* Second loss in three quarters
* Increase to reserves more than doubles from Q1
* Homebuilders, Florida, condominiums weigh on credit
* Shares fall 6 pct premarket (Recasts; adds financial details throughout, share price)
NEW YORK, July 21 (Reuters) - Regions Financial Corp (RF.N), the large U.S. Southeast regional bank, said on Tuesday it had a bigger-than-expected quarterly loss due to mounting losses on commercial and real estate loans.
The second-quarter net loss applicable to common shareholders was $244 million, or 28 cents per share, compared with a profit of $206 million, or 30 cents, a year earlier.
The loss was its second in three quarters. Excluding items, the loss was 48 cents per share, according to Reuters Estimates, while analysts, on average, expected a loss of 23 cents per share.
Its stock fell 6 percent to $3.80 in premarket trading. Through Monday, the shares were down 49 percent this year, while the KBW Bank Index .BKX was down 16 percent.
Regions, which took $3.5 billion from the U.S. bailout program, has been hit particularly hard by the nation's housing and credit crisis.
The bank set aside $912 million for credit losses, triple the year-earlier amount, while net charge-offs more than doubled to $491 million. The increase to reserves more than doubled from the first quarter.
Regions, based in Birmingham, Alabama, said its most stressed portfolios included residential homebuilder loans, Florida home equity loans and condominium loans, which together are 8 percent of the total. It said the recession is also pressuring its retail and multi-family commercial real estate loans.
Chief Executive Dowd Ritter tried to downplay the losses, saying deposits grew 3 percent in the quarter, and net interest margin edged only slightly lower. "We continue to proactively de-risk our balance sheet," he said.
Results included charges of $64 million to bolster a federal deposit insurance program, and $53 million tied to the bank bailout program.
Regions is one of 19 large banks that underwent government "stress tests" and was ordered to raise $2.5 billion in capital, one of 10 banks found to have a shortfall.
Its shortfall was among the largest identified by the government relative to the bank's size and market value.
Unlike many rivals, Regions has a limited ability to raise capital without using shares or selling assets.
As a result, many analysts believe it may sell its Morgan Keegan asset management unit, which made $30 million in the quarter. Morgan Keegan has been hurt by lawsuits and arbitrations over investments in risky securities made by some mutual funds thought to be relatively safe.
Regions has $142.8 billion in assets and 1,900 branches in 16 U.S. states across the South, Midwest and Texas. (Reporting by Jonathan Stempel, editing by Gerald E. McCormick and Jeffrey Benkoe)