Corporate insiders such as executives and directors tend to have the most up-to-date information on their businesses. When they buy company stock, it is generally a positive development.
Here, we are going to highlight an insider purchase at HomeStreet Inc (HMST:US). HomeStreet operates as the bank holding company for HomeStreet Bank, a state-chartered commercial bank. The company provides commercial and consumer banking services primarily in the Western United States. It’s traded on the NASDAQ Stock Exchange and currently has a market capitalization of $924 million.
HomeStreet Inc: Insider Buying
Form 4 filings show that on 5 May, the CFO of HomeStreet, John Michel, purchased 8,400 HMST shares at a price of $42.60 per share. This purchase cost the insider approximately $350,000 and increased his holding by around 40%.
Positive Insider Sentiment
This CFO trade looks interesting for several reasons. Firstly, it is a substantial purchase. Our insider model score has moved up 2 points to a score of 4 on the back of this trade, which suggests insider sentiment at HomeStreet is very positive.
Secondly, Michel purchased stock at lower levels at the end of 2020 which indicates that he picks his trading levels well.
Third, Michel was CFO for 11 years at First Foundation Advisors LLC. He is therefore very experienced in the financial industry. He is likely to be adept at making trading decisions.
HomeStreet produced a solid set of Q1 2021. Net income came in at $29.7 million which was up from $27.6 million in the last quarter of 2020. Earnings per fully diluted share were $1.35 versus $1.25 in the prior quarter. Net interest margin was slightly up at 3.29%, against 3.26% in the previous quarter. Return on average assets was 1.65%, which was up from 1.47%. During the quarter, the bank did not have to make any provision for loan losses.
As a result of this strong performance, the company declared a dividend of $0.25 – an increase of 67% on the prior quarter. It also repurchased $25 million of common stock.
“HomeStreet’s earnings during the first quarter of 2021 reflected strong underlying performance across all of our lines of business making our first quarter a great start to the year,” commented Mark K. Mason, HomeStreet’s Chairman of the Board, President, and Chief Executive Officer.
Given these impressive Q1 numbers, we see the insider trading at HomeStreet as bullish. It suggests that the CFO believes that the financial performance will continue to be robust and that the shares will move in an upward direction.