First Republic Bank Execs Offloaded $12M-Worth Of Shares Before Near-Collapse

First Republic Bank’s top executives are reported to have sold stock worth millions of dollar in the bank months before it nearly crashed.

First Republic Bank (FRB) stock began to decline last week. It plummeted 73% from March 8 through March 13. Federal regulators had taken over two banks that were insolvent in California and New York. A coalition of banks pledged to inject $30 billion worth of deposits into FRB on Thursday as the bank was under severe pressure from clients who were withdrawing their funds.

FRB shares continued to fall Friday morning, despite the rescue agreement that was reached the day before. Below $26, the share price plunged by more than 80%. According to The Wall Street Journal, in the three months prior to the drop, bank executives sold shares worth almost $12 million.

In the months that followed the March near-collapse in March, executives had been selling stock at the bank. James Herbert II, Executive Chairman, sold stock worth $4.5 million since the start of the year. Three other top officials — FRB’s chief credit officer, president of private wealth management, and chief executive — sold another $7 million worth of stock. According to WSJ the stock sold for $130 per share on average.

The insider trading regulations that are applicable to all companies do not apply for banks. FRB does not have to report insider transactions and sales to the Securities and Exchange Commission. Investors often look through company records to determine if there are any signs of health. FRB reports insider transactions to the Federal Deposit Insurance Corporation. According to a WSJ analysis, FRB was not the only company on the S&P 500 Index that didn’t report insider sales to SEC as of Wednesday.

Similar sell-offs occurred prior to the collapse Silicon Valley Bank’s (SVB). Federal regulators took control of the bank earlier this month, after it had been under severe pressure from clients withdrawing money. According to reports, the SEC and Department of Justice launched an investigation into SVB’s collapse.

Greg Becker, SVB Financial’s Chief Executive, and Daniel Becker (CFO) both exercised stock option and sold large shares during the week that SVB was insolvent. Becker sold 12,451 shares for $2.3 million on February 27th. Beck sold approximately one-third of his shares on the same day for $575,000 The plans for the sale had been filed 30 day earlier.

SVB was the 16th largest U.S. bank before it crashed last week. It had approximately $175 billion of customer deposits. More than 90% of these deposits exceeded the $250,000 threshold set by FDIC for guaranteed insurance.

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FDIC is an independent agency funded by premiums banks and other financial institutions pay for FDIC insurance. The FDIC’s Deposit Insurance Fund had $128.2 Billion at the end of the last year.

“From First Republic Bank Execs Release $12M Worth Of Shares Prior to Near-Collapse“

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