Regional Bank Stocks Experience Broad Decline

By Will Feuer

Regional bank stocks traded lower for a second consecutive day as investors sought to assess the challenges facing New York Community Bancorp.

The KBW Nasdaq Regional Banking Index witnessed a significant drop of nearly 5%. In fact, the index has plummeted approximately 10% just this week.

Western Alliance Bancorp shares saw a decrease of over 10%, while Zions Bancorp stock slipped 8%. Additionally, Eagle Bancorp and M&T Bank both experienced declines of over 6%.

Following suit, other regional banks also suffered decreases in value following the decline in shares of New York Community Bancorp, which dropped nearly 14% on Thursday.

On Wednesday, New York Community Bancorp announced a reduction in its dividend and reported a quarterly loss. CEO Thomas Cangemi commented on the company’s need to adjust to regulatory demands as a result of its acquisition of assets and liabilities from Signature Bank. This acquisition occurred shortly after three banks failed consecutively in early 2023, causing concerned customers to withdraw their funds.

Bank of America analysts attributed most of NYCB’s challenges to internal factors, however, they also acknowledged that credit normalization is likely to have implications for the entire sector.

Moody’s, a credit-ratings agency, has placed NYCB’s ratings under review for potential downgrading due to the ongoing pressure on its capitalization and funding.