Paul B. Murphy Jr., the chief executive at Southwest Bancorp. of Texas Inc., knows that some people will not like its new name.
The directors were skeptical about "Amegy" when Mr. Murphy presented it to them, he said, and he himself will be a little sad to see the 16-year-old Southwest of Texas go.
But it must. "Southwest" is common in Texas bank names and has been confusing customers, Mr. Murphy said. Moreover, the Southwest Bank of Texas name is limiting for an operation with ambitions to expand well beyond the Houston market.
The switch "involves some risk, but it is absolutely the right thing to do," he said Tuesday. "The old name didn't fit us anymore."
Southwest Bank of Texas is set to become Amegy Bank NA on March 7. If shareholders approve, the parent will become Amegy Bancorp. Inc. in May. The $7.5 billion-asset Southwest worked for two years and considered about 3,000 options before settling on Amegy - a blending of "America" and "energy," Mr. Murphy said. "It's a coined word that reflects the energy of the people of America."
Southwest worked with a branding consulting firm; Mr. Murphy would not say how much it spent on the project.
More than two dozen Texas banks, thrifts and other financial services providers have "Southwest" in their names, and his company is bumping into them as it expands into new markets, he said.
It chose to retain the name of a property it acquired last year, Lone Star Bank of Dallas, to avoid confusion with Southwest Bank in Fort Worth. (In turn, that bank is suing Southwest Securities Bank of Arlington, which changed from First Savings Bank in June, to keep it from using the name.)
Mr. Murphy also pointed out that because a Southwest Securities and a Southwest Mortgage already exist, his company named its units SWBT Securities and Mitchell Mortgage, respectively.
"It is increasingly confusing to our customers, as well as inefficient and expensive for us to operate under multiple names," Mr. Murphy said in the press release announcing the change.
Still, there are risks to choosing names that are not in any dictionary.
Ken Gaebler, a principal with the branding consultant Walker Sands Communications in Chicago, said a number of firms have succeeded after adopting "contrived" words for their corporate identities, including the telecommunications provider Cingular Wireless LLC.
But companies that choose conceptualized words run bigger risks, Mr. Gaebler said.
"People are going to be more skeptical about names that sound strange or foreign," he said. "They're going to ask 'Why did they pick that?' The company could see a higher level of attrition if they don't reach out and let their customers know that everything else is still intact."
For that reason, Mr. Gaebler said, the campaign that follows the introduction of a made-up name is crucial, and little expense should be spared.
"Underfunding a campaign could put a company at risk, because whether or not the name change works depends on how well the marketing work is executed," he said.
Robert Patrick Cooper, One-United Bank's senior counsel, said the Boston company considered devising a new word when it switched from Boston Bank of Commerce at the end of 2002.
After mulling a number of possibilities, it went with the more conventional OneUnited. It feared a concocted name "would not convey the solidity and stability that people look for in their banks," Mr. Cooper said. "The challenge you deal with," he said, is having people say, " 'What does it mean?' "
Mr. Murphy said Southwest plans to spend $6 million, more "by far" than it has ever spent on an ad campaign.
The publicity blitz began Wednesday, when copies of the Houston Chronicle (delivered to 500,000 residences) were wrapped in plastic coverings printed with the Amegy announcement.
The company plans extensive radio, television, and billboard advertising and is working hard to sell the Amegy brand to its employees, Mr. Murphy said. "If our bankers feel good and embrace it, our customers will too."
All of this should put to rest any lingering ideas that Southwest is considering a sale, Mr. Murphy said. As one of the largest Texas banks, it is often pegged as a takeover target for out-of-state banks.
"If we were thinking about selling the bank in two or three years, we wouldn't go through all this headache and expense," Mr. Murphy said. "We're definitely sending a positive long-term message."
