Sept. 8 (Bloomberg) -- Bank and savings and loan insiders spent more money buying shares of their companies in May, June and July this year than in any previous three months in at least two decades, betting that financial institutions are bouncing back from the credit-market crunch.

Insiders including bank directors and executives bought $296.2 million of their own stock in the period, according to data compiled by the Washington Service. That's the most since the research firm began tracking the data in November 1986.

``It does clearly indicate that management, directors, insiders are confident in their ability to see their way through these tough times,'' said Standard & Poor's analyst Jack Bartko in an interview Sept. 3.

Financial companies around the world recorded more than $500 billion in writedowns and credit losses this year amid the collapse of U.S. mortgage markets, and were forced to raise more than $360 billion in capital. On July 15, the Standard & Poor's 500 Index reached the lowest since 2005 after investors lost confidence in a government plan to rescue mortgage companies Fannie Mae and Freddie Mac. The government seized the two companies yesterday.

Some insiders have been ``pretty vocal'' that July 15 was the bottom for financial stocks, said Anton Schutz, president of Mendon Capital Advisors Corp. in Rochester, New York, which manages about $150 million in assets. Previously, concerns over Fannie and Freddie and IndyMac Bancorp Inc.'s seizure by regulators led to ``blood in the streets,'' he said.

SunTrust, BB&T

Alston Correll, chairman emeritus of Georgia Pacific LLC and a SunTrust Inc. board member, bought $2.93 million in the lender's shares July 24. James Maynard, chairman of Golden Corral Corp. and a member of BB&T Corp's board, bought 72,500 shares of the bank for $1.97 million that month. SunTrust has advanced 14 percent since Correll's purchase, and BB&T stock has risen 8.5 percent since Maynard bought the stock.

Richard Urquhart, vice president of finance for Investors Management Corp. where Maynard is chairman, said the BB&T shares were purchased on behalf of the company. Urquhart said Investors Management doesn't ``make any judgments about what's going to be happening in the stock markets or the housing markets.''

``When we can buy it at attractive prices, we do,'' Urquhart said of the BB&T shares. A call to Correll wasn't immediately returned.

Insiders are supporting the finance sector, saying, ``If we don't believe in it, how can anybody else?'' Bartko said.

U.S. Bancorp board member David O'Maley, chief executive officer of Ohio National Financial Services Inc., bought 75,000 shares of the Minneapolis-based lender for $1.76 million on July 16. The stock has climbed 43 percent since then.

Evidence of Confidence

William Fries, who helps oversee $53 billion at Thornburg Investment Management in Santa Fe, New Mexico, calls the insider purchases ``encouraging.'' The buying is ``accumulating evidence that the insiders at some of these companies have confidence in their prospects,'' Fries said in an interview.

``I don't buy stocks based on insider-trading activity, but I'm always impressed when some middle manager or an executive buys stock that's not related to options or they execute an options contract and they hang onto the stock,'' Fries said.

The stock purchases were made before mortgage companies Fannie Mae and Freddie Mac were taken over by the U.S. government to prevent their collapse. Fannie and Freddie will be taken into conservatorship and the move may wipe out stakes held by shareholders.

Insider buying may not be the best financial indicator, Schutz said. He pointed to former Wachovia Corp. Chief Executive Officer Kennedy Thompson, who bought 100,000 shares of the bank at $39.19 apiece November 16, 2007. Wachovia closed at $16.75 Sept. 5 on the New York Stock Exchange, and has declined 56 percent this year.

``To me, that's the ultimate example of bad timing,'' Schutz said.

To contact the reporters on this story: Linda Shen in New York at lshen21@bloomberg.net; Brett Gering in New York at bgering1@bloomberg.net.

Last Updated: September 8, 2008 00:01 EDT