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Shares of New York Community Bancorp (NYCB) fell Friday afternoon after the regional bank reported a larger-than-expected fourth-quarter loss. Investors are selling the regional banking sector amid concerns about NYCB’s weak financial results and uncertainty around inflation.
Yahoo Finance’s Julie Hyman and Madison Mills explain the details.
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by angel smith
video transcript
Madison Mills: NYCB stock plunged today after the New York-based lender revealed its fourth-quarter loss was much deeper than previously announced. It’s down over 25%. Now, what’s interesting is that their specific book values remain relatively unchanged. That’s what Chris Marinak said earlier today. If we look at the KB index, we see a broader regional market. The KBE index isn’t doing too well today either, with him down just over 1.2% heading into the close here. But what I’m curious about is whether the downward trend we’re seeing in the broader regional indicators indicates that people think this is a broader issue within the region, or if this is a problem for NYCB. The question is, do you think it’s unique?
Julie Hyman: right. I mean, you know. NYCB is a type of company that has made acquisitions including Flagstar Bank. And Sandro Dinero, the CEO of that bank, is now the CEO of NYCB. It also acquired the remaining debt of Signature Bank, which went into financial trouble due to banking problems last year. So I think investors are just not happy about this. So this is an undetermined situation, right? The company said it had significant weaknesses and a review of the loan revealed it required a $2.4 billion impairment charge. So what’s next?
Madison Mills: right.
Julie Hyman: And I think this decline shows that investors don’t have the confidence that they know what’s going to happen next.
Madison Mills: That’s dissatisfying.
Julie Hyman: no.
Madison Mills: And this is also a challenge for local banks, which have not been able to stress test in a higher environment over an extended period of time. Even if the Fed does start to reverse course, it won’t give it much time to stress test the new environment we’re about to face.
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