In light of M&I's recent offering of $780 million (a 40% dilution in shares outstanding)... any opinions on the size needed for Regions?
I was talking to a M&I exec.. and he said the offereing was necessary due to additional capital requirements that were recently conveyed to them. I'm not sure what regulatory agency this was... and if this will be something that will effect other regional banks other than M&I.
I'm not trying to send out the alarm bells.. just curious on any educated guesses on why M&I has been the only major regional to have another stock offering. Are they the exception to the general rule that no offerings are needed for the regionals? Or is M&I the first of more to come from the regional banks such as RF?
MI just did a second dilution, it is something like getting on par with RF which did a second dilution earlier.
What you say about the MI executive saying they had additional capital requirements does not make sense, those things would have been disclosed, and maybe you misunderstood. They needed capital, they raised it.
If you looked carefully at MI´s second quarter earnings release you would have seen numbers that indicated they would or could dilute, not least of which was the NPAs compared to reserves and the TCE, as well as the capital ratios.
It looks like MI tried to hold off as long as they could with their second dilution until the third quarter, in the hopes that the NPAs would turn around sooner for them, but unfortunately the third quarter saw NPAs increae to 5.6%, and because their capital ratios were not very strong they had to dilute.
While I am hopeful that RF will be able to avoid another dilution I really don´t know as if their NPAs increase significantly they may have to. But right now their numbers are pretty strong.
You are also wrong, MI was not the only major regional to do a second offering, I believe many have, they simply did it before MI did it.
I don't recall another major regional back doing a 2nd offering. I know some of the healthier regionals did a second offering to pay back TARP, but I'm not talking about that.
We shall see. My guess is there will be some of the weaker regionals following M&I in doing a 2nd major offering to raise up more capital (TARP repayment is still a long ways away for the weaker hands).
I don't have a stock position either way in Regions.
I do hold some of their corporate bonds.. that is my only financial interest.
I would love to see Regions and other regional banks get back to "normal"... but I'm concerned about the dilution to come to the common stock shareholder. If not this time... surely when TARP has to be repaid.