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According to Market Intelligence, April 2023

Using festivals, coworking spaces to reach customers without branches

Banks across the U.S. continue to trim their branch networks and invest in digital channels, but one community bank has replaced much of its distribution and branding through guerrilla marketing.

While U.S.-based banks have shrunk their branch networks for eight consecutive years, Citizens Bank of Edmond stands out, having all but abandoned physical locations. The bank reaches its customers through extensive social media marketing and innovative strategies such as the creation of a street festival and a co-working space for customers. The moves have made the bank, which has just $267.0 million in assets, more efficient and helped it build its customer base.

"We really try to take our liabilities and flip those into strengths," Jill Castilla, president and CEO of Citizens Bank of Edmond, said in the latest Street Talk podcast. "We had excess office space and excess occupancy expense, so how do we utilize that to be a competitive advantage rather than just whining about that?"

In the episode, Castilla discussed the bank's transformation from a traditional community bank with six branches to an institution with one full-service location that reinvented the way it interacts with customers.

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Castilla joined Citizens Bank of Edmond in 2009, but spent the next few years turning around the bank to satisfy the requirements of a written agreement with the Federal Reserve. The bank exited that enforcement action in spring of 2012, returned to profitability and started producing at a return on equity of over 9%.

Castilla then shifted the conversation with the bank's board to focus on efficiency and encouraged them to consider trimming the bank's remote branch locations, which were losing $500,000 each annually. The bank eventually found a buyer for three of its branches, recorded a gain on the sale and found it could meet its customer needs by pairing a video teleconference system with their ATMs.

That strategy helped the bank avoid any customer fallout, Castilla said, adding that the institution also actively communicated with customers through letters and social media. The executive has embraced social media to build the bank's brand and to market a family-friendly street festival that it launched in 2014.

That festival, Heard on Hurd, has become a monthly event with more than 20 food trucks and live music that attracted 159,000 people to its home market of downtown Edmond, Okla., last year. In 2014, the bank spent $70,000 to put on Heard on Hurd, but the cost is now less than half that amount because the institution was able to raise fees paid by food trucks and pop-up shops to participate in the event. The bank also asked vendors to donate 15% of their sales to the Edmond public school foundation, helping fulfill its annual $20,000 pledge to the foundation.

The investment has paid off for Citizens Bank of Edmond, Castilla said.

"We've had tens of millions of loans that have been sourced to us from Heard on Hurd. People coming that Monday after Heard on Hurd saying, 'I want to move my business accounts, my business loans; I want to refinance my mortgage with your bank because of the good you're doing in my community,'" Castilla said in the episode.

Citizens Bank of Edmond participated in another large food truck festival in nearby Oklahoma City that led to another venture. While the bank did not sponsor the event, they provided ATMs on short notice when the organizers were in a bind. That effort helped build the Citizens Bank brand in Oklahoma City's midtown district and prompted some businesses like Elemental Coffee to become customers.

To meet the cash and coin needs of those customers, Citizens Bank of Edmond opened a self-service electronic banking facility, called Midtown Bank. Castilla said a soft opening resulted in an incredible amount of customer acquisition and noted that Midtown Bank has already paid for itself.

Citizens Bank of Edmond is in the process of unveiling its latest project, a new co-working space called Vault 405. That facility was born through the conversion of one of the bank's remaining branches that it recently vacated. The coworking space is open to Citizens Bank customers, who also pay an additional membership fee for a dedicated working space or an office. After a soft opening early this year, Castilla said about 80% of the offices are reserved ahead of the official launch.

"It's been incredibly popular," Castilla said in the episode.