One outcome of these times is that de novo banks actually have an advantage as the new kids on the block. As troubled competitors try to unwind problem assets from distant headquarters, a startup's message can be simple and direct: "We don't have bad loans on our books and we're local."
Last November, NUVO Bank & Trust became the first de novo to open its doors in Western Massachusetts in more than two decades, dating back to the 1987 opening of Bank of Western Massachusetts, now a division of People's United Bank of Bridgeport, Conn.
Based in Springfield, the $19 million-asset NUVO competes in a region that is largely dominated by out-of-state banks. As its chief executive officer, James Gardner, sees it, there's a need for new blood in the area.
"In our communications we're focusing on the term 'local,'" says Gardner, who has 35 years of community banking experience. "That's a big piece of what the economic lessons are teaching us."
Because of the woes on Wall Street and the asset troubles behind many overleveraged national banks, "people are now turning to a more localized perspective and they want to be able to touch and feel their bank," and see the fruits of keeping their funds locally invested," says Gardner.
The organic local presence of NUVO is part of its logo, where the "O" is designed to look like two people holding hands. Some ads also spell out the acronym of the bank's less-than-catchy name: Never Underestimate a Visionary Organization.
"We also have a name and a brand that is expandable," Gardner says. "As the bank gets momentum and as we get national recognition we expect that we will be able to grow the bank beyond Western Massachusetts."
Expansion may be key to the banks's future because one of biggest challenge NUVO faces is drumming up business in an area that fits no one's definition of fast-growing. But that's where the new bank's experienced employees come in.
Jeffrey Sattler, NUVO's president and chief lending officer, is the face of the bank in local television and print ads. With 25 years of commercial lending experience in the area, he has a familiar face to many local business owners. In one TV spot, created by West Springfield-based Market Mentors, Sattler says, "Your deposits are reinvested right here in the community - let's get it done." In another he states, "Loans, no problem. I'll help you do it."
Products and features are part of the message, too, such as the bank's "Transfer in 10" easy account-switch application in its branches. To entice consumers to switch their accounts to NUVO, the bank is offering such bonuses as a free, three-month membership to Planet Fitness. But it's local ties that bind the brand to the community. Sattler's appearance emphasizes that the bank has staff with local experience, which small-business owners may have been missing at other institutions where the officers of other acquired lenders may have moved around or been replaced by outsiders, says Sattler.
"The reputations of the bankers we have are pretty established in this marketplace," Sattler says. "We're not in a growth market but with the way the market has evolved, Western Mass doesn't play as much a factor in the balance sheets of these bigger banks."
While being new has its advantages, NUVO has been careful to push itself as young rather than fledgling. For example, only one print ad broaches the topic: "New bank. Free from credit problems."
New may be a good thing from a business perspective - no CDO or subprime exposure on these books - but a de novo also must be careful to not to appear inexperienced, says Jonah Disend, CEO of New York-based brand consultant Redscout.
"You need to feel like an established brand and not a startup," Disend says. "People know that startups fail, so the message has to show the bank as something that's innovative and cutting edge."
Still, the lack of size can be a relative plus these days, says Bruce Clapp, president of bank marketing consultant MarketMatch.
"There's certainly been a change in peoples' receptivity toward [a bank's] message," Clapp says. "Size always was a positive because you could offer a larger branch network and more access. Now it's a strong negative because people are looking for a small bank that's more in tuned to their personal needs."