Between March 10 and May 15, insiders at regional banks bought a combined 2.3 million shares of stock while selling off only 335,000 shares. These insiders believe that the sell-off in bank stocks is not a reflection of the strength of the banks' businesses and that the sell-off was overdone.
U.S. regional bank stocks in general rose sharply last week, with the SPDR S&P Regional Banks ETF (KRE) up 7.8% for the week, the biggest weekly gain in more than two years, which could be attributed to a big buying spree by the banks' "own people.
Michael Rose, an analyst at financial services firm Raymond James, reported on Monday that since the banking crisis broke out in March this year, insiders at regional banks have been buying stocks on a record scale. 2.3 million shares were bought by insiders between March 10 and May 15, while only 335,000 shares were sold.
Such net buying is rare, as insiders have only bought shares on a net basis in seven of the 18 quarters between the first quarter of 2005 and the first quarter of this year. The last net buying was in the first quarter of 2020, at the beginning of the new crown outbreak.
This bullish indicator reflects the combined view of bank insiders that, on the one hand, the general sell-off in regional bank stocks is not a reflection of the strength of the banks' own businesses and, on the other hand, the recent selling pressure is overdone. Those with direct, in-depth knowledge of the company are buying shares in the open market, expressing confidence in bank stocks, their credit performance during the crisis, and/or their improved competitive position.
The ten regional banks with the highest number of shares bought by insiders since the March 10 banking crisis are Byline Bancorp (BY), Stellar Bankcorp (STEL), Coastal Financial Corporation (CCB), Third Coast Bancshares ( TCBX), Central Valley Community Bankcorp (CVCY), Princeton Bancorp (BPRN), PCB Bancorp (PCB), Lakeland Financial Corportation (LKFN), Texas Capital Bancshares (TCBI), Farmers National Banc Corp (FMNB).
Although there are more than 140 bank failures every year, on average, there are nearly three bank failures a week. This year, although the number is small, the "quality" is extremely high - according to statistics, in 2009, 140 banks failed, with total assets of $170.9 billion, not as many as Silicon Valley Bank. In 2010, 157 banks failed with total assets of $96.5 billion, not as much as Signature Bank.
So, although only three banks failed at the beginning of 2023, the amount of assets directly exceeded the amount in the two years of the crisis. As of December 31, 2022, Silicon Valley Bank has about $209 billion in assets, its deposit size of $175.4 billion, is also the largest local deposits in Silicon Valley.
As mentioned by Wall Street News nearly a month ago, in March of this year, when the banking crisis broke out, more than 1,000 executives and directors of more than 600 publicly traded U.S. companies bought shares of their companies, a record number of people and companies involved since May of last year. Of these, more than half were people from financial companies, a percentage that is at least two years high.
Financial companies accounted for a large proportion because, after the collapse of three U.S. banks, including Silicon Valley Bank, triggered panic, corporate executives are betting that their own company's stock will rebound, reflecting the optimism of companies after the outbreak of the banking crisis.