SOURCE: The Bedford Report
March 16, 2011 07:35 ET
Regional Banking Merger and Acquisition Speculation Heats Up
The Bedford Report Provides Analyst Research on Regions Financial & SunTrust Banks
NEW YORK, NY--(Marketwire - March 16, 2011) - As the economic recovery gains momentum, analysts are predicting a surge in regional bank takeovers. As major banks experience diminishing returns in their core business, they are showing willingness to utilize their large resource pools to acquire smaller institutions in a race to diversify and to build their reach. Given the limited opportunities for meaningful acquisitions, the companies in stronger financial positions, and the willingness to act, stand to gain the most from such activities The Bedford Report examines the outlook for companies in the Regional Banking Sector and provides research reports on Regions Financial Corporation (NYSE: RF) and SunTrust Banks, Inc. (NYSE: STI). Access to the full company reports can be found at:
Regions Financial has long been mentioned as a possible takeover target. In late 2010, shares of the company surged following a report from the South Florida Business Journal claiming that PNC could be in "due diligence" with Regions. Though the rumor was largely discredited by The Wall Street Journal, Regions remains a possible acquisition target due to its Florida presence.
Both Regions and SunTrust have failed to repay their TARP borrowings. This has led analysts to question whether or not the banks will merely allow another financial institution to payoff TARP via an M&A transaction.
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Regions reported a fourth quarter net income of 3 cents per share, which compared favorably with a loss of 17 cents in the prior quarter and 51 cents in the year-ago period. Regions didn't release reserves during the fourth quarter, as its provision for loan loss reserves of $682 million matched its net loan charge-offs.
Regarding its capital ratios, Regions executives explain that "The minimum guideline to be considered well-capitalized for Tier 1 capital and Total capital is 6 percent and 10 percent, respectively. Regions' consolidated Tier 1 capital ratio was 12.40 percent and its Total capital ratio was 16.35 percent."
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