Western New York banks are taking the offensive to counter a wave of negativity and worry, seeking to reassure local customers that banks here are strong, well-capitalized and safe for their money.

In recent days and weeks, area financial institutions have launched mass advertising campaigns, proactively sent out letters to customers and responded to a multitude of questions from consumers about the safety of their banks and deposits.

In doing so, they're trying to assuage customer concerns that local banks might be facing the same kind of trouble that has brought down the titans of the industry. And they're hoping to head off the kind of consumer panic and mass withdrawals -- sometimes based solely on rumor -- that can

quickly cascade into disaster.

"There's a lot of concern. People have a lot of questions about what's going on," said Bill Freeman, first vice president and marketing director at First Niagara, whose "We Believe in You" campaign also tries to underscore that consumers can believe in the bank. "There's the assumption out there that everyone is caught up in this, and that's not the case."

Indeed, such a run on deposits is what brought down giant Washington Mutual of Seattle late last month and IndyMac Bancorp of California earlier this year.

"It's important for us to reassure our clients in this challenging economic environment, and advertising is one way to get the message out," said Shelly Van Dusen, spokeswoman for KeyCorp, which just took out a full-page ad in The Buffalo News and other daily newspapers throughout its 13-state banking footprint.

At the same time, they're using the opportunity to tout their own stories, reiterate their strategies and philosophies, and cite the advantages that have kept them more immune from the current troubles.

"Thanks to a long barrage of national news stories, bank customers are uncertain and confused," said Jim Holding, spokesman for Northwest Bancorp, the Warren, Pa.-based parent of Northwest Savings Bank, whose ad mirrors a letter sent to customers in August. "We feel that telling our story ourselves may help reassure them. We don't like it when our customers are upset."

And that becomes a springboard for them to offer new products or services to meet customers' changing needs.

"In challenging economic times, consumers want to hear from their financial institution," said Joseph Goode, spokesman for Bank of America Corp., which this week began using ads touting its strength and safety over the next month.

The efforts by the banks come as many regional and community bank executives locally and elsewhere are increasingly worried that consumers, politicians and the media are lumping them in with the likes of WaMu, Wachovia Corp., Citigroup and other banking giants. That's hurting the image of the smaller banks and creating the impression that they're under siege as well -- an impression the banks want to correct.

"Well-capitalized banks that have avoided the subprime credit mess need to distance themselves from the Washington Mutuals of the world and reassure their customers that they are a solid and safe place to deposit their money," said William Collins, of the public relations firm Travers Collins & Co.

But most of the nation's 8,000-plus banks haven't been affected by the problems, or at least not to the same extent. Some experts predict that as many as 100 banks could fail during the current crisis, but that's still a fraction of the total. And until recently, bank profits were hitting record highs, and the industry's capital level is at or near its highest -- making it far more secure than it was before the savings and loan crisis.

In particular, banks in upstate and Western New York are healthy and open for business, despite a few hiccups from sour mortgage investments at banks like M&T Bank Corp. and Five Star Bank, to name a couple of examples. And they want to make sure consumers and businesses know it.

"Key is not a bank in financial crisis," said Van Dusen. "We're well-capitalized and offer the stability and soundness that comes from a bank which has been serving the community since 1825."

"Many clients have remarked favorably about the ad," she said. "They've indicated that it makes them feel more reassured and confident in the bank."

First Niagara Financial Group's First Niagara Bank, Citizens Financial Group's Citizens Bank and Northwest Bancorp's Northwest Savings Bank have also begun mass media advertising to convey their messages of safety and soundness.

Others have eschewed costly advertising but are still actively communicating with customers, both proactively and in response to questions. They cite their lack of subprime loans or other risks and their high capital strength, credit quality and loan loss reserves.

"We are in regular communication with our customers, but on a more personalized basis," said Kevin Brady, marketing director for Evans Bancorp and Evans Bank.

e-mail: jepstein@buffnews.com

Originally published by NEWS BUSINESS REPORTER.

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