However, our rating from Dominion Bond Rating Service remains on negative outlook. Currently, Regions Senior ratings are Ba3, BB+, BBB-, and BBB by Moodys Investor Services, Standard & Poors, Fitch Ratings and Dominion Bond Rating Service, respectively. Regions ratings with Moodys Investor Services and Standard & Poors and Regions Banks ratings with Moodys Investor Services are currently below investment grade.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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