by Calculated Risk on 7/22/2008 05:23:00 PM

Also on regional banks see the WSJ: Regional Banks Battered Amid Turmoil in Markets

Here are some comments from the Regions Financial conference call (hat tip Brian):

“Given the continuing deterioration in residential property values, especially in Florida , and a generally uncertain economic back drop, we expect credit costs to remain elevated. While we're not predicting the duration of this economic downturn, we think it is prudent to plan for no real improvements until 2010.”

And on home equity in Florida:

“Home equity credits caused over half the increase [in net charge offs] rising to an annualized 1.94% of outstanding lines and loans, up from 57 basis points last quarter. We are clearly experiencing greater deterioration in this portfolio than originally expected. Mostly due to Florida based credits which account for approximately $5.4 billion or one third of our total home equity portfolio. Of that balance, approximately 1.9 billion represents first liens. Second liens which total $3.5 billion or 22% of our home equity portfolio are the main sources of loss. In fact, the second quarter annualized loss rate on Florida 's second liens was 3.5 times the rate of first lien home equity loans and lines - 4.74% for second liens versus 1.37% for first liens in Florida. So to emphasize this point, 22% of our total home equity portfolio or $3.5 billion had a 4.7% net charge off rate. The remaining 78% had about a 1.1% net charge off rate. The problems in this portfolio are very concentrated.

... Customers who did not live in the properties but purchased them to be used as an investment home or second home were more prevalent in Florida than our other markets and have been especially problematic. As property values have dropped, so has the equity supporting these loans, exacerbating home equity write-offs. Significant income losses are also negatively affecting a growing number of borrowers’ ability to repay home equity loans.”

A comment from reader Brian: "Those second liens in Florida are starting to resemble credit cards with respect to their charge off rates, unfortunately the interest rates on the loans are not 18%!"