What Happened?
A number of stocks fell in the afternoon session after disclosures from two lenders raised concerns about deteriorating loan quality across the industry.
The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Regional Banks company Axos Financial (NYSE: AX) fell 6.6%. Is now the time to buy Axos Financial? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company Atlantic Union Bankshares (NYSE: AUB) fell 6%. Is now the time to buy Atlantic Union Bankshares? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company Amalgamated Financial (NASDAQ: AMAL) fell 6.7%. Is now the time to buy Amalgamated Financial? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company 1st Source (NASDAQ: SRCE) fell 3.3%. Is now the time to buy 1st Source? Access our full analysis report here, it’s free for active Edge members.
- Regional Banks company Republic Bancorp (NASDAQ: RBCAA) fell 3.5%. Is now the time to buy Republic Bancorp? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Amalgamated Financial (AMAL)
Amalgamated Financial’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 3.5% on the news that the earnings season got off to a strong start as several big banks reported third-quarter results that surpassed Wall Street's expectations.
The positive results were driven by a rebound in investment banking and strong trading desk performance. JPMorgan Chase reported a significant jump in profit and revenue, boosted by increased trading and dealmaking. Similarly, Wells Fargo saw its shares climb after reporting strong net interest income and raising its guidance. Citigroup also exceeded revenue estimates across all its business lines. While Goldman Sachs also beat expectations, its shares dipped slightly on news of potential job cuts aimed at curbing costs. Overall, the strong reports from these financial giants suggest a healthy pickup in corporate activity and trading.
Also, Fed Chair Jerome Powell gave investors a major reason for optimism by suggesting the Fed could soon stop its quantitative tightening (QT) program. For months, this policy acted like a brake on the economy, systematically draining cash from the financial system to cool inflation. Powell's comments signal that the Fed may be ready to ease its pressure, which would leave more liquidity in the market to flow into assets like stocks.
Amalgamated Financial is down 23.5% since the beginning of the year, and at $25.36 per share, it is trading 33.5% below its 52-week high of $38.13 from November 2024. Investors who bought $1,000 worth of Amalgamated Financial’s shares 5 years ago would now be looking at an investment worth $2,138.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
