Recent Insight Reveals Regions Financial Corporation Is Making the Right Moves

Regions Financial (NYSE: RF  ) seemingly had a difficult year in 2013 -- but one little-considered piece of data could mean the best is actually ahead of it.

The results
2013 was an interesting year for Regions compared to other regional bank peers like BB&T (NYSE: BBT  ) and Fifth Third Bancorp (NASDAQ: FITB  ) . Since the beginning of January last year it has seen its stock price rise more than 50% -- versus 48% and 34% for Fifth Third and BB&T, respectively -- but its pre-tax actually fell year over year.

By comparison, Fifth Third and BB&T each saw theirs rise by more than 10%, as shown in the chart below:

Pre-Tax Income

2012

2013

Change

Regions Financial

 $1.7

 $1.6

-4.5%

BB&T

 $2.8

 $3.1

11.9%

Fifth Third Bancorp

 $2.2

 $2.6

17.6%

Source: Company Investor Relations

And of course, while it's not exactly an apples to apples comparison, it's also a bit troubling to see under the severely adverse scenario from the Federal Reserve's recent stress test projects that Regions would recognize a loss of $1.4 billion after nine stressful quarters, whereas BB&T would see a gain of $1.4 billion, and things at Fifth Third would essentially be flat. 

All of this is to say that a quick glance at the financial performance and potential risk posed by Regions Financial certainly leaves something to be desired.

Beyond the balance sheet
While it can be dangerous to venture away from the financial performance of a firm when considering an investment, a recent survey reveals one striking difference between Regions Financial, the two banks mentioned earlier, and largely every other bank in the country.

Temkin, a research and consulting firm, recently announced its 2014 Experience Ratings, which surveyed customers surrounding their experiences with 268 companies and how they'd rate the ease of the interactions, whether or not they accomplished what they'd wanted to, and ultimately how they felt about those interactions.

Interestingly, Regions Financial actually placed 8th among every company measured with an experience rating of 81% -- whereas grocery store H.E.B. led all firms with a rating of 88%. Yet the true difference with Regions was it outperformed the broader banking industry average by 10%. By comparison, Fifth Third Bank had a rating of 60%, underperforming the industry average by a staggering 11%.

The reason why
On the most recent earnings call the CEO of Regions, Grayson Hall, said the firm, "focused on the fundamentals [last year]: serving the financial needs of our customers and communities, and building stronger relationships with them." And the CFO, David Turner, later went on to add banking is; "a relationship model. It's really about serving the customers...understanding their needs, and making sure we develop the products to deliver those needs."

At times executives at publicly traded firms can be full of quips and quotes that ease the concerns of investors, but those quotes, plus the reality that Regions Financial led the way in customer experience, should serve as an encouragement to the initiatives the company undertook last year, as the data shows its customers are satisfied.

While it's critical to monitor whether or not these more satisfied customers ultimately translate to bottom line results for Regions -- investors should have confidence knowing happy customers can often pay big dividends.

The biggest change you never saw coming
While Regions leads the way in customer experience, most of the banks don't do a great job of satisfying the needs of their clients. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

 

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