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Tuesday, October 27, 2009

Regions Financial Reports $437 Million Loss

Regions Financial Corporation reported a third quarter loss of $437 million saying it was hit hard by the struggling Miami commercial real estate sector.

The primary reasons for the bank’s latest earnings performance was higher than expected credit costs including a $1 billion loan loss provision to cover failing loans and $41 million to close 121 branches across 16-states.

The Birmingham, Alabama based banking giant said Tuesday in its earnings report that “Commercial real estate credits constituted the bulk of third quarter’s inflow of non-performing loans, however, many of these loans are secured by income-producing properties, enhancing the company’s ability to restructure and return the loans to performing status.”

Regions reported a net loss of $437 million to common shareholders for the quarter ended September 30, versus $79 million in profits during the same period last year. The company’s losses per share to common shareholders totaled 37 cents in the quarter, compared with 11 cents in earnings a year ago.
Dowd Ritter, Regions CEO, acknowledged that the company’s “credit-related costs continue to be elevated,” but he said the economy appears to be turning around and the bank is “preparing for the economic recovery.”

The bank’s nonperforming assets not including loans held for sale, increased by $662 million in the latest quarter. Its loan loss provision rose to $1 billion from $417 million a year ago and the bank charged off $45 million in Miami commercial real estate loans and others.

According to the bank’s investor presentation, more than half of Regions’ nonperforming loans were in Miami commercial real estate and Georgia.

Regions’ portfolio in Florida included about $2.18 billion in first-lien home mortgages, $3.59 billion in second-lien home mortgages, and $800 million in retail property loans, $500 million in multifamily property loans and $356 million in condominium loans.

During the third quarter, Regions charged off 6.33% of its second-lien home mortgages in Florida, compared with just 1.2% in charges-offs for the rest of its second-lien portfolio.

 




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