NEW YORK (Reuters) - Large U.S. regional banks on Tuesday reported disappointing fourth-quarter results, watching profits tumble or evaporate as they set aside more money to cover mortgage problems that continued to escalate.
By Tim McLaughlin
NEW YORK (Reuters) - Large U.S. regional banks on Tuesday reported disappointing fourth-quarter results, watching profits tumble or evaporate as they set aside more money to cover mortgage problems that continued to escalate.
Lending to people with weak credit has rocked U.S. banks of all sizes as defaults on risky subprime loans rise, sapping the U.S. economy while rattling financial markets worldwide. Three large regional banks in Ohio -- a key state in the upcoming U.S. presidential election -- on Tuesday turned in financial results that demonstrated how the weak housing market is forcing banks to curtail or tighten lending in some sectors.
Cleveland-based National City Corp <NCC.N> lost $333 million in the fourth quarter, compared with a year-ago $842 million profit. The bank's loan loss provision in the quarter was $691 million and $1.3 billion for the full year because of continued problems with risky subprime mortgages.
!ADVERTISEMENT!On Jan 2, National City cut its dividend 49 percent and announced the elimination of 900 jobs, on top of 2,500 eliminated since the middle of 2007.
National City has stopped making several kinds of mortgage and home equity loans, and plans in 2008 to emphasize mortgages less likely to go into default.
It is one of many lenders to suffer write-downs, build reserves for bad loans, and cut jobs in the housing slump.
KeyCorp <KEY.N>, also a large regional bank in Cleveland, said net income in the quarter fell 83 percent to $25 million, blaming problems with loans to residential builders. The bank has curtailed lending to condominium developers while moving nearly $2 billion worth of residential-related loans to a special asset management group.
Fifth Third Bancorp <FITB.O>, based in Cincinnati, Ohio, said fourth-quarter profit fell 42 percent to $38 million.
"Obviously, this has been a difficult quarter for the banking industry," Fifth Third Chief Executive Kevin T. Kabat said in a statement. "Like others, we saw a fairly marked turn in credit performance during the quarter. ... We expect credit conditions and the performance of our loan portfolio to continue to deteriorate in the near term."
Investors in U.S. bank stock won't be happy about that assessment. The Philadelphia KBW Bank Index <.BKX> has dropped 36 percent since reaching an all-time high in February 2007.
(Reporting by Tim McLaughlin, editing by Mark Porter)
