New York Community Bancorp (NYCB) shares slide further in Wednesday's morning session after Moody's downgraded the regional bank's credit rating to Junk. Yahoo Finance Live anchors Akiko Fujita and Rachelle Akuffo lay out the risks NYCB's recent troubles pose to other regional banks, nearly a full year after 2023's regional bank crisis.

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

AKIKO FUJITA: We are beginning this hour, Rachelle, with those renewed concerns about a regional banking crisis. Those fears ignited by the latest headlines coming out of New York Community Bancorp. The stock extending its losses, trading down nearly 10% after Moody's downgraded the bank's credit rating to junk.

The firm announcing today it would be appointing a new Executive Chairman Alessandro Dinello to quiet investor concerns. But that's done little to calm the jitters. In an SEC filing, the bank stressed it had ample liquidity and did not expect the credit downgrade to have, their words, "a material impact on existing contracts."

And sort of worth backing up here, Rachelle, in terms of what's been happening with this particular firm, the losses-- really plummeting last week when the company announced or reported higher than expected losses stemming from their real estate loans, commercial real estate to be exact. Since then, the stock has been slashed by more than half.

And taking a look at where it is today, those losses continuing, really weighing on the broader regional banks. As investors try to say, is this a New York Community Bancorp specific story? Or is there a potential for a contagion effect?

RACHELLE AKUFFO: It's true. And it's worth noting that when you think of banks versus, say, your typical company that's trading on the stock exchange-- say, if a company like Apple were to lose like 50% of its stock price value, people would say, hey, this is a great time to perhaps get on this investment. Consumers aren't going to stop buying iPhones.

But when it comes to banks, it becomes about confidence because you have no way of predicting whether or not some of this news that they're hearing is going to affect whether people start withdrawing their deposits, which is why we heard the new chairman there trying to shore up some confidence.

And one of the other things they also did was added some provisions in for credit losses of up to $552 million. When you combine that with a cut in the dividend, it signals that there might be trouble ahead. And especially since they became a Category IV bank after taking on Signature Bank, they crossed that threshold, which means more regulatory scrutiny, more efforts need to be made to shore up capital there, which of course, is also going to cost money. And as you mentioned there, that contagion fear still not really being simmered there even despite some of the words that we heard from Janet Yellen as well.

AKIKO FUJITA: Yeah, and we heard from Fed Chair Jay Powell in that interview with "60 Minutes" that he felt that things could be pretty contained as it relates to loans stemming from commercial real estate. But it's worth backing up, Rachelle, to talk about why we're so focused on these regional banks, the small to mid-size banks.

That's because a big chunk of those commercial real estate loans are held there specifically. Roughly $2.7 trillion in commercial real estate loans. Goldman Sachs estimating about a majority of that, 80% about that-- about 80%, by the way, is held by those smaller banks. And that's why any sign-- any sign of some pressure stemming from those loans has just led to a real risk off in the space.

RACHELLE AKUFFO: It's true. And Bloomberg even reporting that US commercial real estate contagion now moving to Europe. So we'll continue to track that story.