Insider Confidence Meets Capital Return at First Citizens – Buyback Wednesdays

First Citizens BancShares, Inc. (FCNCA), a top-20 U.S. bank with $229.65 billion in assets and a member of the Fortune 500, has consistently stood out for its disciplined expansion through FDIC-assisted acquisitions. We’ve covered FCNCA multiple times in our Monthly Newsletter and Insider Weekends, and I initially presented the stock at ValueX Vail shortly after its game-changing acquisition of Silicon Valley Bank, which instantly doubled its asset base.

We decided to revisit the company on account of a new development at the company: a recently announced $4 billion stock buyback representing roughly 14% of its market cap at the time of announcement. This development is backed by insider buying, creating a classic Double Dipper scenario where both executives and the company are actively acquiring shares, signaling strong internal confidence.

Source: IA Special Situations Newletter (May 2023)

First Citizens BancShares, Inc. (FCNCA): $1,862.62

Market Cap: $24.75B

EV: $35.69B

Key Insights

• The bank’s decision to terminate its FDIC loss share agreement in April 2025 signals confidence in asset quality, reducing overhead from legacy portfolios and freeing capital for shareholder returns.  
• Insider buying has also picked up, especially of class B common shares, which trade at a big discount to class A shares and have higher voting rights.
• The bank has been consistently buying back its shares, reducing shares outstanding by over 17% over the last three years.
• Net interest income rose 2% sequentially in Q2 2025, marking a rebound after declining for several quarters.
• Tangible book value per share increased by 10.4% over the prior year and 2.7% sequentially, despite $2.9 billion in share repurchases over the past 12 months.
• Loan originations have remained subdued over the past two quarters, reflecting increasing pressure from a challenging macroeconomic environment.
• Management has revised its guidance downward for H2 2025, pointing to the potential for interest rate cuts as a key driver of the more cautious outlook.

First Citizens leads the industry in FDIC-assisted acquisitions, completing more such deals than any other U.S. bank since 2009. Its takeover of Silicon Valley Bank was the largest of these transactions, elevating First Citizens into a major regional player nearing $230 billion in assets. Currently classified as a Category 4 bank, its rapid expansion will likely move it into Category 3 within two to three years, triggering higher compliance costs and new regulatory mandates such as annual stress tests and “living will” plans.

The bank recently terminated its loss-sharing agreement with the FDIC ahead of schedule, concluding that loan losses from the acquired Silicon Valley Bridge Bank portfolio are unlikely to exceed the $5 billion threshold that would trigger FDIC participation. It also reflects its confidence in the quality of the acquired loans and its financial strength to absorb any future losses independently, without relying on FDIC support.

The decision reduces operational complexity and cost by eliminating extensive reporting, compliance checks, audits, and specialized systems required under the agreement. The loss-share arrangement had introduced material regulatory overhead, including heightened legal, audit, and risk management functions to monitor covered assets. By shedding these burdens, the bank can streamline operations and refocus resources on its core strategic initiatives.

Valuation

The bank is currently trading just above its tangible book value, a reasonable valuation considering its solid asset base and consistent revenue growth. For perspective, Berkshire Hathaway historically viewed 1.2x tangible book value as an attractive level for share repurchases.

With First Citizens’ tangible book value per share at $1,594 as of June 2025, a 1.2x multiple would imply a share price of $1,912.80. The class A shares are currently trading at $1,862.62, placing it right at that threshold, suggesting the valuation is fair and well-aligned with buyback logic. Class B shares, on the other hand, are trading below book value.

Insider Buying

Insider activity at First Citizens has been both consistent and impressively well-timed. Just before the stock surged following the SVB acquisition, the CEO and CFO were busy buying shares in February and March 2023, joined by a director, echoing similar opportunistic buying during the pandemic crash in March 2020. Back then, I calculated that the stock was trading below tangible book value, presenting a compelling setup. Sure enough, shares rallied from ~$1,300 to over $2,300 before settling back around $1,800.

