Story updated with credit downgrade.

NEW YORK(

TheStreet

) -- A

Regions Financial

(RF) - Get Report

remains one of the weaker regional banks and could benefit a capital raise or a merger with a stronger bank such as

BB&T

(BBT) - Get Report

, according to a CreditSights report.

Regions stock took a beating last week after the bank's risk management team resigned and the bank was downgraded by both Moody's and Fitch. The bank was also downgraded to junk status ( BB+/B from BBB-/A-3, with a negative outlook) by Standard & Poor's Ratings Services on Tuesday on concern that more loan losses may erode the firm's capital. Regions ended the day down 14 cents at $5.21.

CreditSights analysts talked to the bank about the possibility of issuing more common equity to build its excess capital position, according to the report.

"Regions stated to us that it was always prudent to look at different options but believed that it was sufficiently capitalized," the report said. "We cannot rule out that Regions could decide to issue additional common equity to build its excess capital position further, or pursue a sale to a stronger competitor."

As for merger possibilities, CreditSights argues that the most logical strategic buyer is for Regions is BB&T.

"These two companies have complementary branch profiles in the Southeast," said the report. "We note that the companies have been in merger talks previously, and we cannot rule out that BB&T would consider a bid for the company now that its acquisition of Colonial has largely been integrated."

If Regions were to be acquired by BB&T the CreditSights analysts believe that Regions would be accretive to BB&T's EPS.

The analysts also said that Regions -- which has branches in Florida and Texas -- could be attractive to other strategic buyers such as

US Bancorp

(USB) - Get Report

,

SunTrust

(STI) - Get Report

,

PNC

(PNC) - Get Report

or a Canadian bank.

The analysts noted that any of these banks could consider making a bid, however a bid by BB&T was the most logical.

--Written by Maria Woehr in New York.

To contact the writer of this article, click here:

Maria Woehr

.

To follow the writer on Twitter, go to

http://twitter.com/newsgirlmw

.

To submit a news tip, send an email to:

tips@thestreet.com

.