Friday's Financial Winners & Losers

Updated from 1:36 p.m. EDT

Financial stocks tripped Friday on recession talk and company-specific news, including some negative analyst calls.

The NYSE Financial Sector Index recently lost 24.89 points, or 0.3%, to 9283 as a few of its regional-bank components were hit with KBW downgrades. In particular, Central Pacific Financial (CPF Quote) and First Horizon National (FHN Quote) shed 5.5% and 3.4%, respectively, on cuts to underperform.

KBW cited Central Pacific's construction-portfolio "credit issues" which could have a "less than favorable effect" on near-term earnings, though it believes the bank will ultimately pull through the currently tough operating environment. As for First Horizon, the analyst believes the "current real estate credit climate will hamper earnings power in the near future" even as it takes "positive steps" to position the bank for long-term growth.

Another member of the NYSE financial index, Fifth Third Bancorp (FITB Quote), said its tier 1 capital will decrease by an estimated $690 million after it buys back preferred stock from certain six-year holders on Dec. 27. The Cincinnati bank said it will still be "well-capitalized" per Federal Reserve guidelines. It also issued $575 million in tier 1 capital-qualifying trust preferred securities last month, which, it says, will mitigate the effects of the transaction.

But the bank's shares fell 1% to $33.88, helping to pressure the ailing KBW Bank Index to a 0.9% loss along with Wells Fargo (WFC Quote) -- which slipped 1.1% after Friedman Billings cut its third-quarter income estimate -- and BB&T (BBT Quote).

The latter, a Winston-Salem, N.C., bank, said today that it will buy Georgia insurer Sidney O. Smith for an unspecified sum. The deal should close in November. BB&T shares were off 60 cents, or 1.5%, to $40.39.

Elsewhere, Freddie Mac (FRE Quote) retreated after reaching a $50 million settlement with the Securities and Exchange Commission. The deal resolves charges that the McLean, Va., mortgage investor misled investors by manipulating its earnings through 2002 from as early as 1998. Shares closed down 1.6% to $59.01.