One of the most bullish insider transaction patterns investors can pick up on is ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.Here, we are going to highlight a cluster buying pattern at First Citizens Bancshares Inc (FCNCA:US). First Citizens Bancshares is the largest family-controlled bank holding company in the US. Its primary subsidiary is First Citizen Bank, which has a presence in 22 states and operates as a commercial and investment bank. It recently merged with financial services firm CIT Group. The company is listed on the Nasdaq Stock Exchange and currently has a market capitalization of $11.1 billion.
First Citizens Bancshares Inc: Insider Buying
Our insider transaction data shows that between April 29 and May 16, four insiders at First Citizens Bancshares bought stock. Those who bought shares were:
- CEO/Chairman Frank Holding Jr. (671 shares @ $630.00 per share)
- CFO Craig Nix (300 shares @ $658.96 per share)
- Director Robert Newcomb (750 shares @ $669.55 per share)
- Independent Director Harold Durham (1,000 pref C Shares @ $22.65 per share)
- Independent Director Robert R Hoppe (14 shares @ $637.664 per share)
In total, the five insiders spent just over $1 million on company stock.
This buying activity caught our attention for two main reasons.
Firstly, it is very interesting that the two most influential insiders within the business, the CEO and the CFO, are both part of the recent cluster buy. Mr. Holding Jr. has worked within the business for close to 40 years and has been CEO for a little over 20 years. Meanwhile, Mr. Nix has worked at the company for over 30 years and has been the CFO at First Citizens Bank for the last eight years. These insiders are likely to have an intimate understanding of the business so it’s notable that they are picking up company stock at these levels.
Secondly, three of the four insiders have spent a large amount of money buying shares. This suggests that they are confident in the prospects of the business. It’s worth noting that Mr. Newcomb has upped his holding three-fold, which signals that he strongly believes the market is undervaluing the shares.
First Citizens Bancshares recently produced a solid set of Q1 results, with deposits and loans growing since the end of last year.
Total loans during the quarter excluding those gained through the CIT Group merger grew by $455 million, which was 2.8% on an annualized basis, and total deposits were up $833 million or 3.7% annualized. Net interest income of $649 million for Q1 2022 was up $310 million compared to Q1 2021. The interest income on loans was $621 million during the quarter which was much higher than the $328 million achieved in the first quarter of last year.
The company said that due to the strength of the balance sheet, it expects to start repurchasing shares in the second half of this year.
“We were additionally pleased with the positive momentum in our card, merchant, wealth and rail lines of business. Expenses were well-controlled during the quarter, and we’re committed to achieving our target cost savings from the CIT merger. Credit quality remained strong and net charge-offs remained low,” said CEO Frank Holding Jr.
Having read through these promising results and the positive comments from the CEO, we see the recent insider purchases of company stock at First Citizens Bancshares as a positive development. It would appear that several insiders, including those at the top of the business, believe that the shares are undervalued by the market at present.