ABA Banking Journal - September 2011 - (Page 20)
ABA Community BAnking | stOcK tRAdING dILEMMAs
“What will help my stock?”
Experts ponder a bank CEO’s question
By stEvE cOchEO, ExEcUtIvE EdItOR
he president of a western community bank writes: “Our board has been struggling with solutions to support our stock price. We are thinly traded, making money, and our asset quality is better than most. Unfortunately, the market price for our stock is hovering around 60% to 65% of book value, which does not compare favorably with other similar West Coast bank stocks that trade around 78% to 85% of book value or higher. In fact, one problem we have encountered is how to appropriately price a secondary offering. Looking for solutions, we have considered either a stock split or the creation of an ESOP to help solve this book-to-market price problem.” —from “Banker Suggestion Box” on www.ababj.com We took this to experts. One common counsel was patience—especially since bank stocks in general have not been market favorites recently. “There’s no quick answer,” says David Hogan, director of investor relations at First Financial Bankshares, an 11-bank holding
company in Abilene, Texas, with $3.8 billion in assets. “It will take time and effort to get your bank’s message out and get your trading volume up.” Hogan has written several articles on bank investor relations on www.ababj.com, including “Questions Bank Investors Are Asking…,” at http://tinyurl.com/bankinvest Above all, says Hogan, the key is having a good story to tell and management adept at telling it. How well solutions work depend on a bank’s specifics, experts say. Being proactive is a strong beginning. Stock price is as much a sales, perception, and competitive challenge as is making loans or opening accounts. “There are so many publicly traded banks,” says Hogan, that a bank not on the radar of analysts and institutional investors must work at it. This is also a challenging time to hope to improve the bank’s “multiples,” says Laurie Hunsicker, managing director at Stifel, Nicolaus & Co., who covers community banks and thrifts.
20 | ABA BANKING JOURNAL | september 2011
If you would like to try to load the digital publication without using Flash Player detection, please click here.