Feb 1 (Reuters) - A sell-off in shares of U.S. regional banks continued on Thursday, adding to losses from a day earlier when a surprise loss and a 70% divided cut from New York Community Bancorp renewed fears about the health of the industry.

The KBW Regional Banking Index fell 1.4% after seeing its biggest single-day decline since the collapse of Signature Bank in March last year. COMMENTS: MATT PESTRONK, CO-FOUNDER AND PRESIDENT, REAL ESTATE DEVELOPER POST BROTHERS

"I think the stock is oversold and they are a pretty smart lender with a proven history over time of low loan losses. People want to be very negative on banks. Banks are probably closer to health than they have been. Rates are going to come down and that will ease pressure on floating rate loans and their borrowers. Therefore, loan losses will be less due to high floating rates causing borrowers to default. Everyone agrees on that. It is a question of when.

"There is no bank that I am aware of with billions and billions of dollars of exposure to office buildings that is significant relative to their regulatory capital. Their regulatory regime changed as the bank went over $100bb. They have a simple and time tested model that is different from other banks over $100bb with much more complicated models such as Citibank and other global financial institutions. They probably over-reserved for losses associated with those loans."

MARTIN RAUCHENWALD, PARTNER, LEADER OF FINANCIAL SERVICES PRACTICE, ARTHUR D LITTLE

“Contractionary monetary policy, economic slowdowns, and an ongoing high interest environment have created real danger for financial institutions, with the increasing probability of mortgage default threatening another period of turmoil. Financial institutions need to urgently reassess their portfolios and explore alternative financing options – or risk being hit by a new crisis.” DAVID WAGNER, PORTFOLIO MANAGER, APTUS CAPITAL ADVISORS

"It was definitely an unwelcome reminder of what happened in March '23. The nexus of regional bank stress last year stemmed, essentially, from the mismanagement of interest rate exposure that caused massive mark-to-market losses - that's not what is happening here. NYCB declined for several company-specific reasons. First, the acquisition of Signature Bank made NYCB large enough that it was subject to significantly higher capital ratios and that was the primary factor behind the dividend cut and the dramatic increase of the loan loss provision from $45 million to $552 million.

"I believe that this is an idiosyncratic issue.

"If there is anything more “systemic” in the results yesterday that needs to be watched, it’s that the bank said it thinks credit deterioration could occur in the office and multi-family property markets (commercial real estate). But that sentiment hasn’t been echoed by any of NYCB’s peers such as Regions Financial or KeyCorp, so this may be a function of bank-specific poor loans. "

(Compiled by the Global Finance & Markets Breaking News team)