Insider buying in US regional banks at 3-year high as execs look to bolster confidence
05/06/2023 15:00
By Shubham Batra
June 5 (Reuters) - Regional bank executives buying
shares in their own companies hit a three-year high in the
United States during the second quarter of 2023 as they rushed
to restore investor confidence in their firms following the
collapse of Silicon Valley Bank.
Such a buying frenzy was last witnessed in the first quarter
of 2020, when stocks sold off in reaction to the spread of
COVID-19, according to investment research firm VerityData.
US Bancorp USB.N , East West Bancorp EWBC.O , Zions
Bancorp ZION.O and SoFi Technologies SOFI.O are some of the
names from the 244 banks that saw heavy insider buying in the
second quarter.
A total of 778 executives and other company officers bought
own bank shares in the second quarter through May 26, compared
with 524 buyers during all of first quarter of 2023, when the
collapse of three regional lenders sparked a massive selloff in
U.S. bank stocks, data from VerityData showed.
The ratio of buyers to sellers in the regional banking
sector has also hit a record high in the second quarter of 2023,
according to the data.
"Insiders should have a pretty good sense of how their own
deposit base is holding up, so we wouldn't expect purchases if
things were falling apart behind the scenes," Eric Compton,
equity strategist at Morningstar, said.
"This remains one of the few 'closer to real-time' signals
you can get in between earnings reports."
Markets tend to track trading activity of executives and
other shareholders of a company as investors believe the
insiders have more information of the company's outlook.
Company executives are mandated by the U.S. Securities and
Exchange Commission to disclose all their trading activity
within two business days following the transaction date.
Bank executives are sending a signal after the regional
banks reported quarterly earnings that it is clear with the
investments in their own bank shares that markets over-reacted
to the collapse of two regional lenders, Ben Silverman, vice
president of research at VerityData, said.
Bank stocks have stabilized in recent weeks, but haven't
recovered their March losses. Both the S&P 500 Financial index
.SPSY and KBW Regional Banking index .KRX are in the green
for May, but are down over 4% and 22%, respectively, in the year
so far.
In the week ended March 15, deposits at small banks fell
more than twice the previous record drop and recorded the
biggest decline as a percent of overall deposits since the week
ended March 16, 2007. Bank deposits, however, started
stabilizing from April.
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Regional Banking index performance this year https://tmsnrt.rs/3OShdf1
Top 15 regional banks with insider buying https://tmsnrt.rs/3oRvVbg
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(Reporting by Shubham Batra in Bengaluru; Editing by Shounak
Dasgupta)
((Shubham.Batra@thomsonreuters.com))