Regions Financial (RF 2.26%) is a bank in need of a turnaround, and it's certainly priced for one. The bank has struggled in the past because of risky loans it handed out, and the hope now is that it can recover by following a more conservative approach. In this video, Fool.com analyst Anand Chokkavelu tells us why that strategy might not work.
Warren Buffet famously said, "Only when the tide goes out do you discover who's been swimming naked." Regions Financial is undoubtedly a company swimming naked. The bank lacks geographical diversification, with its operations concentrated in the southeast region. Because of the focus on just one region, the company exposes itself to higher risk and more uncertainty, putting all its eggs in one basket.
When the economy tanks, it's the poorly managed banks that are most devastated. With so much of Regions Financial's business depending on such a small subset of the American population, the bank would have a difficult time weathering the storm.
