Commercial loan losses are mounting on balance sheets around the nation, but analysts said banks should not expect any dedicated government help on that front.

Corporate borrowers are likely last in line behind homeowners and consumers when it comes to prioritizing federal aid, analysts said, though they said banks burdened by bad corporate loans should be able to get some indirect assistance from government initiatives already under way, like the Troubled Asset Relief Program and Term Asset-Backed Securities Loan Facility.

If those programs work as intended by reviving other credit markets and bolstering consumer confidence, corporate loan quality should also improve, analysts said.

"When you think about it from a political perspective, the constituency that Congress is most sensitive to is, obviously, the consumer — the voting consumer — and small business," said Anthony Davis, a managing director with Stifel, Nicolaus & Co. "Beyond that, midmarket and larger corporate borrowers really don't get the ear of Congress."

Andrew Marquardt, a senior analyst with Fox-Pitt Kelton Cochran Caronia Waller LLC, agreed.

"The government's actions are largely focused on the consumer — freeing up credit," Mr. Marquardt said.

Many banks that have substantial commercial loan portfolios, and at least one pure-play commercial lender, have already qualified for Tarp capital and presumably could deploy that capital to shore up commercial lines if necessary. (CIT Group late last year became a bank holding company and was approved for Tarp funds.)

But that may be cold comfort to some banking companies that are already battling deterioration in multiple loan categories and now face an increase in delinquent corporate borrowers.

David Rochester, an analyst at Friedman, Billings, Ramsey & Co., said commercial and industrial lending could be the industry's next big headache.

Chargeoffs at 250 U.S. banks and thrifts that reported commercial loan data accounted for 0.85% of their commercial loans in the fourth quarter, Mr. Rochester wrote in a report published last week.

That was up from the third quarter when chargeoffs were 0.55% of total loans, according to FBR, which surveyed banks with assets of more than $1 billion.

Mr. Rochester said chargeoffs will continue to accelerate through 2009, since there tends to be a six-month lag between higher unemployment and increases in loan losses in the C&I sector.

"Some banks that I cover are talking about trying to build their reserves, because they know that things are getting worse and they want to be as ready as they can be," Mr. Rochester said in an interview. "The challenge is there is a lack of visibility as to how bad it can get."

Mr. Rochester said banks with exposure to states like Nevada and California, where unemployment is soaring, are particularly vulnerable. This group includes U.S. Bancorp, Comerica Inc., and City National Corp., he said

All three posted sizable increases in chargeoffs in their commercial loan portfolios in the fourth quarter.

Bill Parker, U.S. Bancorp's chief credit officer, said in an earnings conference last month that the Minneapolis company was forced to charge off loans to a gas pipeline storage company and a gambling company during the period, though he did not disclose the size of the chargeoffs. "Both are industries that we have active roles in financing," he said.

Though U.S. Bancorp's commercial loan chargeoffs were just $108 million in the fourth quarter, they were up 90% from the third quarter and 369% from a year earlier

Comerica's fourth-quarter commercial loan chargeoffs were relatively small as well, at $66 million, but rose 38% from the third quarter and 100% from a year earlier. Dale Greene, the chief credit officer, said in a conference call last month that the Dallas company was bracing for more chargeoffs.

"Clearly … you're going to see some upticks in middle-market and small-business" loan chargeoffs, Mr. Greene said. "They may be a bit higher than they've been in prior cycles, simply because of the magnitude of what's going on."

City National reported just $12.2 million of chargeoffs last quarter, but that was up from $900,000 a year earlier.

The Los Angeles company's C&I portfolio has an average loan size of $800,000 and its two largest customer segments are services and entertainment businesses.

Russell Goldsmith, City National's president and chief executive, said during a conference last month that the portfolio "looks very good" despite the deterioration.

"I think we're starting to see a few cracks" in the portfolio, but "nothing too serious," Mr. Goldsmith.

"But certainly, for 2009, we're anticipating, given the state of the economy, that there will be more serious problems, but we think they're manageable."

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