- The Washington Times - Tuesday, April 21, 2009

BIRMINGHAM, ALA. (AP) - Regions Financial Corp. on Tuesday reported a surprising first-quarter profit, driven by strong mortgage banking revenue and deposit growth. But loan losses at the regional bank continued to increase as consumers struggled to pay off their debts.

Shares rose along with most bank stocks Tuesday afternoon, gaining 29 cents, or 5 percent, to $6.09, after earlier falling as much as 17 percent.

After paying preferred dividends, the Birmingham, Ala.-based bank reported net income of $26 million, or 4 cents per share, down from $337 million, or 48 cents per share, a year earlier.

Analysts had been expecting a loss of 39 cents per share, according to a poll by Thomson Reuters.

Net interest income, or income generated from loans and deposits, fell 20 percent to $817 million. Noninterest income, or income from fees and other charges, inched up to $1.07 billion from $908 million a year earlier.

Low mortgage rates drove a doubling of mortgage income to $73 million, the company said.

Regions said it opened a record 243,000 new retail and business checking accounts during the quarter, and total customer deposits grew 4 percent on average.

However, the bank’s asset quality remained distressed. The percentage of loans that the bank considers uncollectable jumped to 1.64 percent from 0.53 percent a year ago. And nonperforming assets, or loans considered past due, increased to 2.43 percent of average net loans, from 1.25 percent in the first quarter of last year.

During the quarter, Regions set aside $425 million to cover loan losses, up from $181 million last year, but down significantly from the $1.15 billion provision for loan losses in the fourth quarter.

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