After going through seven M&A deals in its history, OceanFirst Bank has managed to retain an impressive 95% of its deposits acquired from M&A transactions. The $13.1 billion-asset community bank, which is headquartered in Toms River, N.J., credits its marketing and communications strategy for much of that achievement. But leaders say that strategy has needed to flex and change over time.
The most important lesson OceanFirst has learned from its M&A experiences is that there is no one-size-fits-all approach. Every transaction is different, and marketing and communications tactics need to reflect those differences.
“One of the first things we do is spend a lot of time and energy looking at the unique attributes of the customer base of the bank,” says Christopher Maher, chairman and CEO of OceanFirst Bank N.A., which serves New Jersey, Philadelphia, New York City, Boston and Baltimore. That analysis helps the bank better understand the marketing opportunities and challenges.
No two mergers are alike
OceanFirst merged with Cape Bank in New Jersey in 2016. Cape Bank had a long history of serving multigenerational customers. The age of the average branch was 53 years, and some had been in place for a century. “We had to be very careful about making any changes or communicating any changes in a way that would make those customers feel things were dramatically different, or that it wasn’t a welcome change,” says Maher.
In another case, OceanFirst acquired Capital Bank in Vineland, N.J., where many depositors were also shareholders of the bank. As such, there was an intense connection between the commercial business of the bank and shareholders’ pride in the bank’s investment in the local community. There was also an expectation that stakeholders should have easy access to decision-makers on issues such as loan approvals.
“For us, the marketing and communication starts with understanding the customer base and what’s important to them,” Maher says.
Tailoring your M&A communications strategy
Community banks looking to merge with or acquire another bank should base their marketing strategy on the purpose behind that merger or acquisition, say experts. What is it trying to accomplish? Is it a merger of equals or a bigger bank buying a smaller bank? Is the primary goal to acquire a certain aspect of the business, such as commercial lending, a loan portfolio or deposit accounts? Communicating that goal—and the benefits to customers—should be at the heart of messaging to customers.
However, Paul P. Schaus, president and CEO of CCG Catalyst Consulting in Phoenix, says there are common overlaps no matter the goal of the transaction. “One is that you need to inform your customers about what is going on,” he says. “Don’t hide it. If you’re going to maintain everything, tell people you’re maintaining everything. If you’re going to [move] to your account structure because you’re better, then you need to explain why. But don’t keep clients in the dark, because [that’s] when they leave.”
Take the example of a forced march approach, where the acquiring bank is absorbing another bank and its employees and customers need to adapt to new ways. In that case, the marketing strategy could revolve around convincing customers that the new products are better than what they have, notes Schaus.
“It’s really critical that what [employees] see from the very beginning is that your brand stands for something and has a clear belief system.”
—Tim Pannell, FMS Consulting
Banks should also do due diligence to identify the top customers. In many community banks, the top 50 or 100 customers may represent 85% of the profit of the entire bank, according to Tim Pannell, president and CEO of FMS Consulting in Franklin, Tenn. Those top customers require a more personalized approach to marketing and communications, including in-person visits and phone calls with existing bankers and new bankers.
“There will have to be very personal communication with key people. You can’t just treat them like everybody else,” notes Pannell.
Frontline staff are key to success
Customers aren’t the only ones who should be considered when crafting a communications strategy. The acquiring bank must take great pains to communicate effectively to the newly adopted employee base of the acquired bank.
The reality is that M&A transactions create disruption and stir up fears and uncertainty among employees. “As an organization, you need to realize that your number one strategy is to go in and onboard, in a very positive, empathetic way, all of the new human capital,” says Pannell.
“Your frontline people are your marketing people. Word of mouth is still the biggest form of marketing.”
—Paul P. Schaus, CCG Catalyst Consulting
Acquiring banks need to take the time to communicate, listen, answer questions and get people excited about being part of the new organization. “If you don’t do that, you can spend all the time and money you want on marketing, and it won’t matter,” says Pannell. “If Betty the teller and Bob the loan officer are unhappy, they’re going to go to church and the grocery store and Little League and tell all of their friends that they’re unhappy, and the new management doesn’t know what they’re doing, and those people will tell other people. You’ve then undermined everything that you have spent your money to purchase.”
It’s the classic “loose lips sink ships,” agrees Schaus. If the employee doesn’t know anything, they’re going to make it up, which could have a negative impact not just on the workforce but also on customers. “Your frontline people are your marketing people,” he says. “Word of mouth is still the biggest form of marketing.”
“The goal of all of our marketing efforts was to prepare Glasford Bank customers for the changes coming and to help their employees feel comfortable with the changes and also excited about the new products and services being offered.”
—Elizabeth Allen, Better Banks
Merging two banks should include in-person interaction, such as town hall meetings, site visits from executives or informal social events that give people a chance to meet and get to know one another. “Through all of this, you should have a clear brand message that you’re trying to communicate,” says Pannell. “It’s really critical that what they see from the very beginning is that your brand stands for something and has a clear belief system.”
