Based on insider trading of bank shares in 1995, bankers generally proved themselves to be savvy forecasters of industry trends.

It was a roller-coaster year in which rabid insider buying was followed by a rise in selling by insiders - as bankers became convinced that the great stock ride of 1995 would abruptly end.

"Back in 1988 and 1989, when the industry was in trouble, many insiders made bets on their own companies, first selling large numbers of shares before prices fell, and then snapping them up again," said Robert Gabele, president of CDA/Investnet, which tracks insider trading.

"Then as the interest rate environment improved, insiders looked very right," he said, noting that in 1994 "bank stocks declined and insiders started buying. Their actions now seem somewhat prescient."

Bank stocks started surging as last winter ended, and still appear strong as the new year begins. The American Banker index of the top 225 banks rose roughly 45% last year.

In the fourth quarter, insiders were either selling a large number of shares or at least declining to accumulate more shares. Instead of taking options, for example, insiders received cash, Mr. Gabele said.

Money-center and large regional bank insiders in particularly are now selling aggressively. At Citicorp, chief executive John Reed sold 84,000 shares in November, grossing roughly $5.7 million. Of that, 20,000 shares were disposed of as a gift.

A significant volume of insider selling has also been prevalent at Bankers Trust New York Co. and Mellon Banking Corp.

Of the 69 industry groups CDA follows, the 26 banks that comprise the large-bank category ranked 61st - No. 1 being the category with the most insider buying.

At regional banks, insider selling is less prevalent because merger mania continues to boost the banks' stock prices, Mr. Gabele said.

There are exceptions, of course. At Firstar Corp., frequently mentioned as a takeover candidate in the still unplowed merger market of Wisconsin, insiders have been busy selling their shares.

To be sure, insider trading is not always an accurate indicator of future trends. While it can often presage mergers or earnings trends at a particular company, insiders often seem to know as little as the average investor.

At Integra Financial Corp., for example, insiders sold huge chunks of shares in July, less than a month before the company agreed to be sold to National City Corp.

At First Interstate Bancorp., insiders were aggressive sellers through much of the year - obviously not foreseeing the bidding war between Wells Fargo & Co. and First Bank System over their bank.

William Randall, a vice president of First Interstate, sold 16,000 shares last Jan. 27 at $73 a shares. Former chief executive Edward Carson unloaded more than 100,000 shares throughout the year in the $70 to $90 range.

First Interstate shares closed the year near $136 a share.

At Republic Bancorp. in Owosso Mich., insiders were more prescient than some of their larger-bank peers.

Chairman and CEO Jerry Campbell exercised an option and sold 50,000 shares in September at $13.75 a share. Today the stock price of Republic, a $1.5 billion-asset community bank, hovers near $10 a share.

Other regionals are beginning to follow suit in selling company shares, so for at least for the start of 1996, insider selling is expected to be more prevalent than buying.

To Mr. Gabele, "bank stocks have had a nice run, so the chips are now coming off the table."

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