Buybacks at Regional Banks

04/24/2017 2:50 am EST


David Fried

Editor, The Buyback Letter

We last bought Investors Bancorp (ISBC) in January 2016 and it has floated to the top of our ranking again, explains David Fried, editor of The Buyback Letter.

Investors Bancorp is the holding company for regional bank Investors Bank, which in turn provides a wide range of banking products and services for businesses and individuals in the U.S.

The bank provides deposit products such as savings, checking, and money market accounts, along with certificates of deposits through some 151 offices in New Jersey and New York. As of December 31st, 2016, the company had total assets of $23.2 billion.

In years past, mid-cap ISBC was noted for exceptional, industry-leading growth and dirt cheap prices. It raised $2.2 billion in new funds in an IPO in 2014, providing excess capital, which is to be used to transition the bank from a consumer bank to a commercial bank, and to pay for expenses that go along with that transition (technology, for instance).

The market welcomed the change. The bank now also has the money to expand, and planned to acquire other community banks. ISBC bought 8 community banks since 2008, gaining $4.5 billion in new deposits.

The CEO has his sights set around the company's New Jersey base, including Philadelphia, Easton, PA., Long Island and Westchester County. They were in the news recently because they terminated their merger agreement with The Bank of Princeton.

Quarter 4 reported net income of $52.5 million, compared to $44.4 million for the same period a year ago. For 2016, net income was $192.1 million, compared to $181.5 million for 2015. Management has reduced shares outstanding by 5.52% in the last 12 months.

Based in Dallas, Texas, Nationstar Mortgage Holdings (NSM) is one of the largest residential mortgage services providers in the country, dealing in single-family residences. The company has a record 2.9 million customers, and a portfolio of $473 billion in loans.

Early this year the company entered into a sub-servicing agreement with New Residential Mortgage LLC, which will bring more than 750,000 new customers in the 2nd quarter.

In mid-2016 it received Fannie Mae’s highest level of performance recognition — the Five STAR designation — in the 2015 Servicer Total Achievement and Rewards program.

This was the second year in a row that NSM received the Designation, which recognizes mortgage servicers for overall performance, customer service and foreclosure prevention efforts. Nationstar ranked #1 among all large U.S. mortgage servicers evaluated for its 2015 performance.

Quarter 4 net income was $198 million ($2.01 per share), with revenue of $789 million. For the year, profits were $18.6 million (27 cents per share), with revenue of $1.93 billion.

In January, NSM announced a $100 million share repurchase program, which goes through 2017. NSM has repurchased about 9.54% of its shares in the past 12 months.

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