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US banks may record higher writedowns, provisions: Morgan Keegan

Thu Jul 9, 2009 12:25pm EDT

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July 9 (Reuters) - Several U.S. banks, especially those with significant real-estate exposure, are likely to post higher-than-expected provisioning expenses and writedowns in the near term, analysts at Morgan Keegan said.

"Overall we expect a messy quarter earnings-wise across the board with banks recording one-time charges related to the Federal Deposit Insurance Corporation deposit assessment, Troubled Asset Relief Program redemption and charges related to capital actions executed by several banks during the quarter," the analysts said.

First Horizon National Corp (FHN.N), Texas Capital Bancshares Inc (TCBI.O) and SunTrust Banks Inc (STI.N) are core holdings for long-term investors due to their attractive valuation, they said.

Post second-quarter earnings, the analysts expect outperformance in the deeply discounted stocks of Fifth Third Bancorp (FITB.O), Synovus Financial Corp (SNV.N), Zions Bancorp (ZION.O), Marshall & Ilsley Corp (MI.N) and South Financial Group Inc (TSFG.O) on better-than-expected credit trends and improved credit outlook.

Zions could significantly outperform peers over the next few quarters, as credit losses remain manageable, especially assuming the successful completion of the $600 million capital action plan announced during the second quarter, they said.

The analysts expect earnings recovery by the second half of 2010 and believe investors will step back in as stocks stabilize.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Unnikrishnan Nair)

((saqib.ahmed@thomsonreuters.com; within US +1 646 223 8780; outside U.S +91 80 4135 5800; Reuters Messaging saqib.ahmed.reuters.com@reuters.net)) Keywords: USBANKS/RESEARCH MORGANKEEGAN Keywords: USBANKS/RESEARCH MORGANKEEGAN

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