Regions: Financial Winner

NEW YORK ( TheStreet) -- Regions Financial ( RF) was the winner among the largest U.S. banks on Friday with shares rising over 1% to close at $6.45.

The broad indexes ended the day with slight gains but weakened late in the day, after President Obama set up a battle with Republicans controlling the House of Representatives, by saying that he wanted taxes on higher-income families to be raised as part of a compromise over the "fiscal cliff," while the Republicans have indicated that there should be no increase in tax rates. Then again, Speaker of the House John Boehner (R-Ohio) indicated earlier this week that he might agree to an increase in tax revenue from closing loopholes.

The KBW Bank Index ( I:BKX) was up slightly to close at 48.13, with 14 of the 24 index components seeing gains. The index was down 4% for the week, in the wake of President Obama's reelection.

Regions Financial of Birmingham, Ala., has seen its shares rise 51% year-to-date, following a 38% decline during 2011.

The shares trade for 0.9 times their reported Sept. 30 tangible book value of $7.02, and for eight times the consensus 2013 EPS estimate of 77 cents.

Regions has gone through quite a transition this year, with the sale of its Morgan Keegan subsidiary, followed by a common equity raise and the company's second-quarter redemption of preferred shares held by the government for assistance received during 2008 through the Troubled Assets Relief Program, or TARP.

The company currently pays a nominal quarterly dividend of a penny per common share, but investors are looking for a much more significant return of capital next year, especially since Regions reported an estimated Tier 1 common equity ratio of 10.5% as of Sept. 30.

Deutsche Bank analyst Matt O'Connor on Monday estimated that following the next round of Federal Reserve stress tests, Regions will be approved to return capital to investors totaling $275 million in 2013, including $225 million in dividends and $50 million in share buybacks. The analyst estimated that the dividend yield on the company's common shares would rise to 2.4%.

RF Chart RF data by YCharts

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


-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.