Regions Financial (RF) - Get Report posted a wider-than-expected quarterly loss that the bank blamed on the need to set aside capital for the rising number of defaulting loans on its books -- weighing on the bank's already depressed stock price Tuesday.
Known as loan-loss provisions, the amount ballooned over the course of the most recent quarter by more than 100% to $912 million, as of the end of June. At the end of the first quarter, provisions stood at $425 million, and in the year-ago second quarter at $309 million.
Since the bank does business in the South, it has much at risk in the collapsed Florida real estate market, for example.
As a result, the Birmingham, Ala.-based Regions, which operates a chain of retail banks across the Southeast, said it lost $188 million, or 28 cents a share in the second quarter, below analysts' expectations of 22-cent loss.
A year ago, the company posted a profit of $77 million, or 11 cents a share.
Investors sold off shares of the bank Tuesday in response. Regions stock was trading down in morning action at 12%, or 49 cents, at $3.55, on volume of 47 million shares. Average daily turnover is 50 million.
Regions boss Dowd Ritter tried to put a good face on the bank's performance in the second quarter. "While we do not want to downplay the impact of the increase in credit costs," Ritter said in a prepared statement, "this should not overshadow the strong performance of our core business, particularly our sustained growth in households and customer deposits and the stabilization of the net interest margin."
The bank said deposit growth in the quarter mostly came from an 8% rise -- or $1.5 billion -- in non-interest bearing deposits.
Regions has worked hard at marketing itself in recent months. In its press release, the bank cited customer-satisfaction and customer-service polls by Gallup and J.D. Power and Associates.
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