(Bloomberg) -- New York Community Bancorp soared on Friday after its chief executive officer and other insiders bought more than 200,000 shares of the stock, which has lost about half its value since last week’s shock announcement of a dividend cut and larger loan-loss provisions.
The lender rallied 17%, the most since March last year, to close at $4.90. Filings show a handful of insiders at the Hicksville, New York-based bank purchased shares Friday. Alessandro DiNello, who was appointed executive chairman this week, bought 50,000. CEO Thomas Cangemi purchased about 11,000, and several other insiders, including board members, also bought. Combined, the purchases amount to about $870,000, according to a calculation by Bloomberg.
“Insider buying today is a very positive development — it is exactly what investors have wanted to see, renewed commitment to ‘eat their own cooking,’” said Christopher Marinac, an analyst at Janney Montgomery Scott.
The company’s market value has declined by about $4 billion since its Jan. 31 announcement that it would slash its dividend and build a loan-loss provision that was much bigger than analysts had expected. The bank faces the prospect of stiffer regulation due to its increased asset size following a deal for part of Signature Bank last year, and it’s also grappling with concern about its commercial-property loans. The surprise announcement rattled regional-bank shares broadly, but the sector has since stabilized.
Seconds after one of the filings on an insider purchase hit on Friday, a trader or group of traders snapped up call options equivalent to more than 550,000 shares with strike prices of $4.50 — one of which expired at the end of the Friday session, while the other expires in a week. The contracts came in-the-money shortly after 11 a.m. New York time.
Banks have tended to outperform in the week and month following stock-buying by top executives, according to a Friday note by Keefe, Bruyette & Woods analysts who reviewed more than 50 open-market purchases for lenders in the Russell 1000 Index.
NYCB didn’t respond to phone and emailed requests for comment about the transactions.
--With assistance from Carly Wanna and David Marino.
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