MOST READ: How to Play Crumbling Financials

Financial stocks lately are taking a beating as the mortgage crisis persists, tempting many investors to attempt to call a bottom for the real estate market and for banks.

Do so at your own peril.

A brutal week for financial stocks last week continued Monday, as Goldman Sachs cut its rating for the financial services industry to underweight from neutral and said that it was "clearly wrong" in upgrading the sector in May. That came on top of Merrill Lynch's report on Friday, which lowered earnings estimates and price targets for the largest regional banks. Merrill lowered price estimates for 12 large banks and predicted dividend cuts for four.

It certainly wasn't comforting when the Federal Deposit Insurance Corp. issued new rules last Tuesday for large banks to follow in maintaining deposit account records and customer information. These rules are designed to make it easier for the agency to determine which deposits are insured in the event of a bank failure.

Eventually there will be a bottom for home prices, followed by a bottom for the banks, but it seems clear we haven't hit either yet. In the meantime, let's take a look at a few troubled bank stocks and explore a few ways to play the banking sector right now -- if they dare.

Here are total returns for the banks covered in the Merrill report, along with the S&P 500 and S&P 500 financial stock indices:

Click here for larger image.

Regional players were hit hard, with Fifth Third Bancorp(FITB Quote - Cramer on FITB - Stock Picks) suffering the most as shares dropped 23% last week. This followed the company's $1 billion preferred stock offering, which was announced on Wednesday and priced on Thursday, with a coupon of 8.5%. Fifth Third's common shares have returned a negative 74.66% over the past year, surpassed only by National City(NCC Quote - Cramer on NCC - Stock Picks), whose diluted common stock investors have lost 84.46% on their shares over the past year.

« Previous Page

1 2 3 4 5

Next Page »