Banks including Wells Fargo & Co reported first-quarter results that showed the loan losses that have plagued the financial sector amid the recession are easing.

Wells Fargo, the fourth-largest bank in the U.S. by assets, posted a slightly lower first-quarter profit as mortgage originations dropped after a boom in mortgage refinancing in the year earlier quarter.

Huntington Bancshares reported its first quarterly profit since 2008, helped by a tax gain, and SunTrust Banks Inc and KeyCorp reported narrower first-quarter losses compared to the year earlier period.

Regional U.S. banks have struggled as high U.S. unemployment and falling house prices has hurt their core business of lending to consumers and local businesses.

Those such as SunTrust, KeyCorp and Huntington which cater to the U.S. Southeast and Midwest, areas where house prices have fallen sharply, saw particularly heavy mortgage losses.


Wells Fargo, which has a reputation as a conservative lender, avoided the worst losses of the financial crisis in its own portfolios but it has dealt with heavy losses in the portfolios it acquired when it bought Southeastern lender Wachovia Corp at the end of 2008.

Credit at Wells Fargo has turned the quarter, said Chief Financial Officer Howard Atkins in a statement.

The bank said credit losses eased by $83 million to $5.3 billion.

Wells Fargo repaid $25 billion in taxpayer funds to the U.S. government at the end of last year. Shares in Wells Fargo were down 1.9 percent in pre-market trading at $33.05.


SunTrust and KeyCorp, which received $4.9 billion and $2.5 billion from the government's Troubled Asset Relief Program, have yet to return this money. Huntington, which received $1.4 billion, also has yet to return the money.

KeyCorp's first-quarter loss narrowed to $96 million, or 11 cents per share, from $536 million, or $1.09 per share, a year earlier. Analysts' average forecast was a loss of 30 cents per share, according to Thomson Reuters I/B/E/S.

Atlanta-based SunTrust's loss shrunk 74 percent to $229 million, or 46 cents per share, from a year-earlier loss of $875 million, or $2.49 per share, which included a large goodwill writedown. The results beat analysts' estimates of a 58-cent-per-share loss, according to Thomson Reuters I/B/E/S.

Columbus, Ohio-based Huntington posted a net profit of $39.7 million, or 1 cent a share, helped by a tax benefit, compared with a loss of $2.4 billion, or $6.79 a share, a year earlier. Excluding the gain, the bank reported a loss of 4 cents a share compared with analysts' expectations of a loss of 15 cents a share.

Shares in KeyCorp were up 27 cents at $8.85 and Huntington shares were up 41 cents at $6.24 in premarket trading.

SunTrust shares were unchanged in premarket trading.

(Reporting by Elinor Comlay and Joe Rauch; additional reporting by Maria Aspan and Franklin Paul, editing by Dave Zimmerman)