KeyCorp, National City and Fifth Third finished Tuesday in the black after indicating they would participate in the federal government's plan to invest $250 billion in preferred equity in the banking system.
KeyCorp ( KEY), National City ( NCC) and Fifth Third ( FITB) all posted losses for the third quarter as credit deterioration continued to hamstring the three Midwest regional banks. All three stocks finished in the black Tuesday, after giving indications they would accept capital from the government being offered through the $700 billion financial rescue plan approved by Congress earlier this month. Key, Nat City and Fifth Third discussed the progress they have made on reducing their balance sheets as they seek to preserve capital in the poor economic environment. All three banks said they were considering applying for some of the $250 billion in preferred equity investments the Treasury Department will make through the troubled asset relief program, or TARP. Large banks including Citigroup ( C), JPMorgan Chase ( JPM), Bank of America ( BAC) and Wells Fargo ( WFC) have already agreed to accept investments, whether they need capital or not. Key shares finished $1.21, or 12.4% higher, to $10.95 and Nat City shares gained 7 cents, or 2.4%, to $2.99. Fifth Third closed up fractionally higher to $12.25.
Key posted a loss of $36 million, or 10 cents a share, vs. a profit of $210 million, or 54 cents a share in the year-earlier quarter. "We have experienced the most severe financial crisis any of us has known in our business lifetime," said Key CEO Henry Meyer. Key's Tier-1 capital ratio was 8.48% at the end of the third quarter. Key added $133 million to its loan loss reserves, mostly for its loan exposure to residential construction. Key's allowance for losses totaled $1.6 billion, or roughly 2% of loans, at the end of the quarter.