(Recasts; adds details)
June 11 (Reuters) - Analysts at Sanford C. Bernstein & Co cut their price targets on a dozen large and mid-sized U.S. banking companies, saying mounting loan losses could result in the highest level of charge-offs since 1991.
In a note dated June 10, the brokerage lowered its price targets on lenders including U.S. Bancorp, SunTrust Banks and Regions Financial.
Bernstein said rising unemployment is triggering an increase in consumer loan losses, and that commercial loans are suffering from “significant weakening.”
It also increased its forecast for the rate of full-year net charge-offs to 1.33 percentage points from 1.23 percentage points, compared with 0.61 percentage points in 2007. It said the rate in 2009 may be 1.57 percentage points, up from its prior forecast of 1.06.
The brokerage said mortgage and home equity losses will be several times higher than at any time over the last 15 years. Construction charge-offs will largely be confined to residential building, unlike in the 1992 trough, when residential and commercial construction collapsed, Bernstein added.
The following table lists the price target changes: COMPANY SYMBOL RATING PRICE TARGET
New Old BB&T Corp (BBT.N) Market-perform $31 $39 Comerica Inc (CMA.N) Market-perform $34 $42 Fifth Third Bancorp (FITB.O) Market-perform $19 $25 KeyCorp (KEY.N) Market-perform $17 $24 Marshall & Ilsley Corp MI.N Outperform $27 $31 M&T Bank Corp (MTB.N) Market-perform $95 $109 PNC Financial Services (PNC.N) Market-perform $73 $83 Regions Financial (RF.N) Market-perform $19 $22 Synovus Financial (SNV.N) Outperform $13 $15.25 SunTrust Banks (STI.N) Market-perform $47 $58 U.S. Bancorp (USB.N) Outperform $40 $44 Capital One Financial (COF.N) Outperform $77 $80
Shares of these banks were trading down between 2 percent and 6 percent in midday trade Wednesday.
Bernstein said the stocks have sold off dramatically but investors should remain cautious and focus on well-capitalized names. (Reporting by Dilipp S. Nag in Bangalore; Editing by Himani Sarkar)