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Regions Financial: Bank Stock Winner

Meanwhile, while the U.S. housing market continues its multiyear recovery, the time of bailouts hasn't ended, as the Federal Housing Administration on Friday announced it would require an infusion of $1.7 billion from the U.S. Treasury to cover loan losses. This is the first time FHA in its 79-year history has ever needed to borrow money to stay afloat.

FHA Commissioner Carol Galante in a letter to Congress said the agency was unlikely to need a cash infusion from the Treasury during 2014.

Rep. Jeb Hensarling (R., Texas) -- the Chairman of the House of Representatives Financial Services Committee -- in a statement on Friday said "If the FHA was a private financial institution, likely somebody would be fired, somebody would be fined, or the institution would find itself in receivership. Instead, the FHA is merrily on its way to becoming the recipient of the next great taxpayer bailout."

"The FHA is clearly headed toward financial disaster and taking taxpayers along for the ride," Hensarling added. "Unless Congress enacts sustainable housing finance reform, it's possible taxpayers will be forced to write blank bailout checks to the FHA indefinitely. That is unacceptable, and it is further evidence Congress needs to pass the sustainable housing finance reforms found in the PATH Act."

Regions Financial

This is the time of the quarter when sell-side analysts begin publishing their earnings previews, and analysts expect Regions to show net loan growth, as well as increases in net interest income and an expanded net interest margin.

A big concern for many regional and money center banks is the decline in revenue as mortgage refinancing volume subsidies and spreads on the sale of newly originated mortgage loans to Fannie Mae (FNMA) and Freddie Mac (FMCC) decline. Atlantic Equities analyst Richard Staite estimates that for the eight large-cap banks he covers, third-quarter mortgage revenue will be down 55% year-over-year and 40% from the second quarter.

But Regions Financial may see a muted effect this quarter from the mortgage decline. The company's second-quarter mortgage income was $69 million, or 5% of the company's total operating revenue.

Regions will announce its third-quarter results on Oct. 22. Analysts polled by Thomson Reuters on average estimate the company will post earnings of 21 cents a share, compared to 18 cents in the second quarter and 21 cents in the third quarter of 21.
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