It's a dismal day on Wall Street for financial stocks, and Regions Financial Corp. (NYSE: RF) is no exception. The Alabama-based bank today reported an eye-popping quarterly loss of $6.22 billion, or $9.01 per share, as results were pressured by a $6 billion writedown in its banking and Treasury operations.
On an operating basis, Regions' loss of 35 cents per share exceeded the consensus estimate for a loss of 20 cents per share. Net charge-offs for the quarter soared to $796 million, compared to $107.5 million in the year-ago period. Additionally, the company confessed to "emerging stress" in its Florida-based real estate and mortgage businesses.
"Although we're encouraged by steps the government has taken to stabilize the housing market and revitalize the economy, there is no quick fix for credit quality issues currently plaguing the financial services industry," commented Dowd Ritter, RF's chairman, president and chief executive officer.
Ritter added that he doesn't expect unemployment to peak or real estate values to bottom in 2009, and he warned that bank earnings won't improve until such a trough is reached. He doesn't foresee the need to seek new capital from the government, though Regions will look for opportunities to shore up its capital position as market conditions allow.
However, don't look for Regions Financial to pull a Citigroup and spin off its Morgan Keegan brokerage subsidiary. Ritter called the business "an integral part of this company," and said he has "absolutely no thought" of divesting it.
At last check, RF shares were down 19% at $4.89. Earlier, the stock fell to $4.78, marking its lowest price since May 1985.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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Reader Comments (Page 1 of 1)
1-20-2009 @ 4:06PM
BHarrison said...
Regions should certainly have to "eat" this loss. The travesty of it all is that it will be the stockholders (retirees, etc.) who will "absorb the losses" . . . . meanwhile, the CEOs and other corporate officers and management are STILL collecting their obscenely exorbitant salaries, bonuses, and other compensations.
These "criminals" are being allowed to keep their ill gotten "compensations". They should be indicted and prosecuted if they have in anyway participated in the orchestration and perpetuation of any of the pyramid or Ponzi schemes, or other frauds.
It is PAST TIME to start indicting these "criminals" . . . otherwise, they have shown that they are too incompetent to hold the positions that they are, and have been paid enormous salaries and compensations to manage.