Industry's Woes Trickle Down to Regional Banks

Los Angeles Times (05/29/08); Hamilton, Walter
Regional bank stocks had been viewed as a possible refuge because most had not engaged in the sort of high-risk lending practices that got the nation's bigger banks into so much trouble. As the housing crisis has worsened, however, and the economy has soured, SNL Financial analyst Michael Andrews notes that troubles in home loan portfolios have seeped into such areas as auto loans and credit cards and caused shares of Regions Financial, SunTrust Banks and others to take a tumble. He states, "Regionals are suffering a backlash because people saw them as more conservative investments and as being more insulated from asset-quality deterioration than they really are." Among the nearly 600 banks that SNL tracks, the percentage of nonperforming loans to total loans has more than doubled in the past year to 1.37 percent as of the end of March.