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Regions Bank: The Good, The Bad & The Ugly

bmoreland's picture





 

This week's "The Good, The Bad & The Ugly" from BankRegData.com reviews Regions Bank and we will primarily focus on their loan book.

Regions (RF) has $133 Billion in Assets and is the nation's 15th largest bank. They have $102 billion in Deposits and operate over 1,800 branches, primarily in the South and Southeast.

The data for the following tables and charts comes from the FDIC Call Reports and the spot review is not intended as advice. BankRegData holds no positions in any bank stocks nor has financial backing from any institution. If you'd like to be removed from the weekly mailing, please reply to this email and we'll put an X in the "stopSendingAlready" field.

The Good: 1-4 Family 1st Liens 30-89 Days Past Due

The Early Stage delinquency rate on the 1-4 Family First Liens portfolio dropped from 2.07% to 1.93%. Their 99 closest peers on loan size are running a 30-89 Days Past Due delinquency rate of 2.50%. A continued trending downward would bode well for charge offs 6-12 months from now.

Regions has also seen a drop in Early Stage delinquencies for Commercial RE and Commercial & Industrial. In summary, their top 3 loan portfolios, making up 52.60% of all loans, have seen a drop in 30-89 Days Past Due.

The Bad: Commercial & Industrial NPLs

The Nonperforming Rate on Commercial & Industrial loans has jumped significantly from 2.61% to 3.02%. Their peers are at 2.20% and have been trending downward the past 2 quarters.

Nonperforming is defined as loans 90+ Days Past Due plus Nonaccrual Loans.

The increase takes their total C&I NPLs from $352 million to $406 million and marks the first time in over 5 years that they have been significantly worse than their peers.

The Ugly: Commercial Real Estate NPLs

At $20.18 Billion, CRE is the largest of all their portfolios and makes up 22.60% of their loan base. Their performance puts them in the 89th percentile relative to their peer group. In other words, only 11 other banks with similar size CRE portfolios have a worse performing NPL rate.

Bonus Good: While not a normal feature of the weekly mailing, I do want to point out that Regions is aggressively cleaning up their problems. NOI came in at -$206.7 million and marked the 5th time out of the past 6 quarters where they took a substantial loss. How is this good? Well, unlike many of their large brethren, Regions is working through the issues as opposed to just building up NPLs and hoping the problems will work out down the line:

1) They are charging off bad loans. Looking at NPLs to Charge Offs across their loan portfolios shows that their NPL 'inventory' relative to their Charge Offs is fairly good. On their 1-4 Family 1st Liens they have $8.22 in NPLs for every $1 charged off. Their peers are running $26.48. Scroll to the bottom of the page to look at peer performance and you'll note that Regions ranks 12th in their peer group.

2) They are liquidating OREO. Regions took a -$32 million dollar hit to Non Interest Income due to losses on sales of OREO.

3) They are selling underperforming loans. Regions took a -$11.6 million dollar hit to Non Interest Income due to losses on sales of Loans. As a percentage of Loans Held For Sale, Regions is trying to sell slightly less than their peers. What they are trying to sell, however, has a NPL rate of 27.59%.

On the surface, each of these three items may not look good, but they represent a coordinated management effort to clean up their loan book today. Relative to peers, they may look less appealing now, but will be positioned much better down the line.

 

Shameless Plug: Each week BankRegData.com reviews a financial insitution and breaks down a few metrics. Once again, BankRegData holds no positions in any bank stocks nor has financial backing from any institution. If you'd like to receive the weekly e-mail please send a request to info@bankregdata.com.

 


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Tue, 06/22/2010 - 21:48 | Link to Comment vicelord
vicelord's picture

Bill does exceptional work.  I 1st was made aware of his site when Tyler posted a link to it last year some time, and from that point forward I was completely addicted.  It's now become one of those things, like cellphones or GPS devices for your car, that, once you're utilizing it fully, you can't for the life of you begin to comprehend how you were able to get along without it before.

