SOURCE: Rothman Research

Rothman Research

May 21, 2010 08:21 ET

Regional Banks Still Convalescing Painfully

JOHANNESBURG, SOUTH AFRICA--(Marketwire - May 21, 2010) - -- Expectations became as high as a jagged cliff for regional banks when the first quarter's earnings season for 2010 begun with better-than expected results for major banks. Given that the United States, and the whole world for that matter, has recently got out of a recession, earnings results from the big banks were a massive relief for investors and the U.S. economy; both needed a boost of morale and a reason to start trusting the large financial institutions once again. However, the reality in the banking sector is still tainted in red as a large majority of regional banks are still tackling with loans issues linked to the housing industry. 

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Regions Financial Corp. (NYSE: RF) is among those regional banks currently struggling with loan problems. The company recently announced that it is anticipating that its loan issues will reach their peak in the 2nd quarter of 2010. This southeast regional bank is, however, showing encouraging signs of improvement and believes that it would be entering a more profitable turnaround point in the coming months. In its last reported quarterly earnings result, Regions reported a loss of $0.21 per share. The bank also raised its provision to cover losses incurred through loans by 81% for the quarter. Whilst confidence start to brew in the Regions camp, some inherent issues from the financial turmoil still linger. Consumers are still largely holding onto their savings strategy and very few are willing to borrow funds from banks. With economic recovery moderately moving in the right direction, regional banks are also finding it quite challenging to attract local businesses to contract loans.

*Direct & free downloadable research report on Regions Financial Corp. is available by signing up now at

Provisions for loan losses have been a key focus for industry experts and investors during the earnings season for the banking sector. First Horizon National Corp.'s (NYSE: FHN) first quarter 2010 results in mid-April, for instance, were well received by investors and analysts as the regional bank disclosed that it has managed to reduce its loan loss provisions. However, the state of the economy still remains a great test for First Horizon as demand for loans continues to stay stumpy.

*Complimentary downloadable research on First Horizon National Corp. is accessible upon registration at

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