Insider Weekends: Frank B. Holding, Jr. Purchases First Citizens’ Shares

When sifting through insider purchases to add to our daily Event Driven Monitor, we found that many of the insider purchases this week came from regional banks. We have also seen a lot of buyback announcements by regional banks.

One of these banks, First Citizens BancShares (FCNCA), is a familiar name for us. First Citizens Bancshares was founded in 1898, and from 1935 onwards, has been led by members of Robert P. Holding’s family. Over a decade ago, we used to see Frank B. Holding consistently buy shares and actually wrote about his purchases in a 2012 Focus Article. Mr. Holding Sr. unfortunately passed away in 2018, but since then his son, Frank B. Holding Jr., has continued to buy shares of the company.

Frank B. Holding, Jr. currently serves as Chairman and CEO of the company, and made his first purchase of First Citizens of 2023 this week, acquiring 1,020 shares for a total of $736,960. It’s been a little over 6 months since Mr. Holding Jr.’s last purchase. Market conditions during 2022 were generally terrible, but since his well-timed purchase last year, the stock has risen by about 24%. Given Mr. Holding’s history of well-timed purchases, we thought a closer look at the company was warranted.

First Citizens has an incredibly long history as a regional bank, and was founded and is based in North Carolina. The company now has over 550 branches across 22 different states. First Citizens has made a series of acquisitions of smaller banks in the past, but on January 3rd, 2022, they made their largest acquisition when they purchased CIT Group.

When looking at the company’s Q4 2022 results, it is difficult to compare the company properly on a YoY basis given that the CIT merger changed its financial reporting structure. First Citizens chose to exit $1.2 billion of Bank Owned Life Insurance policies, causing a tax charge of $55 million, which impacted Q4 2022 results. Through 2022, First Citizens repurchased $1.5 million Class A common shares during Q3 and Q4. Despite the difficult financial year and general economic conditions, loans grew by 8.5% or by $5.6 billion in 2022. Net revenue for the year turned out to be $5.08 billion and net income was $1.09 billion.

While adjusted EPS for Q4 2022 did grow from the Q3 2022, the $20.94 EPS value missed analysts’ earnings estimates of $22.98 per share. Net interest income for the quarter increased by $7 million or 0.9% from the previous quarter, but noninterest income declined by $4 million. Net income decreased significantly from the previous quarter by 18.4% to $257 million.

First Citizens also chose to set their provision for credit losses this quarter to $79 million, a $19 million increase from the previous quarter, stating numerous reasons for this decision, one of which was a deteriorating economic outlook. Nevertheless, the net loan charge-offs and net loan charge-off ratio for this quarter were just $24 million and 0.14% respectively – a slight increase from Q3 2022, which saw $18 million in net loan charge-offs. Allowance for credit losses also increased by $40 million to $922 million.

As we’ve mentioned when discussing banks this year in our Insider Weekend articles, economic conditions make it difficult to justify a purchase of any bank, including First Citizens Bancshares. First Citizen’s own estimates for the next quarter aren’t exactly steller either – as they predict only single digit growth in loans, leases, deposits, and net charge-offs, as well as a single digit decline in net interest income and non-interest income. With a Price/Book ratio of 1.29, First Citizens isn’t exciting enough for us to invest in the company now, but it was still good to see Mr. Holding Jr. purchase stock, especially considering his family’s investing history in the business.

Welcome to edition 658 of Insider Weekends. Insider buying increased significantly last week with insiders purchasing $119.38 million of stock compared to $14.78 million in the week prior. Selling also increased to $819.34 million compared to $511.82 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 total insider purchases that week. The adjusted ratio for last week dropped to 6.87 In other words, insiders sold almost 7 times as much stock as they purchased. The Sell/Buy ratio this week was favorable compared to the prior week when the ratio stood at 34.63.

Notable Insider Buys:

1. Triumph Financial, Inc. (TFIN): $64.1

Shares of this regional bank were acquired by 7 insiders:

