(Reuters) – Ratings agency Moody’s on Wednesday placed all long-term and short-term ratings and assessments of New York Community Bancorp and its subsidiary, Flagstar Bank, on review for a downgrade.

Moody’s said the ratings action reflected NYCB’s unanticipated loss in its New York office and multifamily properties, weak earnings, material decline in its capitalization, and its growing reliance on wholesale funding.

The review came after the bank, which bought some of Signature Bank’s assets last year, said it was cutting its dividend by 70% and building capital to bolster its balance sheet.

NYCB’s shares fell as much as 46% in morning trading, but later pared losses.

The Signature Bank purchases, along with its 2022 acquisition of Flagstar Bank, pushed NYCB’s balance sheet above a $100 billion regulatory threshold that is subject to stricter capital and liquidity requirements. It had assets of $116.3 billion as of December.

The dividend cut and the surprise loss from NYCB dragged regional U.S. bank stocks, renewing fears over the health of similar lenders.

(Reporting by Baranjot Kaur in Bengaluru; Editing by Sherry Jacob-Phillips and Diane Craft)

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