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(Updated with final share price movements throughout.)



) -- Financial stocks finished mixed Friday, with

Bank of America

(BAC) - Get Bank of America Corp Report

among the laggards, and both


(C) - Get Citigroup Inc. Report


American International Group

(AIG) - Get American International Group, Inc. Report

among the winners.

Bank of America

shares relinquished early gains and finished down 28 cents, or 1.7%, at $16.42. Earlier,

The Wall Street Journal

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reported that Keith Banks, head of BofA's private-banking unit U.S. Trust and asset manager Columbia Management, told employees earlier this week he will stay in his current job for an undetermined transitional period, casting doubt on his future.


pared gains late in the day but still rose 5 cents, or 1.3%, to close at $3.85. The bank rose on reports the Obama administration awarded the bank a $7.7 million contract to help administer the "cash for clunkers" program. Word of the contract comes as the Senate approved late Thursday a $2 billion extension of the program.

Meanwhile, Citigroup is reportedly considering transforming its Phibro commodity unit into a limited partnership headed by Andrew Hall. On Monday,

The New York Times

reported that Hall has discussed with Citigroup leadership a number of possibilities for Phibro, including a spinoff. Hall is due a nine-figure payday in a couple of weeks, compensation that has been criticized by the White House as Citigroup received about $45 billion in taxpayer aid.

AIG surged $4.61, or 20.5%, to finish at $27.14 after the troubled insurer posted better-than-expected earnings results. AIG swung to second-quarter earnings of $2.30 a share, easily topping the Thomson Reuters average estimate of $1.67 a share. It was the first quarterly profit the insurer has reported since the third quarter of 2007. The stock is riding a three-day winning streak, nearly doubling in price.

Other insurance stocks followed AIG shares higher.

Hartford Financial

(HIG) - Get Hartford Financial Services Group, Inc. Report

rose 7.5% to $19.14 and


(MET) - Get MetLife, Inc. Report

gained 3.7% to $36.88.

Among other winning bank stocks,

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

rose 4%,

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

added 2.8%, and

Morgan Stanley

(MS) - Get Morgan Stanley Report

gained 2.2%. On the flipside,

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. Report

slid 1.9% lower.

Among analyst changes, Goldman Sachs raised its stock price target for

American Express

(AXP) - Get American Express Company Report

shares to $33 from $28, and the firm raised earnings estimates for full-year 2009 to $1 a share from 70 cents. Goldman said credit is improving faster than expected. AmEx shares rose $1.38, or 4.4%, to close at $32.69.

On the losing side,

Ambac Financial


dropped 24.6% after the company reported a whopping second-quarter loss of $8.33 a share, ballooning from a loss of $2.80 a share in the year-ago quarter. The recent quarter's loss may not be comparable with the Thomson Reuters average estimate for a loss of $1.04 a share. Still, shares fell 34 cents to $1.04.


Fannie Mae


shares tumbled 16.5% after the company said it plans to tap $10.7 billion in new government aid.

Word of the request came as Fannie reported a second-quarter loss of $2.67 a share, worse than the consensus estimate for a loss of $2.24 a share. Shares were down 13 cents to 66 cents.

Freddie Mac


shares were down 10 cents, or 11.9%, to 74 cents.

Royal Bank of Scotland

(RBS) - Get Royal Bank of Scotland Group Plc Report

shares were also on the decline after the U.K. bank posted a wider first-half net loss. The bank said writedowns on bad debts increased to 7.5 billion pounds.

RBS CEO Stephen Hester said that first-half results were "poor," but added that analyzed alongside the bank's new strategy "they highlight well our core business potential, the hard work of our people in difficult times and the vulnerabilities and economic headwinds we grapple with." RBS shares lost $2.27, or 12.4%, to close at $16.02.

-- Written by Robert Holmes in New York