NEW YORK (AP) ¿ Shares of many regional banks dropped after UBS analysts led by Erika Penala launched coverage of the group with a cautious outlook, saying loan losses will not peak until 2011.

"Our fundamental view is still negative," Penala wrote in a note to investors Monday, saying losses on commercial real estate loans will accelerate, peaking in 2011.

Commercial real estate comprises about 21 percent of loans for the group at the median, according to UBS. But recent recapitalization efforts and the mid-size banks' stock performance offer an opportunity for investors on some stocks, Penala said.

Associated Banc-Corp received the only "buy" rating of the group, with a $17 price target. Its shares have performed poorly compared to peers after the surprise resignation of its CEO in August, Penala said. That means the current stock price is an attractive chance for investors to buy in to shares of the bank, which operates in Wisconsin, Illinois and Minnesota.

Associated Banc-Corp shares rose 25 cents, or 2.4 percent, to $10.74 in afternoon trading.

The other banks fall in to two camps, Penala said:

¿ Five banks will likely need to issue more stock in order to raise capital, diluting existing shareholders. These banks will likely have sluggish balance sheet growth for longer than the more healthy banks. She put Marshall & Ilsley, Synovus Financial Corp., Zions Bancorp, First Horizon National Corp. and City National Corp in the first group and rated them "sell."

Shares of M&I fell 38 cents, or 6.3 percent, to $5.61; Synovus shed 12 cents, or 5.4 percent, to $2.10; Zions dropped 76 cents, or 5.5 percent, to $13.00; and First Horizon National fell 37 cents, or 2.7 percent, to $13.53.

City National bucked the trend, adding 13 cents to $41.23.

¿ Meanwhile, five banks have stock prices that already accurately reflect their earnings potential after the economy has recovered. Penala issued a "neutral" rating on these banks: Bank of Hawaii Corp., Huntington Bancshares Inc., TCB Financial Corp., Valley National Bancorp and Commerce Bancshares Inc.

Bank of Hawaii fell 46 cents to $45.81; Huntington Bancshares dropped 16 cents, or 4.1 percent, to $3.73; TCB Financial shed 17 cents, or 1.3 percent, to $13.20; Valley National slipped 8 cents to $13.29; and Commerce Bancshares dipped 30 cents to $39.21.

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