Insiders at several major banks have been aggressively selling their companies' shares during the last two months, while executives at small to midsize banks have been bulking up their holdings.

The disparity in insider activity is partly a reflection of the buying opportunities that still exist among smaller institutions - and another sign that 1996's merger and acquisition activity, unlike 1995's, is expected to occur among smaller banks.

Insiders at the larger banks may be selling now because the strong performance of those stocks has created an opportunity to take profits, said Robert Gabele, president of CDA/Investnet, a Fort Lauderdale, Fla., firm that tracks insider trading data.

At larger institutions like J.P. Morgan & Co., Bankers Trust New York Corp., Norwest Corp., KeyCorp, and Wells Fargo & Co., insiders unloaded large numbers of shares and cashed out options in late March and April.

At Citicorp, new chief financial officer Victor J. Menezes cashed out options on 100,000 shares on April 24, netting more than $8 million.

Meanwhile, insiders at Whitney Holding Corp., F&M National Corp., North Fork Bancorp., and Star Banc Corp. substantially increased their stakes.

"The consolidation picture for the smaller banks puts a safety net under a lot of their prices," Mr. Gabele said.

"Also, a lot of the small-bank insiders don't see fundamentals slipping. And with their stock prices languishing, there is a lot of value," he added.

Since the beginning of the year, the Standard & Poor's index of major banks has risen 21%, while the banks listed on the Nasdaq index have risen only 5%, according to ILX Systems Inc.

Observers caution that individual insider trades are often made for personal reasons. But taken as whole, the numbers indicate market bullishness among smaller banks, and the opposite tack at the larger ones, Mr. Gabele said.

At Wells Fargo, Clyde Ostler, a director, sold 2,000 shares at $251.63 apiece on April 22, netting $503,206. Another director, Paul M. Watson, sold 3,909 shares at $250 each on April 25, netting $977,250.

These were the first insider transactions at Wells since the bank closed its $13.2 billion buy of First Interstate Bancorp.

At Bankers Trust New York, insiders between April 16 and April 29 exercised options on 43,000 shares and sold them all. In addition, insiders sold more than 4,000 shares that they already owned.

At J.P. Morgan, two executives exercised options on 65,438 shares April 22-24, and sold them all. At Norwest Corp. insiders sold 29,500 shares from April 2-22.

At KeyCorp, chief executive Robert Gillespie last week filed a form 144 with the Securities and Exchange Commission, indicating his intent to sell shares. He plans to sell 20,000 shares worth $780,000. Allen Gula, a vice president, sold 12,000 shares, or 70% of his holding in the Cleveland bank, on April 1.

Herman H. Stephenson, a director who was once chief executive, sold 28,405 Bancorp Hawaii shares April 19-25, netting more than $1 million.

Down the industry food chain, however, insiders were more optimistic about the potential of their companies' shares to rise further.

At North Fork Bancorp. on New York's Long Island, insiders exercised options on 50,000 shares in mid-April and kept all of them. Chairman John A. Kansas kept the 25,000 shares he exercised.

Commonly, insiders sell some of the shares they receive to help offset the cost of exercising their options. When an insider keeps all the shares, the move is considered extremely bullish.

At F&M National Corp. in Virginia insiders bought 51,200 shares between April 9 and 30. James L. Bowman, a director, bought 30,000 shares.

At New Orleans' Whitney Holding, often cited as a takeover candidate, insiders purchased 11,340 shares in April. At Cincinnati's Star Banc Corp., three directors each bought more than 1,000 shares in April.

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