8-KOther Events

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Corporate Update (Sep 4, 2018)

Filed September 4, 2018For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) announced on September 4, 2018, an "Other Event" detailing a significant share repurchase. The company acquired 100,000 shares of its Class A common stock for $465 per share from a trust managed by Ella Ann Holding. This transaction involved shares held by a related party, as Mrs. Holding is the widow of the former Executive Vice Chairman and mother of the current Chairman and CEO, and Vice Chairman. The repurchase was conducted under a previously approved authorization allowing for the purchase of up to 800,000 shares or $282 million over one year. The transaction was subject to rigorous review and approval processes. The Executive Committee approved the terms, with the Chairman and CEO and Vice Chairman recusing themselves. The independent Audit Committee, advised by independent legal counsel and an investment banking firm, reviewed and approved the transaction in accordance with the company's related person transaction policy. The purpose of the sale was for Mrs. Holding to generate funds for estate taxes related to her late husband's passing. The repurchase was funded by BancShares' cash reserves and resulted in a 0.9% reduction in outstanding Class A common stock.

Key Highlights

  • 1First Citizens BancShares (FCNCA) repurchased 100,000 shares of its Class A common stock on August 29, 2018.
  • 2The purchase price was $465 per share.
  • 3The seller was Ella Ann Holding, trustee of her revocable trust, a related party to key executives.
  • 4The transaction was approved under an existing board authorization for share repurchases.
  • 5Independent advisors (legal counsel and investment banking firm) were consulted by the Audit Committee to evaluate the transaction.
  • 6The repurchased shares were retired and restored to authorized but unissued status.
  • 7The transaction reduced outstanding Class A common stock by 0.9%.

Frequently Asked Questions

First Citizens BancShares repurchased these shares as part of an ongoing share purchase authorization approved by its board of directors. The purpose of repurchasing shares is typically to reduce outstanding shares, potentially increasing earnings per share, and to return capital to shareholders.

Yes, the transaction involved a related person as the seller was Ella Ann Holding, widow of a former Executive Vice Chairman and mother to the current Chairman/CEO and Vice Chairman. The company followed its related person transaction policy. The Executive Committee approved the terms (with relevant parties recusing themselves), and the independent Audit Committee, with the assistance of independent legal counsel and an investment banking firm, reviewed and approved the transaction.

The company funded the repurchase using its cash reserves. The transaction reduced the outstanding Class A common stock by 0.9% (100,000 shares out of 10,905,220 outstanding shares after the purchase). The repurchased shares were retired, meaning they are no longer outstanding and cannot be reissued without further board action.

The $465 per share price was determined after review by the Audit Committee, assisted by an independent investment banking firm. This suggests the price was considered fair market value, especially given the involvement of independent advisors in assessing the transaction terms.