WRAPUP 3-US regional banks hit hard by recession, bad loans
* Several banks report losses or big profit declines
* More consumers, businesses fall behind on payments
* Shares mixed (Adds Capital One, Hudson City results; closing prices)
By John Poirier and Jonathan Stempel
WASHINGTON/NEW YORK, April 21 (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 (USB.N), Regions Financial Corp (RF.N) and M&T Bank Corp (MTB.N), while Capital One Financial Corp (COF.N), KeyCorp (KEY.N), Comerica Inc (CMA.N) and Huntington Bancshares Inc (HBAN.O) lost money. KeyCorp lowered its dividend for the third time in a year. Late on Monday, Zions Bancorp (ZION.O) 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 (HCBK.O) bucked the trend, boosting profit to a record.
The KBW Bank Index .BKX 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. Continued...
