Regions Financial Corp. (RF), Alabama’s largest lender, had its investment-grade credit rating restored by Standard & Poor’s as the bank prepares to repay a $3.5 billion bailout by U.S. taxpayers.
Regions, which passed the Federal Reserve’s stress tests this week and raised $900 million in a share sale, was raised to BBB- from BB+, S&P said today in a statement. The company said it plans to use proceeds from the offering to help repay its 2008 rescue by the U.S. Treasury Department.
The lender, which hasn’t reported an annual profit since 2007 in the wake of the U.S. housing crisis, is spending less on soured loans and agreed to sell its Morgan Keegan brokerage earlier this year to get $1.18 billion.
“The upgrade primarily reflects our view that Regions’s capital and earnings have improved,” S&P said. “We expect that Regions will remain firmly profitable over the next two years.”
Shares of the Birmingham-based company rose 4.4 percent to $6.44 at 3:17 p.m. in New York, advancing for a second day after the Fed informed Regions it wouldn’t object to the firm’s capital plan. The bank has advanced 50 percent this year.
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