Fears of a widening global banking crisis made for a brutal Tuesday on Wall Street, particularly for big banks active in Florida.
Consider the performance of the four largest out-of-state banks that collectively control more than half of Florida's deposits.
Shares in Wells Fargo, Florida's biggest bank thanks to its acquisition of Wachovia, were down 24 percent; ditto the double-digit drop for shares of No. 3 SunTrust and No. 4 Regions Financial.
And for the state's second-largest bank, Bank of America, the scenario was even worse. Shares fell another 29 percent to close at $5.10, compounding a 45 percent slide last week. One analyst estimated the Charlotte megabank, struggling with its Merrill Lynch acquisition, needs at least $80-billion to restore capital to adequate levels.
Bank of America's tumble was seen as one more sign the credit crunch is far from abating. Financial losses from the credit crisis may reach $3.6-trillion, suggesting the banking system is effectively insolvent since it starts with capital of $1.4-trillion, said New York University professor Nouriel Roubini, who predicted last year's economic crisis.
"This is a systemic banking crisis," Roubini said at a conference in Dubai on Tuesday.
Closer to home, Regions Financial on Tuesday blamed troubles in Florida for a 9 percent drop in revenue for its fourth quarter. The Birmingham, Ala., bank posted a net loss of $6.22-billion, or $9.01 a share, on revenue of $1.63-billion in the quarter ended Dec. 31.
For years, Regions counted on Florida as its growth engine, but now it's busy foreclosing on development projects in South Florida in particular.
Regions said its most stressed portfolios were in home building, home equity — mainly second mortgages in Florida — and condo loans.
Although 39 percent of its second mortgage portfolio was in Florida, the state was responsible for 73 percent of its second mortgage charge-offs in the quarter, or roughly $40-million in charge-offs.
Among other financial institutions active here:
• Fifth Third shares fell 22 percent.
• Raymond James Financial dropped 11 percent.
• Shares in Citigroup, which reported a loss of $8.29-billion on Friday, dropped 20 percent to a 17-year low of $3.02. The megabank, which has about 12,000 Florida workers, also dropped its dividend to a penny on Tuesday, matching a move by Bank of America last week.
Times wires contributed to this report. Jeff Harrington can be reached at [email protected] or (727) 893-8242.