Small Banks, Credit Unions Look to Ride Wave of Bank Transfer Day

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Byline: Rachel Witkowski

Community banks and credit unions plan to keep pushing promotions in coming weeks as a way of maintaining momentum after Bank Transfer Day.

A number of community banks have gone so far as to build marketing campaigns around now-scuttled plans by Bank of America Corp. and other big banks to implement monthly debit card fees.

Scores of small banks are touting free checking, with some offering cash to those who switch banks. Many bankers say they still have an opportunity to attract upset customers, even though most big banks have scrapped plans for new debit fees.

"I don't think you can put the genie back in the bottle," said Gregory Mitchell, the president and chief executive of First PacTrust Bancorp Inc. in Chula Vista, Calif. "There's already been a high degree of dissatisfaction with customers. a[bar] It just became the proverbial straw that broke the camel's back."

First PacTrust's bank, Pacific Trust Bank, launched an aggressive guerilla marketing campaignA this week. It will use Saturday's so-called Bank Transfer Day to start offering a $60 annual cash rebate to certain customers who use debit cards. (The amount equals $5 a month as a tip of the hat to B of A's now-abandoned fee.)

Management had planned nine months ago to launch a $50,000 marketing campaign in the fourth quarter to rebrand Pacific Trust as a community bank instead of a thrift. Management said B of A's gaffe came at the right time.

"With B of A pulling back, that helps us even more because there's just a lot of noise that keeps our offer relevant in consumers' minds," said Gaylin Anderson, the bank's chief retail banking officer.

Industry observers agreed that big banks did themselves a disservice by proposing the fees. Such a credibility hit will linger even though the fees went away.

"There appears to be reputational damage that is ongoing no matter what the larger banks do," R. Scott Siefers, an analyst at Sandler O'Neill & Partners LP, said during an Oct. 31 American Banker analyst roundtable.

Bank Transfer Day was a grassroots consumer initiative that credit unions seized on as a way of standing out from the banking industry, but some banks are also attempting to capitalize.

"The momentum seems to be going mostly to credit unions but I think a lot of community banks are seeing a lot opportunities as well," said John Hirabayashi, the president and CEO of Community First Credit Union of Florida, which is in Jacksonville.

Community First had scheduled a new advertising campaign this week with a focus on free checking. Hirabayashi said that he had no interest in participating in Bank Transfer Day or "jumping on the bandwagon, so to speak."

Even before the credit union's campaign, memberships rose 50% and checking accounts increased 70% in October compared to a year earlier. …