Regional bank stocks are tumbling after Zions Bancorp and Western Alliance disclosed major loan issues.
Zions reported a $50 million charge-off on two commercial loans, meaning the bank no longer expects those loans to be paid back.
That sent the lender’s shares down 13%.
Meanwhile, Western Alliance alleged borrower fraud, with its stock tumbling 11% despite reaffirming its 2025 outlook.
And the SPDR S&P Regional Banking ETF fell nearly 5%, reflecting sector-wide concerns.
The revelations are amplifying investor unease over hidden credit risks in an environment of high interest rates and economic uncertainty.
Recent bankruptcies, including auto parts maker First Brands and subprime lender Tricolor, have highlighted lax lending standards and opaque private credit exposures.
Jefferies Financial Group, with $715 million tied to First Brands, saw shares drop 10%, marking its worst monthly performance since March of 2020.
Broader markets are also feeling the ripple, with the Dow Jones Industrial Average sliding 315 points and registering a 0.65% drop, with the S&P 500 losing 42 points and a 0.63% decline.
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