RF - Regions Financial cut to Hold at Odeon as focus on margins fails to pay off

2023-11-13 08:13:50 ET

Odeon Capital's Dick Bove downgraded Regions Financial ( NYSE: RF ) to Hold from Buy on Monday as management's focus on margins over sales is likely creating problems for the bank.

"It must give up this focus, aligning its pricing to the markets," he said in a note to clients.

The analyst pointed to the potential for balance sheet deterioration due to deposit outflows, constrained loan growth, and hedging strategies that missed the impact of market pricing.

Cost controls are at work, but are being challenged by the need to strengthen its controls, such as check fraud, Bove said. Furthermore, Regions' ( RF ) expansion plans may not be panning out as hoped. "It is also being blindsided by weakness in some previously stable markets like real estate — residential and commercial," he said.

Overall, the analyst likes the bank's direction. "Regions ( RF ) has had good management for a decade now correcting the lapses of two prior administrations," Bove said. "The expansion of the business has been well-thought out allowing the company to reduce reliance on the core banking business."

Regions ( RF ) stock edged down 0.2% in premarket trading.

Bove's Hold rating agrees with the SA Quant rating and the average SA Analyst rating .

More on Regions Financial

• Regions Financial Corporation 2023 Q3 - Results - Earnings Call Presentation
• Regions Financial: Uncertain, Simply Uncertain
• Regions Financial: Funding Pressures Hit Q3 Results And Leave Shares Unattractive
• Regions Financial downgraded to Neutral at J.P. Morgan on deposit costs

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