It probably seemed like a good idea at the time.

When Westamerica Bancorp. in San Rafael, Calif., announced on Dec. 31 that it would close its branch in Upper Lake, management likely expected little controversy. Banks across the country have closed scores of branches as consumers shift transactions to mobile apps and websites.

Moreover, the Upper Lake branch appears to be one of the $5 billion-asset Westamerica's most vulnerable. It has one of the lowest deposit levels in the company's entire network, at $14.8 million. And it's the smallest of Westamerica's five branches in Lake County, Calif., by deposits.

But a petition on the advocacy website MoveOn.org to stop the branch's closing, slated for Apr. 24, quickly gained steam and helped encourage state regulators give the case a second look. It serves as a reminder for all bankers that even the smallest cost-cutting plans cannot be taken for granted, and that today's wired world creates new avenues for opposition to bank restructuring and may demand more aggressive salesmanship on the part of executives.

The customer appeals in the Westamerica case have been emotional and very personal.

If the office closes, it will leave "hundreds of businesses and thousands of accountholders in Northshore Communities of Blue Lakes, Upper Lake, Nice, Lucerne, Glen Haven and Clearlake Oaks without services for the first time in 94 years," according to the introduction to the petition.

"My husband and I have maintained household bank accounts at this branch since 1976," wrote Cheryl Fecht of Upper Lake, who signed the petition on March 4. "We have taken pleasure in all the little 'perks' local, hometown banking has to offer. … Our individual loss, although quite apparent, pales in comparison to the inconvenient and potentially negative blow to Northshore's community at large."

Another petition signer, Justin Suchan of Upper Lake, was more direct in his plea: "This closure will contribute to the poverty level of some patrons' lives. Some cannot afford to have to travel for banking needs."

Westamerica operates the only bank office in Upper Lake, according to the Federal Deposit Insurance Corp. Upper Lake does not have a credit union branch, according to the National Credit Union Administration. The nearest town, Nice, about five miles away, has a Bank of America branch and a JPMorgan Chase branch. Westamerica's closest branch is about 11 miles away in Lakeport.

The Westamerica petition, which had 163 signatures through March 13, seems to have gotten the attention of state regulators. The California Department of Business Oversight on Feb. 13 issued a nonobjection to the branch closure. But on March 6, the department reversed its decision and re-opened the case.

"The commissioner [Jan Lynn Owen]decided to withdraw the nonobjection because following that initial decision[the department] became aware of substantial concerns and opposition from local businesses and residents," said Tom Dresslar, a department spokesman. "We have a duty under the law to assess whether branch closures will have a ‘seriously adverse’ effect on the community."

The department asked Westamerica to agree to a 30-day extension so the agency can further review the application. If the bank consents to the extension, the department will issue its finding by April 15.

MOVEON TRACK RECORD

This isn't MoveOn's first banking rodeo. The progressive/liberal group, which was established in 1998, has organized and promoted online petitions to protest against several developments in the banking world. MoveOn claims at least partial credit for the outcomes of a few of its petitions.

  • The group says it helped stop Larry Summers from being named chair of the Federal Reserve Board. MoveOn's petition to block Summers garnered 22,375 signers.
  • The Senate allowed a vote on the confirmation of Richard Cordray to head the Consumer Financial Protection Bureau, after 8,786 people signed a MoveOn petition.
  • The $15 billion-asset Bank of Hawaii had planned to close all its branches in American Samoa but later withdrew the plan. That MoveOn petition picked up 843 signatures. Stafford Kiguchi, a Bank of Hawaii spokesman, declined to comment about the petition or its influence on the bank's decision-making.

MoveOn has several additional bank-related protests currently active. One opposes the legislation filed to tax credit unions. Another petition exhorts Attorney General Eric Holder to send Wells Fargo CEO John Stumpf to jail for presiding over a bank that, it argues, commits fraud when foreclosing on homes.
One of MoveOn's highest-priority issues is encouraging Sen. Elizabeth Warren, D-Mass., to run for president. In its "Run Warren Run" petition, MoveOn praises Warren because she "stood up to the big banks" and helped create the CFPB.

MoveOn has committed to spending at least $1 million on its effort to recruit Warren to run for president, said Brian Stewart, a MoveOn spokesman. That money has been used to hire staff in the early voting states of Iowa and New Hampshire and to organize other grassroots events.

In a related campaign, nearly half a million people have signed MoveOn's petition to support Warren's legislation to temporarily set student loans rates equal to the rate at which banks borrow from the Federal Reserve.

Anyone can start a petition using MoveOn's online platform, even nonmembers, Stewart said. In some cases, MoveOn will devote additional money and resources to support petitions, such as providing organizational support or directing the petition to intended targets, Stewart said. MoveOn has not dedicated additional support to the Westamerica petition, as it is primarily a local issue, he said.

SOCIAL MEDIA BATTLE?

David Payne, the chairman and CEO of Westamerica and an American Banker community banker of the year for 2009, has offered explanations for shrinking his retail network that resemble many of his peers'.

Payne has spoken publicly about his intention to reduce some of the company's excess retail capacity. During a Sept. 16 panel discussion at the RBC Capital Markets Financial Institutions Conference, Payne talked about how Westamerica primarily focuses on business customers, who don't typically use brick-and-mortar branches.

"We've got a number of branches which now have such low levels of transaction activity that there is a hard case to be made for they don't need to exist," Payne said. "The kind of question is, what do you form your remaining branch network around? And I think it is more the primary market. It's making sure there is adequate access but maybe we don't need four branches in a market, we need two."

"The vast majority of our customers, that would be business customers, they're not coming into the branch," Payne said.

Westamerica has said little, if anything, publicly about its plans to close the Upper Lake branch. The company has not issued a press release about the closure, nor has it mentioned the issue on its Facebook site. Westamerica also has not asked for approval to close any other branches, Dresslar said. Payne did not respond to requests for comment.

The lack of a public statement or a response to the MoveOn petition is a mistake, according to two bank marketing executives.

"This is a chance to respond in a positive way to change the perspective," said Pamela Hannett, the former marketing technology manager at Bank of New Hampshire in Laconia, who developed the $1.2 billion-asset  bank's social media policies.

"But anything you do in social media is online public relations, so you have to be careful about what you say," Hannett said. "Once you post something in social media and it goes viral, there's no taking it back."

Westamerica probably should have put something on social media before it publicly disclosed plans to close the branch, said Kevin Tynan, senior vice president of marketing at the $830 million-asset Liberty Bank for Savings in Chicago.

"You need to get the straight truth out there," Tynan said. "They need to try to humanize the institution. Maybe put a video on your Facebook page from the CEO, talking about how difficult a decision it is."

(Westamerica does not appear to have a Facebook page.)

As for the fate of the Upper Lake branch, unless regulators intervene, the petition-signers probably should not get their hopes up. Like many bankers, Westamerica's Payne is being squeezed on two fronts when it comes to retail banking — customers aren't going into physical branches as much as they used to, and the need to cut costs in order to appease the incessant pressure to generate profits for shareholders.

"For consumers, if we can just put a strategy together that covers adequately a market, but reduces the number of branches in that market, we will probably be able to rationalize and be efficient enough to leave a pretty healthy branch network behind," Payne said at the RBC Capital Markets conference.

"But we have 94 branches as well and I don't see that — the network as it's currently composed — staying," he said.

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.

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