Regions Financial ( RF) shares were falling as much as 17% early Tuesday after the bank holding company beat Wall Street's expectations but may not have cushioned enough for loan losses.

The Birmingham, Ala. holding company reported net income of $77 million, compared to a net loss of $6.2 billion in the fourth quarter and net income of $337 million in the first quarter of 2008.

After factoring in $51 million in dividends on preferred shares paid mostly to the government, which provided with $3.5 billion in capital on Nov. 14 via the Troubled Assets Relief Program (TARP), first- quarter net income available to common shareholders was $26 million, or 4 cents per share, coming in ahead of the Thomsen Reuters consensus analyst estimate of a loss of 39 cents per share.

Shares were recently falling 14.7% to $4.95, after hitting a low of $4.81 earlier in the morning.

This followed a down day in the market Monday, driven by a first-quarter earnings release from Bank of America ( BAC), which also showed an improvement in earnings, combined with declining asset quality.

While Regions' first-quarter profit coming on the heels of such a large fourth quarter loss may seem like great news on the surface, the fourth quarter loss reflected goodwill impairment charges of $6 billion, as the company wrote down the carrying value of past acquisitions, including Amsouth Bancorp., which had $58 million in total assets when acquired by Regions Financial in late 2006.

The market's initial negative reaction might be explained by a quick look at a few asset quality ratios for Regions:

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