Regions Financial Corp. swung to a third-quarter profit, helped by sharply reduced credit costs for risky loans, though the lender's top line weakened from a year earlier.
Like its peers, the regional lender has seen results lifted by reductions in provisions set aside to cover souring loans. Revenue growth, however, has been a greater challenge for many lenders as continued low interest rates trim the profitability of lent funds.
Regions--which operates banks across the South, Midwest and Texas--said net interest income in the latest period slipped 1.2% from a year earlier, reflecting lower investment portfolio yields and an increase in cash reserves at the Federal Reserve.
Regions reported a profit of $155 million, compared with a year-earlier loss of $155 million. After the payment of preferred dividends, the lender reported a per-share profit of 8 cents a share, compared with a year-earlier loss of 17 cents a share.
Revenue edged down 0.7% to $1.6 billion. Analysts polled by Thomson Reuters expected a per-share profit of 4 cents on revenue of $1.63 billion.
Loan-loss provisions were reduced to $355 million, down from $760 million a year earlier and $398 million in the second quarter. Net charge-offs, or loans lenders don't think are collectible, were 2.52% of average loans, compared with 3.52% and 2.71%, respectively.
Standard & Poor's Ratings Services in August removed the prospect of an impending downgrade for Regions, saying it now expects the lender to remain profitable this year and next.
Shares closed Monday at $3.90. The stock is down 44% since the start of the year.
