April 25 (Reuters) - Valley National Bancorp ( VLY ) and

Eagle Bancorp ( EGBN ) were the latest regional banks to outline

a hit to their earnings from exposure to commercial real estate

(CRE) loans, underscoring the uncertainty that has clouded the

industry.

High interest rates and borrowing costs have heightened

worries of debt defaults in the CRE market, which is already in

doldrums due to empty office buildings in the post-pandemic era,

prompting banks to build rainy day funds for potential defaults.

Investor focus this year is on the CRE exposure in regional

lenders' loan books after New York Community Bancorp ( NYCB )

reported a surprise quarterly loss in January due to writedowns

on loans tied to the sector.

Eagle's stock hit its lowest in six months and was last

trading down 12% on Thursday, a day after it reported a near

six-fold jump in provisions for credit losses that led to a

surprise loss for the first quarter.

The bigger provisions were due to weakness in just one

office property, however, and it was not indicative of other

loans in its office and CRE portfolio, Eagle said.

Analysts at KBW said while the results had "credit noise"

due to office exposure, it is encouraged by the bank's high

level of capital.

The bank's common equity tier 1 capital ratio - a regular

metric used to measure the capital strength of a bank - was

9.34% versus 9.02% a year earlier.

It reported a loss of 1 cent per share for the first

quarter, compared with a profit of 78 cents per share a year

earlier.

Valley National's provisions for credit losses also surged

to $45.3 million from $9.5 million a year earlier. Besides CRE,

the bank's commercial and industrial as well as construction

loan portfolios drove the increase in provisions.

"We see this as a mixed quarter for the company," J.P.

Morgan analyst Steven Alexopoulos wrote in a note.

"With all eyes on credit quality given the company's

concentration in CRE loans, while credit quality remained

stable, the increase in reserves implies higher loss content in

the portfolio is now being assumed."

Scrutiny of regional banks has increased after the failures

of Silicon Valley Bank, Signature Bank and First Republic Bank

last year reverberated across the global financial system.

Valley's shares were last down 1% after falling as much as

7.6% earlier in the session. Its net income was 18 cents per

share in the three months ended March 31, versus 28 cents a year

earlier.