(Reuters) -New York Community Bancorp shares fell as much as 46% to their lowest in over two decades on Wednesday after the lender slashed its dividend and posted a surprise loss for the fourth quarter.
The bank reduced its quarterly dividend by 70% to 5 cents per share and reported an adjusted loss of $185 million.
That compared to a profit of $274 million a year earlier and analysts’ average estimate for a profit of $204.34 million.
The bank, which had bought assets of failed lender Signature Bank last year, said it was building capital to deal with potential enhanced regulation.
“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,” CEO Thomas Cangemi said in a statement.
Under the proposed Basel III rules, banks with assets between $100 billion and $250 billion will be subject to stricter capital requirements.
New York Community Bancorp had assets of $116.3 billion as of December-end, according to its latest earnings report.
“While we certainly did not expect this degree of impact… it appears that a more mature management team is now driving the ship and willing to now take the considerable short-term pain in order to position for long-term gain,” J.P.Morgan analyst Steven Alexopoulos said.
The lender set aside $552 million as provision for credit losses, compared with $124 million in the year-ago period.
The pessimism spilled over into other bank stocks. Valley National Bancorp shares fell 10%, while the KBW Regional Banking Index was on course for its biggest one-day drop since last May if losses hold.
(Reporting by Niket Nishant in Bengaluru; Editing by Shweta Agarwal)
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