Stock sales by insiders have surged at some of the nation's largest banks, suggesting that top executives may see limits to their companies' stock-price increases.
Data from CDA Investnet, Fort Lauderdale, Fla., showed insider selling at Bank of New York Co. leaped to 683,259 shares between Jan. 1 and Aug. 1, from 103,446 in the same period last year.
Sizable jumps also occurred at BankAmerica Corp., to 510,717 shares from 172,997; at BankBoston Corp., to 409,049 from 106,989; and at First Chicago NBD Corp., to 270,827 from 3,510.
The rise was a relatively marginal 7% at J.P. Morgan & Co., to 94,399 shares from 88,222. And insider sales fell by roughly half at Citicorp, to 630,000 shares, and by 45% at Chase Manhattan Corp., to 183,983.
But analysts at CDA Investnet said the overall level of sales is at a historic high.
The conventional view is heavy selling reflects some pessimism on the part of people who tend to be high-ranking executives.
"They don't think the stock is going higher," said bank analyst Richard X. Bove of Raymond James & Associates, St. Petersburg, Fla. "People at the highest level are smart enough and have been at their jobs long enough to know that the stock market goes up and the stock market goes down."
Analysts acknowledge there can be personal and seasonal factors less tied to investment perceptions. And some observers argue that insider selling is not a good leading indicator. For example, directors at the defunct Bank of New England Co. were buying shares months before it failed in 1991.
A portion of the selling is the result of expiring options or top executives' cashing out as they prepare to retire.
Seasonal factors such as the need to pay college tuition can also spur sales, especially now that the capital gains tax rate has been lowered.
Bank share prices have been rising amid the steady economy, low interest rates, and low inflation. The Standard & Poor's bank money-center index is up 31.75% this year. BankBoston, BankAmerica, and Bank of New York have been among the leaders, gaining 16%, 27%, and 22%, respectively, since January.
Bank analyst Michael L. Mayo of Credit Suisse First Boston said the market's heights have some investors uneasy.
"On a relative valuation basis, bank stocks are still inexpensive," Mr. Mayo said, "but there has been some concern from some managers at these banks about the level of the overall stock market, which might lead them to lighten their loads."
BankBoston chairman William Crozier, who is set to retire next year, sold 50,178 shares.
Other sellers at BankBoston were Peter Manning, director of mergers and acquisitions, who diminished his holdings by more than 40%, or 35,746 shares; and Ira Jackson, director of external affairs, who disposed of 15,310 shares to reduce his holding by 18%.
"While BankBoston is among the large bank stocks which have realized impressive price appreciation this year ... recent stock price swings have some investors questioning the sustainability of the forward price movement," CDA Investnet president Bob Gabele said in a recent report.
The majority of insider sales at BankAmerica were by Michael Rossi, a vice chairman who has left the company. Others were by senior managers Martin Stein and Thomas Peterson and vice president Raymond Peters. The sales took place between Jan. 21 and May 1.
Sellers at Bank of New York included Deno Papageorge, who sold 18,825 shares in his largest open market sale since 1995. Gerard Hassell sold 6,900 shares and relinquished control of another 4,000. That followed his sale of 16,972 shares in March. The Bank of New York selloffs were between April 17 and June 20.
Selling at Citicorp has been less active this year than last, but some big transactions were executed by vice chairman William R. Rhodes and executive vice president Charles E. Long. But Mr. Gabele said most of the trades were on options not set to expire until 1999 to 2004.
John Roche, vice president of Citicorp's legal division, sold 12,346 shares in addition to 30,000 in April. Vice chairman H. Onno Ruding, a large seller in 1996, lowered his position by 17% by selling 50,000 shares. Vice president Thomas Jones, who exercised options on 32,453 of his shares, eventually reduced his position by 30,000 shares.
"Generally, when we went through difficult years in the early 1990s, some top executives did not get salary increases and instead were awarded options," said Richard Howe, a Citicorp spokesman, "so it is logical that they would take advantage of this."