Bank stocks rebounded Wednesday after investors had fled the sector a day earlier.

The KBW Bank Index rose 14.56%, after sinking 19.7% Tuesday due in large part to negative earnings reports by Regions Financial Corp. in Birmingham, Ala., and State Street Corp. in Boston, as well as news that the British government had bailed out its banks again.

"I think there was an overreaction earlier as investors extrapolated from other names that have reported, and today, some are hunting for bargains," said Jacqueline Reeves, the managing director of Bell Rock Capital LLC.

The broader markets also rebounded. The Dow Jones industrial average was up 3.51%, and the Standard & Poor's 500 index, 4.35%.

Northern Trust Corp. rose 30.9%. The Chicago custodial banking company reported Wednesday that its fourth-quarter net income nearly tripled from a year earlier, to $342.3 million, or $1.47 a share, on strong revenue growth.

Another custodial company, Bank of New York Mellon Corp., rose 22.6% despite reporting an 88% drop in its fourth-quarter earnings from a year earlier, to $28 million. It took $1.2 billion of writedowns in its investment securities portfolio.

U.S. Bancorp fell for much of the day but rebounded in late afternoon to close up 4.9%. The Minneapolis company said Wednesday that its fourth-quarter net income fell 65% from a year earlier, to $330 million, or 15 cents a share, because of a $253 million securities writedown and a fivefold increase in its loan-loss reserve, to $1.27 billion. Analysts on average had estimated the company would earn 22 cents a share.

PNC Financial Services Group Inc. said Wednesday that it expects to post a fourth-quarter loss when it reports results Feb. 3, but the Pittsburgh company's shares rose 37.1% after it also noted that it expects credit losses from the recently acquired National City Corp. to be less than the $1.8 billion it initially forecast.

PNC also said that, excluding Nat City integration costs, it would report a fourth-quarter profit.

On Wednesday, Bank of America Corp.'s shares rebounded in a market recovery to close up 31%, at $6.68.

The Charlotte banking company's chief executive spent about $1.2 million to buy company stock Tuesday, according to a regulatory filing. Kenneth D. Lewis, who is also the company's chairman and president, bought 200,000 shares priced at $5.98 to $6.06 a share, B of A disclosed in a filing Wednesday.

Amidst a broad decline in bank shares a day earlier, the company's shares had closed down 29%, at $5.10, their lowest price in more than a decade. The stock's free fall came after the Charlotte company last week reported a $2.39 billion fourth-quarter loss and revealed that it would sell another $20 billion of preferred stock to the Treasury Department. B of A also disclosed that it had entered a loss-sharing agreement with the government after Merrill Lynch & Co. Inc., the New York investment company it bought Jan. 1, reported a staggering fourth-quarter loss of $15.31 billion.

Five other directors disclosed stock purchases, including lead director O. Temple Sloan Jr., who paid more than $244,000 for 41,800 shares.

Hudson City Bancorp Inc. rose 6.7%. The Paramus, N.J., company said that its fourth-quarter net income rose 60% from a year earlier, to $124.3 million. Earnings per share were 25 cents, 2 cents short of the average estimate by analysts in a Thomson Reuters survey.

The $54.2 billion-asset company also said it would raise its dividend by a penny, to 14 cents.

Other gainers Wednesday included State Street, up 14.6%; Regions, 7.6%; Citigroup Inc., 31.2%; and JPMorgan Chase & Co., 25.1%.

More gainers: Colonial Bancgroup Inc., 31%; KeyCorp, 14.8%; Marshall & Ilsley Corp., 7.3%; and Comerica Inc., 7.4%.

Decliners included Fifth Third Bancorp, 5.5%; BankUnited Financial Corp., 12.2%; and 1st Centennial Bancorp, down 80%, to 13 cents.

The latter's banking unit, the $939 million-asset 1st Centennial Bank in Redlands, Calif., said late Tuesday that it is "critically undercapitalized" and warned that "unless a substantial capital infusion or sale can be accomplished in the very near future, it will not be able to continue as a going concern."

It went on to say: "No investment or sale proposal is presently under consideration that would likely lead to the successful recapitalization of the bank."

Calls to the bank were not returned Wednesday.

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