William Hosler, a director at PacWest Bancorp (PACW), recently bought 3,750 shares. The buy increased his stake by 7 percent, and came to a total cost of $99,300.
The director was the last buyer as well, with an 8,000 share pickup for $200,000 last June. The company’s CEO has sold shares twice since then, but still owns over 1 million shares of the company in total.
Company insiders own 1.8 percent of shares.
The California-based bank is down about 43 percent in the past year, amid rising interest rates and a slowdown in lending activity.
Yet the bank maintains a strong 32 percent profit margin, and revenue declined only 20 percent last year, less than the drop in share price. PacWest now trades at 0.9 times its book value, indicating that the bank is discounted by about 10 percent of its total loan value.
Action to take: Regional banks trading below book value tend to be solid investments over time. Traders who buy at or under today’s prices should fare well. The bank pays a 3.5 percent dividend at current prices, a solid payout for getting paid to wait.
For traders, shares have started to trend higher in the past few weeks. The June $30 calls, last going for about $1.55, offer a mid-to-high double-digit return in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.