Tips from the Pros: Effective Investor Presentations

Tips from the Pros: Effective Investor Presentations

Casteel, Lynn E

What makes for a successful investor presentation? That’s the question Community Banker editor Debra Cope recently put to four investor relations consultants. They offered practical tips and insights on what flies-and what flops-with investors.

LYNN E. CASTEEL

MANAGING DIRECTOR – INVESTOR RELATIONS PRACTICE

TRAVERS COLLINS & CO.

BUFFALO, N.Y.

What does the investment community really want to hear in your presentation? How you plan to grow the size and profitability of your institution. Are you using a de novo strategy? Entering new markets? Planning acquisitions? They also want to understand the near-term focus of your loan growth.

Asset quality is always a primary consideration. What is being done to analyze and understand risk in the underwriting process? Are you pursuing sources of non-interest income? Do you have a specific strategy for expanding non-interest income such as acquiring non-bank financial services companies?

With most community banks conducting business in limited geographic markets, investors like to have an understanding of the relative vitality of the regional economy, and the factors driving it, as well as the competitive climate.

When preparing a presentation, assume that your audience will know nothing about the strengths of your organization and the factors that build value. Develop your presentation around these items. If you’ve built a record of double-digit growth, make sure that they understand this when you’re done. Although a visually interesting presentation is a good idea, substance should always trump style. Five-year charts are effective at reinforcing growth and performance trends that increase confidence in management’s capability going forward. Text slides should be brief and include just the major points.

For institutions that are coming through a challenging period, deal with it head-on in the presentation. Explain what happened, how it impacted results and what has been done to reduce or eliminate the possibility of it happening again. Not dealing with negative issues reduces credibility, which will eliminate your company as an investment alternative.

At a typical investor conference, you get 15 to 20 minutes to make your presentation and another 10 minutes to answer questions. In this limited time you have to convince a room full of skeptics that your business strategy makes sense and that your management team is capable of successfully executing the plan. From the perspective of the professional investor, there is little to differentiate banks, in terms of products and services. The real differentiator is the quality and depth of the management team.

Rehearse the presentation. Also, anticipate and practice responding to questions. This is your opportunity to convince investors that you have a real command of the important issues, or just the opposite.

LINDA MARGOLIN

PRESIDENT

MARGOLIN & ASSOCIATES

CLEVELAND

What’s the big difference between a good presentation and a bad one? The uninteresting ones contain the same information that’s in the company’s Form 10K or 10Q. What you really want to do is find something new to tell your audience-show them how you are pursuing a strategy based on the core competencies.

Effective presentations move beyond the numbers. The numbers validate that you are executing on your strategy. They support the fact that you have a strategy and are making progress with it. But strategy itself is what the CEO brings to the table. It’s a reflection of his vision.

The biggest mistake you see with beginners is putting too many numbers or words on a slide. You do what you have to do, but it’s generally better to say less than more.

And don’t forget that you’re dealing with a sophisticated audience when you’re talking to institutional investors. They want a presentation that is slick, not cute. Investors have money at risk and want to know it’s being taken seriously.

It’s important to let investors know what they are buying into. Put goals in place to let them know what the long-term growth goals are, provided the management feels comfortable that it can execute. Also, take stylistic pointers by observing what others are doing. See what other companies have a similar story to yours, and how they presented it, and how they have performed.

For a small bank to connect with investors, it’s important that they have something to say. If they’re small they’ve got to be doing something exceptionally well to get the attention of institutional investors. A $2 billion market cap will be in the public domain all the time, but if you’re a small market-cap bank, you may want to wait until you’ve got a compelling story to tell before you seek out institutional investors.

SHERWOOD LEE WALLACE

CHAIRMAN AND CEO

THE INVESTOR RELATIONS COMPANY

DES PLAINES, ILL.

If you’re going to be on a program with five or 10 other banks, you should expect your presentation to be limited to 15 to 20 minutes. If you’ve organized the meeting for investors, you can go 30 to 35 minutes, and I think you should. Organizing the event gives you that prerogative.

The business bankers are in teaches them to be serious and subdued, and to convey stability. But it shows well to have some enthusiasm and energy. The way to do that is to let the banker start out by talking about some aspect of his business that he’s enthusiastic about. We interview clients and see what excites them about their bank. We let them talk and get them on something that sparks enthusiasm. When we hit on something that is important to the business, we try to start presentations with that.

You want the banker to start out with the three most important elements for the company-and no more than five. Investing comes down to three issues: Management, strategy, and managements ability to carry out its plan, which encompasses finances. You want people to gain confidence in the CEO, and in his ability to grow the company. The company is the horse, and the CEO is the jockey investors are counting on.

What are some do’s and don’t’s? The biggest mistake everybody makes, banks or otherwise, is that people have a tendency to start off with the history of their bank. Nobody cares. They want to know who you are now and where you are going.

Also, banks have a tendency to throw tons of numbers at people. Simplify, simplify, simplify. Focus on a few key numbers.

Finally, almost every presentation has a Q&A session at the end. Answer every question directly, completely, and succinctly. If you go on for 10 minutes, it will be the last question you get. And remember, the Q&A isn’t the time for war stories. Save them for the more informal discussions before or after the meeting.

JEFF WILHOIT

VICE PRESIDENT

FINANCIAL RELATIONS BOARD

CHICAGO

In an investor presentation, publicly traded banks seeking a greater following within the investment community have a powerful opportunity to maximize the potential for investment thesis uptake among their hard-won audiences. For the most effective investor presentation, public banks would do well to consider three things.

Differentiate. With hundreds of similarly-sized banking peers vying for the attention of Wall Street, the things that management may cite internally as proof-positive of their particular genius may just be the same old story when communicated to jaded investors and bank analysts. Reaching these audiences requires the development of an ironclad investment thesis consisting of a number of investment appeals.

These appeals are a banks specific value proposition, and communicating them consistently can help a bank separate itself from the herd. These might include a particular competency in securing new assets, or a proven track record of product innovation.

Know the Audience. Armed with these new messages, timely market intelligence can ensure that those investors being targeted are the ones most likely to respond. A bank that has a stated commitment to organic growth may not resonate with an investor that seeks strong growth through consistent acquisitions, nor will a bank with a conservative lending culture find much favor among those investors who look for a higher risk/reward proposition. Fortunately, this information is readily accessible through investment databases and investor relations firms with a proven history of industry relationships.

Know Thyself. With the right messages and the right audience, the last hurdle is developing the right delivery vehicle. In presentations, it is important to be true to corporate culture, to be comfortable with the source material, and to make it ones own. A bank that values irreverence and questioning of old banking truths should not suddenly button down in an attempt to curry the favor of a particular audience. At the end of the day, a publicly traded bank can start to look an awful lot like a commodity if it endeavors to act like one.

Copyright America’s Community Bankers Apr 2004

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