BUZZ-Investors curious about which bank will raise capital next, Wells Fargo says

Reuters
2024-11-18
BUZZ-Investors curious about which bank will raise capital next, Wells Fargo says

** Regional lenders Dime Community Bancshares DCOM.O, Valley National Bancorp VLY.O, and Associated Banc-Corp ASB.N have raised capital in recent weeks after a Trump-fueled rally in bank stocks

** Investors are asking, "Who's next?", says the brokerage

** The three lenders priced their stock offerings at a discount in the range of 6%-7% to their closing prices

** Wells Fargo Securities says common thread is the ongoing accumulated other comprehensive income (AOCI) issue; AOCI captures the change in the value of banks' securities portfolios

** Banks' AOCI has been under close scrutiny after rapidly rising interest rates led to a surge in unrealized losses on their bond portfolios

** Wells Fargo notes DCOM and VLY also have commercial real estate issues, which remain a point of emphasis for regulators

** Brokerage singles out regional lenders Provident Financial Services PFS.N, Fulton Financial FULT.O, Community Financial System CBU.N, and Merchants Bancorp MBIN.O as potential candidates who could raise capital next

** DCOM and ASB shares have jumped 25.1% and 24.4%, respectively, while VLY has fallen 6.2% YTD

(Reporting by Arasu Kannagi Basil in Bengaluru)

((ArasuKannagi.Basil@thomsonreuters.com;))

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