Still reeling from Friday's downdraft, bank stocks continued their decline Monday along with the rest of the market. Analysts said the sector's descent would have been much deeper if not for favorable earnings reports that started to flow in last week.

The Standard & Poor's bank index fell 1.70%, along with the Dow Jones industrial average, off 2.92% and the S&P 500, down 2.54%

"Banks are down fractionally, as opposed to any major selloff," said analyst Frank J. Barkocy of Josephthal, Lyons & Ross Inc.

"The level of earnings and the quality of earnings so far are factors that should help their relative price performance and keep the group at a better pace relative to the market as whole."

Even when banks took a sharp turn downward in midday trading, Mr. Barkocy still maintained that the tradeoff in bank stocks "seems significantly less" than the market as a whole.

Mr. Barkocy added that unlike in other industries, the earnings reports of banks have been in line with or better than expectations. Among those reporting strong earnings on Monday were NationsBank, Norwest Corp., and National City Corp. NationsBank closed at $79.50, down $1.062; Norwest, at $32.875, up 12.5 cents; and National City at $35.75, down 50 cents.

Analyst Raphael Soifer of Brown Brothers Harriman & Co., New York, also noted during the afternoon that the stock market was down 50 points, while banks were down only marginally.

"Banks are doing better than the general market because of the optimism of the current earnings," he added.

Some analysts, however, believe that the strong bank earnings were just a smoke screen for deteriorating fundamentals.

"Banks are one of the few institutions that can engineer their earnings," said Jarius Dewalt of M.R. Beal & Co., who co-authored a report last year on the subject. "You can deal with loan loss reserves, but the margin squeeze is coming and we will see much more pressure in core earnings."

Mr. Dewalt conceded that second-quarter earnings for most banks would be "reasonable, but as the market begins to dissect the earnings, it will see the 'creativity' of bankers."

Citicorp, which was soaring during the day, closed at $65.875, down 43.7 cents; BankAmerica Corp., which closed at $75.50, down 81 cents; Chase Manhattan Corp., which closed at $65.875, down $2.12, and Northern Trust Co., which closed at $58.625, up $1.125.

Citicorp shares received an additional boost earlier in the day from news that the company is making inroads in Asia by snaring its growing middle class, said Mr. Soifer.

Analyst Robert B. Albertson of Goldman, Sachs & Co. noted that the bank's stock was simply catching up after languishing in the past.

"Citibank is not the typical bank that is affected by the Fed's fund rate or the consumer credit quality," said Mr. Albertson. "It is a global story."

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