Surging revenue from consumer lending, including auto loans and mortgages, offset credit problems from the energy sector in the second-quarter results of Regions Financial in Birmingham, Ala.
Net income at the $126 billion-asset company fell 4% to $259 million from a year earlier. Earnings per share were unchanged at 20 cents. Total revenue fell 2.4% to $1.4 billion.
Net interest income after the loan-loss provision rose 2.5% to $776 million. Total loans rose 3.5% to $82 million, propelled by growth in auto and indirect consumer loans. Regions also expanded in residential mortgages and credit cards. The net interest margin narrowed 1 basis point to 3.15%.
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The sharp fall in gas prices early this year helped U.S. consumers to stay current on their credit obligations during the first quarter.
July 7 - Alabama
After years of bulking up on shared national credits, a number of regional banks are cutting back because of the heartburn from problem oil and gas loans. A few lenders are refusing to budge, but many will have no choice if they want to dilute the energy risk on their books.
June 30 -
The management team at Bank of the Ozarks knows it has a dependency on commercial real estate. But they assert that sound underwriting, and efforts to diversify, are what really matters when assessing risk.
July 11
The provision for credit losses rose 14% to $72 million. Regions recorded $17 million of net chargeoffs in its energy loan book.
Noninterest income fell 11% to $526 million, due to $90 million of insurance money last year. Regions was reimbursed $90 million from its insurance providers a year ago to cover the cost of a lawsuit settlement.
Noninterest expense fell 2% to $915 million. Regions recorded $22 million in property-related expenses to prepare about 60 branches to be closed in the fourth quarter. Regions also recorded $1 million to cover severance for employees associated with the branches. Regions also took $3 million of legal and regulatory charges in the quarter. The efficiency ratio worsened to 65.6% from 65.4%.