The KBW Bank Index fell 2.27% Wednesday as investors continued to take profits from recent rallies.
In a Dow Jones report, Credit Suisse analyst Craig Siegenthaler said that credit quality would remain weak for regional banking companies in particular and that their fundamentals probably would not improve for several quarters.
"We think what's going to happen is, the pullback is going to continue into third-quarter results," Siegenthaler wrote. "The question is whether investors step in and buy again. We don't think so because the fourth quarter is going to be worse than the third in terms of negative earnings and losses."
However Morgan Keegan analyst Robert Patten said in the same report that, though more profit-taking is in store, "we will see some buying come back in because a lot of people missed the move."
Decliners went across the board.
JPMorgan Chase & Co. fell 1.9%; Bank of America Corp., 1.1%; Wells Fargo & Co., 0.5%; PNC Financial Services Group Inc., 2.4%, and U.S. Bancorp, 2.7%.
However, Citigroup Inc. rose 2 cents a share, to $4.56.
Among the regional banking companies, SunTrust Banks Inc. fell 7.2%; KeyCorp, 5.4%; Marshall & Ilsley Corp, 3.7%; Regions Financial Corp., 6.3%; First Horizon National Corp, 2.3%; Fifth Third Bancorp, 3.3%, and M&T Bank Corp., 2.9%.
The Dow Jones industrial average was off 0.32%, and the Standard & Poor's 500 index 0.33%.