A trio of southeastern regionals reported strong third quarter earnings gains Friday, boosted by vigorous loan growth and improved asset quality.
Net income at Regions Financial Corp., Birmingham, Ala., was up 31% to $37.4 million from $28.6 million in the year-ago quarter. Regions' 88 cents in earnings per share was one cent higher than consensus estimates.
First Tennessee National Corp. earned $36.8 million, representing a. 34% gain. The Memphis-based bank's $1.14 in earnings per share was just 2 cents short of consensus estimates.
BancorpSouth reported a 6.5% jump in earnings, to $6.8 million. The Tupelo, Miss.-based company's 86 cents in earnings per-share was fully 7 cents above consensus.
The $11.7 billion-assets Regions, formerly First Alabama Bancshares, attributed its improved earnings to good loan growth. Loans at Sept. 30 were 44% higher than a year earlier, although the bank also completed three acquisitions during the quarter that added $346 million of assets.
First Tennessee, which has $10.4 billion of assets, also reported strong loan growth, up 21% from a year earlier excluding mortgage warehouse loans. This growth was led by a 37% increase in consumer loans and a 14% rise in commercial credits.
Noninterest income, which contributes nearly half of First Tennessee's total revenues, gained 7% from the year-ago quarter to $90.6 million, excluding securities transactions. Mortgage banking revenues, derived from recent acquisitions, provided the primary kicker.
One major disappointment was in the vaunted bond division, whose revenues fell 28% to $17.6 million from the year-ago quarter because rising interest rates have deflated the market for bonds, which First Tennessee sells to other banks.
"It is a pretty volatile line item and this just demonstrates that," said Peter Tuz of Morgan Keegan.
BancorpSouth, with $2.5 billion of assets, saw improved performance in its mortgage division, which produced a $50,000