Banks lost ground Friday for a third straight day, gripped by foreboding about Asia and 1998 earnings.
"People are a bit antsy," said Moshe A. Orenbuch of Sanford C. Bernstein & Co., New York. "You had a couple of earnings disappointments in the fourth quarter and few positive surprises."
Among the decliners were Pacific Century Financial, Honolulu, which fell 68.75 cents, to $21.4375, apparently becoming the first bank to see its core domestic business hit by Asian woes. Until now, Asian grief was confined to the overseas trading and lending units at money-centers.
But Pacific Century-tourist-dependent Hawaii's largest bank-will earn less core revenue this year because fewer Asians, especially Japanese, will visit the islands, said David H. Winton at Keefe, Bruyette & Woods Inc. The result: less branch and domestic lending as Hawaii's economy slows, Mr. Winton said in downgrading shares to "market perform" from "attractive."
The slowdown could extend eastward, to areas like California that also benefit from Asian commerce and tourism, Mr. Winton said. "It depends on how long the overseas crisis lasts."
One West Coast banking company, BankAmerica Corp., fell $1.625, to $64.1875, despite positive words from analysts after a meeting with management. Analysts credited senior executives for candor about Asia and how the vulnerability is being monitored and reserved against.
But right now, investors are unloading-bank shares on Friday fell more steeply than broader indexes. Citicorp was down $1.8125, to $113.125; J.P. Morgan & Co. $3.5625, to $99.625; and KeyCorp $1.25, to $63.625.
The Standard & Poor's bank index fell 1.47% and the Dow Jones industrial average 0.39%. The Nasdaq bank index was off 0.90%, and the S&P 500 fell 0.57%.
First Commercial Corp., Arkansas' biggest bank, was among the few gainers, rising $2.4375, to $59, on reports that it has held merger discussions with one or more banks. The company declined to comment.
The broad selloff of bank shares began late last year and has continued with few interruptions. But it is simply not sustainable, market watchers said.
"Banks' better relative earnings will win out," said Mr. Orenbuch of Sanford Bernstein.
He and other analysts insist that even if banks' overall earning growth slows this year, it will still surpass most other industry groups.
"I'm surprised bank shares have been so hurt, given managements' reiterations that they're comfortable with analysts' 1998 earnings projections," said analyst Fred A. Cummings of McDonald & Co., Cleveland.
On Friday, Mr. Cummings reemphasized a "buy" recommendation for Norwest Corp., but the shares still slipped 62.5 cents, to $35.50.
Norwest shares are well suited for today's trading environment, Mr. Cummings insisted. "Our focus is on the companies with the best earnings visibility given current concerns about earnings growth industrywide."