The WSJ reports that Regions Financial Corp. will set aside four times as much money to cover expected loan losses in the fourth quarter as it did in the third, citing further weakening in its portfolio of loans made to home builders.
The Birmingham, Ala.-based bank said its loan loss provision would rise to about $360 million in the fourth quarter from $90 million in the earlier period. The announcement is the latest sign that costs from the struggling housing market are mounting at the country’s regional banks.
Regions has made about $7.5 billion in loans to residential builders, representing about 8% of its total loan portfolio. To slow defaults, the bank said it has assigned a team of executives to help distressed builders work out their debts. Still, it thinks the sector will struggle “well into 2008” and expects bad debts to mount through the year.
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