Housing weighs on regional banks

NEW YORK (Reuters) - Real estate weighed on results of several large regional banks on Thursday, as homeowners and developers struggled to keep up with payments.

Profits fell at PNC Financial Services Group Inc (PNC.N), KeyCorp (KEY.N), Comerica Inc (CMA.N) and First Horizon National Corp (FHN.N). Operating profit declined at BB&T Corp (BBT.N), though net income rose slightly.

Each set aside more money for loan losses as housing woes deepened in California, Florida and the upper Midwest, and showed signs of worsening in such markets as Washington, D.C.

"We are in the worst housing market in the recorded history of the United States," PNC Chief Executive James Rohr said on a conference call.

Profit at Pittsburgh-based PNC, Pennsylvania's largest bank, fell 18 percent to $377 million, or $1.09 per share, from $459 million, or $1.46 per share, a year earlier.

The bank, which operates in mid-Atlantic and Midwest states, set aside $151 million for credit losses, up from $8 million a year earlier. "We're just very glad that we're not in Florida and California, Las Vegas, a number of those places that have those depressions going on," Rohr said.

Winston-Salem, North Carolina-based BB&T, which operates mainly in the Southeast, said profit rose 2 percent to $428 million, or 78 cents per share, from $421 million, or 77 cents per share. Operating profit fell more than 5 percent to $401 million, or 73 cents per share.

BB&T more than tripled what it set aside for loan losses. Chief Executive John Allison said the bank's residential construction portfolio showed strains in Atlanta, Florida, the Washington, D.C., area and the West Virginia panhandle.

Cleveland-based KeyCorp said profit fell 38 percent to $218 million, or 54 cents per share, from $350 million, or 87 cents per share. The bank's provision for loan losses more than quadrupled. Chief Risk Officer Charles "Chuck" Hyle said Southern California was a particular problem in commercial real estate.

Comerica, which moved its headquarters last year to Dallas from Detroit, said profit fell 43 percent to $109 million, or 73 cents per share, from $190 million, or $1.19 per share. It posted seven-fold increases in its provision for credit losses and net charge-offs, with more than half of the latter attributable to residential real estate developers in its Western markets.

First Horizon, which is Tennessee's largest bank, said profit fell 89 percent to $7.9 million, or 6 cents per share, from $70.5 million, or 55 cents per share. The Memphis-based bank set aside more than five times as much for loan losses, citing particular deterioration in its national construction and home equity portfolios.

In afternoon trading, shares of PNC rose 1 percent, BB&T rose 3 percent, KeyCorp fell 1.8 percent, Comerica fell 0.2 percent, and First Horizon rose 1.4 percent.

(Reporting by Paritosh Bansal, Jonathan Stempel, Karey Wutkowski and Lilla Zuill; Writing by Jonathan Stempel, editing by Gerald E. McCormick)