Financial stocks saw choppy trading around the flat line Monday as investors took a breather following a barrage of miserable earnings last week that finished with a huge Friday pullback.

Recently, the NYSE Financial Sector Index fell 0.2% to 9,006.83 and the KBW Bank Index dipped 0.1% to 100.35.

Among the decliners was Wintrust Financial ( WTFC), whose earnings dropped by about one-third year over year to $9.9 million, or 40 cents a share, under significant pressure from what the Illinois bank called "an extreme mortgage banking environment."

Revenue was off 7.4% to $77.7 million. Analysts polled by Thomson Financial were looking for income of 64 cents a share, less special items, on revenue of $88 million. Shares surrendered $1.67, or 4.4%, to $36.67 in recent trading.

Struggling mortgage investor Luminent Mortgage Capital ( LUM) announced that CFO Christopher Zyda has resigned effective year-end, having declined to relocate to Philadelphia from Luminent's San Francisco headquarters, which is currently being shut down. Controller Karen Chang will succeed him. Shares were losing 5.4% to $2.11.

Friedman Billings cut both Cathay General Bancorp ( CATY) and student lender Nelnet ( NNI) to underperform, assigning price targets of $25 and $18, respectively. Shares were sliding 4.8% to $27.95 and 3.6% to $17.82.

American Express ( AXP) and Discover Financial Services ( DFS), meanwhile, were the hardest hit of a group of credit card issuers and mortgage lenders downgraded by Lehman Brothers.

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