More regional banks likely to raise new capital

At least 10 regional banks are likely to need to raise new capital or cut their dividends in the coming year, a JPMorgan Chase & Co. research analyst wrote Monday in a client note.

Nine banks likely will join the many that have already raised cash to shore up their capital base amid a weakening lending market, JPMorgan analyst Steven Alexopoulos wrote in a research note.

The banks named are Amcore Financial Inc., BankAtlantic Bancorp Inc., BankUnited Financial Corp., Boston Private Financial Holdings, Citizens Republic Bancorp Inc., Colonial Bancgroup Inc., Franklin Bank Corp., Private Bancorp Inc. and Windtrust Financial Corp.

A 10th, Comerica Inc., will likely have to slash its dividend from the present quarterly dividend of 66 cents, Alexopoulos wrote in the note.

Alexopoulos based his projection of a dividend cut for Comerica on his expected earnings for the bank over the next 12 months. He estimates Comerica, based on its current dividend, would pay out more than 90 percent of its earnings as dividends.

Shares of Comerica rose 56 cents to $38.90 in afternoon trading.

Banks of all sizes have faced increasing earnings pressure in recent quarters because of a rise in delinquencies and defaults among many types of loans, including mortgages and commercial loans. Rising defaults have forced the banks to reserve more cash to cover the losses.

A bank's reserve levels, along with its credit quality in its portfolios and its capital ratios, were all taken into consideration when determining which regional banks might need to raise new cash, Alexopoulos wrote in the note.

Nearly all the problems bank face stem from a rise in nonperforming assets and how it affects those reserve levels and capital ratios, Alexopoulos added.

Comerica is unlikely to need to raise capital, because its current levels are sufficient, Alexopoulos added.