Updated from 2:24 p.m. EST with new stock prices

Financial stocks were hit harder than most on Friday amid poor employment data that put the market in a generally somber mood.

The NYSE Financial Sector Index underperformed both the Dow Jones Industrial Average and the S&P 500 with a 2.8% slide to 7,893.94, in part thanks to more woes at Citigroup ( C).

Keefe Bruyette analyst Diane Merdian estimated a more than 50% likelihood that the New York banking giant will cut its dividend , and she also amped up fourth-quarter expectations for mortgage-related writedowns at between $15 billion and $16 billion vs. the prior estimate of $11 billion. That should pressure a quarterly loss of $1.16 a share, said Merdian.

Last week, a Goldman Sachs analyst -- who also had originally estimated Citi's writedown number at $11 billion -- ratcheted that figure up to $18.7 billion.

Regions Financial ( RF) shared in the credit-crunch misery, plunging 10.7% to $20.80, after the Alabama bank said it will set aside some $360 million in the fourth quarter to cover bad credit, compared with $270 million last quarter. The provision, the girth of which is largely due to Regions' souring portfolio of homebuilding loans, comes to 1.45% of total loans vs. 1.19% last quarter.

Huntington Bancshares ( HBAN), of Ohio, lost ground on news it agreed to a debt-restructuring of borrower Franklin Credit Management ( FCMC) -- which, among other things, included slashing roughly $300 million off Franklin's debt to Huntington.

That leaves Franklin, which deals in the hairy mortgage market, with about $1.5 billion in debt to Huntington due to mature in May 2009. Franklin paid a fee of $12 million for the agreement. Huntington shed 4% to $13.52 as Franklin fell 5 cents, or 4.6%, to $1.05.

Huntington, together with Citi and Regions, helped pull down the KBW Bank Index, which was down 2.4% to 84.04.

Elsewhere, Irwin Financial ( IFC) announced that mortgage-market travails induced a loss from operations in the fourth quarter. In October, the Columbus, Ind., bank originally estimated a "return to modest continuing operations profitability" following a third-quarter shortfall. Meanwhile, Cascade Bancorp ( CACB) more than doubled its fourth-quarter loan-loss provision, sequentially, bringing earnings guidance below Street expectations both for the quarter and for the full year.

Irwin lost 64 cents, or 9.2%, to $6.29. Cascade was down 9% to $12.07.

Among the few financial winners on Friday was Michigan insurer North Pointe ( NPTE), shares of which rocketed 45.9% after Australia-based QBE Insurance agreed to buy it for $16 a share in cash, or about $146 million. The deal should close in the first half. North Pointe shares soared $4.86 to $15.44.

Fellow insurer Progressive ( PGR), which is based in Ohio, climbed 1.2% to $18.73 on an upgrade to a buy at Stifel Nicolaus. And New York online broker Investment Technology Group ( ITG) garnered a buy rating at Bank of America. Its shares were adding $1.43, or 3.1%, to $47.99.