Regional banks report losses in third quarter

NEW YORK - National City Corp., Fifth Third Bancorp, and KeyCorp, Ohio's largest banks, reported third-quarter losses amid the worst housing slump since the Great Depression.

National City revealed plans to cut about 4,000 jobs, or 14 percent of its workforce, over the next three years after posting a net loss of $729 million, or 85 cents a share, the Cleveland-based company said yesterday. Fifth Third in Cincinnati reported a quarterly loss of $56 million, or 61 cents, and Cleveland-based KeyCorp's loss was $36 million, or 10 cents.

"We have experienced the most severe financial crisis any of us has known in our business lifetime," said KeyCorp chief executive Henry Meyer in a statement. The company's stock rose 12.4 percent to $10.95 in New York Stock Exchange composite trading on optimism the dividend won't be cut.

The losses add to pressure on the managements of National City, Fifth Third, and KeyCorp after shares of the companies fell more than 50 percent this year.

"As our results indicate, we aren't immune to disruptions in the capital markets and weakening economic conditions," Fifth Third CEO Kevin Kabat said in a statement. "Higher credit costs once again drove bottom-line results."

U.S. Bancorp, Minnesota's biggest bank, said third-quarter profit dropped 47 percent to $576 million, or 32 cents a share, missing analysts' estimates, as the value of investments declined and reserves for bad loans to builders and home buyers rose. Regions Financial Corp., Alabama's largest bank, said profit fell 80 percent to $79.5 million, or 11 cents, as declining property values in the southern part of the country led to loan losses.

Shares of U.S. Bancorp fell 3 percent to $30.20 and Regions Financial advanced 6.1 percent to $11.29. National City rose 2.4 percent to $2.99 and Fifth Third gained 0.2 percent to $12.25.

Raskind and Kabat, both 51, pointed to signs of improvement at National City and Fifth Third. Raskind said National City is gaining market share and has "strong capital," while Kabat said Fifth Third's "core earnings power" remains positive.

National City, the biggest of the Ohio banks, reported its fifth straight quarterly loss. After preferred dividends, the third-quarter loss was $5.1 billion, or $5.86 a share. The company raised $7 billion in April, giving Raskind financial leeway to contain losses from subprime mortgages and loans tied to home equity, construction, and cars.

Treasury Secretary Henry Paulson has offered to inject $125 billion into banks by purchasing preferred shares, part of a $700 billion industry bailout that also may include buying defaulted loans.

National City said it's premature to discuss participation in Paulson's proposal. Fifth Third, KeyCorp, U.S. Bancorp, and Regions Financial said they plan to ask to be included.