The week got off to a rocky start as markets digested the collapse of Silicon Valley Bank last week and federal regulators’ shutdown of Signature Bank over the weekend.
Amid fears of contagion, banking sector stocks fell dramatically on Monday as investors scrambled to find new patterns of risk and reward. The effect was most pronounced among medium-sized and regional banking firms. At that point, a sudden drop in share price halted trading for many stocks.
For the retail investor, the situation is still murky – but a strong indicator of where things are going could come from insiders at banks, with company executives coming to terms with fiduciary responsibility for the solvency of their institutions. These insiders don’t trade their banks’ shares lightly, and when they do, it sends a signal that investors should pay attention to.
we can use Insider Hot Stocks tool on TipRanks to follow some of these trades — and in doing so we discover that insiders are calling the bottom on two regional bank stocks. While both showed heavy losses in early trading on Monday, according to Wall Street analysts, both retained their ‘Buy’ ratings and posted three-digit upsides for the coming year, according to TipRanks data.
Clients Bancorp (cube,
We’ll start with Client’s Bancorp, a regional bank based in West Reading, Pennsylvania. By a market cap of $550 million, the company fits perfectly into the small-cap category; In terms of total assets, about $20.8 billion, it is a modest banking institution. Clients Bancorp is the parent company of Clients Bank, a full-service bank offering a range of personal, commercial and small business banking products.
Over the past few trading sessions, CUBI shares have declined 39%, with a big part of that hit coming on Monday morning, when shares plunged 70%. The stock stabilized, and recovered part of that loss later in the day.
Bancorp customers were exposed to troubles this week after the bank saw a mixed quarter to end 2022. In 4Q22, CUBI reported total interest income of $269.6 million, up 17% year-over-year. However, on the downside, the company’s net income available to shareholders was $25.6 million, a 74% y/y drop. On a per-share basis, diluted EPS of 77 cents not only missed forecasts of $1.59, but also came down sharply from the $2.87 per diluted share reported in 4Q21.
With shares on the backfoot, but insider front, we find that the company’s Chairman and CEO Jai Sidhu has stepped in to take advantage. He bought 45,450 shares of CUBI yesterday, despite the potential crisis ignited by the SVB failure. Sidhu paid over $499K for the shares, and currently holds a total of 1.68 million shares.
The stock has caught the attention of Wedbush analyst Davide Chiaverini. After the Q4 print, he saw cause for optimism in CUBI, and wrote, “On the positive side, average deposits saw a 14% sequential increase driven by strong growth in non-interest bearing despots as well as core fee income.” Was inspired by $8 million, well above our forecast of a decline of $1 million. Credit quality weakened modestly as NCOs increased from $9 million to $27 million or 70 bp of total loans in 4Q from $18 million or 47 bp of total loans in 3Q … We believe the current discount fundamentals Relatively high.
In line with this outlook on the stock, and based on its “high growth potential as it transforms into a fintech-oriented, digital-forward bank,” Chiaverini rated CUBI as an Outperform (i.e. Buy) with a $37 price target. suggested with. Strong 112% upside over the next 12 months. (To see Chiaverini’s track record, Click here,
Customers Bancorp has selected 3 recent analyst reviews, and these are consensus positive with a Strong Buy consensus rating. The stock is currently selling for $17.42 and the $48.33 average price target represents a strong 177% one-year upside from that level. ,View CUBI Stock Forecast on TipRanks,
Metropolitan Bank Holding ,mcb,
The next stock we will look at is Metropolitan Bank Holding, whose main subsidiary is Metropolitan Commercial Bank. MCB focuses its services on businesses, entrepreneurs and individual customers in the mid-market banking segment. The bank, which is based in New York City, maintains six full-service banking centers in the city and on Long Island, and more than 1 million ATM machines globally, as well as no-fee access to online banking and mobile banking apps provides. ,
It’s another small-cap community bank, but a look at the company’s recent 4Q22 report shows that Metropolitan Bank stands on a strong foundation. The bank had total assets of $6.3 billion as of December 31, 2022; While it was down year-on-year, the bank registered an increase in total loans. Metropolitan Bank saw its loan business grow by nearly 5% or $223 million in Q4 to reach $4.8 billion. The bank also had $5.3 billion in total deposits, and was able to divest itself from the cryptocurrency business during Q4.
On the bottom line, Metropolitan Bank had diluted EPS of $2.43 in 4Q22, for a gain of 43% y/y.
With all of that, recent trading on MCB has been tough — the stock fell 44% in Monday’s session.
inside Don’t be shy to buy MCB shares at a discount. No less than 5 people have done this – but the biggest insider trade, by President and CEO Mark DeFazio, deserves special notice. DeFazio spent only half a million dollars to pick up 20,517 shares. In all, DeFazio now owns 131,120 shares.
JPM analyst Alex Lau is pleased with what he sees at MCB, and suggests a path forward for the bank in the coming year: “In the fourth quarter, fintech BaaS business deposits grew (+6% q/q or +51%) y/y), showing positive momentum despite a challenging deposit environment. Looking ahead to 2023, the main focus for MCB will be to drive low-cost deposits to fund its loan growth engine while managing net interest margin. is at the capacity of…”
Giving some magnitude to his outlook, Lau rates this stock as Overweight (i.e. Buy), and gives it a $63 price target for an impressive 156% upside potential over the one-year time horizon. (To see Lau’s track record, Click here,
Lau currently has the only analyst review on file for Metropolitan Bank Holding, which is trading at $24.60. ,View MCB Stock Forecast on TipRanks,
To find great ideas for stocks trading at attractive valuations, visit TipRanks. best stocks to buyOne tool that brings together all the Equity Insights from TipRanks.
disclaimer: The views expressed in this article are those of select analysts only. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.