Small banks looking for more exposure among investors got a boost when Frank Russell Co. launched a new microcap index last month.
J. Bruce Whittaker, the president and chief executive officer of the $289 million-assert Greene County Bancorp Inc. of Catskill, N.Y., said being in the index has put its name before a broader market.
"It just adds more visibility to the stock and lets some people know, who may not have known you were out there, that you exist," Mr. Whittaker said.
Small banks struggle to gain attention. To help, in 2003 America's Community Bankers launched the Nasdaq bank stock index, which includes all banks and thrifts, minus the 50 largest and those with an international focus or specializing in credit cards.
Helen N. Sullivan, a senior vice president of the group, said it touts the index to analysts as a pure representation of the community banking industry. "Historically, the smaller community banks have had a hard time getting coverage from the Street, because the stocks don't trade all that liquidly," she said.
The Russell microcap index includes the smallest 1,000 companies in the small-cap Russell 2000 index plus the 1,000 largest of the still-smaller companies. Financial services is the largest sector represented, with 494 companies. The next largest is health care, with 337.
The microcap index, which was launched after the markets closed on June 24, has a weighted average market capitalization of $290 million; the range is $55 million to $500 million. The average figure in the Russell 2000, which includes 476 financial services companies, is $900 million.
Russell, a division of Northwestern Mutual and headquartered in Tacoma, said it created the microcap index as a benchmark for smaller companies.
Many said they welcome the attention.
Barry L. Hulin is the president and CEO of the $309 million-asset Valley Bancorp of Las Vegas. He has tried to talk it up since its initial public offering last September; he has spoken at two conferences and met with money managers and analysts. He gets about a call a week from investment bankers.
Being in the index is likely to expand the field of people looking at Valley's stock, he said.
"For a small community bank like ours, anything that gives you additional exposure in the marketplace is a good thing," Mr. Hulin said. "It will get people looking at you who might not know you exist otherwise."
Another company working hard to get its name in front of investors is the $707 million-asset Pulaski Financial Corp. in St. Louis. William A. Donius, its chairman and CEO, keeps a spreadsheet of the investors and money managers he has met with since the company went public in 1998. He has met with over 600.
Mr. Donius said being part of an index lends a bank some legitimacy as an investment.
"The purpose of the microcap index is to catch companies before they hit the Russell index and allow investors to potentially benefit from the growth that is present in these small companies," Mr. Donius said.
Michael J. Perdue, the president and CEO of the $708 million-asset Community Bancorp Inc. of Escondido, Calif., agreed. "It's a confirmation that we're doing the right thing to increase the market value for our shareholder," he said.
