Regions Takes MSR Charge

In what has generally been a quiet earnings season for mortgage servicing rights, Regions Financial recorded impairment to the value of its MSRs during the fourth quarter.

During the fourth quarter of last year, Regions took a $16.8 million after-tax impairment charge, equal to $0.03 per share, against the value of its MSR portfolio. Regions fourth-quarter net income totaled $361.6 million, or $0.56 per diluted share. That also reflected $49.3 million of merger-related expenses related to its AmSouth acquisition. Regions said that its mortgage business continued to experience a challenging environment in the fourth quarter.

Mortgage originations of $4.9 billion in the fourth quarter were actually up, helped by the addition of AmSouth's mortgage business. But lower levels of loan sales and early payment default losses hurt gain-on-sale fees and profitability at Region's subprime unit, EquiFirst. Regions recently made plans to sell EquiFirst to Barclays Bank. The company also said it is in the process of integrating its mortgage servicing platforms.

Overall, Regions said its banking division performed well, achieving strong net interest income on a net interest margin of 4.10% during the fourth quarter. For the full year, Regions reported EPS of $2.67 on record earnings of $1.4 billion. That compared to EPS of $2.15 on net income of $1 billion in 2005. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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