NEW YORK (
) -- Big banks and regional players saw their share prices move in opposite directions Tuesday as disappointing earnings from
appeared to scare investors in large-cap financials, but continued M&A activity brightened the outlook for many regional bank stocks.
Citigroup announced it earned four cents per share in the
versus analyst estimates of eight cents. The big reason for the miss was an accounting oddity known as a debt valuation adjustment (DVA). As a result of the rule, some banks take a negative DVA adjustment when their credit quality improves. That cost Citigroup $1.1 billion in the fourth quarter, versus Sandler O'Neill's estimate of $250 million.
Regardless, Citigroup shares fell 6.43% to $4.80 Tuesday. Other large banks dropped in sympathy, with
Bank of America
falling 1.64% to $15 and
losing 0.79% to close at $32.49.
fell 0.36% to $44.75.
On the other hand, many regional bank stocks got a lift after
for $1 billion, or $10 per share--a 30% premium over Sterling's close at $7.70 on Friday. Sterling shares closed up just 16%, however, at $8.93. Comerica shares, meanwhile, fell 8.31% to $38.74, even on the back of earnings that beat analyst expectations.
Shares of regional bank s thought to be targets of M&A activity also rose on Tuesday.
shares were up 4.87% to $2.90, while
SunTrust Banks Inc.
saw its stock rise 1.14% to $29.25.
Written by Dan Freed in New York
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.