Regions' stability leads to 'buy' rating
Birmingham Business Journal - by Crystal Jarvis Staff
Regions Financial Corp.’s rating with New York-based Ladenburg Thalmann & Co. Inc. was boosted to “buy” from “neutral” Wednesday.
Well-known Ladenburg Thalmann banking analyst Richard Bove said the Birmingham-based company’s dominance in Alabama, Tennessee, Mississippi, Arkansas and its position as the No. 4 bank in Florida, makes its franchise attractive.
However, its “constant management turmoil” could leave a bitter taste, he said. Regions has had a high turnover rate in its executive suites within the past few years. This includes executives working at AmSouth Bancorp. and Union Planters Corp. that both merged into Regions.
“At the same time, much like the moth and the flame, every time one gets too close to this company one gets burned,” he said in a research note published Wednesday.
Upheaval in the financial industry, especially the acquisition of Wachovia Corp. by Wells Fargo & Co., could hoist Regions up to one of the top three bank spots in terms of market share in the areas it serves. The bank’s market share is 20.7 percent, compared to the median range of about 16.3 percent, according to Regions’ documents.
“The acquisition of Wachovia by Wells Fargo is significant because Wachovia owned Region’s largest competitor in Alabama, SouthTrust,” he said. “The acquisition of Washington Mutual by J.P. Morgan helped in Florida. The sharp contraction of the community banks in Florida also helps.”
Also, the failure of a few brokerage firms has been beneficial to Region’s brokerage arm Morgan Keegan & Co. Inc., he said.
Regions Financial Corp. (NYSE:RF) shares were trading at $9.81 late Wednesday. The company’s 52-week range was between $6.41 and $27.50.
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