Banking stocks were jarred Thursday amid signs that credit problems had bled into commercial lending.
The 2009 shared national credit review released Thursday found that credit losses hit $53 billion, or more than the combined losses identified in the previous eight reviews. The previous record, set seven years ago, was a third of the 2009 total.
The KBW Bank Index slid 2.1%. The Dow Jones industrial average lost 0.4% and the Standard & Poor's 500 index fell 1%.
Matthew Shields, a bank stock trader at Fig Partners LLC, said that the data is likely to cast a shadow on the stocks of regional and large banks until third-quarter earnings start in a few weeks. "We are in a new age of credit quality," he said of the transition from consumer issues. "The review will definitely be a point to talk about until earnings come out."
Citigroup Inc. shares fell 2% after reports said the company may retrench its U.S. retail banking operations to six major cities. This comes a year after the company failed to complete an acquisition of Wachovia Corp.'s bank in a move that would have helped Citi keep pace with its major competitors.
WSFS Financial Corp. shares lost 4.6% after the company said it would sell a sizeable stake in itself to Peninsula Investment Partners for $25 million, boosting the investor's stake in the company to 20.9%. The company also said that R. Ted Weschler, managing partner at Peninsula and a former WSFS director, would rejoin the board.
Gainers included State Street Corp., which rose 1.2%; Fulton Financial Corp., 1.4%; and First United Corp., 1.4%.
Decliners included Bank of America Corp., which fell 3%; JPMorgan Chase & Co., 1.5%; and National Penn Bancshares Inc., 4.3%.
