The Dow Jones Industrial Average is on track to reach a new all-time high after registering the worst five-day start to a year in its history. The Dow has advanced by approximately 14% from the low reached in February of this year, but the failure of OPEC members to reach an agreement to freeze output on Sunday may prevent the Dow from reaching its all-time high in the near future. Meanwhile, last week’s dollar volume of insider buying remained at an extremely low level, mainly owing to the ongoing first quarter earnings season. Officers and directors usually buy their companies’ shares for one simple reason, which is that they believe those shares are significantly undervalued and are poised to appreciate over time. Insider Monkey processed the few Form 4 filings disclosing insider buying on Friday and identified three companies with noteworthy insider buying activity.
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Four Insiders of This Bank Participated in a Private Placement of 2.00 Million Shares
Let’s begin our discussion with Severn Bancorp Inc. (NASDAQ:SVBI), which registered a cluster of insider buying last week involving four different corporate insiders. To start with, Executive Vice President and Chief Operating Officer James M. Anthony bought a new stake of 65,000 shares on Friday at $5.50 apiece. Moreover, Director Raymond S. Crosby purchased 36,000 units of common stock on the same day for $5.50 each, boosting his ownership to 46,050 units. Konrad M. Wayson, another member of the company’s Board of Directors, snapped up 20,000 shares on Friday at a price of $5.50 per share, which lifted his holding to 50,025 shares. Last but not least, an additional 20,000 shares were purchased by Board member John A. Lamon, who currently holds an ownership stake of 71,250 shares. These corporate insiders bought the aforementioned shares through a private placement of approximately 2.00 million shares that generated gross proceeds of roughly $11 million, before expenses. Severn Bancorp will use the proceeds to pay all unpaid interest and dividends on its Series B preferred stock, which was issued and sold to the U.S. Department of the Treasury in 2008, as well as partly redeem its Series B preferred stock. Severn Bancorp has not paid dividends on the Series B preferred stock since the first quarter of 2012, because the Federal Reserve has not granted approval for it to pay such dividends.
Severn Bancorp Inc. (NASDAQ:SVBI) operates as a savings and loan holding company that conducts its business operations mainly through two subsidiaries: Severn Savings Bank, FSB; and SBI Mortgage Company. The company’s 2015 net income reached $4.54 million, which was up by 55.9% year-over-year. The increase in net income was mainly driven by higher non-interest income and lower provisions for loan losses, which was partly offset by lower net interest income. Net interest income, which represents interest earned net of interest charges, declined by 4.4% to $22.16 million for 2015, which reflects a decrease in Severn Bancorp’s loan portfolio and higher interest expenses on deposits and borrowings. Meanwhile, total non-interest income grew by 41.3% year-over-year to $6.11 million, primarily due to higher revenue from mortgage banking activities and real estate commissions. Shares of Severn Bancorp have advanced by 17% in the past 12 months. None of the hedge funds tracked by Insider Monkey owned shares of Severn Bancorp Inc. (NASDAQ:SVBI) at the end of 2015.