Regions Fin'l soars after bank takeover, upgrade

NEW YORK (Reuters) - Regions Financial Corp (RF.N) shares soared on Tuesday after the large southeast U.S. regional bank's takeover of deposits from a failed Atlanta-area lender provided reassurance about its own financial health.

Shares of Regions were up $1.57, or 16.9 percent, at $10.84 in afternoon trading on the New York Stock Exchange, after earlier rising as much as 19.3 percent to $11.06.

Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners LP, raised his rating on Regions to "hold" from "sell," while Standard & Poor's equity analyst Stuart Plesser raised his price target to $11 per share from $9.

Tuesday's gains came after Regions assumed $900 million of deposits and took over 23,000 customer accounts and five branches from Integrity Bank, an Alpharetta, Georgia-based lender that federal regulators seized late Friday.

The Federal Deposit Insurance Corp was named receiver for Integrity, which was the 10th U.S. lender to fail this year.

As many as 300 lenders might fail because of financial, managerial or operational problems tied largely to the nation's credit crisis, analysts have said.

Like many rivals, Regions has been hurt by an increase in soured real estate loans, including in Florida. Regions in July slashed its quarterly dividend 74 percent to preserve capital, following a 54 percent decline in second-quarter profit.

But analysts said the assumption of Integrity's deposits offers Birmingham, Alabama-based Regions new deposit funding and market share, and suggests Regions' own health is stable.

"The fact that federal regulators approved Regions as the buyer of the deposits likely limits the risk that Regions would be subject to any near-term regulatory enforcement action and/or mandatory capital raises," Fitzsimmons wrote.

JPMorgan analyst Steven Alexopoulos added: "With the market on high alert for signs of stress at banks, we view the FDIC approval of Regions to assume the deposit accounts of Integrity as an indication that Regions itself is deemed to be a sound institution by regulators."

Bill Linginfelter, a Regions executive in Georgia, said: "Our new customers can be confident that their money is safe and that they are in good hands."

Regions ended June with $144.4 billion of assets and $89.9 billion of deposits, and operates more than 1,900 branches in 16 U.S. states.

Through Friday, its shares were down 60.8 percent this year, compared with the KBW Bank Index's .BKX 25.5 percent decline.

(Editing by Dave Zimmerman)