Regions Financial in Birmingham, Ala., posted double-digit profit growth in the fourth quarter as strong business loan growth and sharply lower expenses offset a decline in in fee income and a higher provision for loan losses.
The $125.7 billion-asset company said Friday that its net income available to common shareholders climbed 28% in the quarter from the same period a year earlier to, $390 million. Its earnings per diluted share of 37 cents fell a penny short of estimates of analysts polled by FactSet Research Systems.
Noninterest expenses fell 7% to $468 million, due in part to lower salary and benefits costs resulting from staff reductions.
Net interest and other financing income climbed 6% year over year to $958 million, due primarily to a 3% increase in loan balances, to $81.9 billion. Business loans climbed 4.7% year over year to $50.4 billion, driven by a nearly 7% increase in commercial and industrial loans.
Consumer loans increased only 0.3%, but a bright spot was its indirect consumer lending, which climbed 63% year over year to$2.3 billion. Mortgage loans increased 2% and indirect auto lending rose by 12.6%, but sharp declines in home equity lines of credit and indirect auto loans suppressed overall consumer volume.
Credit quality weakened somewhat during the quarter, as annualized net charge-offs as a percentage of average loans increased 15 basis points, to 0.46%. The company took a $95 million provision for loan losses in the quarter, versus no provision in the same period in 2017.
Noninterest income fell 7% year over year to $481 million as gains in service charges, ATM fees and wealth management income was offset by lower capital markets and mortgage banking fees.
