NEW YORK (Reuters) - U.S. bank stocks plummeted to their lowest level in more than a decade on Monday after analysts’ forecasts for soaring credit losses convinced investors that next week’s quarterly earnings reports could fall short of already low expectations.

The shares of Citigroup Inc (C.N: Quote, Profile, Research), Bank of America Corp (BAC.N: Quote, Profile, Research), Wachovia Corp (WB.N: Quote, Profile, Research) were among the decliners after analysts forecast significant credit losses for large regional banks, including Marshall & Ilsley Corp (MI.N: Quote, Profile, Research) SunTrust Banks Inc (STI.N: Quote, Profile, Research) and Zions Bancorp (ZION.O: Quote, Profile, Research).

“There are concerns this quarter will not be good,” said Lee Delaporte, director of research at Dreman Value Management, which manages more than $20 billion of assets. “People think there’s going to be more bad news, more write-downs, more capital raises, more dividend cuts and more asset sales.”

The KBW Bank index .BKX, a broad measure of the U.S. commercial banking sector reached its lowest level since 1997. Investment banks, as measured by the Amex Securities Broker/Dealer index .XBD, fell to their lowest level since 2005.

Brokers may be doing relatively better because many investors are concerned that consumer debt such as credit card loans will be the next asset to perform terribly during the credit crunch. Large commercial banks tend to have more exposure to consumer debt than large investment banks.

“That’s what the second quarter will tell us: how bad is it getting for the consumer, and how fast are bank balance sheets deteriorating?” said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management.

Adding to investors’ concerns were projections by Lehman Brothers Inc analysts that Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) may need to boost capital by another $46 billion and $29 billion, respectively, due to accounting rule changes.

There is some evidence that issuing new equity is becoming painfully expensive for banks, analysts said.

“Everyone that banks went to before has lost money by now. It’s not going to be as easy now,” Cole said.

Citigroup’s shares fell 71 cents to $16.11, their lowest level since 1998. Bank of America’s fell 80 cents to $21.60, their lowest level since 2000, while Wachovia fell $1.14 to $13.74, its lowest since at least 1996.

Source: Reuters