Regions Financial Misses Estimates

Oct.16.07 | About: Regions Financial (RF)

Regions Financial Corp. reported earnings that missed expectations Tuesday, despite 12% growth in net income. Net was $394 million, versus $352 million in the prior year period, but EPS actually fell to $0.56 from $0.77 a year ago due to the acquisition of AmSouth for $10.5 billion, which Regions issued stock to buy. The merger made Regions the 10th largest U.S. bank by assets under management ($138 billion); YTD the company has realized $237 million in savings. Next year it hopes to reach $500 million in synergies as a result of the merger. Net income fell 13% on a quarterly basis, due to what CEO Dowd Ritter labeled "less than optimal" business conditions. EPS were $0.64 not including merger-related charges, missing consensus analyst EPS estimates of $0.69. Despite unloading its EquiFirst subprime lending arm to Barclays Plc in April, concerns have remained regarding the bank's loan portfolio, making the stock the fourth-worst performer this year among the 24 banks that make up the KBW Bank Index. Its shares are down 22% YTD.

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