Regions Financial Calls for An Overhaul

By Czarina Ara Lasco

Oct 25, 2016 06:00 AM EDT

During the upcoming financial period, Regions Financial's continued struggle to increase lending and volatility in credit quality may dominate the improvement the company is set to make.

As it has been up for approximately forty (40) per cent versus a eleven (11) per cent higher financial sector ETF (NYSEARCA:XLF), Regions Financial Corporation (NYSE:RF) has been a consistent outperformer over the previous six months. Said outperformance has been triggered by the declaration of several initiates that will produce positive operating leverage which has increased the expectations of a reduced valuation gap with other companies.

Upon announcement of the total revenues of $1.4 billion and an EPS of $0.24, both coming forward of the market agreement, Q3 results were also very helpful for Regions Financial.

It is still assumed that after a period of outperformance, Regions Financial will trace the path of the market, and take on that the stock is a hold as the upside potential is not convincing enough as of the present financial period.

Earlier this year, Regions Financial announced that its latest cost savings plan will include a cut of $300 million in expenses (or nine (9) per cent of its core expenses), as much as forty (40) per cent of which had been anticipated to be recognized this year. Taking the total amount in planned cuts of up to $400 million, Regions Financial has revised its guidance for an additional of $100 million during 3Q earnings conference.

Regions Financial Corporation is a US bank and financial services company based in Birmingham, Alabama, with its corporate headquarters at the Regions Center. The company, being a member of the S&P 500 Index provides retail and commercial banking, trust, securities brokerage, mortgage and insurance products and services.

It is the largest deposit holder in Alabama, with $22.8 billion in local deposits, or 25.7% of all local deposits. As of 2012, Regions Financial had $122 billion in assets. In 2010, the company had $137 billion in assets, making it at that time the 22nd largest bank in the United States, and the 10th largest U.S. based bank.

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