More bank closures over the weekend put pressure on regional bank stocks while financial stocks saw early gains fizzle.
The Office of the Comptroller of the Currency announced Friday night the
of First National Bank of Nevada and its affiliate institution, First Heritage Bank, NA, of Newport Beach, Calif. Both banks were held by First National Bank, of Scottsdale, Ariz. The Federal Deposit Insurance Corporation was appointed receiver, and under a purchase and assumption agreement, Mutual of Omaha Bank acquired all of the deposits and some assets of the closed banks.
The news sent down the value of many regional banks like
. Huntington tumbled 36 cents, or 5%, to $6.64. Fifth Third bank gave back 2% to trade at $13.45.
The NYSE financial sector index declined 1.3% to 6,293.28.
Investment bankers were also falling as a group. Private equity firm
Kohlberg Kravis Roberts
, which gained fame by taking RJ Reynolds private two decades ago,
. By doing so, it will have cheaper access to funds as the cratering credit markets have put a damper on its efforts. This move puts pressure on other firms that gain from making money on takeovers.
tumbled 7.6% to $25.43.
Merrill then took a jab at
, sending that stock down for the day. A Merrill analyst suggested that Lehman may write down an additional $2.5 billion in the third quarter and record a loss for the period. Lehman has struggled through the second quarter as negative headlines and management changes pushed the value of the stock down to record levels. The analyst cut his price target to $25 and Lehman was down 3.9% to $16.37.
started the day on a strong note as it was reported that that it will repay $2.1 billion it borrowed under a revolving credit facility three months before its due date. The financial services firm has faced liquidity concerns from the market and has sold off assets to strengthen its balance sheet. The good news didn't completely comfort investors as the stock began to enter negative territory during the afternoon. Shares fell 3% to $7.89.
But the day wasn't a washout for all financial stocks. Mortgage lenders
started out the week trading upward in on the weekend passage by Congress of the
. Fannie traded up 2% in the early hours, and Freddie ticked up 3.5%. Freddie was benefiting from the strong demand for its $2 billion bill sale that began on Monday.