 

I know the majority of posters here at zerohedge couldn't - at gunpoint - be made to trade a bank stock, unless it was to try and short it into oblivion.  But there is money to be made on the long side, too (whether you like it or not,) and Bill's site it invaluable on either side of the trade.  I don't know how he does it, but he helps peel off the layer after layer of obfuscating bullshit and is somehow able to expose and display, in terms just about anyone could understand, exactly how much and of precisely what caliber & quality of shite is on the bank's books, and he goes after it all with the tenacity of a Crystal Meth-addicted Talmudic Scholar with OCD.  

 

Whether you know it or not, he's providing a very valuable service with this site.  If you want to know about the state of the overall economy, it all begins and ends with what's (hiding) on the balance sheets of the nation's banks; and with his site, it's there for all to see in front of God and everyone.  I'm surprised the banks haven't hired a hit-man to take him out, 'cause I can't imagine for a second that they're happy this information has been made so easily accessible.  

 

In short, what he does is uncover exactly what it is that the banks go to such great lengths to hide, and for that he should be commended.

 

(For instance I had no idea, until after Bill Moreland spelled it out for me, that WFC, as it so happens, was able to show such breathtaking profits last year & in the 1st qtr of this year, not because of some ingenious business acuity on their part, or because the economy is doing so much better and the whole mess is in the rear-view mirror, but because they sold every single goddamn performing asset they had.... and now they're left with nothing but teh shit.  Total and complete shit.  So when they report their 2nd & 3rd qtr earnings, I won't be going long their stock, is all I can think to say.  And I'll have a distinct advantage over the legions of jackasses who will buy their stock going into earnings on nothing more than WFC's assurance that "the worst is behind them."  And it'll all be thanks to bankregdata.com.)

Tue, 06/22/2010 - 21:12 | Link to Comment cowdiddly
cowdiddly's picture

Until they replace that idiot Ritter, Im afraid I can't go there.The crony system is in full force here with the board on down. Although I made some huge dinero flipping this pig in the 3-5 dollar range. Thats about all this bank is good for a quick flip. Ritter sent me a personally signed letter(not a normal proxy but a personal letter) telling me how he was so concerned about shareholder value. Now when the CEO sends little ole me a letter red flags go up so I sold my position, I knew I was holding a steaming dog turd anyhow. Glad I did because about 3 weeks later they hit the shareholders with a reverse split. I got lucky getting out with money before he made everyone stuckholders. BITE ME RITTER GO FIND A SUCKER, OH and by the way thanks for the years worth of free mortgage payments I won.

Tue, 06/22/2010 - 19:29 | Link to Comment HungrySeagull
HungrySeagull's picture

We got out of Regions when they started charging monthly fees for the so called "Life Green Accounts (Paid checking etc) It took a few months to move it all out.

They are a scrappy, aggressive and not easily cowed by money problems. I am frankly surprised they lasted this long. I see in the reports that they cut branches, cut costs, cut staff and lowered costs as well as ate what they needed to eat losses and proceeded to just dig in and keep going.

The Branch we used to bank at now has a entire second floor as advertised lease office space.

 

Some of the charts I see that are availible here and to anyone online are truly horrifying and if Regions is a small bank doing what they need to do to return to survival what are the bigger banks must be like.

 

I just wonder if Regions is like a Household family eating one sandwitch per day to surviving on very little cash until things turn around.... I wonder if the Positive Money incoming will finally happen for them or... will this last long enough to force the bank to succumb to the effects of starvation:?

 

Something to consider.

 

THAT is a picture that scares me.

 

Disclaimer, Disclosure; CYA etc... I am not a stock holder, customer or do anything with any FDIC banks. It's all about credit unions and they rule.

Tue, 06/22/2010 - 16:37 | Link to Comment mynhair
mynhair's picture

Management is shoveling CIT as fast as they can, but DC keeps piling on the CIT.

Thanks, but no thanks.

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