New York Community Bancorp (NYCB) earnings were an “all-out blood bath” for the company and don’t augur well for regional banks as a whole. Financials analyst Josh Steiner diagnosed the bank’s “trifecta of horribleness” today on The Call @ Hedgeye.
“They were the catalyst for carnage yesterday across the Financials sector,” Steiner says. “They reported earnings, and there’s no other way to describe it: It was a horrific, horrific quarter. The stock was down 37%.”
Regional Banking (KRE) was down 6% yesterday and down again big today. The ETF is now down over 15% since Hedgeye CEO Keith McCullough shorted it in June.
“The charge-off NYCB took this quarter was larger than all the combined charges-offs they’d taken the previous 48 quarters,” Steiner adds. “That’s a big one. It was so bad it actually wrecked their capital ratio. It’s now below where it needs to be. As a result, they cut their dividend by 70%.”
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