Even at profitable U.S. banks, troubled loans tied to cash-strapped consumers and struggling businesses are still rising quickly.

Wednesday's earnings reports from four large banks, including Wells Fargo & Co. (WFC), U.S. Bancorp (USB), SunTrust Banks Inc. (STI) and KeyCorp (KEY), largely tamed investors' growing hopes that the nation's levels of past-due loans could soon begin to fall.

Each of the companies reported a sharp increase in loan losses from the year-earlier period, even as executives at Wells Fargo and U.S. Bank took pains to show they are growing amid an otherwise grisly era for banks.

The results show that banks still have a long way to go to work through the fallout from the financial crisis. But to some banking executives, a picture of how the banking industry will change has already started to emerge. One element: banks will be more like traditional banks - focusing on lending - rather than providing the raw material that capital markets turned into destructive credit derivatives.

"The industry as a whole has become more disciplined in credit underwriting," said Andrew Cecere, U.S. Bancorp's chief financial officer. "I don't expect that to change" when times are better. Meanwhile, banks "generally are going to be more relevant in the lending market. The shadow lending market," or loans financed through securitization, "has diminished."

U.S. Bancorp, which earned $471 million in the second quarter, also disclosed Wednesday that it has launched a $10 million nationwide advertising campaign to court new customers, likely from other banks. The Minneapolis compay can boast it recently repaid the $6.6 billion in public support it accepted from the U.S. Treasury last year.

Nevertheless, analysts on the bank's conference call challenged U.S. Bancorp's assertion that its financial problems are decelerating. Calyon analyst Michael Mayo reminded management that the bank made similar comments in the fall of 2001, only to report worsening loan problems six weeks later. But U.S. Bancorp CEO Richard Davis remained adamant that "This company has changed. I think it is a good time for you to have trust in our ability to predict." Shares of U.S. Bancorp were up 4.3% in Wednesday afternoon trading.

Wells Fargo, which posted a $3.2 billion profit for the quarter, nonetheless had a harder time convincing investors that it faces a rosy future. Its shares were down 3.6% Wednesday afternoon.

The San Francisco firm grew coast-to-coast last year when it purchased teetering rival Wachovia Corp.

While that acquisition has driven Wells Fargo to record revenues, there are increasing signs that Wachovia's risky loan books could become Wells Fargo's Achilles' heel.

The bank's nonperforming loans, or those becoming uncollectable, rose 45% over the previous quarter. Souring loans from Wachovia's portfolios more than doubled during the quarter to $5.6 billion.

"Our credit losses increased during the quarter, as expected," said Howard Atkins, Wells Fargo's chief financial officer. "But the rate of increase slowed in many of our consumer portfolios."

Wells Fargo also has yet to announce a specific time frame for repaying the $25 billion in assistance it accepted from the U.S. Treasury.

Smaller regional banks, such as SunTrust and Keycorp, could yet face larger troubles in coming quarters.

Both grew agressively in now-sinking markets for commercial real estate. Loans tied to that sector - for projects ranging from strip malls to housing developments - are showing signs of stress just now, even though delinquencies among consumer loans, from mortgages to credit cards, started rising many quarters ago.

Keycorp, which lost $236 million, said that nearly $1.2 billion of its commercial real estate loans are now considered nonperforming - a three-fold increase over a year ago. It set aside $850 million during the quarter for current and future loan losses.

The Cleveland bank, which accepted $2.5 billion in public support from the Treasury, emphasized that it raised $1.8 billion in common equity during the quarter and continues to rein in expenses.

SunTrust, like Keycorp, faces similar problems from commercial loans.

The Atlanta-based company lost $183.5 million, compared with year-earlier income of $504 million. Nonperforming commercial real estate loans, including those for construction projects, have more than doubled in the past year to $1.9 billion. Problems among loans to businesses have increased six-fold over the same period to $716 million.

SunTrust's Chairman and Chief Executive James M. Wells III said the regional bank expects credit losses and non-performing loans to increase in the third quarter.

In addressing the growth in past-due loans, Wells cited "an increase in residential mortgage and real estate construction loans, as well as larger commercial borrowers in economically sensitive industries."

-By Marshall Eckblad and Matthias Rieker, Dow Jones Newswires; 212-416-2156; marshall.eckblad@dowjones.com

(Kerry Grace Benn and Brett Philbin contributed to this report.)