One especially intriguing detail: Chairman and CEO Frank B. Holding Jr. picked up Class B shares. Despite offering 16 votes per share (versus just one for Class A), these shares trade at a discount because they’re OTC-listed and thinly traded. The Holding family has a long legacy of insider buying, dating back to Frank Holding Sr., and that tradition continues.

Holding Jr. doubled down again in June 2023, selling some Nasdaq-listed Class A shares (FCNCA) to load up on the cheaper, higher-voting Class B shares (FCNCB). That share-class swap highlights the family’s long-term mindset: more voting power for less money.

Fast-forward to 2025, and insider buying has picked up once again. With insiders collectively owning roughly 30% (60% of Class B common stock and approximately 20% Class A common stock) of the company, their buying behavior sends a clear message: they see significant value ahead.

Source: InsideArbitrage

Share Repurchases

First Citizens announced an additional $4 billion share repurchase program for its Class A common stock, representing over 14% of its market cap at the time of announcement. The buyback initiative underscores the company’s strong capital and liquidity position, backed by $63.62 billion in liquid assets, allowing the bank to return capital to shareholders without compromising balance sheet strength.

The new authorization will go into effect once the prior $3.5 billion repurchase program, launched in July 2024, is completed (expected by the end of Q3 2025). To date, roughly 83% of that program has been utilized, reducing Class A common shares by 10.77%, and total shares outstanding (Class A + Class B) by 10.02%.

In Q2 alone, First Citizens repurchased 338,959 shares for $613 million, equating to 2.53% of total shares outstanding. Over the past 12 months, total buybacks reached $2.9 billion, or about 10.2% of the total common stock outstanding.

Historically consistent in buybacks, the company has trimmed shares outstanding by over 17% in the last three years. With shares trading at a 1.2x price-to-tangible-book value, management views current levels as attractive for accretive repurchases. Going forward, buybacks are expected to continue at the upper end of the $600 million–$900 million quarterly pace until the CET1 capital ratio aligns with its target range, after which the repurchase cadence may moderate.

Source: First Citizens (Investor Presentation)

Peers

Among regional bank peers, First Citizens competes closely with Citizens Financial Group (CFG), Fifth Third Bancorp (FITB), and KeyCorp (KEY). Over the past three years, First Citizens significantly outpaced its competitors in total shareholder return, driven in part by its strategic acquisitions, including the transformative Silicon Valley Bank deal. However, over the past year, that trend has reversed, with First Citizens underperforming the group amid sector-wide headwinds and digestion of its SVB acquisition.

Source: Seeking Alpha

From an operating metrics standpoint, First Citizens tops the list in Return on Assets (ROA) and comes second in both Return on Equity (ROE) and Net Interest Margin (NIM). Despite this solid profitability profile, the shares trade at roughly 1.2× tangible book, in line with FITB and KEY and only modestly above CFG, which is the lone peer still below book. What First Citizens doesn’t offer is a rich dividend. The peer group largely yields 3.5%–4%, whereas it directs more capital to growth and buybacks. With a payout ratio of just under 7%, there is room for dividend increases in the future.

Growth tells the same story. Revenue, EPS, and total assets have compounded at a far faster rate at First Citizens than at CFG, FITB, or KEY, although its 2023 acquisition of Silicon Valley Bank has supercharged those figures, making year-over-year comparisons more challenging. Even so, the bank’s above-average profitability and disciplined capital return program help explain why investors continue to keep it in focus despite recent share-price underperformance.

