Five Regional Bank Stocks With $1 Mil+ Worth of Insider Buying

US regional bank stocks are under considerable pressure right now. This year, the SPDR S&P Regional Banking ETF (KRE:US) – which tracks an index of smaller US banks – is down around 40%. Higher interest rates are largely to blame, as these have created a number of challenges for smaller depository institutions.

While most investors are fearful of the regional banks at present, those within the industry appear to be quite bullish. Recently, regional bank insiders have been snapping up shares in their own companies in droves. With that in mind, here’s a look at five regional bank stocks that have seen over $1 million worth of insider purchases in the last month.

Lakeland Financial Corp

First up is Lakeland Financial Corp (LKFN:US). It’s the owner of Lake City Bank, which is headquartered in Warsaw, Indiana. Founded in 1872, Lake City offers personal banking, business banking, and wealth management services across the Northern and Central Indiana markets. Year to date, the stock is down about 34%.

2iQ data shows that over the last month, two insiders at Lakeland Financial Corp have purchased stock. On April 28, board member Brian Smith picked up 10,000 shares at a price of $51.00 per share. On the same day, board member Scott Welch also picked up 10,000 shares at a price of $51.58 per share. It’s worth noting that Mr. Welch also made a number of large stock purchases in March.

Both of these insiders are experienced businessmen. Mr. Smith is co-CEO of Heritage Financial Group Inc., a real estate investment and management and consumer finance company based in Elkhart, Indiana. Meanwhile, Mr. Welch is CEO of Welch Packaging Group Inc., which is headquartered in Elkhart, Indiana. 

For the first quarter of 2023, Lakeland posted loan growth of $401.2 million, up 9% year on year, and net interest margin (NIM) of 3.54%, up 61 basis points year on year. Total capital as a percentage of risk-weighted assets was 15.21% as of March 31, 2023, compared to 15.16% at March 31, 2022 and 15.07% at December 31, 2022.

“These healthy capital levels are well in excess of the 10.00% threshold required to be characterized as “well-capitalized” and represent a strong capital position to support the company’s balance sheet and future growth,” commented President and CEO David Findlay.

On the back of these results, the board of directors approved a cash dividend of $0.46 per share for the quarter. This was 15% higher than the dividend declared for the first quarter of 2022.

Texas Capital Bancshares Inc 

Next, we have Texas Capital Bancshares Inc (TCBI:US). It’s a bank holding company, which through its subsidiary Texas Capital Bank, provides various banking products and services for commercial businesses, professionals, and entrepreneurs. Headquartered in Dallas, it has full-service locations in Austin, Dallas, Fort Worth, Houston, and San Antonio. Year to date, the stock is down about 18%.

Over the last month, two insiders at Texas Capital have picked up stock. Chairman Robert Stallings has made a number of stock purchases, investing a total of around $3.25 million in the company. Meanwhile, board member Thomas Long has bought around $200,000 worth of stock.

It’s the buying activity from Mr. Stallings that stands out here, as he has a background in investment management. Previously, he was the Chairman and Founder of ING Pilgrim Capital Corporation, which managed over $20 billion in mutual funds, institutional investments, and retirement accounts, before being acquired by The ING Group, N.V. in 1999. The fact that he has invested $3.25 million in the company over the last month is notable.

In Texas Capital Bancshares’ recent Q1 results, the company noted that all its regulatory ratios continue to be in excess of “well capitalized” requirements. As of March 31, 2023, its CET1, tier 1 capital, total capital, and leverage ratios were 12.4%, 14.0%, 16.9% and 12.0%, respectively.

“Through the quarter, we maintained industry leading liquidity and capital ratios, while adding a record number of new clients and delivering improved financial results for all of our stakeholders. As the banking industry is pressured nationwide, we remain committed to our strategic plan and focused actions to serve the best clients in our markets,” commented Rob C. Holmes, President and CEO.

Zions Bancorporation National Association

Another regional bank that has seen substantial insider buying recently is Zions Bancorporation National Association (ZION:US). It provides a range of banking services in a number of states including Arizona, California, Colorado, Idaho, Nevada, Texas, and Washington. Year to date, the stock is down about 51%.

