Regions Financial Corp. swung to a fourth-quarter loss as it took a $6 billion goodwill writedown and sharply raised loan-loss provisions, although non-performing assets fell slightly amid the continuing disposal of problem assets.
"Although we're encouraged by steps the government has taken to stabilize the housing market and revitalize the economy, there is no quick fix for credit-quality issues currently plaguing the financial-services industry," said Chairman and Chief Executive Dowd Ritter.
The Southeast regional bank, which received $3.5 billion in November from the U.S. Treasury under the Troubled Asset Relief Program, swung to a loss of $6.24 billion, or $9.01 a share, from a year ago net of $70.6 million, or 10 cents a share. The loss excluding the writedown on its banking operations was 35 cents.
Revenue fell 8.3% to $1.64 billion.
Analysts polled by Thomson Reuters were looking for a loss of 8 cents a share on revenue of $1.66 billion.
The company sold or transferred to held for sale about $1 billion in non-performing loans and foreclosed properties in the quarter, resulting in $479 million in losses, driving up charge-offs and credit costs. In mid-December, it said it planned to increase sales of non-performing assets, targeting $500 million to $600 million.
The move sent net charge-offs — loans the bank doesn't think are collectible — up to 3.19% of average net loans from 1.68% in the third quarter. But it resulted in non-performing assets, those seen near default, dipping to 1.76% from 1.79%. The prior-year figures were 0.90% and 0.45%, respectively.
Region's loan-loss provision more than tripled from a year earlier to $1.15 billion, while the third quarter's figure was $417 million.
While regional banks have been weak recently because of their considerable exposure to construction and commercial real-estate loans, some — including Regions — actually look stronger than some major institutions based on tangible common equity to tangible assets, a conservative capital ratio. The figure stood at 5.23% in the fourth quarter, compared with third-quarter figures of nearly 3% for Wells Fargo & Co.'s and 4% for U.S. Bancorp.
Regions shares closed Friday at $6.07 and there was no pre-market trading. The stock is down 24% this month amid the latest swoon in financial shares.