William F. Maletz, Chase Manhattan Corp.'s director of investor relations, has a story to tell, and it sounds a bit biblical.
While there are no floods or lepers in this tale, there is a lengthy period of prosperity, a fall from grace, and a resurrection. And given the abysmal state of Chase's fiscal house just a few years ago, some would even say some miracles were involved.
An unassuming, quiet man who exudes none of the glitz of a polished public relations expert, Mr. Maletz' job is to sell Chase's apparent rejuvenation to investors.
And like any good storyteller who distances himself from his yarn, Mr. Maletz takes no credit for Chase's recent stock price surge, up 18% since May.
"We are following a very simple strategy: Tell them what you are going to do, do it, and tell them what you've done," he says.
Nonetheless, despite improved revenues and earnings and reduced nonperforming assets, the late 1980s continue to make his job more difficult.
Like misdeeds that remain unforgiven, the memory of Chase's bad real estate loans and Third World debt, which had made it a laughingstock on Wall Street by 1990, still stubbornly overshadow the company's image.
Signs of Capital Strength
Sometime this summer, Chase is expected to increase its dividend and, on Wednesday, it announced a stock repurchase program of up to 8.5 million shares - two signs of its capital strength.
But as recent news of the bank's improving economic fundamentals has failed to dispel the cloud of doubt hanging over Chase, more good news probably will be offset for some time by reminders of history.
In a glowing report in March that detailed Chase's resurgence, George Salem of Prudential Securities Inc. pointedly refused to upgrade his 'hold' recommendation.
He cited "an unwritten rule" that it takes just as long to reestablish investor confidence as it did to lose it. "In the case of Chase Manhattan," he wrote, "we believe it will be years before the sins of the past will be erased completely from investors' memories and the valuation of the stock rises to the P/E or market-to-book ratio warranted by Chase's good fundamental growth in 1992-1993."
Benefiting from an External
This month, when Mr. Salem finally did upgrade Chase to "buy" - his first such rating for Chase in two decades - he cited the Federal Reserve's May 17 decision to raise interest rates-not a specific action by the bank.
Mr. Maletz, who came to his new job last October, will only concede that there is "a little bit of an overhang of the past problems in the perception of investors."
Most analysts, however, consider past problems more of an issue than that.
"Why has the stock traded so poorly versus its peers?" asked CS First Boston analyst Thomas Hanley. "We think the answer has historically reflected the company's perceived inability to shake its 'follower' label in terms of its business profiles." Mr. Hanley thinks the stock is a bargain.
Share Repurchase Foreseen
And of course, neither Mr. Maletz nor any investor relations figure could do much in the short term, said Ron Mandle of Sanford C. Bernstein & Co., which owns nearly 5% of Chase. The stock's performance is really not tied to Mr. Maletz' performance, he said.
Mr. Mandle had predicted that Chase would announce a major share repurchase program. Except for Citicorp, Chase was the only money-center that had not announced one. Estimating that a repurchase program could add 15 cents per share to earnings, Mr. Mandle said it would "clearly signal that the management was seeking to enhance shareholder value."
Predictably, Chase was tightlipped about its dividend plans. But Mr. Maletz conceded that dividends are not as high as the company would like.
Another investor lauded Chase's recent performance but said it is still unclear what direction Chase wants to take.
"Chase has suffered from an image of not being a good performing bank, and it is not clear what kind of bank they are," said Ray Garea, the bank expert at Heine Securities, which invests heavily in financial institutions that he determines to be underpriced. Heine currently has no stake in Chase, having dumped a small holding recently.
No Outstanding Strength
While classifying the moneycenters is never easy, Chase is a particularly ambiguous case, Mr. Garea said. Its branch system is poor; its trading operations rank only fifth among the New York money-centers; and it is not that big a player in other areas of corporate finance, he said.
"I think the market has a little trouble figuring out what they are doing," he concluded.
While the stock price is near $40, its 52-week high, Mr. Garea explained, many investors still see the bank as an enigma, despite Mr. Maletz' efforts.
But Mr. Maletz is confident that investors will take a longer view. After the bank has demonstrated results for a long period to match what it has done since 1990, the stock price inevitably will rise, he said.
Succeeding a Miss Texas
Unlike his predecessor in the investor relations post - Sandra Croy, a former Miss Texas who came to Chase from an investor relations job at a Texas bank - Mr. Maletz has a decades-long background in the banking industry. He knows Chase Manhattan from top to bottom.
He joined the bank in 1977, starting as a client executive in the Global Energy Division. After the oil price crash of 1986, he managed problem credits in the energy group.
From there, he moved to Chase's credit department, becoming credit executive within Chase's corporate finance sector in 1990.
Thanks to this experience, analysts trust what he says more than they do other investor relations officers, who are all too often public relation experts with little banking background.
Pipeline to the Top
"He clearly is in touch with senior management," said Prudential's Mr. Salem. "When you speak to Bill, you have the distinct feeling that senior management is speaking to you."