June 18 (Bloomberg) -- Regions Financial Corp., Fifth Third Bancorp and SunTrust Banks Inc. led bank stocks lower for a second day on concern that the U.S. housing slump may trigger a new round of quarterly losses and capital raising.

Six of the banks tracked by the 24-company KBW Bank Index posted declines of more than 7 percent, with Fifth Third tumbling 27 percent in New York trading after announcing plans to cut the dividend and raise $2 billion in capital.

Fifth Third's plan may signal a new wave of capital raising by financial companies as they tally second-quarter damage from the housing slump. U.S. banks could need another $65 billion as losses and writedowns extend into the first quarter of 2009, Goldman Sachs Group Inc. analysts said in a note yesterday. Fifth Third's profit has fallen for nine quarters, including a 19 percent drop in the first three months of this year.

``It might be capitulation Wednesday,'' FIG Partners LLC analyst Christopher Marinac said. ``Investors are viewing banks as toxic at the moment ahead of earnings.''

Second-quarter profit at Fifth Third, Ohio's second-largest lender, may be as little as 1 cent to 5 cents a share in the second quarter excluding additional charges, the Cincinnati- based bank said in a regulatory filing today. Analysts surveyed by Bloomberg had predicted an average of more than 40 cents. The lender will sell subsidiaries and preferred convertible stock, the company said.

Fifth Third fell $3.47 to $9.26 in 4 p.m. in New York Stock Exchange composite trading, and earlier sold for as little as $9.23, leaving the stock down 78 percent in a year. Regions, Alabama's largest bank, fell 10 percent to $11.40 and Atlanta- based SunTrust fell 9 percent to $36.95. Huntington Bancshares Inc., based in Columbus, Ohio, fell 9.5 percent to $5.52.

`Noisy Quarter'

``There is a universal belief that everybody has to raise capital,'' Marinac said.

SunTrust is expected to report ``another noisy quarter'' as it builds reserves against more uncollectible debt, Morgan Keegan analyst Bob Patten said in a note to investors today. The deteriorating credit environment makes for ``increasing uncertainty toward dividend sustainability or possible dilutive capital raise,'' Patten said.

SunTrust spokesman Barry Koling said the bank declined to comment on the slide in shares and analyst reports.

Loans that Fifth Third doesn't expect to be paid back would be $340 million to $350 million, the lender said in the filing. Nonperforming assets in the second quarter will be 40 percent to 45 percent higher than the first quarter, Fifth Third said.

Fifth Third joins the list of banks and securities that have raised more than $300 billion to shore up their balance sheets after losses tied to mortgage and debt markets.

Spreading Problems

Investors are worried that the credit environment ``deteriorates to other types of loan portfolios outside of residential real estate and the homebuilders,'' BMO Capital Markets analyst Peter Winter said.

Credit problems have moved from Wall Street into the regional banks, and the concern is that banks may have to offer larger discounts after a first-round of capital raises left investors ``under water,'' Winter said.

``You can't get a comfort level where the bottom is.''

Fifth Third is the last of Ohio's three largest banks to raise capital, following National City Corp. and KeyCorp.

National City, Ohio's biggest, raised $7 billion after its strategy of buying banks in Florida at the peak of the real estate boom backfired. Chief Executive Officer Peter Raskind said at a May 21 conference that the fresh capital was a ``real game-changer'' and said it would help the bank repair damage from its home equity, construction and subprime mortgage holdings.

To contact the reporter on this story: Linda Shen in New York at lshen21@bloomberg.net

Last Updated: June 18, 2008 16:41 EDT