I thought I had seen just about everything in bank-shareholder relations until I saw this letter from Don Powell, chief executive officer of First National Bank of Amarillo, Tex.:

"Dear Friend and Stockholder: Each Christmas for many years, your bank has run a color ad in the Amarillo Globe News containing the signatures of all of our employees.

"This year we would like to do something a little different and feature the signatures of our stockholders.

"This will provide an opportunity for you to personally wish our customers a merry Christmas, and also remind the community that our bank has 1,400 local owners.

"If you would like to participate, please sign your name below and return it to us."

A Few Bad Apples

What a beautiful idea! One of banking's main problems today is that the public sees a few bad apples and thinks all banks are either crooked, inept, or failing. Yet surveys show that people feel the banking industry in general is terrible, but their own bank is just fine.

In sum, when we can personalize the bank, we remove much of the fear and poor image.

This goes far below the CEO level. A well-run bank trains its personnel to make customers feel they are dealing with Suzy or Joe, not Schmidlap National, and they do not want to let Suzy or Joe down by changing banks or paring accounts.

How smart of First of Amarillo to go further and show that the bank is also Max and Sadie, the shareholders. And that by moving the account you can be hurting these neighbors and friends.

Banks have not always been so interested in shareholder synergism. A New Jersey CEO once told me: "I wish the newspapers would stop quoting our stock every day. Every time the stock goes down, I get irate calls from people wanting to know why. If they would only stop giving out this information, this harassment would stop."

Stop the Presses!

This CEO does make a point. Those who follow the share prices of community banks know that the stock quotations in the newspaper and the actual price you pay or receive are two different things.

You could drive a tank between the spreads that some dealers post on many over-the-counter stocks.

What Goes Up . . .

Did your stock rise from $4 to $5 yesterday? Don't celebrate. It simply means that the last trade was a sale from the bank stock dealer's position to a customer. Did it fall back to $4 the next day? That means that the last trade was the dealer buying from a customer.

This explains how you can have a stock reported at a low of $4 and a high of $5 for the day, with volume of only 200 shares. (It was the same 100 shares first bought and then sold by the dealer.)

You can't blame the bank stock dealer. He has enough trouble financing his position and taking the risk that no one wants the stock he bought without further sharp price reductions. His cost of handling the 100 shares also helps explain the wide spread.

But it sure can make shareholders mad, and they take their anger out on the bank.

To go a step further, when you try to sell a sizable block of stock, what is quoted and what you get are often worlds apar. Again, the banker is blamed.

The Best Advertising

So while one can understand the New Jersey CEO who wished that shareholders would just remain quiet in the corner - ignorant and hopefully happy or at least "sullen but not mutinous," one can also see shareholders as a rich resource the bank can capitalize on.

A shareholder who is local can be enticed to give his bank all or most of his business through statement stuffers that accompany the quarterly reports. They usually say something like, "Put your money when your money is."

And smart bankers try to get out-of-town shareholders to sell their shares back, so that they can be distributed locally where the ownership can do the bank more good than just providing capital.

Another Leap

But now First of Amarillo has gone further, using its shareholders as a marketing weapon to show the community who owns the bank.

The recent campaign does double duty: having the owners thank the other customers and showing the strength of the bank. If "a man is judged by the company he keeps," then "a bank is judged by the local people willing to invest in it."

Mr. Nadler is a contributing editor of the American Banker and professor of finance at the Rutgers University Graduate School of Management.

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