New York, February 02, 2009 -- Moody's Investors Service downgraded the ratings of Regions Financial
Corporation (senior to A3 from A2) and its subsidiaries, including
its lead bank, Regions Bank (bank financial strength to C+
from B- and long term deposits to A2 from A1), and placed
a negative outlook on all debt and deposit ratings.
The downgrade and negative outlook of Regions reflects the company's
concentrations in residential home builder and home equity, particularly
in Florida. The concentrations offset relatively good capital ratios.
Regions' CRE portfolio represents 2.7 times tangible common
equity (TCE), with approximately 60% comprised of construction
and land. Moody's further noted Regions' concentration
in home equity which equals approximately 1.8 times TCE.
Net charge-offs for the fourth quarter of 2008 were nearly double
that of the prior quarter and reflect a pace of asset quality deterioration
beyond Moody's prior expectations. The heightened credit
costs in the fourth quarter were driven by further deterioration in Regions'
most challenged sectors, its Florida residential homebuilder and
2nd lien home equity portfolios. Regions has seen nearly a doubling
of nonperforming assets over the past year, largely in the residential
homebuilder and home equity portfolios. NPAs (including 90+)
as a percentage of tangible common equity plus reserves was 21.1%
at December 31, 2008. Moody's expects further deterioration
in these portfolios as the credit cycle continues to unfold.
Moody's notes that Regions enters this challenging period with healthy
capital ratios. At December 31, 2008, its adjusted
tangible common equity ratio was 7.7%. Meanwhile,
its regulatory capital ratios were healthy also with Tier 1 risk-based,
Total risk-based and Tier 1 leverage were 10.39%,
14.65% and 8.47%, respectively.
These are 465 to 347 basis points above the minimums to be "well-capitalized."
Moody's last rating action on Regions was on September 17, 2008,
when the outlook was changed to negative from stable.
The principal methodologies used in rating this issuer were "Bank Financial
Strength Ratings: Global Methodology" (February 2007) and "Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: A Refined
Methodology" (March 2007), which can be found at www.moodys.com
in the Credit Policy & Methodologies directory, in the Ratings
Methodologies subdirectory. Other methodologies and factors that
may have been considered in the process of rating this issuer can also
be found in the Credit Policy & Methodologies directory.
Downgrades:
..Issuer: AmSouth Bancorporation
....Subordinate Regular Bond/Debenture,
Downgraded to Baa1 from A3
..Issuer: AmSouth Bank
....Subordinate Regular Bond/Debenture,
Downgraded to A3 from A2
..Issuer: Regions Asset Management Company,
Inc.
....Preferred Stock Preferred Stock,
Downgraded to Baa1 from A3
..Issuer: Regions Bank
....Bank Financial Strength Rating,
Downgraded to C+ from B-
....Issuer Rating, Downgraded to A2
from A1
....OSO Senior Unsecured OSO Rating,
Downgraded to A2 from A1
....Multiple Seniority Bank Note Program,
Downgraded to a range of A3 to A2 from a range of A2 to A1
....Subordinate Regular Bond/Debenture,
Downgraded to A3 from A2
....Senior Unsecured Deposit Rating,
Downgraded to A2 from A1
..Issuer: Regions Financial Corporation
....Issuer Rating, Downgraded to a range
of A3 to P-2 from a range of A2 to P-1
....Multiple Seniority Shelf, Downgraded
to a range of (P)Baa2 to (P)A3 from a range of (P)Baa1 to (P)A2
....Subordinate Regular Bond/Debenture,
Downgraded to Baa1 from A3
....Subordinate Shelf, Downgraded to
(P)Baa1 from (P)A3
....Senior Unsecured Regular Bond/Debenture,
Downgraded to A3 from A2
..Issuer: Regions Financing Trust II
....Preferred Stock Preferred Stock,
Downgraded to Baa1 from A3
....Preferred Stock Shelf, Downgraded
to (P)Baa1 from (P)A3
..Issuer: Regions Financing Trust III
....Preferred Stock Preferred Stock,
Downgraded to Baa1 from A3
....Preferred Stock Shelf, Downgraded
to (P)Baa1 from (P)A3
..Issuer: Regions Financing Trust IV
....Preferred Stock Shelf, Downgraded
to (P)Baa1 from (P)A3
..Issuer: Regions Financing Trust V
....Preferred Stock Shelf, Downgraded
to (P)Baa1 from (P)A3
..Issuer: Regions Financing Trust VI
....Preferred Stock Shelf, Downgraded
to (P)Baa1 from (P)A3
..Issuer: Union Planters Bank, National Association
....Subordinate Regular Bond/Debenture,
Downgraded to A3 from A2
..Issuer: Union Planters Corporation
....Subordinate Regular Bond/Debenture,
Downgraded to Baa1 from A3
....Senior Unsecured Regular Bond/Debenture,
Downgraded to A3 from A2
..Issuer: Union Planters Preferred Funding Corp.
....Preferred Stock Preferred Stock,
Downgraded to Baa1 from A3
New York
Robert Young
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Gregory Frank
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's downgrades Regions (senior to A3); outlook negative