There are two main reasons insiders invest in their own companies. They either believe that business is about to get better, or that the company is undervalued. Whatever the reason, insider buying tells us that those within the business expect the share price to rise.
In this report, we are going to highlight some interesting insider buying at Banc of California Inc (BANC:US). Banc of California Inc is the holding company of Banc of California – a full-service business bank that offers commercial and business banking and personal banking services in a number of cities across California. The company is listed on the New York Stock Exchange and currently has a market capitalization of $1.23 billion.
Banc of California: Insider Buying
Our data shows that in late January and early February, two insiders here purchased stock.
On January 27, President and CEO Jared Wolff bought 5,015 shares at a price of $19.70 per share, spending just under $100,000 on stock. Then, on February 1, board member James Barker snapped up 12,900 shares at a price of $19.32 per share, spending around $250,000 on stock.
Wolff’s trade increased the size of his holding by 11% while Barker’s trade increased the size of his holding by 20%.
Both of these insiders have made well-timed purchases in the recent past. Mr. Wolff, for example, picked up stock in October 2020 when it was trading at $11.50. Over the next six months, the stock nearly doubled in price. Meanwhile, Mr. Barker snapped up stock in March 2020 when it was trading under $10. Since then, it has risen as high as $22.
It’s worth noting that both of these insiders have considerable industry experience. Before joining Banc of California in 2019, Mr. Wolff was a member of the Executive Committee at City National Bank and the President of PacWest Bancorp. As for Mr. Barker, he has over 30 years of experience in corporate strategy, private equity, and management of large corporate enterprises. This experience means the insiders are likely to have a good understanding of the bank’s prospects.
Share Price Fall
Banc of California’s share price pulled back on January 25 after the group posted fourth quarter earnings that fell short of analysts’ expectations.
For the quarter, total revenue was up 22% to $77.9 million. Yet earnings per share came in at $0.07, well below the consensus forecast of $0.17. Earnings were hit by pre-tax merger costs and the provision of credit losses for the loans acquired in its Pacific Mercantile Bancorp acquisition.
Management was relatively optimistic about the future, however.
“We continue to see good loan demand and high-quality lending opportunities, and the deposit gathering engine we have built enables us to fund these loans with low-cost core deposits. With the combination of our continued momentum in business development, the positive impact of the Pacific Mercantile acquisition, and our increasing level of asset sensitivity, we believe we are very well positioned to deliver continued growth in revenue, earnings per share and franchise value,” commented Mr. Wolff.
“Given the strength of our balance sheet and capital ratios, we remain in a good position to redeem our Series E Preferred Stock during the first half of 2022, subject to regulatory approval, which will provide another catalyst for earnings growth going forward,” added CFO Lynn Hopkins.
The insider buying here indicates that those within the company expect its share price to bounce back. We see the insider buying as a bullish indicator.