Taking advantage of its depressed stock price, First Palm Beach Bancorp. said Tuesday it would repurchase about 5% of its common shares for the second time this year.
The West Palm Beach, Fla.- based company said its board and regulators at the Office of Thrift Supervision had approved a plan to repurchase up to 261,453 of its 5.4 million shares during a one-year period beginning Sept. 30,
On Aug. 5, the $1 billion asset -thrift completed a buyback program in which they purchased 274,819 shares. They were repurchased at an average of $16.63.
Randy Guemple, senior vice president and chief financial officer at First Palm Beach, said the bank decided to use its surplus capital to buy shares which have been trading at just below tangible book value of $19.55 a share.
"It just seems the natural thing to do because of our capital situation and where our stock price is at," he said. "We have room to grow and still do the buyback."
The thrift reported capital of 10.11% at June 30, well above regulatory requirements.
While stock buybacks have been common among commercial banks, they are less frequent among thrifts which have lacked the financial means to repurchase shares until recently.
"They finally have capital, though they never used to," said Deborah R. Baylus, a thrift analyst at J.W. Charles Securities in Boca Raton, Fla. "Recently, everybody's been doing buybacks ."
Mr. Guemple said the primary reason for the depressed stock price has been weak earnings. In the second quarter, the thrift reported a profit of 29 cents a share. The company operates First Federal Savings and Loan, Association.
In general, traditional thrifts have traded at depressed levels as their core business -- mortgages -- has fallen off with the rise in interest rates. They also face intense competition from banks, who completed their own recovery up to two years earlier.
Mr. Guemple said the company is looking to diversify its business, including expanding its consumer lending efforts, while broadening its marketshare beyond the 7% it now has in wealthy Palm Beach County.
"We think we can also use our capital to expand," he said.