Regions loses $606 million, says loan problems are easing

Regions Financial Corp., the Birmingham, Ala.-based bank that received $3.5 billion in U.S. rescue funds, reported its fourth loss in the past five quarters on Tuesday, in part because of reserves set aside to handle developer and homebuilder loans that went sour.
The stock price for Regions, the bank with the largest portion of deposits in the Nashville market, fell 7 percent on the New York Stock Exchange, closing at $6.08 a share, down 47 cents by the end of trading Tuesday.

For the final three months of 2009, Regions said, its loss narrowed to $606 million, or 51 cents a share. Bank officials said loan problems that have plagued Regions' earnings for several quarters in a row are lessening.

Regions is nearing an "inflection point" at which it won't need to set aside additional money to cover loan losses, President and Chief Operating Officer Grayson Hall said.

"We aren't pleased with the fourth quarter," Hall said on a conference call. "We see improving conditions, but it is still a stressed portfolio."

Regions increased its provision for loan losses to $1.18 billion in the final quarter of the year, and loans no longer collecting interest totaled $4.4 billion, up from $4.1 billion.

The bank said it modified the terms on $1.58 billion of consumer loans during the quarter to assist about 23,500 customers. Restructurings typically involved extending maturities or reducing interest rates.

Some banks have been criticized for not doing enough to work with troubled borrowers to ward off more serious loan problems, but Regions has insisted it is being proactive with its customer base.

For the full year Regions had a net loss of $1.26 billion, or $1.27 a share, compared with a loss of $5.62 billion, or $8.09 a share, in 2008.

Most trouble is in Florida, Georgia

While Regions operates in 16 states, most of its troubled loans stem from Florida and Georgia operations that account for a fourth of total deposits.

Regions paid $63 million of preferred dividends during the quarter, mostly through the U.S. Troubled Asset Relief Program.

Chief Executive Officer Dowd Ritter, 62, will retire at the end of March after four decades with Regions and its predecessor bank, AmSouth Bancorp. Hall, 52, will replace Ritter as CEO, and lead director Earnest W. Deavenport Jr. will become chairman.

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