Regions Financial Corp. (NYSE:RF) Gets Crushed Again as Losses Mount

Regions Financial Corp. (NYSE:RF) got clobbered again in the fourth quarter, as losses continue to mount for the fourth quarter in a row, losing $255 million in the first quarter. Last year in the same quarter the company generated $26 million in earnings.

The major reasons cited for the terrible performance of the company was the need to substantially increase their loan loss reserves, surging bad loans, and net charge-offs.

Provisions for bad loans increased from $425 million last year in the first quarter to $770 million this year. Last year net losses came in at 4 cents earnings a share, while this year they increased to 21 cents a share.

In contrast to all loans, real estate and other loan assets which were nonperforming grew to 5.2 percent, while last year they stood at 2.4 percent.

As a percentage of net loans, loan losses increased to over twice what they were in the same quarter last year, ending at 3.6 percent in contrast to 1.9 percent.

Income generated from non-interest items dropped by 4 percent, most of that related to less fees being applied because of dropping customer transactions, and probably from the regulations which will hamper banks in connection to some fees they can no longer charge. 

When taking into account the growth in deposits at the bank, increasing by 6.5 percent, and up 16 percent from last year, it reveals the soft underside of the company in relationship to loans, which continues to struggle to grow.

The bank did say the use of the commercial line of loans seems to be stabilizing, but overall loans outstanding dropped 2.8 percent, meaning they're having a hard time monetizing their deposits.

Net loan charge-offs for the quarter were $700 million, an annualized 3.16 percent of the average loans of the bank.

Regions has eliminated 2,400 position over the last year while shuttering 120 branches. CEO Grayson Hall said that resulted in net savings of $21 million.

Either way, it's hard to say how long Regions can continue to experience these types of losses before they become a bank that may need to be taken over by the FDIC.

With the company having a market cap of over $10 billion, it's not something the FDIC would want to do by any stretch of the imagination, as it would cut deeply into their Deposit Insurance Fund, which is already depleted.