Cluster Buying by Insiders of Columbia Banking System – Insider Weekends

Columbia Banking System Inc. (COLB): $19.50

Tangible Book Value Per Share: $16.12 (as of December 31, 2023)

Market Cap: $4.36 B

When we see a large cluster of insiders purchasing shares of a company, the transactions tend to be part of a dividend reinvestment or automatic employee purchase plan, and it is noted as such in the comments of the filing. When we saw multiple insiders of the regional bank Columbia Banking System (COLB) purchase shares, we were slightly skeptical of the transactions at first. However, when we took a closer look at the company, we found something interesting, and wrote the following in our January 31 Event Driven Monitor:

Clint Stein, the President, CEO of regional bank Columbia Banking System, Inc. (COLB), purchased 9,500 shares at an average price of $20.96 totaling $199,112. Five other insiders including the CFO and four directors also purchased shares. Columbia is the Pacific Northwest bank that acquired both Bank of Commerce and Umpqua Bank. These purchases follow a big drop in the stock post Q4 2023 earnings. The dividend yield is approaching almost 7%.

I’ve been banking with Umpqua Bank for my business for over 20 years. I once wrote an article about the company in 2008 called Umpqua Holdings: Can the Free Cookies Last? and had an opportunity to interview its prior CEO Ray Davis during the depths of the Great Recession.

Following the merger between Umpqua Bank and Columbia Banking System the parent company is called Columbia but the bank is primarily doing business as Umpqua Bank. The deal was first announced in October 2021 and was finally completed on March 1, 2023. Through the merger, Columbia Banking System became the largest bank headquartered in the Northwest, growing to over $50 billion in assets and 300 locations across Washington, Oregon, Idaho, California, and other states.

As mentioned earlier, Columbia Banking System’s stock had recently taken a big hit following Q4 2023 earnings, but the apparent insider confidence in the company despite poor results is fascinating. Net interest margin dropped on both a sequential quarter and YOY basis to 3.78% for the quarter, compared to 3.91% in Q3 2023 and 4.01% in Q4 2022. This appears to be largely due to 2022 CD repricing as depositors have come to expect better rates on CDs. Overall compared to other banks, a net interest margin of 3.78% is very healthy.

Net interest income also fell on a sequential basis to $453.6 million, lower than the $480.9 million recorded in Q3 2023. However, the number was up from the $305.5 net interest income in Q4 2022. Non-interest income increased by $22 million to $65.5 million, but this was offset by non-interest expenses increasing by $33 million due to a $33 million FDIC special assessment recorded during the quarter. The company also increased its provision for credit losses to $54.9 million – compared to $36.7 in the prior quarter and $32.9 in Q4 2022.

Not all results were poor though, while net charge-offs, non-performing loans, and non-performing assets all increased slightly, they all still remained relatively low at 0.31%, 0.30%, and 0.22% respectively. Tangible book value per share also increased by 13% on a sequential quarter basis to $16.12 per share. Total deposits remained stable compared to Q3 2023 at $41.6 billion, but increased from $27.1 billion in Q4 2022 on account of the merger. Total loans increased to $37.4 billion as well.

Another promising sign is Columbia Banking System’s dividend. Despite the banking crisis following the collapse of Silicon Valley Bank, the company did not cut its dividend to save capital, and has been steadily increasing its dividend over the years, as can be seen from the table below. While this dividend growth is certainly promising, and the dividend yield is an attractive 7.38%, we are slightly concerned about the company’s ability to continue paying such a high dividend.

EPS for the quarter was $0.44, implying the company is paying out around 81% of its earnings in the form of dividends. While it’s nice to see value being returned to shareholders, this doesn’t leave much capital for the company to continue expansion.

Columbia Banking System has certainly underperformed in the recent quarter, but the over 20% drop in the stock price fails to account for some of the positive signs. This appears to be a classic case of the market beating down a stock by far more than it deserves, and it seems likely that the stock will recover once this regional bank crisis resolves.

While we believe Columbia Banking System isn’t as hopeless as the market makes it out to be, it also doesn’t have the “wow factor” that might encourage us to add it to our model portfolio right away. Our biggest concern at the moment would likely be dividend safety in recent quarters, as well as the room for further organic growth. We will take a closer look at the company in the coming months if we find that their CRE or office portfolio is not deeply impacted by macroeconomic factors.

