Regions Financial has huge loss on $6 billion writeoff

NEW YORK (Reuters) - Regions Financial Corp , a large U.S. Southeast regional bank, reported an unexpected $6 billion charge to write down parts of its banking business, resulting in a huge fourth-quarter loss.

The Birmingham, Alabama-based lender said on Tuesday its net loss totaled $6.22 billion, or $9.01 per share, compared with a profit of $70.6 million, or 10 cents per share, a year earlier.

Regions' quarterly operating loss was a larger-than-expected $245 million, reflecting a surge in soured real estate loans.

Regional banks are expected to report dismal quarterly results this month, buffeted by many of the same credit trends that caused Bank of America Corp and Citigroup Inc to post huge quarterly losses last week and JPMorgan Chase & Co to report sharply lower earnings.

"There is no quick fix for credit quality issues currently plaguing the financial services industry," Regions Chief Executive Dowd Ritter said in a statement.

Regions' $5.9 billion merger with Memphis-based Union Planters Corp in 2004 and $10 billion purchase of Birmingham's AmSouth Bancorp Inc in 2006 transformed it into a big regional lender, now with $146.2 billion of assets and 1,900 branches in 16 U.S. states across the South, Midwest and Texas.

The lender said the value of its banking and Treasury operations had fallen below book value, requiring what spokesman Tim Deighton called "the vast majority" of the $6 billion non-cash goodwill writedown. "We were an acquisitive organization," Deighton said.

Regions nevertheless said it remained well capitalized, in part reflecting a recent $3.5 billion infusion from the U.S. Treasury Department's Troubled Asset Relief Program.

Excluding one-time items, the quarterly loss was 35 cents per share, according to Reuters Estimates, compared with the average analyst forecast for a loss of 20 cents per share.

Regions set aside $1.15 billion for credit losses, up from $358 million a year earlier, reflecting falling real estate values and rising unemployment. Net charge-offs increased to $796 million from $107.5 million.

The bank's most stressed portfolios include residential homebuilders; home equity loans, mainly in Florida; and condominiums. It also reported "emerging stress" in Florida residential first mortgage and retail commercial real estate.

Shares of Regions fell 57 cents, or 9.4 percent, to $5.50 in premarket trading. Through Friday, the shares had fallen 70 percent in the last year, compared with a 61 percent decline in the KBW Bank Index .

(Reporting by Jonathan Stempel; Editing by Steve Orlofsky and John Wallace)