First Republic Bank executives sold almost $12 million worth of company stock in the past three months, according to the Wall Street Journal. Executive Chairman James Herbert II sold the most, selling $4.5 million worth of shares since the beginning of the year.
Four of the bank’s top executives, including CEO Michael Roffler, Chief Credit Officer David Lichtman, and Robert Thornton, the bank’s president of private wealth management, have sold $11.8 million worth of stock so far this year, just below $130 per share.
Some of the sales took place shortly before the bank faced liquidity issues, with investors pulling out their money following the fall of Silicon Valley Bank and Signature Bank.
It is uncertain if the executives’ actions involved insider trading. Reportedly, company executives are now considering selling the bank following a stock plummet of up to 35% on Thursday.
The Journal’s analysis revealed that Herbert made two sales in January and February, 7% and 5% of his holdings, respectively. Thornton sold 73% of his outstanding shares for $3.5 million in his first trade since 2021.
Lichtman sold $2.5 million worth of shares in three sales since the start of the year, with the last sale occurring just two days before Silicon Valley Bank revealed it had lost $1.8 billion, leading to a bank run.
None of the executives’ sales filings indicate they were executed under 10b5-1 plans. The trades went largely unnoticed since First Republic is not obligated to report insider sales to the Securities and Exchange Commission. The trades were instead reported to the Federal Deposit Insurance Corporation.
The bank’s fair value of its asset portfolio was $26.9 billion less than its book value. The difference was above the equity of $17.4 billion. As with any other bank, First Republic’s risk is that depositors might withdraw their cash faster than the bank can liquidate its assets.
On Wednesday, Standard & Poors cut the bank’s bond rating to junk status. The following day, shares of First Republic dropped up to 35%, and company executives are now considering a sale of the bank.
However, a statement on Sunday revealed the bank’s capital and liquidity positions are strong, and its capital remains above the regulatory threshold for well-capitalized banks.