Welcome to edition 719 of Insider Weekends. Insider buying increased with insiders purchasing $40.05 million of stock compared to $30.84 million in the week prior. Selling decreased to $731.37 million compared to $970.74 million in the week prior.

Sell/Buy Ratio: The Insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by the total insider purchases that week. The adjusted ratio dropped to 18.03. In other words, insiders sold more than 18 times as much stock as they purchased. This week, the Sell/Buy ratio was favorable, compared to the prior week when the ratio stood at 31.47.

Notable Insider Buys:

1. Columbia Banking System, Inc. (COLB): $19.50

Shares of this regional bank were acquired by 12 insiders:

• President, CEO Clint Stein acquired 9,500 shares, paying $20.96 per share for a total amount of $199,112. Mr. Stein increased his stake by 6.08% to 165,684 shares with this purchase.
• Director John F. Schultz acquired 8,559 shares, paying $20.40 per share for a total amount of $174,561. Mr. Schultz increased his stake by 25.69% to 41,870 shares with this purchase.
• Senior Executive VP Christopher Merrywell acquired 5,000 shares, paying $21.09 per share for a total amount of $105,449. Mr. Merrywell increased his stake by 10.93% to 50,727 shares with this purchase.
• Director Luis Machuca acquired 4,889 shares, paying $20.58 per share for a total amount of $100,638. Mr. Machuca increased his stake by 8.74% to 60,835 shares with this purchase.
• Director Eric Forrest acquired 4,750 shares, paying $20.89 per share for a total amount of $99,245. Mr. Forrest increased his stake by 23.65% to 24,838 shares with this purchase.
• Senior Executive VP Torran B. Nixon acquired 3,650 shares, paying $20.49 per share for a total amount of $74,802. Mr. Nixon increased his stake by 2.76% to 135,750 shares with this purchase.
• Director Mark A. Finkelstein acquired 3,592 shares, paying $20.87 per share for a total amount of $74,965. Mr. Finkelstein increased his stake by 17.68% to 23,908 shares with this purchase.
• Chief Financial Officer Ron L. Farnsworth acquired 2,500 shares, paying $20.71 per share for a total amount of $51,775. Mr. Farnsworth increased his stake by 1.59% to 160,073 shares with this purchase.
• Director S Mae Numata acquired 2,400 shares, paying $21.09 per share for a total amount of $50,608. Mr. Numata increased his stake by 9.26% to 28,316 shares with this purchase.
• Director Craig D. Eerkes acquired 2,141 shares, paying $20.82 per share for a total amount of $44,579. Mr. Eerkes increased his stake by 7.38% to 31,163 shares with this purchase.
• Chief Strategy/Innovation Offc Aaron James Deer acquired 2,000 shares, paying $19.32 per share for a total amount of $38,648. Mr. Deer increased his stake by 5.74% to 36,850 shares with this purchase.
• Director Randal Lee Lund acquired 1,000 shares, paying $19.29 per share for a total amount of $19,288. Mr. Lund increased his stake by 6.19% to 17,149 shares with this purchase.

You can view the list of recent insider transactions for Columbia Banking System, Inc. here.

2. Relmada Therapeutics Inc (RLMD): $4.6

Shares of this specialty pharmaceutical company were acquired by 3 insiders:

• Chief Executive Officer Sergio Traversa acquired 100,000 shares, paying $3.87 per share for a total amount of $386,738. Mr. Traversa increased his stake by 69.43% to 244,024 shares with this purchase.
• CA and CO Chuck Ence acquired 38,970 shares, paying $3.87 per share for a total amount of $150,920. Mr. Ence increased his stake by inf% to 38,970 shares with this purchase.
• Chief Financial Officer Maged Shenouda acquired 32,675 shares, paying $3.85 per share for a total amount of $125,717. Mr. Shenouda increased his stake by 1466.56% to 34,903 shares with this purchase.

You can view the list of recent insider transactions for Relmada Therapeutics Inc here.

