PNC Financial Services Group Inc. shares closed up 2.2% after it reported strong core earnings for the third quarter.
The Pittsburgh company said it earned $1.5 billion in the period, a more than threefold increase from a year earlier.
It booked a $1.3 billion gain from the partial sale of BlackRock Inc. on Sept. 29 to Merrill Lynch & Co. Inc., and recorded a $158 million charge for repositioning its securities and mortgage portfolios.
Even without the one-time items, however, PNC's earnings per share of $1.28 beat analyst estimates by 5 cents, according to Thomson Financial. PNC cited improved earnings from retail banking and processing.
Shares of Mercantile Bankshares Corp. of Baltimore, which PNC is buying, climbed 1.2%.
Bank stocks and the broad market had a mixed reaction to weaker-than-expected economic data.
The Conference Board Inc. reported that the October consumer confidence index dropped 0.5 points from September, to 105.4. Analysts polled by Briefing.com had expected a 1.9-point increase.
The American Banker index of 225 bank stocks fell 0.49%, but the thrift index gained 0.41%. The Standard & Poor's 500 was unchanged, while the Dow Jones industrial average fell 0.05%.
Shares of BancorpSouth Inc. of Tupelo, Miss., rose 1.1% on speculation the company was poised to announce a deal.
BancorpSouth said Monday that it would hold a press conference after the market closed Tuesday, without saying what it would be about. Early Tuesday, a Springfield News-Leader report quoted the chairman of the privately held Signature Bank in Springfield, Mo., as saying Signature would announce a deal with an out-of-state company at the same time the BancorpSouth press conference was scheduled. A Dow Jones news story put two and two together, sending BancorpSouth shares up.
(After the market closed, BancorpSouth did announce it had agreed to buy Signature Bank for $170 million. The deal is expected to close next quarter.)
Greater Bay Bancorp of East Palo Alto, Calif., fell 3.3%, a day after reported disappointing third-quarter earnings.
Campbell K. Chaney, an analyst with Sanders Morris Harris Group, downgraded Greater Bay's shares to "hold," from "buy" on Tuesday. He said he expects its expenses to rise and its net interest margin to contract until the yield curve reverts to its traditional slope.
Shares of two other companies declined after similar downgrades.
Andrew W. Stapp of Cohen & Co. downgraded Prosperity Bancshares Inc. of Houston to "hold," from "buy." Mr. Stapp wrote in a research note that Prosperity's lack of balance-sheet growth -- its loans were flat from the second quarter and its deposits fell 1.3% -- might be a bad sign.
Shares of Prosperity slid 1.3%.
Brad Milsaps of Sandler O'Neill & Partners LP downgraded MB Financial Inc. after the Chicago company reported higher-than-expected credit costs and expenses. Its earnings of 46 cents a share fell 16 cents short of analysts' expectations, according to Thomson Financial.
Shares of MB Financial fell 3.5%.
Other decliners included Bank of the Ozarks Inc. in Little Rock and R&G Financial Corp. of San Juan, Puerto Rico. Each dropped 2.7%.
Other gainers included First Marblehead Corp. of Boston, 2.8%, and Midwest Banc Holdings Inc. of Melrose Park, Ill., 2.4%.
