Shares of several regional banks traded lower on Wednesday following troubling news from New York Community Bancorp. The bank announced a significant dividend cut and reported a quarterly loss, causing its stock to plummet over 37%.
The negative sentiment spilled over into other regional banks, with Western Alliance Bancorp seeing a decline of over 5%, while M&T Bank and Eagle Bancorp both faced a drop of around 4%. Zions Bancorp, Comerica, and Webster Financial also fell by about 4%. Meanwhile, Citizens Financial, Regions Financial, SouthState, and Prosperity Bancshares all traded more than 2% lower.
In comparison to the KBW Nasdaq Bank Index, which saw a decline of less than 1%, the KBW Nasdaq Regional Banking Index experienced a larger drop of about 4%.
The woes for New York Community Bancorp stem from their recent acquisition of the assets of the collapsed Signature Bank. This purchase resulted in the bank being placed in a higher regulatory tier, subjecting it to more stringent standards. As a result, the bank had to take measures to shore up its capital, including the dividend cut.
This news serves as a reminder that even regional banks can face significant challenges in today’s financial landscape. It will be interesting to see how these banks navigate the current economic climate and what steps they take to regain investor confidence.