Barclays maintains an 'Underweight' on Regions Financial (RF); Q3 Review: Asset Quality Lags Peers, But Margin Expectations Outperform

Barclays maintains an 'Underweight' on Regions Financial (NYSE: RF) price target cut $2 to $6.

Barclays analyst says, "For the fourth consecutive quarter, RF reached profitability, but this time from reduced expenses and a lower loan loss provision (despite higher NPL inflows and TDRs) instead of securities or other gains (EPS was $0.08, reserve releases were $0.08). We remain concerned with its Investor Real Estate loan portfolio, totaling $12bn, or 15% of loans (24% in FL; 46% retail/multi-family) where NCOs were 7% and NPLs remain at 9%. We expect this book, albeit shrinking, to weigh for the time being. Uncertainty around TARP, government/board investigations, and the ultimate impact of its Morgan Keegan strategic review also remains."

"Following 3Q11's earnings beat, we are raising our 2011 EPS estimate to $0.20 from $0.15. We are maintaining our 2012 EPS at $0.55."

For more ratings news on Regions Financial click here and for the rating history of Regions Financial click here.

Shares of Regions Financial closed at $3.71 yesterday.

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