Corporate executives and directors tend to have superior information in relation to their firms’ operating activities. If these insiders are buying company stock, it’s generally a bullish signal.
In this report, we are going to highlight a large insider purchase at Bancorp Inc (TBBK:US). Bancorp is a payment services provider and specialized lender that is based in the US. Operating through its subsidiary, The Bancorp Bank, the company supports the payments and banking needs of non-bank companies, ranging from entrepreneurial start-ups to those in the Fortune 500. It is listed on the Nasdaq and currently has a market cap of $1.71 billion.
Insider buying at Bancorp Inc
Our data shows that on November 1, Bancorp board member Matthew Cohn bought 21,121 TBBK shares at a price of $28.00 per share. This trade cost the insider $591,190.
What stands out here is the size of the trade. Our records show that this is the largest purchase from an insider at Bancorp since October 2016. The fact that Mr. Cohn has spent over half a million dollars on stock suggests that he is very confident it’s set to move higher.
It’s worth noting that Mr. Cohn has served as a director of Bancorp since 1999. So, he is likely to know the company very well.
Benefiting from higher interest rates
Bancorp is benefiting from higher interest rates right now.
For the third quarter of 2022, net interest margin (NIM) amounted to 3.69%, compared to 3.17% for the previous quarter and 3.35% for the quarter a year earlier. Meanwhile, net interest income for the quarter amounted to $64.7 million, up 27% year on year.
Looking ahead, CEO Damian Kozlowski said that the expansion of both net interest margin due to rising rates and payment fees across its verticals should support significantly increased profitability in 2023. Currently, the company expects to generate earnings per share of $3.20 for 2023, which would represent a 40% increase on estimated earnings for 2022.
As a result of the higher level of profitability, Bancorp expects to increase its share repurchases to $25 million per quarter in 2023, from $15 million per quarter in 2022.
In light of the rising NIM and higher share buybacks, we see the insider buying activity here as a bullish indicator.