J.P. Morgan Comments On RF 1Q

J.P. Morgan is providing a few comments on Regions Financial Corp.'s RF 1Q results. “Regions reported a second consecutive quarter of positive EPS of a penny, well above consensus and our loss estimates of 10 cents and 7 cents, respectively,” J.P. Morgan writes. “Upside was led by lower than expected net charge-offs (NCOs) and lower credit-related expenses plus securities gains of 4 cents and a small tax benefit (couple of cents). 1Q was also marked by higher net interest margin (NIM) plus continued growth in C&I loans. Key weakness was at Morgan Keegan in all its areas. Looking ahead, earnings will be pressured by still elevated credit-related expenses, loan run-off, and potentially lower debit interchange fees.” J.P. Morgan added that it feels that Regions is doing a good job in its consumer business. “Despite Reg E, service charges were back up to flat yoy,” J.P. Morgan continued. “A second consecutive quarter of positive reported EPS, even with some nonrecurring items, should improve Regions' ability to repay TARP and bolster its plan to remain independent medium term. Long term, the key to improving profitability is sharply reducing the high level of credit-related expenses, but timeframe for this is unclear as it is coming down slowly.” Regions Financial closed Wednesday at $7.06.