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Are More Banking Woes On The Horizon?

Just when it seemed skies had cleared, results from a regional banking giant suggest another storm could be forming.

The latest talk of turbulence stems from earnings results posted by Regions Financials which blamed mounting weakness in commercial and real estate loans for its bigger than expected loss.

Regions, based in Birmingham, Alabama, said its most stressed portfolios included residential homebuilder loans, Florida home equity loans and condominium loans.

In addition it said the recession is also pressuring its retail and multi-family commercial real estate loans.

And this could be the tip of the iceberg. Forsythe Analystics estimates that the US banking sector could see increased commercial real estate loan losses of $250 billion.

Clearly we’re in the early stages of the commercial real estate debacle, says Chris Mutascio of Stifel Nicolaus. We’re not through a quarter of that $250 billion. And if the unemployment rate goes higher I think there could be bigger issues for real estate portfolios.

Considering a slew of regional banks including Keycorp and Fifth Third report this week, what should you expect.

Commercial real estate could be a drag for KeyBank as well as SunTrust , speculates Mutascio. If you’re looking for buys look at Wells Fargo and BofA , he adds.



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Trader disclosure: On July 21st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (APPL), (BAC), (DRYS), (EEM), (FCX), (FXI), (INDY), (SBUX), (UNG); Grasso Owns (OXY), (WMT), (XLF), (CSCO), (V); Grasso's Clients Own (UNH), (V), (WMT), (USB), (OXY); Najarian Owns (AAPL) Call Spread & Put Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (ISRG) & (ISRG) Call Spread; Najarian Owns (JNJ) Call Spread; Najarian Owns (MS) & (MS) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (V) & (V) Short Calls; Najarian Owns (YHOO) Call Spread; Finerman Owns (RIG); Finerman's Firm Owns (MSFT), (NOK), (PBR), (RIG), (TGT), (TBT), (WMT); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IJR), (IYR), (IWM), (MDY), (SPY), (USO)

For Chris Mutascio:
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