The Klein family is finally putting its name on a group of Minnesota banks it began acquiring almost 100 years ago.
C.H. Klein bought First National Bank of Chaska in 1907, and though the family has bought eight more banks over the years, only one has carried the Klein name.
That is going to change as Klein Financial Inc. consolidates its five national and four state charters into a state one under the name KleinBank. The process should be finished in March, and Klein Financial is already combining back-office operations.
Daniel G. Klein, the president and chief executive of the $1.1 billion-asset Klein Financial, said the consolidation will cut administrative and regulatory costs, streamline operations, and put it in a better competitive position to remain independent.
"We are trying to get the company to the fourth generation of Klein bankers," Mr. Klein said.
He said that C.H. Klein, his great uncle, put the family name on only one bank, in Madison. He bought it as a failed bank during the Great Depression and gave it the name Klein Bank.
The family left the original names on other banks it purchased over the years to keep their hometown feel. It owns seven banks in the Twin Cities area and two in western Minnesota.
The local feel has costs, though, including those for nine charters; nine boards of directors; and different advertising campaigns, signs, and brochures.
Klein Financial was also losing business. Mr. Klein said that even though the banks have a combined lending limit of $13 million, customers have gone elsewhere for large loans, because they perceived that the Klein banks were too small to handle their needs.
Unifying the charters will make the loan process more efficient. (Currently, one bank originates a large loan and sells participations to the others.)
Additionally, Mr. Klein said, executives will be freed up to do more banking. Each president is now responsible for call reports, compliance and audit work, and marketing; those functions are being centralized.
"They can spend more time with our clients and developing new business," he said.
Klein Financial chose a state charter because it is less expensive than a national one. The lower fees and administrative costs of the new structure will most likely save "several million dollars" each year, Mr. Klein said.
The changes have caused a stir in the local news media, and some nearby bankers have speculated that Klein Financial is for sale. Mr. Klein dismissed the rumors.
"We don't have anybody waiting in the wings. We're just trying to make this a better bank for the next generation and our customers," he said.
Brenda Marlin, the associate director of the American Bankers Association Marketing Network, said emphasizing that point in its marketing will determine whether the name change is a good move.
"If they just throw an ad out and say, 'We've changed our name,' that might not attract people. If they show how the company has changed and how that helps the customer, they could bring people into the bank," Ms. Marlin said.
The value of using the Klein name would depend on its standing in the community, she said.
The family believes its reputation is good enough to put their name on all the banks, but that reputation should not make the next generation complacent about their place in the company, Mr. Klein said.
Family members can come to work at Klein Financial only after they have completed a bachelor's degree, worked for another company, and been promoted in that job. Klein Financial will not create a position for family members; they must fill an open one. And there are no legacy promotions.
"We're not going to promote someone beyond their competency level into a responsible position - that is the quickest way to bring down the company," Mr. Klein said.
Daniel's brothers, John and Alan, are executive vice presidents at the holding company. Daniel's son Mathew, the only other family member working at a bank, is a commercial lender at First National Bank of Chaska.
