Banking on a Region's Buyback

06/09/2016 8:00 am EST

Focus: STOCKS

David Fried

Editor, The Buyback Letter

David Fried, editor of The Buyback Letter, focuses exclusively on stocks that are undergoing buyback programs. For his latest recommendations, the advisor returns to two stocks that were previously profitable portfolio holdings in his model portfolio.

We last bought Regions Financial (RF) — a leading regional bank in the southeastern US — in February, and it has floated to the top of our list again.

Regions has about $126 billion in assets, is a member of the S&P 500 Index and is the 17th largest bank in the US (based on assets).

A full-service consumer and commercial bank, Regions provides wealth management, mortgage, and insurance products and services.

Regions serves customers in 16 states across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates some 1,630 banking offices and 2,000 ATMs.

It has won awards of excellence for having an engaged workplace, providing distinguished service to small business and middle market clients, and was ranked among the top 10 percent of companies for customer service in 2015.

Analysts taking the long view have noted that while Regions (like other financial institutions), faced major problems during the 2008-09 meltdown and recovery was slow, management has done a good job of returning to banking basics and strengthening the loan portfolio while also expanding the bank’s customer and asset base.

Strong cost-cutting initiatives and shareholder-friendly dividend and repurchase activities have rewarded shareholders.

Regions beat analysts' expectations in the 1st quarter, posting a $257 million profit, up 118% from the 1st quarter of 2015.

Total revenue (net of interest expense) came in at $1.37 billion in the quarter, up 6.5% on a year-over-year basis.

During the quarter, Regions returned about $255 million as capital to shareholders through $80 million dividend payment and repurchase of common stock for $175 million. RF has reduced shares outstanding by 5.4% in the past 12 months.

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By David Fried, Editor of The Buyback Letter

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