Recently two articles were published regarding regional banks that may be of investor interest. The first covered the Southern National Bancorp of Virginia (NASDAQ:SONA) and the second covered Westfield Financial Inc. (NASDAQ:WFD). Both articles highlighted areas of strength, which investors should look to as rationale for investing. Recent events within both banks have helped to further substantiate the areas of strength mentioned within the original articles, further sweetening the offerings for investors.
SONA is a regional bank consisting of 19 branches located within the Maryland and Virginia area. SONA management has discussed buyout opportunities in the past and the bank remains flush with cash. Since the writing of the initial article, the following developments have taken place with regards to shares of SONA.
Following the writing of the original article, SONA shares are trading near $10.28, representing 3.5% gains (approximate) for investors. Shares remain up around 30% on the year.
The SONA quarterly dividend has increased from 5 cents to 6 cents. This dividend represents the bank's sixth consecutive quarterly dividend.
Net income increased to $1.5 million in the first quarter of 2013, from $1.3 million in the fourth quarter of 2012.
Investor Rationale: SONA
The initial article cited substantial year-over-year increases in net income from 2011 to 2012. While some of this was due to the selling of FHA loans to other institutions, SONA has nonetheless continued the trend of increasing net income by reporting an increase from the fourth quarter of 2012 to the first quarter of 2013. The initial article cited the strong SONA cash position, as well as a strong dividend in comparison to local peers. An increase in the quarterly dividend should provide investors comfort in knowing that the SONA financial position remains strong. Finally, 3.5% gains since the writing of the original article have reaffirmed the bullish tendencies of SONA stock year to date.
WFD is a regional bank operating 12 locations within western Massachusetts. The bank has experienced some insider buying activity and has recently announced expansion into Connecticut. Since the writing of the initial article, the following developments have taken place with regards to shares of WFD.
Following the writing of the original article, WFD shares are trading near $7.48, representing a 1% gain (approximate) for investors. Shares remain up around 2.6% on the year.
The bank recently announced a quarterly dividend of 6 cents and a special dividend of 5 cents.
The bank has announced a new share buyback program, authorizing the bank to purchase up to 5% of shares as of April 30. This represents about 1,092,000 outstanding shares.
Investor Rationale WFD
The initial article cited a buyback plan for 2,472,000 outstanding shares. This buyback plan has been completed. Furthermore WFD has reaffirmed a commitment to repurchasing shares by announcing the buyback plan listed above. The initial article cited a pattern in which total dividend payments for the second and fourth quarters have been substantially larger than those made within the first and third quarters. WFD has continued this trend with the announcement of both the special and regular dividends for the second quarter. Additionally, WFD has demonstrated strength through an improvement in net income from $1.6 million to $1.8 million over the first quarter of 2013.
Investors should find comfort in the events and changes listed above. SONA has proven to be a solid regional player through a strong financial position and a strong buyout potential cited within the first article. Furthermore, WFD has demonstrated a policy of continued share buybacks. The buyback plan coupled with expansion plans into new Connecticut territory should only be of benefit to shareholders.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Investors should complete their own due diligence before finalizing investment decisions.