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Community bankers going upmarket
The Russell 2000, Standard & Poor's 500 and Nasdaq-100 are known quantities. But what about the small-bank 545?
The Russell 2000, Standard & Poor's 500 and Nasdaq-100 are known quantities. But what about the small-bank 545? That could be shorthand for the America's Community Bankers Nasdaq index, which the Nasdaq Stock Market unveiled last month in collaboration with the ACB, a Washington trade group that represents mostly small-cap banks and thrifts. It's an unabashed ploy to attract institutional investors to a lesser-noticed corner of the market.
"Post-Sarbanes-Oxley there has been less coverage of small banks, which are thinly traded to begin with," says ACB president and CEO Diane Casey-Landry. "The index will draw attention and liquidity to these banks." Adds Joel Comer, a San Franciscobased principal with investment bank Sandler O'Neill & Partners: "This is a group that consistently has returned as much as 12 percent annually over a period of years. That's a pretty good story that needs to be told."
Casey-Landry, 46, began exploring a potential index with Nasdaq shortly after she joined the 1,200-member ACB from consulting group Grant Thornton four years ago. Last summer ACB and Nasdaq agreed on a cobranded total return index; the benchmark was set at 250 for the official launch on December 2. Of the 545 banks in the basket -- which have an aggregate $178 billion in market value -- most trade on the Nasdaq, fewer than half are ACB members, and none have significant international or nonbanking businesses. "Main Street has known about us for a long time," says ACB chairman William Zuppe, who is also president and CEO of $4 billion-in-assets Sterling Financial Corp. of Spokane, Washington. "It's time that Wall Street did, too."
Zuppe's stock has been a pacesetter, more than doubling in 2003, to a split-adjusted $35. But after its first three weeks, the ACB index, at 249.99, had barely budged.