Community Bank Investor Conference Makes a Play Off-Broadway

More than 120 community bankers, investors and analysts gathered at the Westin New York Hotel in Times Square - a short city block from

The conference provides publicly traded community banks with a forum to present their growth stories to analysts and investors. Twelve community banks from eight states - all members of the America's Community Bankers NASDAQ Stock IndexSM (ACBQ) - took advantage of the opportunity. (see "List of Presenting Banks.")

ACB and the NASDAQ Stock Market launched the Index in December 2003 to track the performance of the communitybased banking sector. With more than 500 listed companies, it is the most broadly representative stock index for community banks.

Investor Relations Overview

The conference opened Thursday afternoon with the Investor Relations Boot Camp, an event that is especially popular among community banks that are newly public or considering an initial public offering.

Van Negris, president and chief executive officer of Van Negris & Company, an investor relations and merchant banking company with offices in New York and Miami, led off the program with a presentation entitled, "The Nuts and Bolts of Effective IR Programs."

In his hour-long session, Negris presented a number of fundamental and advanced strategies that community banks can employ to convey their growth stories to securities analysts, institutional investors and retail shareholders.

"The key fact to communicate to Wall Street is how your community bank will prosper when faced with the onslaught of larger, more aggressive investors," said Negris. "Being a community bank is a wonderful thing. You're like a sports car on a road full of trucks. You can move faster than your larger competitors."

Negris encouraged community banks to augment their traditional approach to investor relations with a more proactive technique he calls strategic financial marketing. Most public companies, he explained, limit their communications to the tried and true, such as quarterly earnings releases, conference calls and securities and Exchange Commission filings. "If this is all you do, you're going to get lost in the shuffle," Negris said.

By taking a strategic financial marketing approach to investor relations, all major bank activities - such as branch openings, new product introductions, and the like - become opportunities to communicate with analysts and investors. "Think in terms of building brand equity," he said. "Take every event that happens in your bank and put it in a larger strategic context. The goal is to educate all investors about your bank, its potentials and its road map for the future, and, most importantly, to understand how to read the tea leaves."

Bankers in attendance responded favorably to Negris's advice. "The investor relations presentation was very enjoyable and informative," said Bruce A. Walsh, senior vice president and chief financial officer of $320 million-asset Newport Bancorp (NFSB), Newport, R.I. "Whenever you attend meetings like this, you hope to come away with one or two good ideas. This presentation gave me way beyond one or two good ideas."

NASDAQ Update

The Investor Relations Boot Camp continued with a presentation by three managing directors from NASDAQ. Greg Hernandez discussed NASDAQ's Market Intelligence Desk (MID), a free resource for NASDAQ's listed companies. The MID provides a 360-degree view of the markets by tapping into 20 different information sources.

Hernandez described how NASDAQ can provide community banks with real-time information about their stock. "We're the eyes and ears of NASDAQ issuers on Wall Street," he said. "We look at trading patterns and trade flow. We can tell listed companies which market makers are involved in their stock and why their stock is moving up or down."

Don Johnson followed that with a brief discussion of recent short-selling trends among NASDAQ's financial services companies. Short selling is a trading strategy that investors use when they expect stock prices to decline. They borrow securities from a broker, sell them and hope to profit by replacing the stock with shares purchased at a lower cost. Short selling can have an adverse effect on stock prices. NASDAQ's MID can help community banks understand trends if their stock is sold short.

Dennis Gustafson, head of the NASDAQ Insurance Company, discussed the impact of the subprime mortgage crisis on directors' and officers' insurance. Many insurance carriers, he explained, are asking banks about their credit exposure to subprime loans. "You have to communicate your lack of subprime exposure to your carriers," he said. "And if you do have exposure, tell them what you're doing about it."

Investor Panel

Two sell-side analysts and one buy-side investor participated in a panel discussion focusing on trends that affect community bank valuations and stock performance. Richard D. Weiss, a senior analyst with Janney, Montgomery Scott, Philadelphia, follows 30 banks in the Northeast and Mid-Atlantic regions. "It's been a bear market for bank stocks for more than a year," he said. "Banks that survived the 1980s and 1990s are pretty efficient. It's hard for them to reduce costs even further."

Collyn Bement Gilbert, managing director of equity research for Stifel Nicolaus & Co., Florham Park, N.J., has only two buy recommendations among the 16 banks she follows. "It's the most bearish I've been in 12 years," she said. "Ninety percent of loans are tied to real estate. I'm very cautious on the group."

Daniel Goldfarb, chief investment officer for OFI Institutional Asset Management, Boston, is hoping for a turnaround in the second or third quarter next year. "The Fed will have to cut more," he said. Goldfarb advised community banks to be forthcoming about their performance in any market conditions. "One portion of brand is honesty," he said.

NASDAQ MarketSite Closing

The first day of the conference concluded with a very special event: a closing ceremony at the NASDAQ MarketSite in Times Square. With Bradley E. Rock, newly elected chairman of the American Bankers Association, at the podium, more than 30 community bankers participated in the 4 p.m. closing ceremony at NASDAQ's headquarters. The ceremony was transmitted live via television and the Internet to investors around the world. "Community banks have a real impact on our economy as they serve their customers and communities and help them grow," said Rock, president and CEO of $1.1 billion-asset Smithtown Bancorp Inc., Hauppauge, N.Y. "Main Street knows about us, and it's time Wall Street did, too."

The following morning, a dozen community bankers presented their growth stories to analysts and investors in individual, 30-minute sessions. Summaries of these presentations will appear in Value: The Community Bank Wall Street Report. In addition, archives of the company presentations are available at http://www.acbplus.com/conferences/2007/irnov/home.asp.

The Community Bank Investor Conference concluded with a luncheon presentation by Bob Davis, who oversees housing and mortgage market policy development, government-sponsored enterprises, minority banking, bank fraud and risk management, and mutual institutions for the new ABA. Davis discussed the status of a number of issues on Capitol Hill, including mortgage lending practices, regulatory burden relief, credit union regulation and taxation, and data security. "One of the best things you can do, as community bankers, is to visit with your congressional representatives when they come home to your district," said Davis. "Help them understand how your bank serves the community and what issues you face in running your company."