Regions Stock Falls After Credit Exec Goes

BIRMINGHAM, Ala. (TheStreet.com) -- Regions Financial (RF Quote) sagged nearly 5% on Wednesday after an analyst questioned the real reasons behind the abrupt reassignment of its chief credit officer.

Regions said late Tuesday that Michael Willoughby, 63, has been named director of credit risk, reporting to Regions' Chief Risk Officer Bill Wells. Tim Laney, currently Regions' senior executive vice president and head of business services, has been named the firm's interim chief credit officer until a permanent replacement is found. He will remain reporting to CEO Dowd Ritter.

Regions is conducting a national search to fill Willoughby's post. The role provides a "logical transition" toward Willoughby's eventual retirement, Regions says. In the meantime Laney will be in charge of the company's credit policy, credit servicing, risk rating accuracy and underwriting.

Regions said that based on a review of "industry best practices" and in light of the unprecedented credit environment the company realigned its credit approval process by separating it from the process for assessing risk in the company's loan portfolio. The changes are part of an ongoing effort to "clearly delineate" the responsibilities for the credit approval process and the risk assessment process.

But Sandler O'Neill & Partners analyst Kevin Fitzsimmons says the abrupt announcement raises questions.

"[T]here was no mention of such a move only a month ago at [Regions'] Investor Day," Fitzsimmons writes in a note. "Plus, it seems like an odd time to make a change at such a critical position (and with no permanent replacement ready to step in) while the company continues to work its way through a painful credit cycle.