Regions drops after reports it may need capital

Shares of Regions Financial Corp., which has accepted $3.5 billion in U.S. assistance, fell 12 percent onday as analysts said regulators may push the company to raise more capital to offset mounting losses.

The bank “probably has been told to raise additional equity capital with $7 billion to $8 billion of projected 2009-2010 losses vs. $4 billion to $5 billion of pretax, pre- provision income,” analyst Jeff Davis of Howe Barnes Hoefer & Arnett Inc. said in a report Monday.

Nashville’s biggest bank and 12th-largest in the U.S. by assets, Regions reported a first-quarter profit of $77 million, down from $337 million a year earlier. The Birmingham-based bank is among 19 institutions being subjected to government “stress tests” to determine their financial strength.

The company is likely to report as uncollectible $2.9 billion of loans this year and $4.0 billion in 2010 as losses from real-estate lending spreads to business loans and other types of credit, Davis said. The company reported charge-offs of $1.55 billion in 2008, he said.

Regions shares have fallen 38 percent this year. Analysts including Chris Kotowski of Oppenheimer & Co. have said the company is as among the most likely of the 19 banks required to boost capital. Tim Deighton, a spokesman for Regions, said the bank declined to comment.