environment is that customers remember when you paid them 10% on CDs and wonder why you are paying only half that much now. Forget the fact that borrowing costs also have been cut in half. And forget the fact that when interest rates were 21.5% and inflation was 18.5%, on an after-tax basis the depositor was losing money in real terms, while today his return is positive. All people consider is that they used to get more dollars than they do now, and some have shown their anger by moving funds from banks to stock and bond mutual funds and money market investments to keep the high returns they were used to. Cross Keys Bank of St. Joseph, La., looking back on 1994 in its newsletter for its community, took the opportunity to gloat over what happened to defectors. As interest rates rose, the bank reported, those who had moved into alternative investments found themselves saddled in some cases with losses of 15% to 20% on principal, as was the case with bond funds with longer maturities. The moral, according to the bank: "If rates are low, accept this, and keep the money short - available to reinvest when rates rise again. "Brokers operate on commission from sales. Bankers are salaried and do not have the same motivation to sell a product without revealing the risk it entails." Cross Keys, which is obviously a scrappy community bank, also took the opportunity to chastise a competitor that offered small businesses a lot of service for a $12 monthly fee, as opposed to their own traditional policy of providing credit against average collected balances and charging the actual cost of servicing the account as best they can calculate it. Analyzing its rival's offer, Cross Keys found that the monthly $12 fee included 100 transactions and the bank charged 30 cents for each additional transaction. However, each check included in a deposit was considered to be an item. Cross Keys then informed its customers in its newsletter that a typical small-business account had an average balance of $5,459, wrote 53 checks, made 35 deposits, and deposited 112 items. The score: Cross Keys calculated its average service charge as $9.49, versus $42 for the competition. The bank has thus used its newsletter to stress its policies and how they help customers. Using the analogy of a dry cleaner, the bank took a swipe at "same for all" pricing by asking: How you could expect to be charged the same for having four pair of pants cleaned at the same price as the next guy who brings in 10 pairs? Community bankers should applaud this way of marketing a bank's strength. If you don't toot your own horn, no one else will. A similar approach has been taken by NBT Bancorp of Norwich, N.Y. When the company mailed out its 413th consecutive dividend since it was founded in 1856, CEO Daryl Forsythe took the opportunity to talk about shareholder value. The bank's letter explained: "Shareholder value is measured in terms of a company's stock price through what is called total return. Total return takes the shareholder's initial investment, adjusts the share ownership levels to account for stock splits, and further assumes that all regular cash dividends are reinvested in the company's stock at the price per share on the date the dividend is paid. "Using this measurement, if you purchased 100 shares of NBT stock on Dec. 31, 1979, at the then current price of $15 per share, you would have made an investment of $1,500. After accounting for stock splits, stock dividends, and a reinvestment of all cash dividends at the prevailing price when they were declared, the total number of shares would have grown to 735.6 shares worth $12,138 at the $16.50 market price on Dec. 31, 1994. This represents an average return for the 15-year period of 14.96%. "Obviously, we cannot assure you of similar returns going forward, but we can promise that we will do our utmost to continue to increase shareholder value. Our record speaks for itself. We trust you are as pleased as we are with the long-term performance of NBT Bank." Again, if a bank is not proud of its accomplishments, as NBT obviously is, who else should care. Just as Cross Keys notes that it offers customers a better deal than the competition, NBT takes the opportunity to show that bank stocks are not the stodgy investments many think they are. Again, don't hide your light under a bushel basket. In the same vein, when Signet Banking Corp. of Richmond, Va., distributed a spinoff of shares in Capital One Financial Corp. - its credit card arm - the company included a letter with the certificates reminding shareholders that they could keep their shares with Signet's discount brokerage operation. Does this reminder sound unnecessary? No way! There are still as many bank shareholders who don't know the full extent of their bank's services as there are bank depositors and borrowers who don't realize they can buy stock in their own bank. Cross-selling and getting the entire relationship is what many bankers feel is the key to successful operation in these days when loan pricing is so competitive. But if you don't tell your story, don't be surprised if no one knows it. Mr. Nadler is a contributing editor of the American Banker and professor of finance at Rutgers University Graduate School of Management.

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