Magazine article American Banker

Don't Put the Investor Audience to Sleep

Magazine article American Banker

Don't Put the Investor Audience to Sleep

Article excerpt

It has never been easy for small banks to get attention from sell-side organizations.

One reason is that even when there is a good story to tell, the stock's modest float makes it hard for dealers to fill decent-size orders. And since many investment firms don't publish adverse reports, for fear of losing investment banking business, investors are wary of the reports they do get.

Many community banks have therefore signed up to tell their stories at investor conferences run by investment banking houses such as Sandler O'Neill & Partners LP, Keefe, Bruyette & Woods Inc., and Ryan Beck & Co. And many banks that have not been invited to make presentations at such sessions pay investor relations firms such as Margolin & Associates Inc. of Cleveland for chances to promote themselves to institutional investors and brokerage house representatives.

I have attended countless meetings of this kind, where 15 to 20 chief executives and chief financial officers tout their banks, typically with impressive PowerPoint illustrations.

After a while, the pitches begin to look and sound alike. What can you say about a community bank's operations to interest analysts who have heard it all before?

Two themes generally come out at such meetings.

First, most of these banks are locally first or second in market share, despite regional giants (whose presence is usually depicted as a plus rather than a problem).

Second, these community banks tend to get a big percentage of their income from fees, often more than a third. …

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