Tuesday, January 25, 2011

Regions Financial Corp. (NYSE: RF): Q4 Earnings Preview

Regions Financial Corp. (NYSE: RF) is scheduled to release fourth-quarter earnings before the market open on Tuesday, January 25, 2011. Analysts, on average, expect the company to post a loss of 13 cents per share on revenue of $1.61 billion. In the year-ago period, the company posted a loss of 51 cents per share on revenue of $1.57 billion.

Regions Financial Corporation operates as the holding company for the Regions Bank that provides a range of commercial, retail, and mortgage banking services in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas, and Virginia. Regions Financial has not posted a profit since its third-quarter 2008 results reported in October that year. 

In the preceding third quarter, the Birmingham, Alabama-based company's net income was $209 million or $0.17 per share, compared to a loss of $437 million or $0.37 per share last year. Analysts, on average, expected the company to report loss of $0.09 per share. 

At its last earnings call in October  Regions Financial President and Chief Executive Officer, Grayson Hall, said "Although the economic recovery in most of our markets remains slow and uneven, we remain committed to returning Regions to sustainable profitability as quickly and prudently as possible and believe this quarter's actions to dispose of problem assets will help us achieve our goal. However, we remain cautious due to the slow pace of economic recovery."

Regional banks, which spent most of 2010 struggling to recover from soured real estate loans, have been slower to repay government bailout funds than large banks with more diversified businesses. Regions Financial still owes $3.5 billion in TARP money,

However, optimism about the banking M&A environment has brightened investors' general outlook about the economy and the industry's recovery from the financial crisis.  Unlike its non-regional, larger competitors, being a regional bank has handicapped RF to raise capital organically -- without the help of outside investors. RF has even considered divesting its Morgan Keegan investment business, which has been the top brokerage in the past five years. The regional bank is often mentioned as one of the top takeover targets during the current bank recovery rally.

In terms of stock performance, Regions shares have gained nearly 10 percent over the past year.

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