8-KOther Events

FIRST CITIZENS BANCSHARES INC /DE/ 8-K Report, Corporate Update (Sep 23, 2019)

Filed September 23, 2019For Securities:FCNCAFCNCPFCNCBFCNCOFCNCN

Summary

First Citizens BancShares, Inc. (FCNCA) announced on September 23, 2019, a share repurchase of 50,000 shares of its outstanding Class A common stock from Ella Ann Holding, as trustee. This transaction, termed the 'Repurchase,' was conducted using existing cash reserves and is part of a broader board-authorized program to buy back up to 800,000 shares of Class A common stock through June 30, 2020. The repurchase was reviewed and approved by the independent Audit Committee under the company's related person transaction policy. The significant aspect for investors is the disclosure of a repurchase involving a significant shareholder with close ties to the company's leadership. Ella Ann Holding is the widow of a former Executive Vice Chairman and the mother of the current Chairman and CEO and Vice Chairman. While the repurchase is within the previously authorized limits and approved by the Audit Committee, investors should note that such transactions can sometimes signal a view on the company's stock valuation or be intended to offset potential dilution. The company funded this repurchase using its own cash, indicating no immediate impact on its debt levels.

Key Highlights

  • 1First Citizens BancShares (FCNCA) repurchased 50,000 shares of Class A common stock.
  • 2The repurchase was from Ella Ann Holding, a related party (widow of former Executive Vice Chairman, mother of current Chairman/CEO and Vice Chairman).
  • 3The transaction occurred on September 18, 2019, and was disclosed on September 23, 2019.
  • 4This repurchase is part of a larger board-authorized program to buy up to 800,000 shares of Class A common stock through June 30, 2020.
  • 5The repurchase was approved by the independent Audit Committee in accordance with the related person transaction policy.
  • 6The company funded the repurchase using its existing cash reserves.
  • 7The repurchase was made from an individual, not in the open market or from another institution.

Frequently Asked Questions

The repurchase is part of a broader, ongoing share repurchase program authorized by the board of directors. Such programs can be used to return capital to shareholders, offset dilution from stock-based compensation, or signal management's belief that the stock is undervalued.

The filing explicitly states the repurchase was reviewed and approved by the independent Audit Committee under the company's related person transaction policy. While the seller is a related party, the process followed appears to be in compliance with internal governance. Investors may monitor the frequency and size of such related-party transactions.

The company funded the repurchase from its existing cash reserves, so it did not require additional debt financing. This means there is no immediate impact on the company's leverage. The repurchase will reduce the number of outstanding Class A shares, which could slightly increase earnings per share (EPS) if net income remains constant.

This repurchase is executed under a previously announced authorization to buy up to 800,000 shares through June 30, 2020. It demonstrates the company's intent to utilize its cash for share buybacks as part of its capital allocation strategy, alongside other potential uses like dividends, acquisitions, or reinvestment in the business.