Bank stocks including shares of the Nashville area's biggest players fell again in trading Monday, as President Barack Obama predicted that some banks would fail and investors worry about the impact of more financial aid for the U.S. financial system.
The White House is deciding how to spend roughly $350 billion left under the $700 million rescue plan for the financial sector passed by Congress last year.
Bank of America, the No. 2 bank in the Nashville area, was the day's worst performer among Dow Jones Industrial Average companies. It lost more than 8 percent on the New York Stock Exchange and closed at $6 per share.
Regions Financial Corp., the top bank in the Nashville market, lost 15.6 percent of its value in trading Monday on the New York Stock Exchange, closing at $2.92 per share. Moody's Investors Service downgraded the company's debt with a negative outlook Monday.
"Net charge-offs for the fourth quarter of 2008 were nearly double that of the prior quarter and reflect a pace of asset quality deterioration beyond Moody's prior expectations,'' the ratings company said.
Moody's said the downgrade reflects the bank's concentration of loans with residential homebuilders and home equity lines, particularly in Florida. Regions' stock has lost 88 percent of its value in the past year.
Fifth Third Bancorp, which also has a Middle Tennessee presence, was another loser on the Nasdaq Monday. The stock lost 12.55 percent of its value to end at $2.09 per share. Analysts at investment management company Sanford C. Bernstein & Co. downgraded both Fifth Third Bancorp and Regions last week.
"In general, some of these larger banks that have been beaten up, things continue to get worse for them," said Kevin Reynolds, a senior vice president of equity research with Wunderlich Securities in Memphis. Rising unemployment and worsening economic conditions make recovery difficult.
Obama addressed the situation in an NBC television interview Monday, saying the government would have to do more to shore up the financial system.
"It is likely that the banks have not fully acknowledged all the losses that they're going to experience,'' he said.
"They're going to have to write down those losses. And some banks won't make it."
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