Regions Financial swings to gain in fourth quarter

BIRMINGHAM, Ala. (AP) -- Regions Financial Corp. swung to a gain in the fourth quarter after a year-ago period weighed down by the sale of an investment management subsidiary.

The big regional bank, based in Birmingham, Ala., said Tuesday that despite "challenging economic headwinds," Regions has increased loans to middle market companies and auto lending, launched new consumer products and invested aggressively in its mobile and online platforms.

However, the bank earned less from interest on loans as its total loan book shrank — a trend it blamed on consumers continuing to pay down old debt.

Regions' net income was $261 million, or 18 cents per share, in the period ended Dec. 31. That compares with a loss of $602 million, or 48 cents per share, in the same period a year earlier.

Adjusted to exclude goodwill impairment and costs related to the early termination of an investment, the bank said it earned 22 cents per share.

Net interest income fell to $818 million from $849 million in 2011's fourth quarter. Net interest income combines interest on loans that the bank collects and interest on deposits and debt that the bank pays out. It is a measure of the bank's ability to profit from its lending.

Interest income has been squeezed at many banks by ultra-low interest rates and competition for depositors and for creditworthy borrowers. Banks rely increasingly on fees for services like money management and basic retail banking.

Regions' average total loans fell 5.2 percent, to $74.62 billion from $78.70 billion in the fourth quarter of 2011. Regions reports average loans as the average balance of "total loans, net of unearned income."

Noninterest income, which includes fees, insurance and gains on securities, rose to $536 million from $507 million in the same period a year earlier.

Total revenue, which combines interest income and noninterest income, edged down to $1.35 billion from $1.36 billion a year ago.

Adjusted net income edged higher than Wall Street anticipated, while revenue was roughly in line. Analysts surveyed by FactSet expected, on average, earnings of 21 cents per share on revenue of $1.35 billion.

For the full year 2012, net income was $991 million, or 71 cents per share, compared with a loss of $429 million, or 34 cents per share in 2011.

In a presentation prepared for its conference call with analysts, Regions called 2012 "a transformational year," noting that it had completed the sale of Morgan Keegan, its investment management business; issued about $900 million of common stock, repaid the bailout money it received from the Treasury Department during the financial crisis and improved its credit ratings.

Regions Financial, the holding company for Regions Bank, provides commercial, retail and mortgage banking services. As of Dec. 31, 2011, it operated about 1,726 branches, mainly in the South and Midwest.

Regions shares closed at $7.43 on Friday, the last day of trading before the earnings announcement. They rose 8 cents, or 1 percent, to $7.50 in pre-market trading Tuesday. The market was closed on Monday for the Martin Luther King Jr. holiday.