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UPDATE - UBS Initiates Coverage on Regions Financial (RF) with a Neutral; Headwinds Keep Us on the Sidelines

December 16, 2011 2:09 PM EST
Get Alerts RF Hot Sheet
Price: $21.04 +1.74%

Rating Summary:
    11 Buy, 23 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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UPDATE - UBS initiates coverage on Regions Financial (NYSE: RF) with a Neutral. PT $4.

UBS analyst says, "While RF is currently trading at the largest discount in our coverage, we remain cautious given the overhang from potential dilution arising from repaying TARP, credit loss concerns, and further balance sheet shrinkage. RF has shown improvements in PTPP, has high asset sensitivity, and appears well positioned for loan growth, but we believe there is too much uncertainty concerning the downside risk and that there is currently more value in other regional bank stocks."

"Credit trends have improved as banks have removed credit crisis loans from their books. Positive signs include lower NPA levels, lower delinquency rates, and improved markets for selling loans. We expect that RF will be one of the last banks in our coverage to see full benefits from these improvements because they still maintain the highest run-off portfolio and above average NCOs...Near-term catalysts include sale of Morgan Keegan and TARP repayment."

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