Things are looking better at Regions Financial (NYSE:RF), but the company still has a long way to go in order to recover from the credit crisis. In the first quarter of 2011, Regions managed to eke out a marginal profit as it continues to work through its troubled loan portfolio, but the bank also reported a decline in tangible book value on both a sequential and year-over-year basis. Regions is working toward a better credit situation, but this has not resulted in growth of tangible book value yet. Here we delve into the company's Q1 report. (Check out the results of another bank struggling to overcome the credit crisis in Bank Of America Still A Long Way From Normal.)

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Regions Financial's First Quarter Financial Results
Regions Financial reported net income of $17 million, or 1 cent per share, in the first quarter of 2011; in the comparable quarter in 2010, the company reported a net loss of $255 million, or 21 cents per share. Regions Financial's loan loss provision fell from $770 million to $482 million in the most recent quarter.

Credit Quality
Regions Financial reported $3.9 billion in nonperforming assets in the first quarter of 2011, about flat with the previous quarter and down from $4.6 billion in the same quarter of 2010. The bank charged off $481 million in bad loans in the quarter, down from $682 million in the last quarter of 2010, and $700 million in the first quarter of 2010.

Regions Financial reported that the bank's ratio of nonperforming loans to total loans was 4.78% at the end of the first quarter of 2011. Although this ratio declined sequentially and year over year, it is still higher than that of other banks that operate in the region.

Renasant (Nasdaq:RNST) reported that 2.61% of its total loans were classified as nonperforming, while Hancock Holding Company (Nasdaq:HBHC) said that 2.33% of its assets were in this category. Both ratios exclude assets covered by a loss-sharing agreement with the FDIC.

Expense Management
Regions Financial also worked to reduce costs and has cut its head count by 2,000 over the last two years. Noninterest expenses on a GAAP basis totaled $1.17 billion in the first quarter of 2011, down by 7.8% on a sequential basis from the final quarter of 2010. Noninterest expenses also declined on a year-over-year basis. Regions Financial cited lower legal and professional fees, as well as reduced salaries and benefits in the quarter.

Regions Financial is still experiencing a decline in book value and reported a tangible book value of $6 per share at the end of the first quarter of 2011. This represents a decrease from the $6.09 per share reported at the end of 2010, and the $6.93 per share reported a year earlier. Although some investors may consider this stock expensive at 1.16 times its tangible book value, others argue that the bank's franchise value makes it attractive for purchase here.

Some banks have been increasing tangible book value over the last year as the credit situation improved. Teche Holding Company (NYSE:TSH) reported a tangible book value of $35.47 as of March 31, 2011, up from $33.27 a year earlier.

The Bottom Line
Regions Financial reported a small profit in the first quarter of 2011 as the bank continues to see a better credit situation. However, this improvement has not resulted in the growth of tangible book value yet. (So you've finally decided to start investing. But what should you put in your portfolio? Find out here. Check out How To Pick A Stock.)

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Tickers in this Article: RF, TSH, RNST, HBHC

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