Regions First Quarter Results Shows Initial Impact of Cost Cutting Program

Regions Financial Corporation today reported financial results for the quarter ending March 31, 2010. 
 
“During the first quarter, asset quality continued to stabilize and deposit growth remained strong; however, substantial credit costs continued to more than offset the underlying strength of our core business. Despite the strong fundamentals of our business, we are not satisfied with our financial performance and we remain intensely focused on returning the company to profitability,” said Grayson Hall, president and chief executive officer. “In addition to restoring financial performance, we will continue to focus on serving our customers, continue to de-risk our balance sheet and implement best-in-class risk management practices.”


Cost Containment Strategies Successful
 
The Company successfully completed the consolidation of 120 branches during the first quarter with minimal customer impact, which should provide an annual $21 million net cost savings starting in the second quarter. The company continues to aggressively control day-to-day operating costs and seek opportunities to further improve our operating efficiency. Benefits of cost control efforts should become increasingly evident as, over time, recession-related and credit costs return to more normalized levels.

While loan demand remains sluggish, commitment levels remain strong and for the first time in several quarters, declines in commercial line utilization rates have begun to level off. Regions remains a leader in small business lending, ranking third nationally by the Small Business Administration, and will continue to focus on this important line of business. In spite of the Company’s efforts, loans outstanding declined 2.8 percent as compared to last quarter. Regions continues to seek opportunities to lend to its customers in need of credit and anticipates loan growth as the general economy improves.  

   * "Loss of 21 cents per diluted share for the quarter ended March 31, 2010, reflects stabilizing net charge-offs and minimal reserve build. Inflows of non-performing loans declined for third consecutive quarter.

    * Core pre-tax pre-provision net revenue increased $11 million or 2.9% linked quarter

    * Net interest margin improved to 2.77 percent driven by 15 basis point improvement in average deposit cost to 1 percent; net interest margin expected to rise to 3.00 percent by year-end 2010

    * Morgan Keegan net income rises 39 percent linked quarter; solid private client, equity capital markets and trust revenues; reduced operating costs

    * Non-interest expense declined 3 percent, after excluding branch consolidation charges and loss on the early extinguishment of debt

    * Record account and deposit growth continues. Average low-cost deposits increased for the fifth consecutive quarter, growing 6.5 percent linked quarter, up nearly $9.6 billion or 16 percent year-over-year.

    * Loan growth remains challenged but commercial line utilization beginning to stabilize. New and renewed loan commitments remained solid, totaling $11.6 billion for the quarter, but total loans outstanding contracted 2.8 percent.

    * Allowance for credit losses increased to 3.69 percent of loans with $770 million provision for loan losses exceeding net charge-offs by $70 million

    * Tier 1 Capital ratio was an estimated 11.7 percent, while the Tier 1 Common ratio stood at an estimated 7.1 percent. Both ratios were essentially unchanged versus the previous quarter.


For more information please visit their website www.regions.com


Sponsor: Cambridge Consulting Group provides banks and other financial institutions with risk management and cost cutting programs that improve their bottom line. Cutting operational costs is a key strategy for most companies. Other than labor, one of the largest cost areas is leased commercial real estate. There are dramatic savings possible by reducing the amount of leased real estate used by consolidation or elimination of branches or operating groups. In the past long term lease agreements have been an expense that was considered untouchable. Cambridge Consulting has developed a new product/strategy- Negotiated Lease Buy Outs. For more information please visit their website at www.commercialleaseterminations.com