As takeover rumors and a stock buyback program drive up share values, insider trading at St. Paul Bancorp has accelerated.
Between Aug. 2 and Oct. 31, executives at the Chicago-based savings bank sold a total of 123,794 shares in option-related sales at prices between $23.75 and $26.38 per share.
The company announced its most recent stock buyback program on July 16, according to Securities Data Co. When the program was announced, shares were selling at $22.25.
Since then St. Paul stock has soared 24%, outperforming the Nasdaq bank index, which has risen by 20%.
St. Paul had dropped 15% in value from Jan. 1 to July 16, while the the bank index, which covers mainly small banks, increased 3%.
To Robert Gabele, president of CDA/Investnet, a company that tracks insider trading activity, the insider sales are in keeping with recent reports of insider selling at larger banks where buybacks have driven up share prices.
"This is something we've been seeing in the large banks and now it's spreading to small ones," said Mr. Gabele, who has criticized such insider selling as contrary to the spirit of share buybacks.
The largest insider sale at $4.1 billion-asset St. Paul was by Joseph C. Scully, chairman and chief executive officer, who exercised options to sell 30,000 shares between Aug. 2 and 5 worth a total of $720,000. He has 90,853 shares left, according to the Washington Service.
Other St. Paul executives who recently exercised their options and sold stock include president Patrick J. Agnew, who on Aug. 5 sold 10,000 shares worth $237,500; chief financial officer Robert N. Park, who sold 17,500 shares worth $452,900 on Oct. 29; and vice president James Lutsch, who in two separate transactions sold 16,000 shares worth $395,780.
Maryellen Thielen, a spokeswoman for the bank, said the activity was due to executives cashing out options before they expire next year.
Chicago Corp. analyst Stephen Skiba said that somewhat improved earnings helped the company's stock rise in recent months.
But he said the real forces behind St. Paul's rise have been its aggressive share repurchase program and last month's announcement that ABN Amro Holding was buying Standard Federal Bank, which fueled merger speculation about midwestern thrifts.
"The recent merger activity was significant," Mr. Skiba said. "St. Paul is a very attractive takeover candidate."
"I don't think this (insider selling) is a red flag," said Angelina Billon, analyst at Capital Resources Research in Washington, D.C.
She said the planned installation of 256 new automated teller machines - giving St. Paul the second-largest fleet in the Chicago area with 441 terminals - should increase fee income and help the company's profits.
Other analysts, however, said St. Paul's business was only one consideration.
"They have to be taken over," said a Chicago-based analyst on the condition of anonymity. The analyst said the thrift has slow growth prospects with little potential for cost savings on its own.
