Move Your Money: 90th Day Report

We are about to measure the first vote, if you will, of Move Your Money. The FDIC begins collecting Call Reports from the banks today, and then we'll be able to measure how deposits have shifted.
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It's been one quarter since Move Your Money burst upon the scene on December 29, 2009. Over the last 90 days, most of the media coverage of the campaign has focused on the amazing phenomenon that acting on the simple idea that putting their money into good banks focused on local needs is a worthwhile notion. It's been a nationwide "human" response affecting the varied landscape of U.S. banking as seen in this map published in the New York Times using date provided by IRA. The web server records show that 100% of zip codes in the United States where the FDIC lists an active bank branch have been explicitly searched using the simple tool my company donated to the website.

We are about to measure the first vote, if you will, of Move Your Money. The FDIC begins collecting Call Reports from the banks today for the quarterly operating period ending March 31, 2010. They have 30 days to submit their filings. It's after that when we'll be able to measure how deposits have shifted since the last Call Reports were filed for the period ending December 31, 2009. Stay tuned for that. For now we are still in that period where anecdotal stories are our main source of feedback. So today I'd like to spend the rest of this article reporting on how one bank experienced the first 90 days of Move Your Money from the receiving end of the pitch fork.

Mechanics Bank of Richmond, California is a 105 year old institution now in its' 5th generation of stewardship in the footsteps of founder E.M. Downer. They rate an IRA "B or better" grade which gets their $2.9 billion asset institution on the MYM list. The history of Mechanics Bank reads much like the script of "It's a Wonderful Life." The mechanics in the bank's name refers to the railroad workers first served by the institution in 1905. Now specializing in lending to small business, this community oriented institution is also trusted with the deposits of over 600 non-profits. They support over 400 charities and allocate a community chest equivalent to $1,000.00 per employee each year to donate to good causes as part of the bank's corporate efforts. Like many other community banks, they provide "toaster benefits" like refunding ATM fees if their customers use another institution's machine except for ATM's located in casinos.

I interviewed SVP of Retail Banking Rauly Butler about the last 90 days and we started off by talking about the economics of new deposit acquisition. Community bankers tend to use direct mail, print, and community event booths. It is tough slogging. Direct mail is a 1/2% response program at best. Getting 50 people to come in for every 25,000 pieces of mail sent is considered adequate. Print is even lower yielding. Event booth marketing literally means investing in sponsoring and tasking staff at local community events. Getting one or two new accounts is the typical yield for that much community investment.

So imagine Mechanic's bank surprise when in the first week of January 2010 their branches in Oakland, Kensington and El Cerrito reported that they experienced a six-fold jump in new account openings. Mr. Butler had no idea where it was coming from until the Oakland branch reported that people were streaming in because of something called Move Your Money they'd seen on the Huffington Post. Over the next 90 days, Rauly estimates that Mechanics Bank picked up between 600 to 800 new accounts in their markets directly attributable to Move Your Money. He estimates it's added between $5M to $6M in new core deposits to their retail banking business. More to the point of running their business, Mr. Butler says being a bank good enough to make the MYM zip code list is 5 to 10 times more effective than anything he can yield from their traditional marketing avenues.

What a windfall! All they needed to do was operate a bank using safe and sound principles. The IRA analysis engine objectively computes the rest. Mr. Butler did note this apparent windfall to this boss Steven K. Buster, the President and CEO of Mechanics Bank. Rauly paraphrases that Mr. Buster noted that Mechanics Bank paid for this by doing it right, by foregoing the things that got other banks in trouble, by looking like lesser performers when other raked it in, and now they are seeing the reward of doing their job. Hooya!

Like many others, Mechanics Bank had some good Move Your Money stories to share. One MYM consumer in Kensington came in asking a lot of detailed questions. The bank staff took the time to answer all of them and educate him. He left then came back and first opened a $2,000 checking account and a $100K CD. Then he came back again and deposited additional money until reaching the maximum $250K FDIC insurance cap. Another walk-in customer at their Danville branch located inside a supermarket came by also asking questions. He made an appointment to return at 4:00pm on Saturday and the branch manager agreed to meet him even though the branch closed at 1:00pm. The reward for that extra touch of service was that the gentleman returned and deposited $400K. We've been hearing stories like these for the past three months. People with the means and need to manage sums far above the $5,000 average consumer account have been taking the time to become much more educated about how banking works and they are making tangible decisions. Americans can now tell the difference and some bankers can walk with their heads held high once more.

Mr. Butler also provided some interesting feedback about these other bankers. He'd just returned from the Western Independent Bankers conference where contrary to some of the reserved coyness displayed by bankers in official interviews feigning not ever having heard of Move Your Money, 100% of the CEO's at that conference attended by over 100 banks not only knew about MYM but treated it as the buzz of the discussion ... and Rauly says they were all smiling. We'll see how that translates into 1Q2010 industry numbers in about month and a half.

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