Why 3 Washington Banks See Red, Not Green on St. Patrick’s Day
March 17, 2010
It was wasn’t a happy St. Patrick’s Day for three banks in Washington state – they lost ground on Wall Street after they released bad news 24 hours earlier.
The three closely watched banks: City Bank, Frontier Financial Corp. and Sterling Financial Corp.
City Bank (NASDAQ: CTBK) shares dropped almost 18 percent – 22 cents and closed at $1.03. This was just 24 hours after the Lynnwood bank was given a deadline by the Federal Deposit Insurance Corp. – 3o days to raise cash or it will have to find a buyer for its assets.
Frontier Financial Corp. (NASDAQ: FTBK) shares fell nearly a third. It dropped $1.35 and closed at $2.89. That’s a loss of $70.2 million – $14.89 a share for the Everett Bank. On Tuesday, Frontier announced its Q4 loss had actually ballooned more than two-fold. Originally, the bank indicated it lost $33.9 million or $7.19 a share. The FDIC reportedly has given Frontier an unsatisfactory in capitalization.
Sterling Financial Corp. (NASDAQ: STSA) shares plummeted almost 17 percent – down 13 cents and closed at 64 cents. The Spokane bank acknowledged it was facing obstacles in raising $300 million.
From the Coach’s Corner, not to pick on Sterling but it’s a candidate as a case study for poor marketing. After watching its countless TV commercials during broadcasts of the Seattle Mariners in the 2009 season, the bank’s problems are understandable.
It spent considerable sums of money on dubious advertising. The TV ads showed a consumer on his deck talking on the phone to someone at his new, out-of-state bank. The actor seemed frustrated in trying to explain where Washington is located – a dig at big banks domiciled elsewhere.
If Sterling had any hope of attracting depositors, the proper strategy would have been to broadcast the benefits of being a Sterling customer.
For related reading, see Marketing: Why One Bank Fails, Another Succeeds. One of the nation’s 2009 bank failures costing the FDIC $298 million was the result of economic conditions, to be sure. But Venture Bank’s collapse was exacerbated by poor management decisions typified by branding.