Despite these buybacks, the bank’s stock closed at $39.44 on May 9, down from $41 a share when the company announced its latest stock repurchase initiative and 26% lower than the $53.52 price it was trading at a year ago.
Aaron James Deer, a San Francisco-based managing director for Sandler O’Neill & Partners, said PacWest is likely to have more buybacks but at a lower volume going forward. He estimates the bank repurchased roughly $120 million worth of stock, or 3.1 million shares at an average price of $38.94 each, representing 2.5% of the outstanding float during 2019’s first quarter. PacWest still has capital for share repurchases, but Deer said the bank could be taking a cautious approach in order to stay flexible.
“Management is mindful of regulatory capital requirements and typically maintains some extra buffer to help with acquisitions or other opportunities that might come along,” Deer said.
“We expect the company to significantly pare back its share repurchases while still remaining active,” he said of the company’s long-held acquisition stance.
Wedbush’s Chiaverini said he also expects the company to “significantly reduce its buyback activity” given that the bank’s high level of capital maintained on its books is “above management’s comfort level.”
Another bank that has seen mixed results on its share buyback program is Pacific City, which announced in April a $6.5 million stock repurchase program through March 27, 2020. Pacific City’s stock closed at $17.27 on May 9, down from $17.60 on April 1 when the bank announced the stock repurchase program.
Others, however, have seen stocks bolstered. Hanmi stock closed at $23.64, up from $21.40 on Jan. 24 when it announced plans to repurchase 5% of its shares, or approximately 1.5 million shares. In August, the bank authorized a stock repurchase plan of up to 5%, or 1.6 million shares, which was completed during 2018’s fourth quarter.
OP Bancorp recently closed at $10.58 on May 9, up from $9.29 on Jan. 25 when it announced the buyback of 400,000 shares — which it largely completed in April, according to a bank statement.
Not all local banks are jumping on the stock buyback trend, however.
Pasadena-based East West Bancorp Inc., parent of the $42.1 billion-in-asset East West Bank, has upped its dividend payout to build value instead of repurchasing stock.
“Given our bank’s loan growth outlook and profitability profile, we believe that organic growth, plus common dividend increases, are a better use of equity at this point, creating long-term value for our shareholders,” said Julianna Balicka, senior vice president and director of strategy and corporate development at East West.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Cathay General Bancorp Adopts New Share Repurchase Program
- PacWest Looks for Next Move
- Banks Struggle in 3Q
- OP Bancorp Reports First Quarter Profit Jump
- Bank Makes Out Like Bandit After Sale Holdup
- Business Briefs: IndyMac Bancorp, Hot Topic, j2 Global, GNP Computers, Digital Insight, Semtech
- Key Deals: PacWest Gets CU Bancorp for $681 Million