The banking sector has been hammered this year, perhaps to the point where investors are considering picking through the rubble. Executives and directors at various-sized banks, however, are already buying up stock.
The banking sector has taken a one-two punch so far in 2023. The first was in March when
the parent of Silicon Valley Bank, collapsed.
(ticker: SBNY) and
also ran aground, with the latter ultimately agreeing to be purchased by
Group (UBS). The second shock was earlier this month when
First Republic Bank
was seized and sold to
(JPM). Smaller banks have seen shares slide to multiyear lows.
But insiders at
(UNTY) bought up stock on the open market in late April and early May. All these stocks have slid more than 20% so far in 2023, but most are ahead of the 39% drop in the
SPDR S&P Regional Banking
exchange-traded fund (KRE).
Salt Lake City-based Zions, a holding in KRE, has seen its stock price cut 60% so far this year. With a market capitalization of about $3.6 billion, Zions is among the bigger of the smaller banks, and is even a component of the
Zions President and Chief Operating Officer Scott McLean paid $1 million on April 28 for 37,000 shares, an average price of $27.44 each. McLean bought shares through his 401(k) plan, which now holds 104,540 shares, according to a form he filed with the Securities and Exchange Commission. Zions didn’t respond to a request to make McLean available for comment.
McLean last bought shares in August 2011 when he paid $500,000 for 29,000 shares, an average price of $17.12 each. An executive vice president at that time, McLean was named president in March 2014.
U.S. Bancorp, with a market cap of $47 billion, is one of the largest banks in the U.S., and is a component of the S&P 500. Its shares have slid 34% so far this year.
U.S. Bancorp’s newest director, Alan Colberg, bought 10,000 shares for $341,400 on April 21. Now the Minneapolis-based bank has since seen an even bigger insider purchase. Scott Wine, a U.S. Bancorp director since July 2014, paid $1 million on April 28 for 30,438 shares, an average price of $32.85 each. That marks his first open-market purchase of the company’s shares. Wine serves as CEO of CNH Industrial (CNH), which didn’t respond to a request to make him available for comment.
Clinton, N.J.-based Unity Bancorp, with a market cap of just over $200 million, is one of the smaller publicly traded U.S. banks. Nonetheless, the stock is in the same boat as larger peers, with a 25% drop for the year to date.
A limited liability company controlled by two brothers who are founding members of Unity Bancorp, Robert H. and David D. Dallas, paid $454,400 on April 26 for 20,000 shares, an average price of $22.72 each. The LLC now owns 1.8 million shares. David Dallas is chairman of Unity Bancorp and is also the CEO of Dallas Group of America, a specialty chemical-manufacturing business in Whitehouse, N.J. Robert Dallas is the president of Dallas Group. Unity Bancorp didn’t respond to a request to make the Dallas brothers available for comment on their stock purchases.
Lakeland Financial stock is down 36% so far this year. The Warsaw, Ind., parent of Lake City Bank has a market cap of $1.2 billion, and saw two directors make large stock purchases.
M. Scott Welch, a Lakeland Financial director since 1998, paid $515,750 on April 28 for 10,000 shares, an average price of $51.58 each. He purchased the shares through a corporation that now owns 25,000 Lakeland Financial shares. Welch owns another 34,000 shares through a partnership, and 1,257 in a personal account. His most recent purchase of Lakeland Financial stock on the open market was in March, when he paid $965,500 for a total of 15,000 shares, an average price of $64.37 each. Welch is CEO of Welch Packaging Group of Elkhart, Ind.
Brian J. Smith, a Lakeland Financial director since 2011, paid $510,000 on April 28 for 10,000 shares, an average price of $51 each. The CEO of Heritage Financial Group of Elkhart, Ind., Smith last bought shares of the bank on the open market nearly three years ago. In August 2020, he paid $10,200 for 227 Lakeland Financial shares, an average price of $45.06 each.
Lakeland Financial didn’t make Welch and Smith available for comment on their stock purchases.
While some banking insiders are buying stock for the first time or the first time in years—motivated by depressed prices—one stalwart buyer warrants recognition.
Robert Stallings, chairman of Dallas-based
Texas Capital Bancshares
(TCBI), has been buying common shares on a regular basis. From March through May so far, Stallings has paid $3 million for 58,000 Texas Capital shares, an average price of $52.06 each. Shares year to date are down 25%.
But Stallings was buying even before the drop this year. In 2022, from April through December, Stallings paid $8.3 million for 148,538 Texas Capital shares, an average price of $56.17. Shares that year had dropped in April, but rose to end December flat.
Stallings, a U.S. Navy veteran and Texas Capital director since 2001, says in an email, “When the events causing pressure on regional-bank stocks have receded, the sector will prosper again, in my opinion, making Texas Capital a uniquely attractive investment for me.”
“The stock is selling at an attractive discount to tangible book and intrinsic value,” Stallings adds. He’s also upbeat on the management of the $2 billion market-cap bank. “Rob Holmes, CEO, and his talented management team know what ‘good looks like’ and what is required to support a best-in-class business plan.”
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at [email protected] and follow @BarronsEdLin.