Several large U.S. regional banks reported losses or big profit declines in the first quarter

TO BE NOTED: From Reuters:

"Regional banks hit hard by recession, bad loans

Tue Apr 21, 2009 10:08pm EDT

By John Poirier and Jonathan Stempel

WASHINGTON/NEW YORK (Reuters) - Several large U.S. regional banks reported losses or big profit declines in the first quarter, reflecting sharp increases in soured consumer and commercial loans as the economy deteriorates.

Profit fell at U.S. Bancorp, Regions Financial Corp and M&T Bank Corp, while Capital One Financial Corp, KeyCorp, Comerica Inc and Huntington Bancshares Inc lost money. KeyCorp lowered its dividend for the third time in a year. Late on Monday, Zions Bancorp also posted a quarterly loss.

"We're in the eye of the storm," said Matthew Warren, associate director of equity research at Morningstar Inc. "It's commercial loans now where losses are climbing from a low level. If you have below average capital and are losing money, it is a very fragile place to be."

New Jersey's Hudson City Bancorp Inc bucked the trend, boosting profit to a record.

The KBW Bank Index rose 8.1 percent after U.S. Treasury Secretary Timothy Geithner told Congress "the vast majority" of banks have more capital than needed.

Even so, declining stock markets and housing prices, rising unemployment and tight credit are causing more consumers and businesses to fall behind on loan payments.

While bank shares have nearly doubled since early March, they are still down 23 percent this year.

SOME BANKS PROFIT

Profit at Minneapolis-based U.S. Bancorp, the nation's eighth-largest bank, fell 61 percent to $419 million, or 24 cents per share. Analysts on average expected 20 cents per share, according to Reuters Estimates.

"We're probably in the middle" of the economic downturn, Chief Executive Richard Davis said.

U.S. Bancorp added $1.32 billion to loss reserves and expects similar additions in the next two quarters.

Profit at Birmingham, Alabama-based Regions fell 92 percent to $26 million, or 4 cents per share. Loan losses more than doubled from a year earlier.

Despite surprising analysts last week by projecting a profit, Chief Executive Dowd Ritter said: "I'm not about to suggest the tough times are behind us, because they're not."

At Buffalo, New York's M&T, which counts Warren Buffett's Berkshire Hathaway Inc among its largest investors, profit fell 68 percent to $64.2 million, or 49 cents per share. Excluding items, earnings were 68 cents per share. Analysts expected 70 cents.

Hudson City, a Paramus, New Jersey mortgage lender, raised its dividend 7 percent and said profit rose 44 percent to $127.7 million, or 26 cents per share, after largely avoiding riskier home loans. Analysts expected 25 cents per share.

OTHERS POST LOSSES

Capital One, based in McLean, Virginia, swung to a loss of $176.1 million, or 45 cents per share, as it set aside more money for losses on credit cards and other consumer debt. The loss from continuing operations was 39 cents per share. Analysts expected a loss of 4 cents per share.

Cleveland-based KeyCorp swung to a loss of $536 million, or $1.09 per share. Excluding items, the loss was 74 cents per share; analysts expected 20 cents. KeyCorp lowered its dividend to a penny per share from 6.25 cents.

Dallas-based Comerica had a net loss of $24 million, or 16 cents per share. Analysts expected an 11 cents per share loss.

Huntington, based in Columbus, Ohio, lost $2.43 billion, or $6.79 per share, largely from a write-off of goodwill on prior bank purchases.

Zions, a Salt Lake City bank, said a similar writedown, as well as commercial real estate losses, led to an $832.2 million quarterly loss. Moody's Investors Service cut its credit rating to junk status, saying Zions could become undercapitalized.

Morningstar's Warren said he favored "higher-quality banks that can ride through some of the worst economic scenarios you can envision," such as U.S. Bancorp, Regions and M&T.

Results other than Hudson City's and M&T's reflected dividend payments on taxpayer money taken from the Troubled Asset Relief Program. Hudson City has taken no TARP funds.

In Tuesday trading, U.S. Bancorp shares rose 20.9 percent to $19.27, Regions rose 5.9 percent to $6.14, M&T fell 1.4 percent to $51.75, KeyCorp fell 4.7 percent to $7.05, Comerica rose 15.9 percent to $21.64, Huntington rose 10.9 percent to $3.45 and Zions fell 15.4 percent to $10.94.

Capital One shares closed up 12.5 percent at $15.05, but fell to $13.35 after-hours. Hudson City rose 6.8 percent to $12.53 and then rose to $12.70 after hours.

(Reporting by Elinor Comlay, Juan Lagorio, Chuck Mikolajczak, John Poirier, Jonathan Stempel and Karey Wutkowski; editing by Lisa Von Ahn and Andre Grenon)"