It’s one thing to take a new position as the head of an organization and promise to do everything you can to help the company reach the highest levels of achievement. It’s a whole new level when you back up the pledge with seven figures.
Southern National Bancorp of Virginia, Inc. (SONA) named Mr. Dennis J. Zember Jr., President and Chief Executive Officer (CEO) of the regional bank in February 2020. (1) Upon taking the new job, Zember said, “I am very eager about partnering with the Board and the employees at Southern National to continue building this exceptional franchise. Together, we will work tirelessly to build value for our investors and our clients.”
He has 1.5 million reasons why he wants to maximize value for investors, he’s purchased more than $1.5 million in SONA shares since being named CEO, including a $1.1 million buy last week. (2) The best we can tell, Zember only sold stock or exercised options during his time at Ameris Bancorp (ABCB) prior to joining Southern National Bancorp of Virginia.
To get started, the CEO will receive $52,000 a year in dividend income based on the bank’s current $0.40 yearly payout and the 130,000 shares of SONA Zember has added to his portfolio since February 2020. (3).
A couple of ways Zember can “build value for investors” is to help the company’s value get on par with the industry based on its book value and price to earnings. SONA trades at 0.75 times its book value, which is a little more than half the industry’s norm of 1.4. The regional bank’s current book value is 15.96. (4)
SONA shares would rise more than 34% if the new CEO can execute a plan that encourages Wall Street to pay just 1 times the current book value. The stock would nearly double if the investors values the company at the industry average of 1.4.
The three analysts covering Southern National Bancorp of Virginia expect the bank to book earnings per share of $0.97. (5) As we type, the street assigns SONA a price to earnings (P/E) ratio of 12.4; whereas, its competitors trade at an average of 14.2 times the bottom line.
If Zember can deliver on the street’s mark of $0.97 and trade at the average bank’s P/E of 14.2, the stock would trade at $13.77, or 15.75% higher than where it is today ($11.90). The company has blown past Wall Street’s expectations in the two quarters following Zember taking charge. If the trend of bullish EPS surprises continues under new management, there could be upside to SONA 2021 earnings per share.
Overall:
New CEO Dennis J. Zember Jr. appears to be lining his personal financial interests with shareholders as he’s invested more than $1.5 million of his own money in the company he now heads.
Southern National Bancorp of Virginia, Inc. (SONA) could offer the CEO and investors a decent return in the next 12 months. Shares offer an attractive combination of growth potential and income. The southeast regional bank could provide a total return between 19%-37% if it could trade at the industry average P/E or price to book, respectively.
1 – https://www.prnewswire.com/news-releases/appointment-of-dennis-j-zember-jr-as-president-and-chief-executive-officer-of-southern-national-bancorp-of-virginia-inc-301008406.html
2 – https://www.secform4.com/insider-trading/1318321.htm
3 – https://finance.yahoo.com/quote/SONA?p=SONA
4 – https://finance.yahoo.com/quote/SONA/key-statistics?p=SONA
5 – https://finance.yahoo.com/quote/SONA/analysis?p=SONA
