Bank investors have been spoiled the past few quarters with outsize profit reports, so when several lenders post just OK earnings it's a reason to sell.

In recent trading Tuesday, the Philadelphia KBW Bank Index was down 2%, outpacing the decline in the broader market. Financial stocks also were knocked down by fears of rising interest rates, which were fueled by a stronger-than-expected March retail sales report.

Shares of Commerce Bank ( CBH) were hit particularly hard on the day, dropping $3.35, or 5%, to $63.20 after the New Jersey-based regional lender announced first-quarter earnings rose 44% from a year ago. The bank said it earned $62 million, or 75 cents a share, compared with $43 million, or 60 cents a share.

Commerce's numbers matched the Thomson First Call consensus estimate. But there were a few chinks in the report.

To start, the bank's total revenue of $316 million came in a bit lighter than some on Wall Street had expected. In a somewhat contentious conference call, Commerce Chairman Vernon Hill disputed the notion that the bank suffered a revenue miss and said expectations of a higher number were nothing more than a "rumor."

The bank also surprised some by reporting that the dollar value of its nonperforming loans -- loans overdue by at least 90 days -- rose by $10 million from a year ago to $33.1 million.

Commerce executives dismissed the increase as a mere hiccup due to "one or two commercial credits" going sour. But the rise in overdue loans comes at a time when most banks are seeing continued improvement on the credit front.

It wasn't just Commerce's earnings report that is spooking bank investors.

Last week, SunTrust ( STI), the large Southeast regional lender, kicked off the bank earnings season by saying it still hasn't seen any signs of a revival in borrowing by big corporate customers.

In fact, bank analysts at Fox-Pitt Kelton have been predicting the first quarter to be a tough one for the sector due to a combination of flat net interest margins, weak commercial loan growth and slow fee growth. The firm expects about a third of the banks its covers to miss the consensus projections. The firm's analysts are particularly cautious about earnings from Fifth Third ( FITB), M&T Bank ( MTG) and Southtrust ( SOTR).

Meanwhile, two other Southeast regional banks, BB&T ( BBT) and AmSouth ( ASO), reported lackluster earnings Tuesday. Both banks said first-quarter profit was little changed from a year ago.

BB&T, based in North Carolina, earned $328.5 million, or 60 cents a share, compared to $327.7 million, or 69 cents a share, a year ago. The bank earned 61 cents in operating earnings, 2 cents shy of analysts' estimates.

BB&T's earnings fell short of expectations due to a "substantial decrease in mortgage banking income." With the great home mortgage-refinancing boom now over, other banks could start reporting a similar problem.

Shares of BB&T were up 4 cents to just under $35 a share.

AmSouth reported that first-quarter profit rose slightly to $160 million, or 45 cents a share, from $155 million, or 44 cents a share, a year ago. It matched analyst expectations.

"The results are generally coming in within expectations," says Lehman Brothers regional bank analyst Jason Goldberg. "Investors are thinking rates are going up and rotating away."

Goldberg says the lack of commercial loan growth remains a concern for banks because normally, business borrowing should be picking up at this point in an economic recovery. "We continue to wait and see," he says.

The strongest earnings report of the day came from State Street ( STT), which said quarterly earnings more than doubled and exceeded analyst expectations. Net income came in at $217 million, or 63 cents a share, compared with $96 million, or 29 cents a share, a year ago. The Boston-based processing and custodial bank reported operating earnings of 67 cents a share, a figure that excluded certain merger costs. The First Call estimate for the operating earnings figure was 66 cents.

But shares of State Street were trading lower in the afternoon. The stock was down $1.55, or 2.9%, to $52.80.

Investors in the bank sector now have to hope to get a lift from the big money-centered banks such as Bank of America ( BAC) and Citigroup ( C), which report earnings later this week.