• Director Carlos M. Sepulveda acquired 47,000 shares, paying $54.47 per share for a total amount of $2.56 million. Mr. Sepulveda increased his stake by 13.21% to 402,810 shares with this purchase.
• Director Todd C. Sparks acquired 9,500 shares, paying $55.08 per share for a total amount of $523,300. Mr. Sparks increased his stake by 28.16% to 43,234 shares with this purchase. These shares were purchased indirectly through various entities.
• Director Harrison B. Barnes acquired 3,921 shares, paying $54.79 per share for a total amount of $214,837. Mr. Barnes increased his stake by 19.99% to 23,533 shares with this purchase.
• Director Charles A. Anderson acquired 3,650 shares, paying $54.89 per share for a total amount of $200,348. Mr. Anderson increased his stake by 2.89% to 129,981 shares with this purchase.
• Director Laura Easley acquired 1,895 shares, paying $53.19 per share for a total amount of $100,795. These shares were purchased indirectly through a trust.
• Director Debra A. Bradford acquired 1,840 shares, paying $54.19 per share for a total amount of $99,710. These shares were purchased indirectly through a trust.
• Director Michael P. Rafferty acquired 1,500 shares, paying $54.96 per share for a total amount of $82,440. Mr. Rafferty increased his stake by 4.51% to 34,760 shares with this purchase.

You can view the list of recent insider transactions for Triumph Financial, Inc. here.

2. Phillips 66 (PSX): $98.81

Director Gregory Hayes acquired 10,250 shares of this energy manufacturing and logistics company, paying $97.75 per share for a total amount of $1 million. Mr. Hayes increased his stake by 253.15% to 14,299 shares with this purchase.

You can view the list of recent insider transactions for Phillips 66 here.

3. Charter Communications, Inc. (CHTR): $406.3

Director Steven A. Miron acquired 2,500 shares of this cable services provider, paying $384.35 per share for a total amount of $960,875. Mr. Miron increased his stake by 37.46% to 9,173 shares with this purchase.

You can view the list of recent insider transactions for Charter Communications, Inc. here.

4. First Citizens BancShares, Inc. (FCNCA): $778.13

Chairman and CEO Frank B. Holding Jr. acquired 1,020 shares of this regional bank, paying $722.51 per share for a total amount of $736,960. Mr. Holding increased his stake by 1.11% to 93,232 shares with this purchase.

You can view the list of recent insider transactions for First Citizens BancShares, Inc. here.

5. LendingTree, Inc. (TREE): $43.96

Chairman & CEO Douglas R. Lebda acquired 18,268 shares of this online loan company, paying $38.63 per share for a total amount of $705,740. These shares were purchased indirectly through a trust.

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

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

Notable Insider Sales:

1. ServiceNow, Inc. (NOW): $472.22

Shares of this software application company were sold by 3 insiders:

• Chairman & CEO William R. McDermott sold 53,933 shares for $458.83, generating $24.75 million from the sale.
• Chief Commercial Officer Paul John Smith sold 2,301 shares for $447.22, generating $1.03 million from the sale.
• Chief People Officer Jacqueline P. Canney sold 1,083 shares for $461.03, generating $499,293 from the sale.

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

2. Paragon 28, Inc. (FNA): $17.31

President & Chief Executive Officer Albert DaCosta sold 1,000,000 shares of this foot and ankle surgical systems designer for $17.00, generating $17 million from the sale. 500,000 of these shares were sold indirectly by Mr/ DaCosta’s spouse.

You can view the list of recent insider transactions for Paragon 28, Inc. here.

3. United Parcel Service, Inc. (UPS): $191.66

Shares of United Parcel Service were sold by 2 insiders:

• Pres Intl, Healthcare and SCS Kathleen M. Gutmann sold 55,574 shares for $188.07, generating $10.45 million from the sale.
• President, US Operations Nando Cesarone sold 7,767 shares for $190.00, generating $1.48 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 United Parcel Service, Inc. here.

4. SPS Commerce, Inc. (SPSC): $144.4

Shares of this cloud-based supply chain management solutions provider were sold by 2 insiders:

• CEO Archie C. Black sold 58,495 shares for $134.89, generating $7.89 million from the sale.
• President & COO James J. Frome sold 16,018 shares for $134.17, generating $2.15 million from the sale.

You can view the list of recent insider transactions for SPS Commerce, Inc. here.

5. Alcoa Corporation (AA): $52.74

Shares of this aluminum company were sold by 4 insiders:

• EVP & CFO William F. Oplinger sold 134,444 shares for $53.04, generating $7.13 million from the sale. 9,804 of these shares were sold as a result of exercising options immediately prior to the sale.
• EVP & Gen. Counsel Jeffrey D. Heeter sold 40,130 shares for $51.21, generating $2.06 million from the sale.
• EVP & CSIO Renato Bacchi sold 10,000 shares for $53.50, generating $535,000 from the sale.
• EVP & Chief Ext. Aff. Officer Harden Sonya Elam sold 4,514 shares for $51.87, generating $234,142 from the sale.

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

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

Disclaimer: Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.