A Key Task for Executives: Marketing Bank's Stock
Kimelman, John, American Banker
Most executives of community banks conduct business without having to leave their home county. But these days, David Kalkbrenner, the chief executive officer of Greater Bay Bancorp, a $2.1 billion-asset bank company in Palo Alto, Calif., sometimes finds himself working 12-hour days in cities such as Minneapolis, New York, and Philadelphia.
"It's up and down elevators, high rise to high rise,'' he says. "You start with a breakfast meeting and you finish with a dinner meeting."
Of course, Mr. Kalkbrenner is not traversing the country to pitch commercial loans or a jumbo mortgage. He is hawking a more precious commodity - his bank's stock - and the suits on the other side of the table are equity analysts who might tout his shares or institutional investors who might go one step better and purchase them.
Community bankers like Mr. Kalkbrenner are beginning to play the investor relations game.
In an industry roiled by mergers, it pays to have a strong share price, both as currency for acquisitions and as a defense against getting taken out. And community banks, like the rest of corporate America, have finally realized that it takes more than strong earnings to drive their share prices up.
"Fundamentals make the biggest different, of course," says Robert Schwaller, a senior associate with Financial Relations Board-BSMG Worldwide, a company that helps banks and other companies with their investor relations. "But there is a huge increase in the number of stocks out there on the exchanges and it becomes increasingly difficult for a company that's doing well to get its story across. Investor relations, in the short term, can get results more quickly."
Says Mark Foreman, senior director of Nasdaq-Amex Market Services, ''A lot of community banks don't realize that you have to go out and market your stock to the investment community.''
So community banks are taking their act on the road. They may present their bank's story at investor conferences hosted by a regional securities firm such as Sandler O'Neill, Hoefer & Arnett, Piper Jaffray, and First Security Van Kasper. Or they may make their case directly in the offices of institutional investors.
But good investor relations need not take an executive away from the office. Often, courting investors may involve nothing more than issuing well-crafted press releases or holding a telephone press conference with key analysts following the release of quarterly earnings.
David Payne, chief executive officer of Westamerica Bancorp in San Rafael, Calif., explores all the options. And he has been doing it since 1989, when he became head of the $3.9 billion super-community bank.
"Before I became chief executive, there hadn't been a candid and straightforward presentation on the strengths and weaknesses of the company," he said.
During the past decade, Mr. Payne has been working to build his bank's reputation with investors. Along with the bank's treasurer, Mr. Payne started making presentations touting his bank as well as paying regular visits to equity analysts and to institutional investors.
While presentations in front of a roomful of potential investors are an important component of investor relations, Mr. …