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. Payne says he prefers one-on-one appointments with leading institutions. "The best interchanges are in smaller sessions when the questions flow more freely and we can be more candid,'' he said. "Honesty is the best policy when dealing with analysts. It's at the core of developing a relationship and trust." Aside from honesty, Mr. Payne and other banks stress the importance of developing a story about your bank that sets it apart from others. "It helps to have a unique story or a unique situation or a little bit of both, whether it's a unique market or a unique product,'' he said. "Our strategy is to be a business bank, we don't want to be all things to all people." It is also important to follow up on your efforts. "It's important to keep them updated with products and services and things being employed to improve the bank's financial performance," he says. As some bankers will tell you, a big part of investor relations is clearing up misconceptions that some analysts and institutions may have about a bank. "We have to educate our New York institutional investors about the difference between oil and petrochemicals,'' says L.D. "Larry" Wright, chief executive of Bay Bancshares Inc., a $300 million-asset bank in LaPorte, Tex., a suburb of Houston. For Mr. Wright, making sure they know the difference is crucial. Oil, a business that his bank has no exposure to, is subject to booms and busts and might scare away many potential investors. By contrast, Mr. Wright's bank lends money to many small businesses that service several major petrochemical plants in the region. For petrochemical producers, oil is a raw material rather than a final product. Though Mr. Wright has been chief executive officer at Bay Bancshares since 1987, he did not begin to engage in full-blown investor relations until his bank became publicly-traded on NASDAQ two years ago. "Before going public, we had 450 stockholders," Mr. Wright says. "Now, we don't know how many we have. We're guessing we have close to 2,000 shareholders." In the months leading up to his bank's public offering, the banker submitted to a grueling road-show schedule arranged by his investment bank, Hoefer & Arnett. But since then, he has continued to make visits to key investors and key conferences. And the personal contact makes a big difference, he says. "I believe everybody is a Texan at heart," he said. "If I can look you in the eye and press your skin, it can be more convincing than if they would be looking at a bunch of numbers." Central to Mr. Wright's pitch these days is his bank's expanded use of technology for selling in call centers and over the Internet. Mr. Kalkbrenner also has a story to tell - one of "the only independently owned bank companies that covers the San Francisco Bay area" that is racking up earnings and asset growth in excess of 20%. It's a story he's willing to tell over and over again.
"A lot of banks are sitting around just waiting to be discovered," Mr. Kalkbrenner says. "You need to be getting out there." n
