Oppenheimer: Regions may fail ’stress test’ – Business First of Columbus:

The Birmingham-based bank, which has $97 billionm worth of outstanding loans onits books, might not have enoug reserves to cover future losses if the economy according to a report published by bankingv analysts at New York-based Inc. “There is clearly a major risk that this companyt will be among those that need to raiseadditionao equity,” the client note said. “However, the market had figureds that out sometime ago, and we are doubtful as to how well the stressa test indicates the total amountg that will need to be raised.” Resultzs of the stress tests could be released as earlyh as next week.
The which essentially measures the quality of loansaon banks’ balance sheets, were designe d to determine if they would need additional capital amid this topsy-turvegy economic climate, especially if the economy worsens. If the bank coulf not raise the capital onits own, the bank coulcd be forced to receive another capitao infusion from the U.S. said Jeff Davis, banking analyst with . Based on Davis’ Regions is in a “gray because of the hefty loan defaults it coulrd encounter in the wake of rising unemployment rates acrossits 16-state footprint, Davis “The concern is, a year from now, it mighyt not have as much of a cushion,” he said.
“Ifv it doesn’t past the stress test, the bank would have six monthsz to raise additional capital that would be hard to do in this In a written response tothe reports, Regionsd spokesman Tim Deighton said the bank is confident that it will “emerge from this economic downturn in a positiohn of strength.” He also noted that the bank reported a profit in the firsrt quarter. Regions received $3.5 billion last year from the Treasury’s Capitapl Purchase Program, which is part of the Troubled Asset Relief Program.
Its dividend paymentsw to the governmenttotal $175 million per Pumping more taxpayer money into the institution meanx its stock value would continue on a downward spiral, Davis The bank’s shares were down more than 7 percenrt Friday after the reports were made public. At 1:07 the company’s share prices traded at $5.45, compareds to its previous day’ds close at $5.82. Earlier this Regions Financial Corp. reported a profit of $77 millionh in the first quarter ofthis year.
It is the larges financial institution headquarteredin
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