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(Adds analyst's comments and background)
July 24 (Reuters) - Analyst Richard Bove downgraded Regions Financial Corp (RF.N) to "neutral" from "buy," and said the large U.S. southeast regional bank was unable to grasp the opportunities before it, partly due to constant management turmoil and the lack of underwriting discipline.
The Birmingham, Alabama-based company's balance sheet also requires a third party like U.S. asset manager BlackRock Inc (BLK.N) to come in and fix it, while problem loans marked to Florida remain another critical issue, Ladenburg Thalmann's Bove said.
"If someone fixed this bank, it could be a winner given the potential power of this franchise. Who that fixer might be is currently unknown," wrote Bove in a note to clients.
He said Regions had enormous potential as it was the dominant bank in the Gulf States and should have pricing power. The bank also had the potential to take market share at will from smaller institutions, and control the municipal bond business in the area with its brokerage and investment banking unit, Morgan Keegan & Co.
"Yet, this bank seems unable to grasp the opportunities in front of it," Bove said.
He cut his price target on the stock to $14 from $18.
The analyst also cut his earnings estimates for 2008 to $1.42 per share from $1.83 per share, and for 2009 to $1.57 per share from $2.09 per share.
On Tuesday, Regions reported second-quarter earnings that fell by half amid higher loan losses.
Like many commercial banks hit by the slump in U.S. housing prices, Regions wrote off more home equity lines and loans made to residential home builders. The company also slashed its quarterly dividend.
Shares of the company closed at $11.80 Wednesday on the New York Stock Exchange. Through Wednesday, they have fallen 50 percent this year. (Reporting by Tenzin Pema in Bangalore; Editing by Bernard Orr)