Hicksville, New York – New York Community Bancorp saw a significant surge in its stock price on Friday after it was revealed that the CEO and other insiders had purchased over 200,000 shares of the company’s stock. This came after the stock had lost nearly half of its value due to a recent announcement of a dividend cut and increased loan-loss provisions. The stock rallied by 17%, closing at $4.90, marking its highest increase since March of the previous year.
The insider buying spree was seen as a positive development by investors, signaling a renewed commitment from company executives. CEO Thomas Cangemi, along with other insiders, invested a combined $870,000 in the stock. This move was seen as a show of confidence amidst the company’s recent challenges.
Since the announcement of the dividend cut and larger loan-loss provisions, the company has experienced a significant decline in its market value. This was compounded by concerns over increased regulatory scrutiny due to the bank’s expanded asset size following a recent acquisition, as well as worries about its commercial-property loans. The news had a ripple effect across the regional-bank shares, but the sector has since stabilized.
In response to the insider purchases, there was a flurry of call options being purchased, indicating a bullish sentiment from traders. This was further supported by a note from Keefe, Bruyette & Woods analysts, who found that banks tend to outperform in the weeks following stock-buying by top executives.
Despite the positive response to the insider buying, NYCB did not provide any comments on the transactions. It remains to be seen how the market will respond to this show of confidence from the company’s leadership.
The market is likely to continue closely monitoring NYCB’s performance in the coming days, especially in light of the recent insider buying and the potential impact it may have on the company and its stock price.