Skip to content

Local banking…

From the New York Times..

~~~ “The Texas banker Edward Speed wants his fellow Texans to think small.

Sensing an opportunity to capitalize on public outrage over big national banks rescued by taxpayer bailouts, Mr. Speed has started acampaign urging Texans to take their cash out of banks like Wells Fargo and turn it over to small homegrown institutions like his, the Texas Dow Employees Credit Union in Lake Jackson near the Gulf Coast.

His pitch drips with Texas swagger — “Real Texans bank locally” reads one of his ads. “We respectfully suggest they head on back home and make their profits where they live.”

He started a Web site, bankwithtexans.org, urging people to switch their accounts from “out-of-state carpetbaggers” to local institutions that never embraced risky Wall Street investments like credit-default swaps and instead stuck to taking deposits and making old-fashioned loans.

Across the country, community banks like Mr. Speed’s are trying to tap into the public’s outrage over Wall Street greed to lure customers from their big multinational competitors.

The overarching message: You can trust us, because we did not cause the crisis and did not need bailouts.

“We’re pretty convinced that the public is very upset with these big banks, and they don’t have much use for them anymore,” Mr. Speed said in a telephone interview. “I can’t beat Wells Fargo and Bank of America nationally, but I can certainly beat their branch across the street.”

Of course, 115 small banks have failed since the financial turmoil began last year, and more are expected as loans for commercial real estate begin to falter. But they represent a small fraction of the nation’s 8,000 or so community banks.

The message is being spread on highway billboards, in local television spots, at town hall meetings and even at professional baseball games.

At the Colorado Rockies’ first home game of the season, in April, fans at Coors Field witnessed a single-engine propeller plane with a banner in tow. It read: “This is the closest thing we have to a private jet.”

The ad was commissioned by FirstBank of Colorado, which hired a local marketing firm to design ads that promoted the regional bank’s conservative lending practices.

In Bellingham, Wash., the North Coast Credit Union is running local newspaper ads saying “Bailouts are for boats” and “Why should your bank’s C.E.O. get a golden parachute while the rest of the bank nosedives?”

In Indiana, a group of 75 credit unions banded together to buy a radio spot emphasizing “policies that serve people on your street, not Wall Street.” Worthington National Bank in Fort Worth suddenly gained $10 million in new deposits after running billboards urging consumers to “Just Say No to Bailout Banks.” And Hancock Bank in Gulfport, Miss., posted signs outside its braches over the summer saying “Bailouts? No thanks.”

The ads come as public sentiment toward the beleaguered banking industry has reached a particular low point. In a Gallup poll conducted in June, only 18 percent of respondents expressed high confidence in the nation’s banking institutions, the lowest since Gallup began conducting the survey in 1979.

USAA Federal Savings Bank, based in San Antonio, Tex., has perhaps the most visible new marketing campaign, costing $25 million, to lure customers from larger institutions. The campaign, by Campbell-Ewald, a division of the giant ad agency Interpublic Group, includes a variety of ads on radio and television and in print with the message, “Banks don’t need bailouts, people do.”

“It’s a land grab right now and credit unions and small banks are in a great position to grab market share, and they’re using marketing messages to their advantage,” said Jacob Jegher, a senior analyst at Celent, a consultant to the financial industry.

Even credit unions and small private banks, which have competed fiercely against one another for years, are banding together to combat the megabanks. In early August, a group of officials representing more than 300 community banks and credit unions from across the country gathered in a ballroom in Dallas to hear about a new venture to combine their marketing budgets for the campaign.

The plan was created by BancVue, a consulting and marketing company for small banks. Its aim is to bring new high-interest, no-fee checking accounts offered by small banks and credit unions nationwide under one brand, called “Kasasa” — a name made up after BancVue conducted extensive consumer marketing tests. BancVue argues that smaller banks, by pooling their marketing resources, can attract deposits from larger institutions.

The idea for Kasasa came after customer studies suggested that most people preferred the personal service of a community bank, but were concerned they could not offer the same innovative products, like debit card rewards and name-brand credit cards, as the megabanks, said BancVue’s chief executive, Gabriel Krajicek, who is based in Dallas.

Persuading a customer to switch banks is difficult. “It’s easier to get a divorce than to change your checking account,” Mr. Speed, the Texas banker, said.

But the recession has provided an opening for small banks to promote their relative stability. According to the Federal Deposit Insurance Corporation, the federal agency that insures deposits, banks with less than $1 billion in assets remained the best capitalized in the industry, meaning they have adequate cash to absorb loan defaults.

And most smaller banks have continued to extend credit to consumers and small businesses, while big banks like Citigroup continue to cut back on their outstanding loan balances. With the bankruptcy of theCIT Group, one of the biggest small-business lenders in the country, community banks sense even more opportunity to fill the void.

So far, the campaigns appear to be helping banks attract new customers. According to an analysis by the Independent Community Bankers of America, small banks were the only segment of the industry to show growth in net loans and leases in the second quarter.

A pilot program testing Kasasa with 10 community banks over the summer delivered growth rates of 150 percent on new accounts in just two months, according to BancVue.

“It took $4 gasoline to get folks to think about their driving habits,” Mr. Krajicek said. “Similarly, it has taken a meltdown of the megabanks and other financial institutions to get consumers really thinking about where they are putting their money, who they can trust and what results they should expect.”

Even though he cannot attribute any specific gains to his new ad campaign, Mr. Speed says his commercial lending business is already 25 percent higher than he had projected for the entire year.

Mr. Speed recently hired two bankers after BBVA of Spain bought Compass Bank of Birmingham, Ala., and eliminated the entire commercial lending staff at the branch across the street from his credit union.

“It showed their arrogance that they came in here and wiped out the community bankers that have been here for a long time,” he said.