Wall Street loves growth.
Unfortunately, the healthiest banks have already gobbled up most of the low hanging fruit. Hudson City Bancorp (NASDAQ:HCBK) is a perfect example, as shares got crushed ~8% after telling analysts the regional bank has already booked most of the high quality borrowers and the future will be less exciting.
The bank also said it received an enforcement action from the Office of Thrift Supervision. The OTS would like HCBL to reduce its interest-rate-risk position. That means the bank will likely sell assets, raise capital, and/or reduce its dividend.
Yikes. That’s a tough hit to take for a bank which largely avoided the credit crisis and was much more conservative than lending whores like Citigroup (NYSE:C), Bank of America (NYSE:BAC), Wachovia, and Washington Mutual. But if you tell Wall Street growth is slowing and the OTS is on your back, traders will sell first and ask questions later.