Regional bank stocks slide after two banks disclose bad loans

[Financial market chart showing downward trends with red candlesticks and graphs on a dark background. Concept of stock market crisis. 3D Rendering]
peshkov

The KBW Nasdaq Regional Banking Index (KRX [https://seekingalpha.com/symbol/KRX]) sank 5.7% in Thursday afternoon trading, its biggest drop since April, following the disclosures by two banks of irregularities related to some loans.

After Wednesday's close, Zions Bancorporation (NASDAQ:ZION [https://seekingalpha.com/symbol/ZION]) said it found "apparent misrepresentations and contractual defaults [https://seekingalpha.com/news/4504510-zions-bancorporation-stock-slides-after-disclosing-50m-loan-writedown]" by the borrowers and supporting collateral when it reviewed two related loans made by its California Bank & Trust division. Zions took a provision for the full $60M outstanding under the loans.

On Thursday, Western Alliance Bancorporation (NYSE:WAL [https://seekingalpha.com/symbol/WAL]) said it sued a borrower [https://seekingalpha.com/news/4504940-western-alliance-sues-borrower-alleging-fraud-stock-tanks], alleging fraud in failing to provide collateral loans in first position, among other claims.

Zions (NASDAQ:ZION [https://seekingalpha.com/symbol/ZION]) stock plunged 12% and Western Alliance (NYSE:WAL [https://seekingalpha.com/symbol/WAL]) tumbled 10% in Thursday trading.

That apparently has investors wary of other regional banks. Among the biggest decliners in the sector: Flagstar Financial (NYSE:FLG [https://seekingalpha.com/symbol/FLG]) -6.4%, Banc of California (NYSE:BANC [https://seekingalpha.com/symbol/BANC]) -8.0%, Webster Financial (NYSE:WBS [https://seekingalpha.com/symbol/WBS]) -5.8%, Metropolitan Bank Holding (NYSE:MCB [https://seekingalpha.com/symbol/MCB]) -6.1%, Axos Financial (NYSE:AX [https://seekingalpha.com/symbol/AX]) -6.6%, and Bank OZK (NASDAQ:OZK [https://seekingalpha.com/symbol/OZK]) -5.2%.

MORE ON WESTERN ALLIANCE, ZIONS BANCORPORATION, ETC.

* Western Alliance: Don't Worry About First Brands [https://seekingalpha.com/article/4828829-western-alliance-dont-worry-about-first-brands]
* Bank OZK: Why I'm A Buyer Of The Common And Preferred Shares [https://seekingalpha.com/article/4827949-bank-ozk-why-i-am-a-buyer-of-common-and-preferred-shares]
* Zions: A Beneficiary Of Lower Rates [https://seekingalpha.com/article/4827103-zions-a-beneficiary-of-lower-rates]
* Western Alliance sues borrower, alleging fraud; stock tanks [https://seekingalpha.com/news/4504940-western-alliance-sues-borrower-alleging-fraud-stock-tanks]
* Webster Financial Q3 2025 Earnings Preview [https://seekingalpha.com/news/4504942-webster-financial-q3-2025-earnings-preview]