How to Communicate the Acceptance of TARP Money

While most banks have already put in place a communication plan for participating in the capital purchase program under TARP, there are some that have not yet. Over this past week, I received phone calls from three different banks asking for direction on how to communicate their participation in this program. Therefore, I thought it might be good to revisit some basic guidelines for communicating acceptance of funds from TARP.

There is a lot of misinformation and confusion concerning the TARP Program. One of the main reasons for this confusion is because the government has not been very clear on their intentions with the TARP program, and they continue to change the rules concerning participation (and reporting). As a result, media has had a field day with the situation, painting participating banks as either failing or troubled banks. However, as we all know, that is not the case. While there is no guarantee from the treasury that participating banks will not have problems, the goal of TARP funds is to assist healthy banks, empowering them to support the recovery of the industry. Therefore, how do you communicate to your marketplace your participation in TARP while emphasizing that your bank is sound and strong?

If your bank participates in TARP, be proactive in your communication. You should be communicating a customized message to four different audiences:

1. Shareholders: Write a letter to your shareholders stating the strategic significance of participating in TARP and the opportunities that additional capital can provide to the bank in growing and becoming more profitable. This letter can be very strategic, informative and technical because it is going to the ownership base of the bank. Provide them with the detailed and persuasive reasoning they need as well as an explanation of precisely how the TARP funds will be used.


2. Employees: Communicate to your employee base through an intranet letter, and then follow up with a “town hall” meeting. You want to communicate that your participation in TARP is not a signal of your weakness but rather the opposite. TARP funds are designed to help strong banks weather this economic storm, and your bank will benefit and grow even stronger from the additional capital. You need to communicate strength and confidence so that your employees can share that information to the customer. No doubt customers will ask where the money is. So even if you do not communicate with your employees, they are, in fact, still communicating to your customers; make sure they are communicating the right, intended message.


3. Customers: You should send a letter to your customer base letting them know that you will be participating in the TARP program. This letter should not get too technical; focus on communicating that you are participating because of your bank’s recognized strength and leadership, not weakness. Highlight the fact that the acceptance of funds allows the bank to attract more deposits, which in turn allow the bank to make more loans (this might help the customer understand that the bank does not make loans from capital but rather deposits). The letter should build brand loyalty and confidence in their bank. Let your customer hear this from you first and not the local press. You may also want to encourage dialogue on the subject by setting up a Q&A page on your website that answers common questions and includes a response mechanism to receive even more information. A transparent attitude will build goodwill and highlight the benefits of the program.


4. Community: You should communicate to your community your participation in the TARP program through a press release. This press release should communicate that the bank is participating because it is a strong community bank, and the funds will enable the bank to better serve the community even better. You should accompany this letter with interviews with local media and talks at local luncheons. The focus should be on how the bank is strong and how it can more readily meet the needs of the community through participation. Keep the focus on your community and your understanding of its needs, rather than emphasizing the bank. Rather than defending the media accusation that banks are hoarding the TARP money to cover losses, promote your bank’s strengths and TARP-driven opportunities to lend more to the community, sparking new growth and economic activity.

You cannot over communicate on this subject. Given the recent media hype surrounding the TARP program, it is not unreasonable that all of your target audiences would have some questions and concerns. Don’t wait for them to ask, or let the media convey the message for you with their own slant. Be proactive, and keep the message positive. If you communicate clearly and appropriately with your shareholders, employees, customers and the community, you can avoid the misperception that the bank has problems. The net result will be greater confidence in the bank and the opportunity for greater market share as customers are moving money to the bank they perceive to be the safest.

As pointed out and well said by Ray Davis, president and CEO of Umpqua Holdings Corporation, about his own bank’s participation in TARP: “This is important recognition of the strength and stability of Umpqua and our good standing as a strong and healthy financial institution. This additional capital will add to an already successful strategy of supporting the growth of our communities through smart, responsible lending, and exploring new market opportunities.”

Branding Opportunities During an Economic Crisis

No doubt, we are all experiencing an economic crisis and challenge as never before. As a result, most banks are making adjustments in loan policies and procedures, deposit acquisition strategy, and watching non-interest expenses. However, let’s not forget the all important element of brand during this crisis.

According to surveys, money is in motion more so than it has been in more than 50 years. And as a result, there is greater opportunity to pick up deposits and relationships if we position our brand properly in the marketplace. Contrary to the reaction of cutting back on non-interest expenses, this is not the time to cut back on putting forth your brand internally and externally.

More than ever, you want to communicate your brand so that your employees feel confident in communicating with the customer, you have a greater top-of-mind awareness during this transferring of funds and the marketplace will feel something positive about your bank. Remember, ultimately, branding is all about what the customer feels about your bank, and in today’s environment, the feeling of trust is very vital. In the US Banker magazine this month (November) the opening line of an article titled Building Your Bank Brand said “In today’s competitive marketplace, branding can be the final factor that affects a consumer’s decision of where to bank.” The author goes on to say, “The degree of trust influences the buying decision more that the product or service features and benefits themselves.”

Therefore, make sure you are communicating and building your brand. You cannot over communicate during these times. Continue to remind your employees of the vision and mission of the organization. Continue to remind them of the longevity and success of the organization. And continue to remind them that that they are the key to communicating with the customer. You will want to communicate through e-mail, staff meetings, newsletters and even town-hall meetings.

Also, you will want to communicate to the customer and the marketplace, reassuring them of the safety and soundness of the bank. However, you will want to do this within your brand and according to your brand message. Avoid the temptation to just communicate a message that highlights the negative aspects of our crisis. Make sure, as an institution and leader in your community, that you communicate a positive message of hope. You want to be an inspiration during this time; if you do so, people will transfer those positive feelings of hope to your brand. Look for opportunities to communicate through mass media, retail merchandising, personal contacts, luncheons, press releases and personal contact (Be very active in the community).

No one can deny that we are going through an economic crisis. However, the present crisis also creates opportunity for the banks that will seek to step forward and lead with their brand. Never has it been more important to define your brand, differentiate your bank from competitors and communicate clearly what you deliver to the marketplace. Avoid getting lost and trapped in a survival mode where you lose sight of your brand, but rather embrace your brand and seize the opportunity in the marketplace.