Big provision, higher funding costs cut into Regions' profit

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Regions Financial in Birmingham, Ala., reporter lower quarterly profit that reflected a bigger loan-loss provision and higher funding costs.

The $129 billion-asset company said in a press release Thursday that its first-quarter profit fell 5% from a year earlier, to $378 million. Earnings per share of 37 cents matched the mean estimate of analysts compiled by FactSet Research Systems.

Net interest income declined by 7%, to $857 million. Total loans rose by 5%, to $83.7 billion, including increases in commercial-and-industrial and non-owner-occupied commercial real estate loans. The net interest margin expanded by 7 basis points, to 3.53%, though the average rate paid to depositors increased by 19 basis points, to 0.73%.

Borrowings from the Federal Home Loan Bank, which carry higher rates than deposits, more than doubled, to $6.9 billion.

Regions recorded a $91 million loan-loss provision after receiving a $10 million benefit a year earlier. The move reflected "normalizing credit quality," CEO John Turner said in the release.

Noninterest income fell by 1%, to $502 million, on lower income from mortgages and capital markets.

Noninterest expense declined by 3%, to $860 million, on lower salary and employee benefit costs. Regions cut 610 positions and closed 11 branches in the last year.

At the same time, Regions is "continuing to make smart investments in talent and technology,“ Turner said.

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