CORRECT:UPDATE:Regions Financial Posts Loss As Credit Troubles Rise

Regions Financial Corp.'s (RF) earnings Tuesday disappointed investors who had grown accustomed to other banks' reports that losses from bad loans are tapering.

The Birmingham, Ala., regional bank's results, released Tuesday, show its problems with delinquent loans rose across the board. The bank's disclosures carry a bit of a sting, since CEO C. Dowd Ritter suggested last year that his bank's loan problems would soon start to ease.

Regions "still faces some near-term credit and economic challenges," Ritter said in a statement. "We are obviously not pleased with the fourth-quarter loss but believe that we have taken the appropriate steps." Regions, which has 1,900 branches in 16 states, mostly in the Southeast, lost $543 million during the quarter after it set aside another $1.2 billion to absorb current and future loan losses.

The results are in stark contrast with those from other regional banks over the past 10 days, which have generally exceeded investors' expectations.

Back in September, Ritter said the bank's levels of new nonperforming loans--or loans at high risk of becoming uncollectable--may have peaked in the second quarter; Regions's stock price rose 8.5% that day. But since then, the bank's nonperforming loans have also risen, including during the fourth quarter, when they reached $4.4 billion.

Ritter said in September that the bank's quarterly losses from loans could peak in late 2009 or early 2010. His forecast could yet prove correct, but loan losses rose again during the quarter, to $692 million. Banks typically book loan losses several months or quarters after loans become nonperforming.

It's possible Ritter won't be working at Regions when its loan troubles start to fade. The bank said in December that Chief Operating Officer Grayson Hall will become CEO on March 31, when Ritter, who's been with the company since 1969, retires.

Shares of Regions recently were down 2.9% to $6.36. The KBW Regional Banking Index was recently up 1.4% to $49.93.

The Southeast regional bank has posted losses in four of the past five quarters, struggling with its real-estate exposure to hard-hit Florida and other Southern markets. Banks have mostly posted improved fourth-quarter earnings as they rebound from the prior year's quarter, which coincided with the depths of the financial crisis. Regions's revenue dropped 3.6% to $1.57 billion.

Ritter made headlines in June for using a Regions company jet for personal use only days after the bank accepted $3.5 billion in public support from the U.S. Treasury's Troubled Asset Relief Program. Regions hasn't yet repaid its TARP investment.

-By Marshall Eckblad and Nathan Becker, Dow Jones Newswires; 212-416-2156; marshall.eckblad@dowjones.com

Regions Financial (NYSE:RF)
Historical Stock Chart
From Jun 2024 to Jul 2024