Shares of regional banks tumbled Thursday afternoon along with the broader market after a new report showed steeper-than-expected declines in sales of existing homes.
The home sales report provides further evidence of continued weakness in the housing and mortgage market, a problem regional banks have been grappling with for about a year. A handful of regional banks reported second-quarter results throughout the week and the general theme was that rising delinquencies _ especially among loans tied to residential real estate _ are among the biggest problems facing banks, forcing them to sharply increase loss reserves.
In afternoon trading, the Dow Jones Industrial average tumbled more than 200 points to 11,426.14, and the S&P 500 was down 1.6 percent. The worse-than-expected housing report diminished investors' optimisim about some upbeat earnings reports.
Shares of Regions Financial fell $1.44, or 12.2 percent, to $10.36 in afternoon trading.
Earlier in the week, the Birmingham, Ala.-based bank said its second-quarter profit fell 55 percent as it set aside more than $300 million to cover bad loans.
SunTrust Banks Inc. shares declined $2.51, or 5.8 percent, to $40.70.
Atlanta-based SunTrust's earnings fell 21 percent, despite a boost from the sale of 10 million shares of Coca-Cola Co. SunTrust earned $535.3 million, or $1.53 per share during the second quarter. Excluding all the special gains and some charges tied to asset impairments, SunTrust's second-quarter earnings would have been 78 cents per share.
Shares of both Fifth Third Bancorp Inc. and KeyCorp also fell Thursday afternoon. The pair both reported losses during the second quarter.
Fifth Third shares fell 68 cents, or 4.6 percent, to $13.97. Shares of Key fell 68 cents, or 5.6 percent, to $11.43.
One regional bank that has been faring better than the others Thursday was National City Corp., despite it announcing a second-quarter loss of $1.76 billion earlier in the day.
Cleveland-based National City shares fell only 2 cents to $4.69 in afternoon trading.
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