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.
Diversified business loan portfolio
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).