A sign is pictured above a branch of the New York Community Bank in Yonkers, New York, U.S., January 31, 2024.
Mike Segar | Reuters
U.S. regional banks sold off again on Thursday, adding to losses from a day earlier when New York Community Bancorp, reported pain in its commercial real estate portfolio, renewing fears about the industry’s health.
The KBW Regional Banking Index slipped 1.6%, after seeing its biggest single-day decline since the collapse of Signature Bank in March 2023.
NYCB shares lost another 8.5% of their value and were last trading at $5.92, partially erasing deeper losses from earlier in the morning. The stock experienced a record single-day drop of 37.6% on Wednesday, according to LSEG.
The frenzied selling in banking shares has rekindled fears about regional lenders, even as many analysts and investors said the problems at NYCB were mostly unique.
“Last year was definitely the year of deposits. No bank wanted to be in a position where they were seeing deposit outflows. This year, the story changes to credit quality,” said Alexander Yokum, senior equity analyst at CFRA Research, adding NYCB’s exposure to real estate is bigger compared to peers.
Moody’s has put its ratings on NYCB on review for a downgrade that could push it into “junk territory”, while Morgan Stanley said it is reviewing earnings estimates for the bank. Many banks, such as Bank of America and UBS, also cut target prices for NYCB.
Western Alliance Bancorp’s shares fell 4.8%, while those of Valley National Bancorp dropped 5%. Comerica’s (CMA.N), opens new tab shares fell 2.1%.
The S&P 500 Banks index fell roughly 1.2%.
The fall of U.S. regional banks stocks on Wednesday translated into $685 million in paper profits for short sellers, according to data and analytics company Ortex.
NYCB’s purchase of Signature Bank, along with its 2022 acquisition of Flagstar Bank, pushed its assets above a $100 billion regulatory threshold that is subject to stricter capital and liquidity…
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