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Regions Financial focuses on business loans

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Mar. 10 2015, Updated 6:06 p.m. ET

Business loans contribute more to the loan portfolio

Regions Financial’s (RF) loan portfolio can broadly be classified into business and consumer loans. Business loans account for ~62% of the total loan portfolio. Business loans include:

  • commercial loans – commercial, industrial, and owner-occupied commercial real estate mortgage and construction loans
  • investor real estate loans – commercial real estate mortgage and construction loans

 

Consumer loans include residential first mortgage, home equity, indirect, consumer credit card, and other consumer loans.

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Diversified business loan portfolio

Regions Financial’s loan portfolio is diversified by product, client, industry, and geography. Its commercial loan portfolio is diversified across industries. It has the highest exposure to real estate at 13.4%. Its exposure to the healthcare industry is next at 11%.

Concentrated consumer loan portfolio

The bank isn’t really into consumer loans, except residential and home equity. Residential first mortgage and home equity account for 80% of Regions Financial’s consumer loan portfolio. Consumer loans, other than residential mortgage and home equity, only form 8% of the total loan portfolio.

In this respect, Regions Financial differs from bigger banks like JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup (C). Generally, these banks have big and diversified consumer loan portfolios. Other regional banks also have a smaller consumer loan portfolio. However, it still typically forms ~15% of the loan portfolio for Regions Financial’s peers.

Consumer loans—excluding consumer real estate—form 15% of BB&T’s (BBT) loan portfolio. For SunTrust Banks (STI), consumer loans—other than residential—form ~17% of the total loan portfolio. BB&T, SunTrust, and Regions Financial together form ~4% of the SPDR S&P Regional Banking ETF (KRE).

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