This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Regions Financial: Accounting Probe Loser (Update 1)

Stocks in this article: RF I:BKX

Updated with market close, return and stock ratio information.

NEW YORK ( TheStreet) -- Regions Financial (RF) was the loser among the largest U.S. banks on Monday, with shares pulling back 2% to close at $6.99.

According to a Wall Street Journal report, Regions -- headquartered in Birmingham, Ala. -- is being investigated by federal bank regulators, the Securities and Exchange Commission and the Special Inspector General for the Troubled Asset Relief Program, for improperly accounting for nonperforming loans during the financial crisis.

Regions received $3.5 billion in government bailout funds through the Troubled Assets Relief Program, or TARP, in November 2008, and redeemed in full the preferred shares held by the U.S. Treasury in April, after the company in the first quarter sold its Morgan Keegan brokerage subsidiary to Raymond James Financial (RJF) for $930 million, and raised $900 million in capital through a common equity offering.

The Journal said that the government investigations of Regions sprang from two civil lawsuits brought against the company in 2010 by pension funds holding the company's stock, alleging that "Regions hid problems by moving loans out of nonaccrual status, which means interest payments were overdue and collection of the principal unlikely," according to the Journal piece.

Regions Financial didn't return a call requesting comment.

The company's shares have now risen were up 64% year-to-date. The shares trade just above tangible book value, according to Thomson Reuters Bank Insight, and for 9.1 times the consensus 2013 earnings estimate of 77 cents, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is 82 cents.

Regions currently pays a nominal quarterly dividend of a penny a share. Following the next round of Federal Reserve stress tests that should be completed in March, investors are expecting the company to begin returning capital to shareholders. Credit Suisse analyst Craig Siegenthaler in November estimated that Regions would be approved to raise the quarterly dividend to four cents, and to buy back $249 million worth of shares during 2013. Of course, it is too early to predict whether or not the investigations will affect any payout by Regions.

Miller Tabak analyst Thomas Miller wrote on Monday that the investigation of Regions Financial's accounting "is not 'new news,' and the malefactors, if there were any, are long gone from RF's management. Management has aggressively addressed problem loans, and loan classification processes, in recent quarters, and we take the bank's recent improving credit metrics as a sign that a very substantial percentage of RF's recession legacy problem loans have been fully addressed."

Miller added that "the investigations well may lead to RF paying a modest settlement and agreeing to maintain better practices -- practices already implemented -- in future periods."

Interested in more on Regions Financial? See TheStreet Ratings' report card for this stock.

A Quiet Christmas Eve

The broad indexes were all slightly lower during an abbreviated holiday trading sessions, as investors continued to hope that President Obama and Congress would come up with a compromise to avert the Fiscal Cliff, and also pass an annual "patch" the Alternative Minimum Tax, or AMT.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs