Tags: Regions | Financial | profitable | RF

Regions Financial Finally Profitable this Year

By    |   Wednesday, 21 March 2012 10:24 AM

Sunbelt bank Regions Financial (RF) is set to finally become profitable this year, after logging four years of negative earnings.

Regions Financial’s core business is banking, with about 1,800 branches in 16 states. It also services mortgage loans and offers commercial insurance, along with other financial services. But Regions is now focused mainly on banking, and it has agreed to sell its Morgan Keegan brokerage unit for $930 million.

For fourth quarter 2011, Regions Financial posted sales of $1.5 billion, down from $2.3 billion in 2010. Quarterly net income fell to 11 cents per share, down from a 3 cent gain.

For full-year 2011, sales were $6.3 billion, down from $8.2 billion in 2010. Net income for 2011 narrowed to a 2 cent loss, compared to a 62 cent loss last year.

For 2012, Wall Street’s consensus earnings estimate is 46 cents per share. For 2013, the earnings estimate is 70 cents.

Taking strong steps

Regions Financial has been rebuilding its capital levels and improving credit quality, which will boost the bottom line. S&P analysts note that the bank is taking strong steps toward generating capital from profits. However, Regions Financial still owes $3.4 billion in federal rescue TARP loans.

Most observers see Regions Financial as a hold. Of the 26 analysts followed by Thomson/First Call, one has a strong buy recommendation and five have buys, with 18 holds and one underperform.

RBC Capital analysts upgraded Regions Financial to outperform, though, setting a price target price of $7. On the downside, the bank’s large outstanding TARP obligation could derail dividend increases or stock buybacks, analysts added.

The company next reports on April 24.

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Wednesday, 21 March 2012 10:24 AM
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