Regional Banks Prepare for Biz-Lending Troubles

Financial Week (04/21/08); Johnston, Megan
Most of the top U.S. regional banks are blaming residential real estate and other consumer-driven factors for their poor financial results in the first quarter. First Horizon in Tennessee had one of the worst performances as it recorded an 89-percent decline in profit and a $240 million increase in provisions for loan losses; while U.S. Bancorp had to set aside $485 million for bad loans, which is a 174-percent increase from last year. "We still expect commercial credit to deteriorate more meaningfully in the remainder of 2008, given our outlook for continued deterioration of the U.S. economy," writes FBR analyst James Abbott in a report. The troubles at the regional level could cause problems for other banks and cutbacks in lending could spread to commercial finance companies, analysts add.