Net income dropped 5.3% to $285 million, or 20 cents a share, from $301 million, or 21 cents, a year earlier. The average estimate of 27 analysts surveyed by Bloomberg was 21 cents.
Regions, run by CEO Grayson Hall, is focusing on cutting costs as tepid economic growth restricts lending. JPMorgan Chase & Co., the biggest U.S. bank by assets, said this month that third-quarter mortgage fees and related revenue plunged 65% to $839 million. Wells Fargo & Co., the largest home lender, said mortgage-banking revenue tumbled 43%.
Regions gained 41% this year through yesterday, the third-best performer in the 24-company KBW Bank Index.
Mortgage refinancings slumped after rates on 30-year loans jumped from historical lows of less than 3.5% earlier this year to an average of 4.3% at the end of September, data compiled by Freddie Mac show. Applications, which accounted for 82% of all requests for home loans last year, made up 63% in the third quarter, according to the Mortgage Bankers Association.
Loan growth, a stable net interest margin, controlled expenses, further loan-loss reserve releases and continued share repurchases will "more than compensate for a drop in mortgage-origination revenues," Jason Goldberg, a Barclays Plc analyst, said in an Oct. 8 note. "Prolonged declines in real estate prices within Regionsí Southeastern footprint" could have a negative effect on shares, Goldberg said.