Just after the March 2023 banking crisis, American Banker interviewed Oakworth’s CEO, Scott Reed, about crisis communication strategies taken by various banks during the series of failures. This is an excerpt taken from that article, published on May 29, 2023.
The news broke on a Sunday in March — regulators had taken over Signature Bank.
Not only was it the second failure in just a few days — Silicon Valley Bank had met the same fate on that Friday — but the third largest in U.S. history. (Silicon Valley Bank was the second.)
There was wall-to-wall news coverage about these events. Speculation about the future of other institutions and the health of the industry overall spread across social media in a way that banks hadn’t been forced to grapple with during prior crises. Twitter was still in its infancy when the 2008 financial crisis struck, while other platforms, like TikTok and Instagram, weren’t even around yet.
“You could see a storyline develop on Twitter then a few hours later, you could see it on TV,” said Chris Donahoe, co-head of U.S. operations at Edelman Smithfield, a communications firm. “You could see in real-time how hot takes and lines of inquiry would develop on social media and evolve across the media spectrum.”
That meant bank executives had to quickly decide whether to issue a public statement reassuring clients of the safety and soundness of their own institutions.
But saying something would risk inserting the bank’s name into a conversation about other banks’ failures that had nothing to do with the soundness of their institution. Staying silent was also a risky proposition as clients or others could make incorrect assumptions about the bank.
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Perhaps one of the biggest struggles during the [banking] crisis in March was for executives’ assurances about their bank’s stability to not sound disingenuous. A few days before its failure, Signature released a statement that outlined its strengths, including “a diversified deposit mix, with more than 80% of deposits coming from middle market businesses” and “a high level of capital as evidenced by a common equity tier 1 risk-based capital ratio of 10.42%.” Just days later, the institution was taken over by regulators.
Consumers took note of this, and it made them suspicious of similar statements from other banks.
“It’s hard for banks to be taken seriously when they all [say] the same thing before insolvency,” one person wrote on Twitter after First Republic Bank in San Francisco released its own statement about its solvency.
The $212.6 billion-asset First Republic declined to comment for this story. It was subsequently taken over by regulators in early May.
Listening to all of the questions clients and employees have is an important way to counteract this. Ensuring all communication is fact-based and transparent is another way to prevent doubts, Donahoe added.
Oakworth Capital Bank in Birmingham, Alabama, is consistently communicating with clients through thought leadership pieces that are posted to its website. John Norris, who is responsible for Oakworth’s investment management services, writes regular blog posts on a variety of topics, including macroeconomic events. The bank also hosts a podcast. Oakworth’s client base is largely businesses whose owners are deeply interested in what’s happening with the broader economy. They have come to appreciate the bank’s efforts to keep them apprised of macroeconomic issues, said Scott Reed, CEO and chairman of Oakworth.
The $1.3 billion-asset bank opened in March 2008 as a financial crisis was gripping the country. As a result, management learned the importance of over communicating with clients, Reed said.
Oakworth approached the current turmoil in much the same way, with Norris addressing Silicon Valley and Signature’s failures in his blog. The bank also provided training and information to employees so they could meaningfully discuss the events with any concerned clients.
Since the bank is consistently discussing macroeconomic issues with clients, talking about the recently failed regional banks seemed like a natural fit, Reed added. He believes that consistency ensures that clients can trust the information that Oakworth is putting out.
“We sort of laugh that when times are really good, it sounds boring to talk about safety and soundness,” Reed added. “Internally, we describe this as it doesn’t matter until it matters.
“The subtle message is that the team at Oakworth is attuned to what is happening in the world, how it impacts the bank and by extension clients’ businesses,” Reed said about how its clients view their thought leadership. “We have that ongoing communication with them.”
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