Posts Tagged ‘RF’

October 21st, 2009

Regions Financial Corporation Q3 2009 Earnings.

Regions Financial (RF) announced its Q3 earnings yesterday. Besides expected continued losses, the call emphasized consolidation, staff reduction and expense reduction. For a transcript of the Tuesday RF Q3 earnings call transcript, go here.


What also stood out was the jump in the Commercial real estate net charge offs. It has been known for some time that after consumer real estate, it was the turn of commercial real estate to brake economic growth. Now we are seeing effects of that translated into actual dollar terms appearing on
financial statements.


On the home builder and condominium portfolio, which have declined by $498 million, CEO Dowd Ritter expects the source of these losses to decline through 2010. He also expects gross level of NPA’s to peak by the end of this year or into the first quarter of next year.


The operating expense run rate for the next year or a period after that, is expected to hover around $1 billion.


As expected with a bank battling this credit crisis, Regions Financial (RF) is trying to pare down its operating expenses with its full force being directed towards “personnel related measures”. The plan is to consolidate 121 branches and more over the next two quarters. Look out for increased job cuts.


What is most surprising to me is the irony in its personnel related cost cutting measures and the pretty pay package of new CFO, Irene Esteves. (When you click on the link, scroll down to Senior Management Effectiveness and click on the datapoint to open it.) Regions Financial is a TARP recipient to the extent of $3.5 billion which raises the question on how RF is going to pay the ‘guaranteed’ million dollar bonus to its CFO for 2008 as well as 2009.


Of course with the dismal outlook, the company has been unable to set up a TARP repayment date. But the company responds, “…we are taking every action necessary to be prepared for that.”


Our weak governance score for Regions Financial is underlined by the less than sterling financial outlook for the company. Don’t forget to register with us to access all the tabs on this company. Tabs provide more details on Regions’ Board of Directors and its Internal Control Environment. Registration is simple and above all, it’s FREE!


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