After a battering from dismal fourth-quarter reports this week, bank stocks gained Friday as investors sought bargains.
The KBW Bank Index rose 2.34% for the day but fell 11.44% for the week.
"This past week or more, financials have been at the bottom of the auger, but we're seeing some rebound here, given the greatly oversold condition," said Gary Townsend, the chief executive of Hill-Townsend Capital LLC.
Bank stocks fell in early trading as investors digested earnings reports released late Thursday. But the sector rebounded in afternoon trading. Investors who are "still interested" in bank stocks are trying to "buy them on the cheap," Mr. Townsend said.
The markets have built in most of the effects of the earnings season, he said, since the bulk of the large banking companies have reported.
The Dow Jones industrial average fell 0.56% Friday. The Standard & Poor's 500 rose 0.54%.
BancorpSouth Inc. rose 19.6%. The Tupelo, Miss., company announced Friday that fourth-quarter earnings fell 47% from a year earlier, to $16.8 million, or 20 cents a share. The results missed the average estimate of analysts polled by Thomson Reuters by 11 cents.
People's United Financial Inc. rose 5.3% a day after the Bridgeport, Conn., company said its fourth-quarter net income fell 23%, to $35.4 million, or 11 cents a share, missing the average estimate by 2 cents.
City National Corp. rose 0.7%. The $16.5 billion-asset in Los Angeles company said late Thursday that net income fell 86%, to $6.5 million, or 13 cents a share. Analysts on average had expected earnings of 62 cents.
The company cut its dividend by nearly half, to 25 cents a share.
Other gainers Friday included Citigroup Inc., which rose 11.6%; U.S. Bancorp, which rose 5.5%; KeyCorp, which rose 8.2%; SunTrust Banks Inc., which rose 10.5%; Regions Financial Corp. which rose 9.7%; and Fifth Third Bancorp, which rose 2.1%.
Capital One Financial Corp. fell 11.9% a day after reporting a fourth-quarter loss of $1.4 billion, or $3.74 a share.
Webster Financial Corp. fell 19.7%. The $17.6 billion-asset Waterbury, Conn., cut its dividend by 29 cents, to a penny a share, after reporting a preliminary fourth-quarter loss of $300 million, or $5.91 a share.
The results included a $188.9 million goodwill impairment charge related to Webster's "commercial banking, consumer finance, and other business segments." It said that it still needs to determine whether there would be an additional charge related to its retail banking, and that it will release its final fourth-quarter results in the "near future."
Webster also recorded a $129.6 million charge on certain investment securities, a $118 million charge from the devaluation of trust-preferred investments, and an $11.6 million charge against equity securities. The provision for credit losses more than doubled from the third quarter and a year earlier, to $100 million.
In addition, Webster announced plans to cut 200 jobs; it has already cut 247. In the fourth quarter it recorded $5.9 million of severance charges.
Analysts on average had expected Webster to earn 22 cents a share, according to Thomson Reuters.
UCBH Holdings Inc. fell 32.7%. The $13.5 billion-asset San Francisco company said late Thursday that it lost $53.7 million, or 51 cents a share. Analysts on average had expected it to post a loss of 7 cents a share.
Its loan-loss provision rose eightfold from a year earlier and nearly tripled from the third quarter, to $112.1 million. UCBH also recorded a $10.7 million writedown related to three pooled bank trust-preferred securities.
Losses were partially offset by a $50.1 million tax benefit.
In the fourth quarter of 2007, UCBH earned $16.2 million, or 16 cents a share.