Regional banks PNC Financial Services Group , BB&T and Fifth Third Bancorp

reported better-than-expected first-quarter results on Thursday but warned that U.S. consumer demand for loans is still low.

The banks are highly exposed to struggling U.S. consumers as well as local businesses. Even as U.S. unemployment has dropped below 10 percent and other economic data appears to be improving, the banks' results show customers are still saving more and borrowing less.

While loan losses on some classes of loans, such as residential mortgages, are showing signs of easing, banks such as Fifth Third said that commercial loan losses are rising.

Among southeastern U.S. banks, BB&T has emerged from the financial crisis in arguably the strongest competitive position, with relatively low levels of loan losses. PNC, which absorbed troubled Cleveland-based lender National City Corp, is similarly regarded as among the stronger survivors of the crisis.

Fifth Third, based in Cincinnati, is struggling from losses on loans it mad in areas such as Michigan and Florida, among the hardest hit by the financial crisis.


Winston-Salem, North Carolina-based BB&T reported net income of $194 million, or 27 cents per share, down from $318 million, or 48 cents per share, a year earlier. Analysts on average were expecting net income of 23 cents per share, according to Thomson Reuters I/B/E/S.

PNC said its first-quarter profit attributable to common shareholders fell to $333 million, or 66 cents a share, compared with $460 million, or $1.03 a share, a year earlier.

Excluding costs related to exiting the U.S. government's Troubled Asset Relief Program, the bank reported earnings from continuing operations of $1.11. That beat analysts' expectations earnings of 71 cents a share.

Fifth Third reported a loss attributable to shareholders of $72 million, or 9 cents a share, compared to $26 million, or 4 cents a share, a year earlier. Analysts on average expected a loss of 18 cents a share.

While BBT&T and Pittsburgh-based PNC have repaid the funds they received from the Troubled Asset Relief Program, Fifth Third has yet to return the $3.4 billion it received.

At a conference in February, the bank's chief financial officer said it would likely repay the money this year.

Shares at Fifth Third dropped about 15 cents in premarket trading to $15.00 from $15.15 on Wednesday and BB&T shares dipped about 1.7 percent to $34.49. PNC shares were up about 2.3 percent at $66.80.

(Reporting by Elinor Comlay and Joe Rauch, editing by Dave Zimmerman)