A full-page advertisement that California Federal Savings placed in the Wall Street Journal not long ago evoked a rare public rebuke from California savings and loan executives, who happened to be attending an industry convention in Hawaii.
Cal Fed criticized its competitors for emphasizing scenery over substance in their advertising.
"A cheap shot," muttered Great Western Savings Chairman James Montgomery.
So angry was Herbert Young, chief executive of Gibraltar Savings, that he questioned the quality of Cal Fed's assets at a convention panel discussion.
"It does occur to me that if you (eliminate) the goodwill at Cal Fed, I think their net capital position is zero," Young said.
The incident underscored a sharp difference of opinion about how financial institutions should promote themselves in what has become a highly uncertain and unstable banking environment. More and more, banks and savings and loans are emphasizing safety and security in their advertising, and some are leaning heavily on nature to emphasize the message.
That's why Dinah Shore promotes Glendale Federal Savings standing under a redwood tree and Great Western Savings puts up freeway billboards of a mountain-ringed lake in Yosemite National Park, with the accompanying words "We'll always be there." Even American Savings, saddled with prodigious loan problems, is using Yosemite in its ads.
"We're seeing a rush to rocks, mountains and trees," says Los Angeles advertising executive Leonard Pearlstein.
The Cal Fed advertisement drew such a sharp reaction from Young and Montgomery because it questioned the truthfulness of this advertising approach.
"These days," the ad said, "a lot of financial institutions are showing you pictures of trees, rocks, mountains--whatever--to say they're big, safe, secure and even eternal. But standing on a rock doesn't make them a rock, and standing under a tree doesn't give them a tree's strength."
Cal Fed points out, among other things, that its net worth (assets minus liabilities) is more than 2 1/2 times the federal regulatory minimum. (The "goodwill" that Young referred to is a common accounting device in the S&L; industry: It is the intangible asset that goes on the books when an S&L; pays more than book value for another association.)
Cal Fed is using numbers and plain talk to emphasize the old banking virtues of conservatism and solidity. "It's a more factual approach that I think is needed more than ever now," says Cal Fed Chief Executive George Rutland.
Whatever the approach, the message is the same. Financial institutions are trying to woo jittery savers who are worried about the country's banking system. The concern is particularly acute in California, where the banking industry has had more than its share of troubles.
Radio ads for City National Bank now brag that the medium-size Beverly Hills bank has "no energy loans or loans to foreign countries to dilute our strength or color our judgments"--a direct reference to the problems of the commercial banking industry.
Newspaper advertisements from Foothill Thrift & Loan Assn. in Los Angeles say its deposits are now backed by the Federal Deposit Insurance Corp., a government agency. Most California thrift and loans, which make short-term consumer and mortgage loans, are insured privately.
"Customers are so confused and anxious that they'll give up one-half to 1 percentage point (on deposit interest rates) to get safety and security," says Los Angeles advertising consultant Irving S. White.
The savings and loan industry, whose specialty is long-term mortgages, has long emphasized safety, chiefly because its depositors are older and less tolerant of risk. Home Savings of America, for example, has been preaching the theme for decades.
But the emphasis has heightened following the deposit panic that rocked Stockton-based American Savings last year and the rash of government seizures of medium-size savings and loans throughout the state in 1985.
Heavy Spending on Ads
Promotion-minded savings and loans spend heavily--Great Western's annual advertising budget is about $20 million--to attract new deposits. Particularly coveted are those consumer accounts insured up to $100,000 that provide a stable deposit base.
One tried-and-true gimmick is the use of a trusted public figure, such as Shore, as chief spokesman. One of the most successful advertising campaigns featured the late John Wayne promoting Great Western in the late 1970s.
"People were bringing $25,000 to $45,000 in here and saying, 'I'm putting my money here because the Duke told me to,' " a Great Western spokesman said.
Great Western uses cowboy actor Dennis Weaver, whose folksy drawl can be heard these days on radio and television drawing an analogy between the thrift and the permanence and reliability of such natural wonders as Yosemite's El Capitan, Yellowstone's Old Faithful geyser and the rocky spires of Monument Valley, Ariz.
However, Cal Fed isn't using its chief spokesman, Bob Hope, in California these days because the S&L; believes Hope's comedic image isn't appropriate in this environment. The new no-frills pitch "doesn't lend itself to light-hearted comment," Chief Executive Rutland says.
One reason that the Cal Fed advertisement ruffled so many feathers in Hawaii was that it violated the unwritten rule about criticizing competitors in public. The ad's closing words are: "Pretty pictures of redwoods are nice. But if anyone thinks they make people feel better about their money, they're barking up the wrong tree."
CalFed officials make no apology for the ad and say the current campaign will continue indefinitely.
"It shows a sensitivity that I wish wasn't there," said Rutland, who added that the ad is aimed at financial institutions in general, not just savings and loans.
Some advertising experts also don't believe that image advertising for financial institutions is very effective, particularly when several take the same approach.
"They're all trying to carve out an image, but unfortunately they're all doing the same thing," says Fullerton marketing consultant Richard Kremer, former marketing director of Home Savings of America.
American Savings, the nation's largest savings and loan, has featured television and newspaper spots of Chairman William J. Popejoy in Yosemite pushing for help in restoring and cleaning up the park. The ads also touted the fact that most of American's assets are backed by California home loans.
Restore S&L;'s Image
An American spokeswoman said the ads were conceived as a way both to raise money for Yosemite and restore American's image. American is continuing to use Yosemite as part of the fund-raising drive, but the ads featuring Popejoy concluded at the end of October.
The Popejoy ads had apparently played to mixed reviews, particularly with consumers who are aware of American Savings' problems. (The S&L; has more than $1.7 billion in problem loans, highest in the industry.)
Consumers wondered why Popejoy was "up there cleaning up Yosemite and not . . . his own place," Kremer said.