Updated from 2:25 p.m. EDT with new stock prices

Citigroup ( C) led financial stocks downhill Monday after the banking giant reported sliding third-quarter earnings .

New York-based Citi said it earned $2.38 billion, or 47 cents a share -- 57% lower than last year, albeit 3 cents a share over sharply reduced analysts' estimates, per Thomson Financial. CEO Chuck Prince called it a "disappointing quarter, even in the context of the dislocations in the subprime mortgage and credit markets."

Citi shares sank 3.41% at $46.24, weighing on both the NYSE Financial Sector Index -- down 1.56% to 9,464.66 -- and the KBW Bank Index, which shed 0.73% to 107.97.

Also cramping both indices were JPMorgan Chase ( JPM), Bank of America ( BAC) and Bank of New York Mellon ( BK), which are all due to report earnings this week. Shares pulled back 1% or more.

Sallie Mae ( SLM) slumped 5.24% in heavy trading after a J.C. Flowers-led group offered to terminate its agreement to take out the education lender -- a response, it says, to a request Sallie issued Friday to expedite its lawsuit against the group. The legal wrangling started after the buyer group, which also includes JPMorgan and BofA, cut down its bid for Sallie in light of a new federal law that will reduce education lending subsidies.

Sallie Chairman Albert Lord said last week that the ordeal has drained earnings at the firm -- which, argued the group, means a termination will help Sallie by freeing it "from the restrictions that it is complaining about." The group also filed a counterclaim and reiterated its belief that the above-mentioned law constitutes a "material adverse effect" under the merger agreement.

Sallie shares surrendered $2.54 to $45.91.

Elsewhere, negative analyst research hurt Illinois-based Calamos Asset Management ( CLMS), down 6.35% to $29.92, and Florida's BankUnited Financial ( BKUNA), which lost 9.18% to $11.58. Credit Suisse and JPMorgan respectively downgraded the firms to neutral ratings.

But Goldman Sachs raised Assurant ( AIZ) to buy, citing robust earnings from a special property and the expectation of a reinstated stock-buyback program next year, among other things. Shares of the New York-based insurer ticked up 44 cents to $56.45. Waddell & Reed Financial ( WDR) got a Credit Suisse upgrade to outperform, which boosted shares by 3.68%.

Also among the scant financial-sector winners, with gains of at least 1.3% apiece, were asset manager U.S. Global Investors ( GROW), education lender First Marblehead ( FMD), and mortgage lender Thornburg Mortgage ( TMA).