Hopefully, there’s a great brand ambassador who can get people excited about the merger and being part of the new team, he adds.
Prepare customers for change
Glasford Bank merged with Better Banks in June 2022. In this case, the two banks were already part of the same holding company, Backlund Investment Company, which was founded by Steve Backlund in 2003. Glasford Bank served the town and surrounding area of Glasford, Ill., which has a population of about 2,000 people. Better Banks served a larger footprint in central Illinois, with some existing overlap to Glasford.
“The goal of all of our marketing efforts was to prepare Glasford Bank customers for the changes coming and to help their employees feel comfortable with the changes and also excited about the new products and services being offered,” says Elizabeth Allen, marketing director at $500 million-asset Better Banks.
Marketing focused on making customers aware of things such as the additional branch and ATM locations, as well as keeping employees of both banks up to date with the progress of the merger. “We focused on the benefits and made it clear that they would be working with the same people and would get the same level of service,” Allen says.
She says the key marketing theme was “Same People. Same Service. More Products. More Technology.” Marketing efforts started with a letter from the president of Glasford Bank announcing the merger, followed by a letter from the president of Better Banks welcoming Glasford customers to the family. Additionally, a press release was distributed to all local media. Emails and social posts were also included throughout the merger process, and a welcome book was created and mailed to all of Glasford Bank’s customers with details about the merger and what they could expect.
Another cornerstone to a good communications strategy is having a very definitive and clear communication timeline. Pannell advises developing a communications flow chart to organize communications and marketing. The starting point may begin with a welcome letter to customers on “legal day one” of a merger or acquisition and end months later when the conversion is fully executed.
“You’re putting these pieces together in your flow chart and then you’re building some of your other communication around that ‘anchor communication,’ which is communication required by compliance,” he says.
Employees also need to be trained on questions from customers, such as what changes will occur immediately. Will my debit card work? Will my account numbers change? Will there be ATM fees? In addition, it’s important to share external communications and marketing pieces with employees before they’re sent to customers, such as a press release on the merger or a new customer brochure.
It’s important to have a strategy and a checklist, but one of the most important aspects is to listen to customers and to employees. As Maher says, “What works in one environment with one group of employees and customers may not work in
Onboarding for new employees
Marketing experts recommend putting together a package of informational pieces for new employees. Examples of materials to include are a letter from the president, executive team bios, a FAQ fact sheet, a separate FAQ on the transition and background on the bank that talks about its history, culture and philosophy.
Oftentimes, the most important question for employees is ‘what’s happening to me?’ It’s important to have answers to questions including:
Am I keeping my job?
Do the terms of my employment change?
How will health insurance, 401(k), paid time off and tenure be affected?
How do the mechanics of how things come together actually work?
Who do I go to when I have questions?
What’s next, and what’s the timeline?
Taking advantage of M&A disruption
If a local competitor is involved in an M&A deal, it opens the door wide for your community bank to better establish and develop customer and employee relationships.
For customers who may be thinking about leaving a bank but are reluctant to do so, a merger or acquisition can trigger them to action. “Changes that M&A bring about to operating procedures, new faces and different ways of doing business spurs people to make a move,” says Emily Mays, vice president, chief administrative officer and senior marketing director at $185 million-asset Community Spirit Bank in Red Bay, Ala. “This organic opportunity is prime timing to attract them to your institution.”
Community Spirit Bank recently ramped up its marketing following the announcement of a potential sale of one of its direct competitors. There were rumors swirling about who was going to come in and buy the bank, which was making both employees and customers nervous, notes Mays. “We wanted to do some front-of-mind marketing in case they are considering a change, or maybe they’re not happy that their bank is being sold,” she says.
Community Spirit Bank focused on digital marketing and social media marketing. It invested in paid digital ads and made a concentrated effort to post more frequently on social media about its involvement in the community. “We’re always making sure that we’re telling that story of the bank being a living and breathing part of the community in any way that we can,” says Mays. Consistent messaging and boosting ads expand the reach, and geotargeting amplifies your message to the specific market that you have opportunity in, she adds.
Be proactive with outreach
Targeted or direct marketing can also help capture specific clients or business lines. “Nine out of 10 times, the greatest opportunity is going to come in the small business commercial banking arena,” says Tim Pannell, president and CEO of FMS Consulting. “That is where disruption can be most impacted.”
To capitalize on that disruption, banks need to be more aggressive on marketing outreach, making more calls and working their centers of influence. Personalizing those marketing efforts as much as possible also helps banks connect with customers and create new relationships.
Research also can enhance your marketing strategy. What is the customer base of the bank being acquired, and what do you know about the acquiring bank, its processes and perhaps its track record on previous acquisitions? Banks that are in the same marketplace have an opportunity to collect information from checks they may be processing from competitor banks and send marketing letters to those potential customers.
“Basically, it’s about letting them know that if this disruption is displeasing, you still have a community bank that is here for you,” Pannell says.