NYCB shares surge after top executives disclose stake purchases By Reuters
2024-02-10 03:20:11

By Manya Saini and Niket Nishant

(Reuters) -New York Community Bancorp (NASDAQ:)'s battered shares surged 15% on Friday after top executives disclosed they had bought shares in the embattled U.S. lender.

NYCB has taken steps to boost investor confidence in recent days after its shares lost around 50% since Jan. 31, when it posted a surprise quarterly loss and slashed its dividend.

Purchases by NYCB executives totaled more than $850,000 combined, regulatory filings published on Friday showed. The filings gave no details beyond the name of the purchaser, the number of shares and their value.

Among the buyers were NYCB's newly-appointed Executive Chairman Alessandro DiNello, who bought 50,000 shares for around $209,480, the filings showed, while Peter Schoels, a director, purchased 100,000 shares for $414,750.

Market participants tend to track the trading activity of executives, as investors believe the insiders could have a clearer view of the company’s outlook.

"I believe insider buying today is a very positive development," said Christopher Marinac, director of research at Janney Montgomery Scott LLC, adding: "It is exactly what investors have wanted to see."

DiNello, who was appointed executive chairman earlier this week, said on Wednesday NYCB would take steps to reduce its exposure to the troubled commercial real estate (CRE) sector, including considering the sale of loans in its CRE portfolio.

Michael Ashley Schulman, a partner and chief investment officer at Running Point Capital Advisors, said the purchases could indicate that executives believe NYCB's current share price may not reflect the bank’s actual condition.

"On the other hand, one might say that their ... share purchases can be seen as a relatively cheap option to help rescue their $3.2 billion market cap bank, their employees, depositors, and their current ownership stake,” he said.

The share purchases come a day after Morningstar downgraded NYCB's credit rating due to "outsized" CRE exposure. Rating agencies Fitch and Moody's (NYSE:) had already cut their NYCB ratings.

The sell-off in NYCB's shares has stirred contagion concerns as investors feared potential defaults of CRE loans would hurt the balance sheets of several regional banks.

The KBW Regional Banking Index, a key index to gauge investor sentiment toward the sector, has fallen 11% so far this year. It was up 0.8% late on Friday morning. The was up 0.4% and stood at a record high.

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