Jan 26 (Reuters) - Regions Financial Corp (RF.N) may slash its dividend by 90 percent and there is no likelihood of the company’s earnings turning positive in 2009, veteran banking analyst Richard Bove said.
The Ladenburg Thalmann analyst cut his price target on the shares of the large U.S. Southeast regional bank to $7 from $14. Bove forecast a 2009 loss, compared with his prior profit view, and lowered his 2010 earnings estimates for the company. [ID:nWNAB3275]
Regions Financial is likely to slash its dividend to 1 cent a share, Bove said in a note to clients. The company currently pays a quarterly dividend of 10 cents a share.
The company, like its peers in the regional banking industry, failed to underwrite properly and the company’s troubles with loan losses are intensifying now, Bove said.
Regions reported an unexpected $6.22 billion quarterly loss last week, reflecting a huge writeoff for its banking business and a surge in soured real estate loans, especially in Florida. [ID:nN20395589]
Bove, however, maintained his “buy” rating on the stock and said the bank retains the best franchise in the Gulf States, while states like Alabama, Tennessee and northern Florida continue to offer superior growth prospects.
Shares of the Birmingham, Alabama-based lender closed at $4.66 Friday on the New York Stock Exchange. They have fallen 79 percent in the last 52-weeks through Friday. (Reporting by Anurag Kotoky in Bangalore; Editing by Himani Sarkar)