While Standard & Poor’s has taken the historic step of downgrading U.S. debt for the first time ever, the influential rating agency has done the opposite thing for Regions Financial Corp. and its banking subsidiary.
S&P has raised its outlook for Regions – beset by loan woes, still holding on to TARP funds and preparing to sell its beleaguered but profitable Memphis-based investment banking unit Morgan Keegan – from negative to stable.
According to BusinessWeek:
“S&P said the Birmingham, Ala.-based company’s profitability in recent quarters has modestly exceeded expectations.
The lender’s results have been buoyed by improved loan performance, gains on securities sales and a small level of reserve releases, S&P said.
S&P credit analyst Robert Hansen forecasts that Regions will see its loan-loss provisions diminish as loan performance continues to improve.
Those factors and the potential sale of Morgan Keegan increase the likelihood that Regions will redeem its preferred shares sold to the Treasury under the Troubled Asset Relief Program, S&P said.”
So, just to re-iterate, the raters at S&P consider a bank on a stronger trajectory than Uncle Sam.