Driven by top-line strength, Regions Financial Corporation (RF - Free Report) recorded an impressive earnings surprise of 3.8% in fourth-quarter 2017. Reported earnings of 27 cents per share outpaced the Zacks Consensus Estimate of 26 cents. Moreover, results compared favorably with the prior-year quarter’s earnings of 23 cents. Results included certain one-time items of 7 cents per share.
Income from continuing operations available to common shareholders was $318 million compared with $278 million in the year-ago period.
Easing margin pressure and higher revenues were the positive factors. Moreover, credit quality recorded significant improvement. However, lower loans and deposits balance were the undermining factors. In addition, expenses escalated.
For 2017, income from continuing operations available to common shareholders was $1.19 billion compared with $1.09 billion in 2016. Earnings per share from continuing operations were $1.00, up from 87 cents in 2016. Results surpassed the Zacks Consensus Estimate by a penny.
Revenues Improve, Costs Flare Up
For 2017, adjusted total revenues (net of interest expense) came in at $5.71 billion, up 2.6% year over year. Further, the figure surpassed the Zacks Consensus Estimate of $5.69 billion.
Adjusted total revenues (net of interest expense) came in at $1.47 billion in the reported quarter, beating the Zacks Consensus Estimate of $1.45 billion. Additionally, revenues climbed 6.2% from the year-ago quarter figure.
Regions Financial reported adjusted pre-tax pre-provision income from continuing operations of $548 million, up 12.3% year over year.
On a fully-taxable equivalent (FTE) basis, net interest income was $930 million, up 6.4% year over year. Net interest margin (on an FTE basis) expanded 23 basis points (bps) year over year to 3.39% in the quarter. Elevated market interest rates and deposit cost management drove the results. These increases were partially offset by reduced average loan balances, the impact of debt issued during the third quarter and the tax-related reduction related to leveraged leases.
