Bank stocks fell Thursday, brought down by the number of companies reporting worse-than-expected fourth-quarter results.
The KBW Bank Index fell 5.92%. Frank Barkocy, the director of research at Mendon Capital Advisors Corp., said the sector was dragged down by negative earnings reports from Fifth Third Bancorp, KeyCorp, Huntington Bancshares Inc., SunTrust Banks Inc., and other companies, as well as by a 14.5% decline in Bank of America Corp. shares after reports that former Merrill Lynch CEO John Thain had agreed to resign from the Charlotte, N.C., company.
"Plus, there was probably some profit-taking from yesterday, when the KBW Bank Index rose 14.56%," Mr. Barkocy said.
The broader markets also fell. The Dow Jones industrial average was off 1.28%, and the Standard & Poor's 500 index, 1.52%.
Fifth Third fell 28.6%. The Cincinnati company said Thursday that it lost $2.2 billion in the fourth quarter, or $3.82 a share, due in large part to a $965 million goodwill impairment charge, impairment charges on securities and bank-owned-life-insurance valuations, $800 million of losses on the sale of loans, and a sevenfold rise in the loan-loss provision from a year earlier, to $2.8 billion.
Analysts on average had expected Fifth Third to earn a penny a share, according to Thomson Reuters. In the fourth quarter of 2007, it earned $16 million, or 3 cents a share.
KeyCorp rose 5.2%. The Cleveland company swung to a net loss of $554 million, or $1.13 a share, compared with a year-earlier profit of $25 million, or 6 cents a share. The results were hurt by an 85-cents-a-share goodwill writedown. Analysts on average had forecast a 2-cents-a-share loss.
Huntington fell 30.6%. The Columbus, Ohio, company reported a fourth-quarter loss of $417.3 million, or $1.20 a share, due to higher credit costs incurred by Franklin Credit Management Corp., a Jersey City subprime mortgage lender, which was acquired with Sky Financial Group of Bowling Green, Ohio, in 2007.
Excluding special items, analysts on average had forecast a profit of 20 cents a share. The year earlier, Huntington lost $239.3 million, or 65 cents a share.
The company also cut its dividend to a penny, from 13 cents a share.
SunTrust Banks Inc. fell 10.9%. The Atlanta company reported a fourth-quarter loss of $347.6 million, or $1.08 a share, compared with year-earlier net income of $11.1 million, or 1 cent a share.
Revenue, excluding investment gains and losses, rose 8.8%, to $1.93 billion. On average, analysts contacted by Thomson Reuters estimated earnings of 7 cents a share and revenue of $2.16 billion.
SunTrust cut its dividend to 10 cents a share, from 54 cents.
Comerica Inc. rose 9.3%. The Dallas company said that fourth-quarter net income fell 97% from a year earlier, to $3 million, or 2 cents a share, missing the average estimate by 22 cents. Its provision rose 16% from the third quarter and 78% from a year earlier, to $192 million. Comerica cut its work force last year by 5%, or about 600 jobs, and said it plans to cut another 5% this year, about 570 jobs, mostly by the end of the first quarter.
M&T Bank Corp. fell 4.4%. The Buffalo company's net income rose 57% from a year earlier, to $102 million, or $92 cents a share, but missed analysts' average estimate by 18 cents. M&T's earnings were reduced by 24 cents a share for an impairment charge of $24 million on writedowns of certain investment securities and a $19 million change in valuation for residential mortgage service rights. Its provision was up 50% from a year earlier, to $151 million.
Valley National Bancorp fell 13.6%. The Wayne, N.J., company said Thursday that fourth-quarter net income was off 39% from a year earlier, at $16.9 million, or 11 cents a share, missing analysts' average estimate by 17 cents. Earnings were affected by a $10.8 million impairment charge on investment securities.
BB&T Corp. fell 0.25%. The Winston-Salem, N.C., company reported a 26% drop in fourth-quarter net income from a year earlier, to $305 million, or 51 cents a share. Analysts on average had expected the company to earn 47 cents a share.
Citigroup Inc. fell 15.3%. It said Thursday that Sir Win Bischoff will not stand for re-election as chairman of its board. Instead, Richard D. Parsons, the lead director and chairman of the board's nomination and governance committee, is to become chairman of the board on Feb. 23.
Other decliners Thursday included Zions Bancorp., off 7.9%; City National Corp, 7.3%; and Bank of New York Mellon Corp., 4%.
Gainers included JPMorgan Chase & Co., up 2.1%, and State Street Corp., 22.9%.