| June 25
June 25 Regions Financial Corp, a large
U.S. southeast regional bank, agreed to pay $51 million to
settle federal and state allegations it failed to account
properly for souring commercial loans during the financial
crisis, boosting its earnings.
The settlements announced on Wednesday call for the
Birmingham, Alabama-based lender to pay a $46 million fine to
the Federal Reserve, and a $5 million fine to the Alabama
Department of Banking.
Regions also entered into a two-year deferred prosecution
agreement with the U.S. Securities and Exchange Commission.
The Fed and the SEC also brought civil charges against three
former managers at the company's Regions Bank unit: Thomas Neely
Jr, once a senior commercial credit executive; Jeffrey Kuehr,
who led a problem loan workout department; and Michael
Willoughby, who was chief credit officer.
Neely is contesting the charges against him, and faces a
possible $2.4 million fine from the Fed. Kuehr and Willoughby
each agreed to pay $70,000 to settle with the SEC, and agreed
with the Fed to a banking industry ban.
The SEC said that, in the first quarter of 2009, the men
intentionally took steps to circumvent Regions' internal
accounting controls, and improperly classify $168 million of
troubled commercial loans as "performing."
It said this was done to enable Regions to set aside less
money for loan and lease losses, boosting earnings per share.
In a statement, Regions said it provided "extensive
cooperation" in the investigation, and has since 2009 regained
profitability, slashed credit losses, overhauled top management,
and strengthened risk management and board oversight. It said it
set aside enough money last year to cover the settlement.
Augusta Dowd, a lawyer for Neely, said in an email: "Mr.
Neely had an extremely successful career in the banking industry
... The charges are unwarranted, and we intend to work
vigorously and aggressively to clear his name."
William Clark, a lawyer for Kuehr, did not immediately
respond to requests for comment.
Jack Sharman, a lawyer for Willoughby, said: "The settlement
allows him to resolve the claims and move forward."
Regions has about 1,700 branches in 16 U.S. states and
assets of $117.9 billion.
It held the $3.5 billion of federal bailout money it took
during the financial crisis for roughly 3-1/2 years. The U.S.
government announced the bank's repayment in April 2012.
(Reporting by Jonathan Stempel in New York. Editing by Andre