Abel Collins made the move in January.
He walked into a Bank of America branch in South Kingstown and asked to close his savings and checking accounts. He told the bank staff he planned to deposit his money into a nearby Newport Federal Saving Bank.
“They seemed sad about it,” Collins said of the BofA employees, recalling how they made a last-ditch effort to keep his business by noting that the bank had paid back its $45 billion federal bailout.
“I actually never had a bad experience at Bank of America,” said Collins, program manager at the Sierra Club in Rhode Island. “I wanted to take my money [out of a bank] that had helped to finance the housing bubble.”
Collins is one of untold bank customers nationwide who have been inspired by the Move Your Money campaign, an Internet-based effort to convince people to shift their accounts from the banking giants to community-based institutions.
The movement started at the popular Web site The Huffington Post at the end of December as part of the backlash against financial institutions that are perceived to be too big to fail.
Proponents of Move Your Money contend pouring money into locally based banks and credit unions serves to punish the mammoth institutions that some say touched off the economic downturn, then received a taxpayer-financed bailout. Supporters say using a community bank has added benefits for the local economy.
The campaign has drawn a lot of attention, but its effects are difficult to measure, at least at this point.
Banks are due to file their first-quarter regulatory reports – which will include an accounting of deposits – with the Federal Deposit Insurance Corporation within the next month.
At the very least, Move Your Money organizers say the community-bank search feature on their Web site, moveyourmoney.info, has been used for every zip code in the United States.
The movement also has captured the attention of banks and credit unions, both big and small.
Big banks downplay its effects and contend that those customers who move will miss out on superior products at competitive prices.
But spokesman Jefferson George said the bank has not seen “a notable amount” of account closures, either nationally or in Rhode Island in recent months. (And Collins disclosed that he still holds a Bank of America credit card, because it offered decent interest rates.)
For their part, community banks and credit unions appear unsure whether to embrace Move Your Money.
Newport Federal Savings Bank – or NewportFed – for instance, was pleased to hear that Collins was a new customer. But the bank didn’t plan to openly align itself with Huffington Post’s effort.
“The Web site is fairly political,” said Nino Moscardi, chief operating officer of NewportFed’s publicly traded holding company Newport Bancorp Inc.
Yet at least one institution has made it a limited part of its marketing message.
Westerly Community Credit Union’s February newsletter encouraged members to “take the pledge to Move Your Money,” and included a briefing on the campaign.
Meg Sisco, the credit union’s vice president of marketing, said the newsletter item has been the extent of WCCU’s endorsement of Move Your Money. She said the thought was to woo members who might have accounts elsewhere.
But, she said, the credit union didn’t want to divert members to the Move Your Money Web site because it doesn’t provide a listing of credit unions.
Executives at BankNewport also considered tying their advertisements into Move Your Money earlier this year, but eventually decided against it.
“We thought it had a little bit too much bite,” said David Murray, senior vice president of marketing.
Instead, the bank stuck with its already planned marketing campaign that had a similar but somewhat toned-down message: Bank local.
BankNewport said recent numbers indicate some success with that message. The bank has experienced a flood of deposits recently, although Murray acknowledged other factors would be at work, too, such as existing customers’ depositing tax returns.
Peter Nigro, professor of finance at Bryant University, characterized Move Your Money as a “great marketing ploy,” saying the differences between community banks and the larger ones aren’t as great as one would think.
Yes, large transactional lenders use statistical models to determine whether to make a loan, while a small institution may rely more on the relationship between banker and business.
“But I don’t think anyone’s lending like they did three years ago,” Nigro said.
National institutions are concerned about their low capital ratios, he said.
“But regional banks have their own problems,” added Nigro, pointing to troubled commercial real estate loans in the portfolios of some banks.
For Kathy Black, making the move was a matter of principle.
After reading about the Move Your Money campaign earlier this year, she transferred her personal and business accounts from Citizens Bank to The Washington Trust Co., Rhode Island’s largest independent bank.
She acknowledged she had “no horror stories” about Citizens Bank, which is part of the Providence-based Citizens Financial Group, the 19th-largest bank-holding company in the nation.
“But I got to the point where I felt the big-bank thing wasn’t working for me, and I don’t think it’s working for society,” said Black, who operates a life-coaching business out of her Cranston home. “We’re realizing how empowered we really are to make changes to a system that is no longer working for us.”
While Citizens may be big, a bank spokeswoman said last week, it still is concerned about local communities, particularly in its home state of Rhode Island. The spokeswoman, Amie Kershaw, noted the bank’s bridge loan program for business owners affected by the recent historic flooding.
Although she had no recent statistics on deposit trends, Kershaw said the number of new personal and business checking accounts has been on the rise of late. •
