Immediately following Silicon Valley Bank’s (SVB) failure, credit unions and banks sent messages to their members or customers. They affirmed that their institutions were safe. It was also common to point out that that they did not have SVB’s business model or its exposures.
Effective communication is an art, especially in a crisis. The audience is used to receiving marketing promotions. This situation is very different from those routine messages.
This special contact should be authentic (even personal), drafted for the event, and include relevant facts for the specific circumstances.
The following are examples from two CEO’s, one from a bank and the other a credit union. Following each is a response from the audience.
March 13, 2023
Dear Customers and Friends of VeraBank, (posted on the bank’s web site’s landing page)
I want to take this opportunity to address what is going on in the financial markets, regarding the orderly liquidation of Silvergate Capital Bank, the closures of Silicon Valley Bank and Signature Bank, and how it relates to VeraBank.
It understandably creates worry any time there is a failure in our industry. Let me reassure you, these banks are nothing like VeraBank, and we have no exposure to the issues leading to those niche banks’ downfall.
Both Silvergate and Signature Bank focused heavily on volatile crypto industry, and Silicon Valley Bank was the largest bank serving start-up technology businesses and venture capital firms involved in that industry. These banks did not practice the prudent diversification of revenue and risk, unlike VeraBank and the great majority of community banks in this country. For instance, at the close of 2022, 97% of Silicon Valley Bank’s $175 billion in deposits were uninsured, and they only had $12.5 billion in cash on hand to cover those deposits. As of closing this past Friday, only 30% of VeraBank’s deposits are uninsured, and we have over $928 million in cash on hand or 87% of our uninsured deposits in cash on hand to cover any customer liquidity needs. I can assure you that is a very high level for our industry.
In other words, where Silicon Valley had only 7.1% of their uninsured deposits covered by cash on hand, VeraBank has 87% covered. We also have liquidity sources that could fairly easily increase our liquidity by close to twice the amount we have now. At VeraBank, we have always understood the importance of good liquidity and risk management. VeraBank is funded with stable local deposits from the communities in which we do business and not the kind of “hot” and unreliable money that funded the three institutions that are now failing.
VeraBank has been through many good and bad economic times, and we continue to operate with the same conservative philosophies that have served us well for over 93 years.
Most recently we went through the Great Recession of 2008-09, the ups and downs of the oil and gas markets of the last 15 years, and a global pandemic, and we have not missed a beat.
Actually, it has been just the opposite at VeraBank: we have thrived because we understood the importance of risk management. We understand that we serve each of you and do not dare put your money at undue risk.
Please do not confuse VeraBank with these other banks and others you may hear about in the weeks to come. I am very confident in our bank and how we protect our customers. Please reach out and talk with any of my 500+ colleagues if you have any concerns at all. Let me provide you with my cell number, 903-649-8790, so you can feel free to text or call me directly if you would like to talk about these issues.
Thanks for your continued support,
The response: according to an evening business news report, Tidwell received over 700 calls spending most of his day on the phone.
VeraBank was established in 1930 at the height of the Great Depression, is a privately-owned community bank that serves East and Central Texas with its network of 38 conveniently located branches in East and Central Texas and has $3.5 billion in assets.
A CredIt Union CEO’s Email to Members
SAFE AND SECURE SINCE 1933
A Member Responds:
Suggestion: If you are going to send out an email blast starting with “I’m” as in “I’m pleased to report…” make sure that your Member/Owners (?) can contact you personally (and not have to guess at an email address because you may be too busy to respond to us plebeians…).
As a credit union that is supposedly member owned, WE (your members) should have an open line of communication with transparent abilities to see how our credit union is run on a daily basis.
Again, this includes open lines of communication to ANYONE in our credit union, including a directory of staff. As a member that is hearing impaired, a telephone is not a particularly viable option but email certainly is. . .
This is the first email that I have received concerning the operations of G1 since becoming a member over a year ago. There should be email blasts to indicate G1 annual reports as well as opportunities for election to the board of directors…
This email is meant to be a frank/direct/open suggestion for improvement of member communications with the actual member/owners of G1.
Each reader or CEO can choose which approach best fits their style.
As the credit union member suggests, this kind of member contact should be more frequent. It would include other items that the owners (not customers) would find useful or relevant, not just when a special event occurs. For most art generally improves with practice.