(Bloomberg) — New York Community Bancorp’s stock price surged after its CEO and other company insiders purchased over 200,000 shares, following a significant drop caused by a recent dividend reduction and increased loan-loss provisions. The lender’s stocks jumped 17%, marking its biggest gain since March of last year, closing at $4.90. Insider filings revealed that several individuals at the Hicksville, New York-based bank acquired shares on Friday. Among them, Alessandro DiNello, the newly appointed executive chairman, purchased 50,000 shares, while CEO Thomas Cangemi bought around 11,000 shares. Additionally, various other insiders, such as board members, also made purchases. Altogether, the acquisitions totaled approximately $870,000, as calculated by Bloomberg analyst Christopher Marinac. Marinac commented that the insider buying was a positive development, indicating a renewed commitment from investors. He described it as a demonstration of their dedication to their own company, which has been desired by investors.
The company’s market value has plummeted by about $4 billion since its announcement on January 31 about the reduction of its dividend and its plan to establish a much larger loan-loss provision than what analysts had anticipated. The bank is facing potential tougher regulations due to its increased asset size resulting from a prior deal with part of Signature Bank last year, as well as concerns about its commercial-property loans. The unexpected announcement had a broad impact on regional-bank shares, but the sector has since stabilized.
Following the release of one of the insider purchase filings on Friday, a trader or group of traders quickly bought call options equivalent to over 550,000 shares with strike prices of $4.50. One of these options expired at the end of the Friday session, while the other expires in a week. Both options moved into a profitable position shortly after 11 a.m. New York time.
An analysis by Keefe, Bruyette & Woods analysts highlighted that banks tend to perform well in the week and month following stock purchases by top executives, after reviewing more than 50 open-market purchases for lenders in the Russell 1000 Index.
NYCB did not respond to phone or email inquiries about the transactions.–With assistance from Carly Wanna and David Marino.(Updates shares.)Most Read from Bloomberg Businessweek©2024 Bloomberg L.P.
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