Members of KeyCorp’s board of directors have been buying up shares of the bank’s stock, at a time when its price has lagged and its deal for First Niagara Financial Group awaits approval.
Since Jan. 25, 13 members of Key’s board have bought a total of 164,100 shares, with a market value of $1.8 million, according to insider trading data compiled by Thomson Reuters.
Beth E. Mooney, who is the Cleveland-based bank’s chairman and CEO, bought 20,000 shares on Jan. 25, with a market value of $224,400.
Another board member, Buffalo resident William G. Gisel Jr., bought 13,000 shares, with a market value of $141,181. Gisel is CEO of Rich Products Corp.
“Having been on the board of KeyCorp for four years, I have gained a deep appreciation for the capabilities and integrity of the bank’s leadership team,” Gisel said. “My decision to increase my share ownership was based purely on my belief that Key is a well-run, professional organization with a strong attachment to the communities that it serves.”
Board member Ruth Ann M. Gillis bought 21,200 shares, in two separate purchases, with a market value of $230,645.
The wave of buying could be seen as the directors taking advantage of the drop in Key’s share price, a demonstration of confidence in the stock, or perhaps a combination of the two. The purchases come against the backdrop of Key’s planned acquisition of First Niagara, a deal currently valued at about $3.5 billion. That deal still needs shareholder and regulator approval.
“The purchases reflect individual decisions by directors to increase their ownership of KeyCorp stock,” said Therese Myers, a KeyCorp spokeswoman.
Key’s stock price is down 14 percent from when the First Niagara deal was announced Oct. 30, closing at $10.63 on Tuesday. Bank stocks have been hit hard much of this year; the KBW Nasdaq Bank Index has sunk since the start of the year before moving up somewhat in the past couple of weeks. (As a comparison, First Niagara’s stock was down 10.5 percent since Oct. 30, and M&T Bank’s is down 11.6 percent over that period.)
Back in fall 2014, eight top insiders at First Niagara bought up stock in their own company, at a time when First Niagara’s share price was low and the bank was sticking to an independent path. Their individual purchases added up to 88,000 shares with a market value of $690,000. Those purchases began to appear not long after First Niagara announced it had increased the size of an accounting write-down of its previous deals to $1.1 billion from $800 million. A day after that announcement, First Niagara’s share price had closed at $7.51 per share on Nasdaq, creating a bargain-buying opportunity. First Niagara’s stock closed at $9.26 on Tuesday.
While Key’s stock price is lagging, Barron’s last week published a story calling Key “an overlooked banking bargain.”
Barron’s said Key’s stock price could rise 30 percent in a year, according to a summary of the story published by Reuters. Barron’s also said the First Niagara deal could prove more lucrative than expected, and that its shares traded at a 13 percent discount to U.S. banks, using data from FactSet.