BSB Bancorp
Situation
In July 2001, Travers Collins & Company was called upon to provide investor relations counsel and support to the executive team of BSB Bancorp, Inc. The company had faced a very challenging 18-month period marked by the departure of its long-time CEO, substantial loan losses related to its oversized commercial loan portfolio, a failed merger attempt, internet rumors of its imminent demise, and the hiring of a new CEO with a significantly different strategic vision for the company.
The executive team recognized that the difficulties of the prior 18 months had affected BSB's relationship with investors and had the potential to impact customer relationships. They concluded that to start rebuilding shareholder value they would need to create a better understanding of the Bank's strategy and potential for success in coming months.
Execution
We initiated our research with an analysis of BSB's institutional ownership to determine the predominant investment characteristics of their shareholders and the near-term buying or selling trends. Institutional ownership declined during the first two quarters of 2001, indicating investor uncertainty about asset quality. A review of postings to internet-message sites revealed a very active exchange of postings - particularly for a financial institution - with a group of decidedly negative messages predicting everything from failure to regulatory takeover. This was troubling in that these message boards are the domain of the individual shareholder, which typically provides stability for the financial institution ownership base.
Next, we developed a plan and budget document that focused the client's limited resources on communicating the primary messages of:
- A solid valuable banking franchise, and
- A focused management team intent on eliminating the asset quality issues as quickly as possible.
Since institutional investors have a disproportionate effect on the valuations of stock - a result of their ability to purchase or sell large blocks of shares - we focused the initial communications activities in areas that more effectively reach this higher priority target group. These activities included a scripted earnings conference call, development of a promotional mailer - for distribution on a targeted basis - and the creation of an investor presentation for use with groups of professional investors.
We also initiated development work on a "Fact Sheet" mailer that would be the staple of our institutional-investor-mailing program, as well as a cover letter for the solicitation package that outlined BSB's investment characteristics and reinforced its status as an interesting value investment option with improving performance.
Results
Despite the relatively short period of time that this program was in place - less than six months - there is a clearly defined set of benefits that BSB realized from improving the quality of its investor communications program. These benefits included a 30% increase in BSB stock price, the addition of sell-side analyst and a 15% growth to institutional ownership base.