Our data shows that in the last month, four insiders here have purchased stock. Those who have purchased shares are:

• President and COO Scott McLean (37,000 shares @ $27.44 per share on April 28)

• CFO Paul Burdiss (20,000 shares @ $27.62 per share on May 1)

• Chairman and CEO Harris Simmons (20,000 shares @ $24.16 per share on May 3).

• Exec. Vice President Rebecca Robinson (10,000 shares @20.38 share on May 4)

Combined, the four insiders have bought around $2.25 million worth of stock.

Looking at this insider trading activity, there is a clear ‘cluster buying’ pattern. This is where three or more insiders at the same organization have purchased company stock within a short period of time. Typically, cluster buying a bullish signal. Especially when those buying are top-level insiders, which is certainly the case here.

In Zion’s recent Q1 results, management noted that its regulatory and economic capital remained durable during the quarter. It also said that it continued to evidence very good credit quality, with no net charge-offs and continued strong credit metrics. For the quarter, the company reported net interest income of $679 million, up 25% year on year. This allowed the group to repurchase $50 million worth of stock during the period.

FB Financial Corp

A fourth company that has registered some major buying activity from insiders is FB Financial Corporation (FBK:US). It’s the owner of FirstBank, which is headquartered in Nashville, Tennessee, and has over 80 full-service branches across Tennessee, South Central Kentucky, Alabama, and North Georgia. Year to date, the stock is down about 27%.

Two insiders have made large stock purchases here in the last month. Between April 18 and May 4, Former Chairman and Founder James Ayers made six purchases, investing a total of around $1.2 million in the company. Meanwhile, board member Orrin Ingram made a smaller purchase worth around $402,000.

Mr. Ayers’ background is worth highlighting here. Ayers - who served as Executive Chairman of the boards for both the Company and FirstBank, led FirstBank since its inception in 1984 and took the responsibilities of the Executive Chairman in April 2016. Mr. Ayer has extensive exposure to the delicacies of the business world. In addition to his past services on the Board, he also served as the Chairman of Community Care, Inc. He is also the Chair of The Ayers Foundation, which strives to improve the quality of life of Tennesseans by offering financial support for college scholarships, medical research and services and continuing education for teachers.

In FB Financial’s recent Q1 results, President and CEO Christopher T. Holmes said that for the past three quarters, the company had been preparing for potential challenges airing from higher interest rates, slower economic growth, high inflation, and shrinking liquidity. It noted that it began using a mantra of liquidity, credit, and capital in the first half of 2022 and that, as a result, the company was well positioned for the current banking environment. It added that its liquidity position, credit quality metrics, and capital ratios all improved during the quarter.

NBT Bancorp Inc

Finally, we have NBT Bancorp Inc (NBTB:US). It’s a financial holding company incorporated in the state of Delaware and based in Norwich, NY. It primarily operates through NBT Bank, N.A. and two financial services companies. Year to date, the stock is down about 27%.

Our data shows that on May 2, board member Timothy Delaney purchased 40,000 NBTB shares at a price of $29.77 per share. This trade cost the insider approximately $1.2 million.

Mr. Delaney has been a director of NBT since January 2011 and has been a director of NBT Bank since 2006. He also serves on the NBT Financial Services, Inc. Board which is an affiliate of the company. What stands out here is that his purchase of 40,000 shares has increased the size of his position by about 110%. The fact that the insider has more than doubled his holding suggests that he sees a lot of value in stock at present.

For the first quarter of 2023, NBT posted net interest income of $95.1 million, up 18.3% year on year. As for capital ratios, the company ended the period with a CET1 ratio of 12.28% and a Leverage ratio of 10.43%.

“NBT’s first quarter results reflect the strength of our balance sheet and our consistent and traditional banking franchise,” said NBT President and CEO John H. Watt, Jr. “During a quarter characterized by heightened market volatility, we grew loans and deposits, maintained strong asset quality, increased our capital position and continued to deliver high-quality and timely customer service,” he added.

Insider transactions can help cut through the noise

Now, there is no guarantee that the insiders mentioned above will profit from their recent stock purchases. The regional banking crisis is still playing out and there are likely to be more casualties in the next few months.

However, insiders tend to have deep insight into their companies’ operations and financials and are typically well ahead of analysts and portfolio managers when it comes to business trends. So, insider transaction data could be a very valuable research tool here.

Interested in learning more?

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