(Reuters) – New York Community Bancorp shares fell as much as 46% to their lowest in over two decades on Wednesday after the lender slashed its dividend and posted a surprise loss for the fourth quarter.
The bank, which had bought assets of failed lender Signature Bank last year, said it was building capital to deal with potential enhanced regulation.
The pessimism spilled over into other bank stocks. Valley National Bancorp shares fell 10%, while the KBW Regional Banking Index was on course for its biggest one-day drop since last May if losses hold.
COMMENTS:
SANDY VILLERE, PORTFOLIO MANAGER, VILLERE & CO, NEW ORLEANS
“This could be a catalyst to make valuation a little cheaper for regionals. Something impacting a bank like that could open an opportunity to buy a solid bank. It’s a good opportunity to take a shot at a good bank because this seems to be stock specific.”
DAVID SMITH, BANK ANALYST, AUTONOMOUS RESEARCH
“The bank stocks are reacting as a result of the poor outlook given by the NYCB which has sparked concerns among the rest of the group and particularly for banks that could be crossing the $100 bn asset threshold in the next year or so and may come under tighter regulatory concerns which could have an impact on earnings.”
“The market reaction that we are seeing right now is more of a knee-jerk reaction and is relatively constrained as banks are getting painted by the same brush as NYCB which had a large loss and has given a poor guidance. I don’t think what we saw in the regional banking space in last March is anywhere on the cards right now.”
STEVE SOSNICK, CHIEF STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT
“Many traders believe that warnings of the type we saw from NYCB are like cockroaches – if you see one, there must be more hiding just out of sight. To be fair, I know of no other looming problems, but the options in KRE (SPDR S&P Regional Banking ETF ) tell me that many traders are not taking any chances.”
(Compiled by the Global Finance & Markets Breaking News team)
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