Key Metrics

• The NPL-to-loans ratio is a key indicator of a bank’s asset quality, measuring the share of loans that have gone 90+ days without payment and are unlikely to be repaid, essentially, the bank’s “bad loans.” A lower ratio signals a healthier loan book and stronger credit discipline. For First Citizens, the NPL ratio has consistently ranged between 0.30% and 0.90% over the last decade. Even as net interest margins (NIMs) expanded, the bank has maintained high credit standards, demonstrating prudent risk management and disciplined underwriting.
• The Common Equity Tier 1 (CET1) capital ratio compares a bank’s capital against its assets. As of Q2 2025, First Citizens has a CET1 capital ratio of 12.12, well above the regulatory minimum. This provides a solid capital buffer, keeping the bank resilient to potential credit shocks. But this metric has slowly been shrinking in recent quarters.
• The assets-to-equity ratio reveals the proportion of an entity’s assets that have been funded by its shareholders. First Citizens has maintained a ten-year median assets-to-equity ratio of 10.7, which sits squarely within the industry’s standard range, reflecting a balanced approach. It is neither unusually conservative nor excessively leveraged. 
• Return on Assets shows the percentage of how profitable a company’s assets are in generating revenue. After a significant spike in this metric following the SVB acquisition, it has normalized to the 1-1.5% range, which is modest, though not impressive.

Q2 results

First Citizens BancShares reported decent Q2 results, beating top and bottom line estimates. Key earnings metrics were solid, marked by net interest income growth, net charge-offs at their lowest level since the second quarter of 2024, and adjusted noninterest expense at the low end of its guidance range. Funding mix remained stable with 80.8% of total funding composed of deposits.

Source: First Citizens (Investor Presentation)

• Revenue totaled $2.38 billion, exceeding forecasts by $170 million despite a 3.3% Y/Y decline.
• Non-GAAP EPS came in at $44.78, beating estimates by $5.69.
• Net interest margin held steady at 3.26%, with lower rates on interest-bearing deposits offset by higher borrowing costs and lower purchase accounting accretion (PAA). 
• Net interest income rose 2% sequentially, marking a rebound after declining in five of the last eight quarters.
• Tangible book value per share increased by 10.4% over the prior year and 2.7% sequentially, reflecting $2.9 billion in stock buybacks over the past 12 months.
• Noninterest income rose 7.2%, driven by favorable customer derivative valuations and investment gains. 
• Rail segment rental income increased $5 million with utilization at 96.9%, now in its 15th straight quarter of positive repricing.
• SVB Commercial segment loans contracted $289 million (3.1% annualized), largely from Tech and Healthcare Banking, partially offset by growth in Global Fund Banking. Deposits rose $778 million within the SVB Commercial segment.
• Net charge-offs fell to $119 million (0.33% of avg. loans) from $144 million (0.41%) in Q1, thanks to improvements in the SVB and Commercial segments.
• Liquidity remained strong with $63.62 billion in liquid assets, up from $62.79 billion last quarter.

Outlook

Given the macroenvironment, key metrics such as net interest income and noninterest income ranges were tightened, reflecting a more cautious but precise outlook. The CFO explained,

“The revision reflects the new interest rate curve as well as the jumping off point from the second quarter.”

Source: First Citizens (Investor Presentation)

As seen from the table above, the company anticipates Q3 loans in the $141 billion to $144 billion range, driven by growth in general and commercial banks and SVB Commercial. For the full year, guidance was modestly lowered to $143 billion to $146 billion.

Deposit guidance for Q3 is $159 billion to $162 billion, with full-year guidance revised lower to $161 billion to $166 billion, due to a lower starting point and shifts in loan growth expectations.

Headline net interest income guidance for full-year 2025 was tightened to $6.68 billion to $6.88 billion.

