1st Trust Bank for Savings in Memphis has long been mistaken for other banks, and no wonder: 20 others in the Memphis metropolitan statistical area have the words First or Trust in their name, according to the Federal Deposit Insurance Corp.
So, eight years after it was founded, the $351 million-asset 1st Trust plans to rename itself Magna Bank.
William C. Menkel, its president and chief executive officer, said the bank wants to put an end to the confusion its current name has caused.
"We've had our customers go to other banks … and we've had their customers come in here," he said.
Shareholders are to vote on the name-change proposal at a May 14 meeting. Mr. Menkel said he is confident that the measure will pass.
The Memphis market is dominated by the First Tennessee Bank unit of the $37.6 billion-asset First Horizon National Corp., which has more than 52% of its nearly $27 billion of deposits.
All told, banks with either First or Trust in their name control more than 67% of the Memphis area's deposits.
Sometimes even regulators are confused, Mr. Menkel said. Once examiners arrived at his bank to perform an examination, but they had the wrong bank, he said.
"That's an indictment almost," Mr. Menkel said. "We needed to change the name," because "the market didn't even know who 1st Trust really was."
It is doubtful the bank would be mistaken for others under the name Magna Bank.
According to the FDIC, no U.S. bank has had Magna in its name since the 1998 sale of the $7 billion-asset Magna Bank of St. Louis to Union Planters Corp. of Memphis. (Union Planters was sold to Regions Financial Corp. of Birmingham, Ala., in 2005.)
1st Trust is not the only community bank to change its name to stand out more.
American Momentum Bank in Tampa, which opened its doors in August of last year, was supposed to be American Commerce Bank, but its executives decided that the area had enough banks with Commerce in their name.
Several banks that had Citizens in their name have renamed themselves.
"The problem is that you get banks that grow and expand over time," said Barry McCarver, an analyst at Stephens Inc. in Little Rock. "Ten years ago that may not have been an issue, because they weren't in the same market — but as they grow, they are."
The confusion creates problems with use of automated teller machines, Mr. McCarver said. "One of the biggest issues that banks have had with this issue is a customer pulls up to the … wrong ATM and they get hit with a fee of an ATM that they weren't aware of," he said.
1st Trust, which has three branches in Memphis, started out as a traditional thrift, focusing on mortgage and real estate lending. Mr. Menkel arrived in 2005 and made it more of a commercial lender.
Mr. Menkel had been the president of the National Bank of Commerce unit of National Commerce Financial Corp. of Memphis; that company was acquired by SunTrust Banks Inc. of Atlanta in October 2004.
With the help of a consulting firm, 1st Trust executives chose the name Magna (Latin for great) out of about 300 possibilities.
Mr. Menkel said he expects renaming to cost his company $900,000 to $1 million this year.
