US bank stocks sink after New York Community Bancorp cuts dividend By Reuters

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<p>(Reuters) -Regional U.S. bank shares sank on Wednesday, dragged down by a 46% plunge in the shares of <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> New York Community Bancorp </span></span> (NYSE:) after it cut its dividend and posted a surprise loss.</p>
<p>The KBW Regional Banking Index fell by nearly 4%, putting it on track for its biggest one-day drop since May 2 last year when concerns over the health of <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> First Republic Bank </span></span> (OTC:) deepened the impact of the collapse of Silicon Valley Bank and <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> Signature Bank </span></span> (OTC:).</p>
<p>Deposits have since stabilized, but investors said ongoing concerns about the regional banking sector were compounded on Wednesday by uncertainty over the trajectory of Federal Reserve interest rates. </p>
<p>The central bank will announce the outcome of its first policy meeting this year later on Wednesday. </p>
<p>“That fear is out there. On the banking side, that’s what’s happening,” Tim Ghriskey, senior portfolio strategist at Ingalls &amp; Snyder, said. “The fact that it’s Fed day compounds this issue because you never know what the Fed is going to say. They might be somewhat dovish.”</p>
<p>Shares of <span itemscope="" itemtype="http://schema.org/Corporation"><span itemprop="name"> Valley National Bancorp </span></span> (NASDAQ:), Western Alliance (NYSE:) Bancorp and Comerica (NYSE:) also fell between 3% and 10% each.</p>
<p>NYCB, which bought some of Signature Bank’s assets last year, on Wednesday said it was cutting its dividend by 70% and was building capital and bolstering its balance sheet. </p>
<p>The Signature Bank purchases, along with its 2022 purchase of Flagstar, pushed NYCB’s balance sheet above the $100 billion regulatory threshold that subjects it to stricter capital and liquidity requirements.</p>
<p>“While we began preparing to be a $100 billion bank almost immediately after closing the Flagstar acquisition, we crossed this important threshold sooner than anticipated as a result of the Signature transaction,” New York Community Bancorp (NASDAQ:) CEO Thomas Cangemi said in a statement.</p>
<p>The shares of some banks just under the threshold also fell on Wednesday. Zions, with $87 billion, was down nearly 3%, and Comerica, with $85 billion, was down 1.5%. </p>
<p>New York Community Bancorp had assets of $116.3 billion as of December-end, its latest earnings report said.</p>
<p>The bank 70% quarterly dividend cut to 5 cents per share and adjusted loss of $185 million reported on Wednesday compared to a profit of $274 million a year earlier and analysts’ average estimate for a profit of $204.34 million.</p>
<p>Some analysts said NYCB’s issues were idiosyncratic and that Wednesday’s selloff was a knee-jerk reaction. </p>
<p>“I don’t think what we saw in the regional banking space in last March is anywhere on the cards right now,” David Smith, a bank analyst at Autonomous Research, said. </p>
<p>NYCB set aside $552 million as provision for credit losses for the fourth quarter, compared with $124 million in the year-ago period. </p>
<p>“Its purchase of assets from failed Signature Bank apparently triggered NYCB to set aside more capital and additional loss provisions. So on that front, it was unique to NYCB and not contagious to other regional banks,” said Stephen Biggar, banking analyst at Argus Research.</p>
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