Risks

• Management highlighted that loan originations have remained muted for two consecutive quarters, mirroring a broader industry trend where banks face stiff competition for high-quality borrowers. Federal Reserve data support this, showing a decline in commercial and industrial (C&I) lending since the start of the year, as businesses delay capital spending amid economic uncertainty and trade tensions.
• The rise of private credit is another headwind for banks with more stringent underwriting policies for their loans.
• First Citizens is highly exposed to macroeconomic conditions due to its commercial loan focus (only ~20% of its loans are consumer-related). Its profitability is closely tied to interest rates, and any Fed rate cuts could significantly compress its margins.
• First Citizens faces regulatory risk as rapid growth may push it into Category 3 status, triggering higher compliance costs. This includes annual stress tests and “living will” requirements.
• Integration-related risk of operations, personnel, technologies, services, and products of acquired companies. 
• Concentration of loans and leases in certain industries in healthcare, such as medical and dental industries, as well as the Rail segment, increases the risk of losses and could impair its earnings if these industries experience economic difficulties.
• The bank’s efficiency ratio increased to 63.2% in Q2 2025 from 56.4% in Q2 2024. This was driven by higher personnel and marketing costs, raising concerns about cost control and operating leverage.

Analysts’ View:

Analyst sentiment is mixed, with seven upward and four downward earnings revisions ahead of the next report. Piper Sandler recently downgraded the stock to Neutral from Overweight, citing sluggish loan and deposit growth in Q2, despite strong net interest income and solid capital levels. Goldman Sachs maintains a Buy rating but lowered its price target from $2,535 to $2,200 in response to more cautious forward guidance. Across 10 analysts, the average rating is “Buy,” and the mean price target stands at $2,338.40, reflecting 25.54% potential upside from the latest trading price.

Conclusion

Most banks are a leveraged business that do well during good times but face large risks during economic downturns. First Citizens, as a trusted FDIC partner for decades, actually shines during times of turmoil with their ability to buy assets on the cheap from banks that are failing.

First Citizens distinguishes itself with a fortress balance sheet, high-quality loan book, and strategic M&A, which enhances its tech, healthcare, and VC exposure. These integrations provide revenue diversification and could help buffer against broader lending slowdowns.

With a $4 billion buyback program, the bank offers investors a rare combination of stability and upside. Insider buying adds further conviction. As the broader banking sector grapples with rate normalization and rising credit risk, First Citizens stands out as a compelling, shareholder-friendly defensive play trading just above tangible book. If you can find a few class B shares, then you can get exposure to the company below book value. 

Welcome to edition 104 of Buyback Wednesdays, a monthly series that tracks the top stock buyback announcements during the prior month. The companies in the list below are the ones that announced the most significant buybacks as a percentage of their market caps. They are not the largest buybacks in absolute dollar terms. A word of caution. Some of these companies could be low-volume small-cap or micro-cap stocks with a market cap below $2 billion.

As earnings season just beginning to wind down, the number of companies announcing share buybacks has held steady, coming in at approximately 80 this month, compared to 70 in the prior month.

Top 5 Stock Buyback Announcements 

1. Bitmine Immersion Technologies, Inc. (BMNR): $33.30

On July 29, 2025, the Board of Directors of this blockchain technology company announced that it had approved a new $1 billion share repurchase program, equal to around 28% of its market cap at announcement.

2. The Bancorp, Inc. (TBBK): $64.85 

On July 7, 2025, the Board of Directors of this bank announced that it had approved an additional $500 million stock repurchase agreement, equal to around 18% of its market cap at announcement.

3. Gentex Corporation (GNTX): $26.75 

On July 16, 2025, the Board of Directors of this auto mirror manufacturer announced that it had approved an additional 40 million share repurchase agreement. This represents around 17.8% of its market cap at announcement.

4. Brightstar Lottery (BRSL): $15.73 

On July 29, 2025, the Board of Directors of this global lottery operator authorized a new $500 million share repurchase program, equal to around 16% of its market cap at announcement. 

5. Collegium Pharmaceutical, Inc. (COLL): $31.1

 On July 7, 2025, the Board of Directors of this pharmaceutical company authorized a new $150 million share repurchase program, equal to around 15% of its market cap at announcement. 

If you are reading this article and have not signed up to receive such articles by email, please sign up for our free, IA Plus or IA Premium service here. If you are an existing subscriber, you can login to the InsideArbitrage.com website to adjust the kinds of articles you receive by email by turning on or turning off specific categories of articles.

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.