Bank Buying Is Back
Bank Buying Is Back
Over the past few weeks insider transactions among small bank stocks has dried up.
In a pervious newsletter I highlighted my thoughts on the drying up on insider purchases at bank stocks.
I stated that insider transactions among small banks had fell off a cliff because insiders were in a quiet period given Q1 2023 results were yet to be released. After Q1 results start to get released, the insider transactions should start to pick up again.
Fast forward a couple of weeks from when that was written. Bank insiders are back at it, buying up their own stock in size. The sheer volume of bank insiders buying is impressive and should be a telltale sign that things are ok at US based banks.
I think banks represent one of the best risk/rewards in today’s market. Most are trading significantly under replacement value, they pay large dividends and if there is ever a reduction in interest rates bank security portfolios will increase in value, shooting book value and the share price upwards.
I have tracked the largest insider buys at banks over the past three days. This should be a good starting point for your research to find undervalued banks that are well capitalized to survive the downturn.
But before we get into the bank transactions, first a word from today’s sponsor…
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Large Bank Insider Purchases
A director of Princeton Bancorp (BPRN) bought $152k of stock in the open market.
A director of Norwood Financial Corp (NWFL) bought $25.5k of stock.
A director of Community Trust Bancorp (CTBI) bought $34k worth of stock. Another director bought $36k worth of stock. An executive officer also purchased $88k worth of stock.
The CEO of Mainstreet Bancshares (MNSB) bought $233k worth of stock.
The Head of Commercial Banking at Amerant Bancorp (AMTB) bought $18k worth of stock.
An EVP of BancFirst Corp (BANF) bought $21k worth of stock. Another director purchased $51k of stock.
A director of Associated Banc-Corp (ASB) bought $99k of stock.
The EVP of Glacier Bancorp (GBCI) purchased $33k of stock. The Chairman of the Board also purchased $82k. The CFO bought $72k. Finally the CEO bought $20k.
A director of Bob Bancorp (BCBP) bought $130k worth of stock. The CEO also purchased $16k of stock. The COO bought $53k and another director also purchased $46k.
A director of Guaranty Bancshares bought $49k of stock.
A director of Servisfirst Bancshares bought $50k of stock.
A director of Texas Capital Bancshares (TCBI) bought $1.2 million of stock.
A director of PNC Financial (PNC) bought $123k of stock.
A director of William Penn Bancorporation (WMPN) bought $14k.
A note on Ponce Financial (PDLB)
Ponce Financial is one of my favorite banks that I personally own. They are overcapitalized, an ECIP recipient and trading significantly below book value. I highlighted in the Telegram group their recent earnings and wanted to highlight the screenshots I posted on the bank below.
A few things to highlight:
Ponce posted their first positive net income since June 30th, 2022. This is a step in the right direction and sets up the bank for a strong year
The bank has $184 million of cash against a market cap of $168 million — this bank will not be going under like the regionals that are failing
Book value increased as interest rates decreased, sending up bond valuations. If interest rates decrease the value of any bank with a bond portfolio will do extremely well.
The stock was up 4.16% yesterday and should continue to recover. The stock is trading at 0.63x book value and when the environment recovers, I don’t see why it shouldn’t trade north of 1.0x book value.
Hedge fund manager Chris Demuth says Ponce should be worth $20-22 per share in his most recent article on the small bank.
It is one of my favorite bank stocks and should continue to generate value for investors.
Disclosure: I long Ponce Financial (PDLB). I will buy or sell my shares anytime following the publication of this article. This is not financial advice. I am not a financial advisor. Do your own due diligence.
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