Regions Financial Corp. just can't seem to elude questions about the Troubled Asset Relief Program and its capital levels.
Just a week after Regions' fourth-quarter earnings presentation, in which the company fielded several inquiries about the $3.5 billion of government bailout funds it has yet to repay, the question resurfaced during a financial services conference Tuesday in New York.
Grayson Hall, president and chief executive, reiterated that two things need to happen before the Birmingham, Ala., bank pays back the money it received as part of the Tarp: a return to sustainable profitability and a substantial improvement in credit.
"We believe we are positioned well to do that," he said. "We just have to deliver. We clearly are in prove-it mode."
Hall was especially candid in his assessment of the bank's credit quality.
"We are showing favorable improvements in almost all of our credit metrics, but they are still very elevated," he said. "And the pace of improvement is lagging some of our peers. … Clearly our level of inflows to nonperforming status is higher than that of our peer group, but favorably trending at this point in time, and we fully expect those trends to continue."
Executives also were asked whether they expected to pass the government's latest round of stress testing. Regions is among the 18 banks that had to submit a comprehensive capital plan to regulators in January to outline how it expects to repay Tarp and to show that it will remain well capitalized.
"From a capital perspective, we have got a good plan in place," Hall said. "We feel confident in our ability to execute that plan. I think when you look at where we are at from a Tier 1 common perspective at 7.9% at the end of the quarter, obviously we've got capital actions that have to take place in the future, and we are accounting for all those today."
David Turner, the bank's chief financial officer, responded more frankly: "To maybe kind of cut to the chase … what you're asking is, do we see a capital raise outside of Tarp repayment, and we do not."
