Bank Failures Are Sparking CU Safety Ads
"Yes, we are about to include some safety and soundness messages in our newsletter in September and we've also bought Bauer decals for every one of our branches," said Merrill Mann, vice president of the $1.7 billion APCO Employees CU of Birmingham. He was referring to the BauerFinancial five-star rankings of financial performance, which have been cited by the Alabama media in comparing banks and CUs.
Reporters have focused on last week's disclosure by the $26 billion Colonial Bank chain of Montgomery-the state's second largest-of a reported $606 million second-quarter loss, including comments about its long-term survival and search for a merger partner or fresh capital.
In Texas and Chicago, where Guaranty Bank and CORUS Bankshares, respectively, have been the subject of media scrutiny, CUs have been preparing for possible safety and soundness campaigns.
And in Georgia, the $132 million MidSouth FCU of Macon began running "your funds are safe" radio ads last week following the July 24 failure of the competing $2.8 billion Security Bank Corp.
While being cautious about marketing that could prove unsettling to consumers, MidSouth management said it needed to reassure members that the CU was stable. "We're not about to go overboard with this radio spot because we don't want to even remotely cause any type of unrest, and throwing muddy campaigns out there is not in the MidSouth culture," said DeAnn Dent, vice president of credit union development.
"There's plenty of room in middle Georgia" for both banks and CUs to compete, said Dent.
The latest 30-second radio ad will run four days this month and reach "most of our middle Georgia membership," she said. The CU has 34,000 members.
MidSouth first began running a print safety and soundness campaign last January, but felt the need to reassure members once again, said Dent.
The Security failure and its FDIC-engineered takeover by another Georgia bank has not generated any kind of panic, she said, as most of Security's former customers seem "pretty loyal and don't seem to be making huge movements to other banks or credit unions."
A spokeswoman for BauerFinancial in Coral Gables said its rating service and its system of classifying zero to five stars has become more widely used recently by banks, credit unions, regulators and the private sector.
"It's obvious that any five-star institution would want their community to know about their rating, especially in times of economic hardship," said the spokeswoman. "If a bank or credit union has been able to earn or maintain a five-star rating, or even a four-star rating, they have also earned the right to advertise that fact."