3. RBB Bancorp (RBB): $17.62

Director James Kao acquired 32,000 shares of this regional bank, paying $17.56 per share for a total amount of $562,020. Mr. Kao increased his stake by 7.14% to 480,376 shares with this purchase.

You can view the list of recent insider transactions for RBB Bancorp here.

4. Compass Diversified Holdings (CODI): $22.25

Shares of this holding company were acquired by 2 insiders:

• Assistant Secretary Patrick A. Maciariello purchased 22,500 shares at an average price of $22.29 totaling $501,532.
• Director Simon Heidi Locke purchased 2,488 shares at an average price of $22.10 totaling $54,982.

You can view the list of recent insider transactions for Compass Diversified Holdings here.

5. Burke & Herbert Financial Services Corp. (BHRB): $57

Shares of this regional bank were acquired by 3 insiders:

• Director Julian Forrest Barnwell acquired 5,663 shares, paying $57.82 per share for a total amount of $327,459.
• Director Jose David Riojas acquired 2,000 shares, paying $60.00 per share for a total amount of $120,000.
• Director Shawn Patrick Mclaughlin acquired 1,500 shares, paying $59.36 per share for a total amount of $89,034. Mr. Mclaughlin increased his stake by 3.06% to 50,500 shares with this purchase.

You can view the list of recent insider transactions for Burke & Herbert Financial Services Corp. here.

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Meta Platforms Inc – Class A (META): $474.99

Shares of Meta were sold by 3 insiders:

• COB and CEO Mark Zuckerberg sold 190,243 shares for $399.25, generating $75.96 million from the sale. A majority of these shares were sold through the Chan Zuckerberg Initiative Foundation and the rest through a trust.
• Chief Operating Officer Javier Olivan sold 6,500 shares for $400.00, generating $2.60 million from the sale.
• Chief Legal Officer Jennifer Newstead sold 566 shares for $404.00, generating $228,664 from the sale.

You can view the list of recent insider transactions for Meta Platforms here.

2. Olin Corp. (OLN): $51.35

Shares of this specialty chemicals company were sold by 4 insiders:

• Chairman, President & CEO Scott McDougald Sutton sold 584,865 shares for $53.92, generating $31.54 million from the sale. 205,534 of these shares were sold as a result of exercising options immediately prior to the sale.
• VP, HR Valerie A. Peters sold 81,535 shares for $52.47, generating $4.28 million from the sale. 71,800 of these shares were sold as a result of exercising options immediately prior to the sale.
• VP & CFO Todd A. Slater sold 63,250 shares for $54.15, generating $3.42 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• VP & Pres, Epoxy & Corp Strategy Damian Gumpel sold 9,238 shares for $53.20, generating $491,460 from the sale.

You can view the list of recent insider transactions for Olin Corp. here.

3. Coinbase Global Inc (COIN): $129.22

Shares of cryptocurrency brokerage were sold by 3 insiders:

• Director Frederick Ernest Ehrsam sold 195,672 shares for $126.78, generating $24.81 million from the sale.
• Chief Legal Officer Paul Grewal sold 10,000 shares for $121.02, generating $1.21 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• President & COO Emilie Choi sold 9,500 shares for $128.89, generating $1.22 million from the sale.

You can view the list of recent insider transactions for Coinbase Global here.

4. Salesforce Inc (CRM): $285.66

Shares of Salesforce were sold by 3 insiders:

• Chair and CEO Marc Benioff sold 75,000 shares for $284.03, generating $21.30 million from the sale.
• Pres/Chief Engineering Officer Srinivas Tallapragada sold 10,000 shares for $283.12, generating $2.83 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
• Co-Founder and CTO, Slack Parker Harris sold 4,200 shares for $287.95, generating $1.21 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Salesforce Inc here.

5. Atlassian Corporation (TEAM): $217.39

Shares of this productivity software company were sold by 2 insiders:

• Co-CEO, Co-Founder Scott Farquhar sold 41,205 shares for $252.81, generating $10.42 million from the sale.
• Co-CEO, Co-Founder Michael Cannon-brookes sold 41,205 shares for $252.81, generating $10.42 million from the sale.

You can view the list of recent insider transactions for Atlassian Corporation here.

You can view the full list of sales from this Insider Sales page.

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium and Plus members.