Excerpted from Rising Commercial Loan Losses Cast A Long Shadow Over U.S. Banks

Despite some hopeful signs of relief for U.S. banks in second-quarter 2009, the next several quarters likely will continue to be a struggle, especially for small regional institutions, Standard & Poor’s Ratings Services analysts said during a quarterly conference call on Aug. 6. Overall, the industry outlook remains predominantly negative, in part because of banks’ lower profit margins related to still-heavy provisioning required for increased reserve building. Asset-quality deterioration shifted to commercial lending, both commercial and industrial and commercial real estate (CRE), from consumer-related loans.