Bank stocks retreated Monday as investors took gains ahead of what some fear might be weakness to be displayed by financial companies that announce quarterly results this month.

The KBW Bank Index fell 3.83%, after closing up 3.67% last week on four straight days of gains.

"We had a nice run last week, and a lot of bank stocks are pretty far off their lows, so I can imagine there was a little bit of profit-taking today," said Cassandra Toroian, the president and chief investment officer of Bell Rock Capital LLC in Rehoboth, Del. "We're also going into earnings season, so there's speculation that the news in banks' earnings isn't going to be very good."

Some banks fell Monday after Calyon Securities analyst Michael Mayo initiated coverage of them with a "sell" rating, asserting that loan losses could exceed levels seen during the Great Depression. U.S. Bancorp was off 4.6%, SunTrust Banks Inc. 8.1%, BB&T Corp. 4.4%, KeyCorp 7% and Fifth Third Bancorp 21 cents, to $3.07.

"While certain mortgage problems are farther along, other areas are likely to accelerate, reflecting a rolling recession by asset class," Mayo said. "New government actions might not help as much as expected, especially given that loans have been marked down to only 98 cents on the dollar, on average."

Mayo assigned "underperform" stock ratings to Bank of America Corp., which fell 1.6%; Comerica Inc., 4.2%; JPMorgan Chase & Co., 3.7%; PNC Financial Services Group Inc., 5.6%; Wells Fargo & Co., 6.7%, and Citigroup Inc., 13 cents, to $2.72.

B of A shares recovered slightly after Rochdale Securities analyst Richard X. Bove initiated coverage of the Charlotte company with a "buy" rating. The company "is so large that it will mirror events in the United States economy," Bove said. "If the economy revives by yearend, so will the bank. If the economy falters, the bank will continue to struggle. My belief is that the economy has turned."

Analysts Lana Chan, Peter Winter, Jonathan Katz and Virginia Nuckols at Bank of Montreal's BMO Capital Markets Corp. on Monday downgraded City National Corp. shares from "market perform" to "underperform" and New York Community Bancorp from "outperform" to "market perform." City National, a Beverly Hills banking company, fell 7.7%, and New York Community 6%.

The analysts also said the recent rally in bank stocks may not be sustainable.

"The stabilization in housing is one of the key metrics we are looking for to get more positive on the bank group; however, one month is not a trend," they wrote. "We are concerned that nonperforming assets and early delinquencies reaccelerated in" the fourth quarter, "reflecting increasing deterioration in commercial real estate and commercial and industrial loans, indicating that this downward credit cycle still has legs."

Still, Toroian said bank stocks are a good bet for investors.

"While there are expectations that there are still going to be bumps in the road, investors should have a long-term focus," Toroian said. "Generally speaking, for every dollar a bank adds to its book value, that's a multiplier to the value of the company. So regardless of what they're doing in the short term, if investors haven't gotten in when valuations are so low, that would be a mistake."

The broader markets also fell Monday. The Dow Jones industrial average fell 0.52%, and the Standard & Poor's 500 index 0.83%.

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