DBRS Places Regions Financial Corporation Ratings Under Review with Negative Implications

DBRS has today placed the long- and short-term ratings of Regions Financial Corporation and its operating bank subsidiaries (collectively Regions or the Company), including Region’s Issuer & Senior Debt rating of A (high), Under Review with Negative Implications.

The review reflects DBRS’s view that Regions has struggled with steep asset quality deterioration over the past year. Credit losses on the Company’s residential and commercial real estate loan portfolios have impacted earnings and while Regions has already charged-off a substantial amount of loans in this credit cycle, DBRS believes that significant amounts of potential losses likely remain embedded in those portfolios, while reserve coverage may be insufficient to address potential losses. Moreover, the Company’s performance, including revenues, net earnings, net interest margin and average deposits, has been declining over the past year with the near-term outlook further clouded by the extremely difficult operating environment.

DBRS’s review will focus on Regions’ asset quality and financial performance. Additionally, the review will also consider the Company’s plans to bolster reserves, defend its banking franchise and deposit business in addition to reviewing its financial projections in the near- to medium-term. DBRS will examine if these trends combined may suggest a decline in franchise strength.

DBRS notes that the review could potentially result in the confirmation of the current ratings and the restoration of the Stable trend, if the performance and plans are deemed appropriate for the Company’s current rating level. On the other hand, a one notch downgrade could result if the review of current performance and near- to medium-term trends suggest performance and metrics more fitting of the next lower rating range: “A”. DBRS expects to conclude the review within 90 days.

Regions Financial Corporation, a diversified financial services corporation headquartered in Birmingham, Alabama, reported $144 billion in consolidated assets as of September 30, 2008.

Note:
All figures are in U.S. dollars unless otherwise noted.