Topline
Insiders at the struggling regional bank First Republic sold $11.8 million in the company’s stock this year shortly before its share price collapsed as angst about the bank’s future mounted following the demise of three similar institutions.
First Republic has had a chaotic week.
Key Facts
Six First Republic insiders sold 90,682 shares of the firm’s stock between January 17 and March 6 at a share pricqe of between $123 and $145, according to regulatory filings disclosed by the company; they include executive chairman James Herbert, CEO Michael Roffler, head of credit David Lichtman and banking chief Michael Selfridge.
Those shares would be worth just $3.1 million at First Republic’s Thursday share price of $34.355.
Herbert, the company’s founder and longtime CEO before stepping down last spring, was the biggest seller, offloading $4.5 million of his First Republic shares in separate January and February transactions.
A person close to Herbert told Forbes the 78-year-old’s sales were part of routine transactions intended to fund philanthropic efforts and estate planning, pointing out that the shares disposed of by Herbert in 2023 amounted to roughly 4% of his total stake in First Republic (the bank declined to comment on the nature of the executive transactions).
Wealth management head Robert Thornton was the next biggest seller, offloading $2.5 million worth of First Republic’s stock, followed by Lichtman ($2.5 million), Roffler ($979,000), Selfridge ($218,000) and board member Reynold Levy ($111,000).
The Wall Street Journal first reported on the publicly disclosed sales early Thursday.
Surprising Fact
First Republic’s only insider stock purchase this year was board member Rick Osterloh’s acquisition of $148,000 in shares on March 9, when the stock traded at $96.
Contra
Dozens of executives at other banks have bought the dip in their company’s stock during the onslaught on bank stocks; Friday’s 43 insider stock purchases among finance bigwigs was the busiest such day in three years, according to Insider Insights data.
Key Background
First Republic shares are down 70% since last Wednesday, the day Silvergate Capital announced it would shut down and a run began on its since-failed contemporary Silicon Valley Bank and fellow California bank. The company, which announced Sunday it secured $70 billion liquidity extension from the Federal Reserve and JPMorgan Chase, saw its shares crater as much as 36% in Thursday trading before reports about big banks’ plan to deposit tens of billions of dollars into First Republic and a subsequent announcement of $30 billion in fresh uninsured deposits spurred a dramatic turnaround for a 10% gain on the day for the sputtering stock. The CEO of Silicon Valley Bank’s parent company sold $3.6 million worth of his company’s stock two weeks before the institution’s forced closure, a move that is reportedly under investigation by federal prosecutors.
Further Reading
First Republic Stock Crashes But Bounces Back As Big Banks Reportedly Closing In On $30 Billion Rescue Plan (Forbes)
Banking Chiefs Are Aggressively Buying Their Own Stocks In The Wake Of Silicon Valley Bank’s Collapse (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2023/03/16/first-republic-bank-insiders-dumped-12-million-in-stock-before-70-collapse/