NEW YORK ( TheStreet) -- The bank stock rally has taken a breather, as investors consider how many loans have yet to go bad, and how long it will take until lending starts getting good again.
While residential real-estate pain hasn't ended, it appears to have peaked. Even credit-card write-offs may be topping out soon. On the other hand, losses from commercial and industrial, or C&I, lending, and commercial real estate still appear to have a ways to go. Moody's estimates that U.S. banks will post another $336 billion in write-downs through the end of 2010. The largest portion of losses will come from residential real estate, which is spread across many banks throughout the country. But roughly 23% of the losses will come from commercial real estate, which is segregated to fewer banks that loaded up on such loans. They haven't recognized losses to the same degree as their residential-weighted peers, because commercial pain tends to come later in the cycle. For instance, a recent report by Citigroup equity analysts found that "consumer-heavy" banks and those that underwent large acquisitions are far past the worst of their credit cycles. For instance, Wells Fargo ( WFC), which posted large writedowns on Wachovia's bad assets through the quick-and-dirty purchase-accounting method, is roughly 68% of the way through its writedowns, according to Citi's research. PNC ( PNC), which did the same for its National City assets, is estimated to be 67% through. Others that were heavily weighted in residential real estate and other consumer debt are even closer to the light, with First Horizon ( FHN) approximately 81% through the cycle. The largest and most diverse banks are thought to be just past the midway point. Citi estimates that Bank of America ( BAC) has posted 52% of the write-downs it will see through 2010, and and JPMorgan Chase ( JPM) has posted 55%.