First Bank McKinney, a suburban Dallas community bank, came out ahead last month in a lawsuit to keep a St. Louis-based holding company from using its name.
A state judge ordered a permanent injunction against Houston's BankTexas, which First Banks Inc. bought in 1994, keeping it from changing its name to First Bank Texas. First Bank McKinney had sued to prevent the name change, arguing that it would be an infringement on its trademark and a pirating of its good will.
"We've had tremendous success since we were founded in 1989," said David Brooks, chief executive of the $12 million-asset McKinney bank. "We were not going to allow (First Banks) to capitalize on that good will."
Mr. Brooks said the name change would have been especially damaging because BankTexas has a branch in McKinney.
First Banks officials in St. Louis referred calls to David Weaver, BankTexas' chief executive. Neither he nor BankTexas' legal counsel in the case returned phone calls seeking comment.
Mr. Brooks said he expects BankTexas to appeal the decision.
Legal wrangles surrounding bank names popped up repeatedly in 1995, as the last vestiges of unit banking were swept away in most of the country. Previously independent banks, branching or consolidating with other independents, found themselves sharing monikers with their brethren. Over the "First Bank" name alone, trademark disputes have sprouted in Nebraska, Texas, and Colorado.
In Texas alone, there are already six independent banks with "First Bank" in their name, including one in Houston, where $323 million-asset BankTexas is based. Across the country, there are 132 independent banks, mostly in the Midwest and Southeast, that begin with the words "First Bank," according to Federal Deposit Insurance Corp. documents. There are more than 1,000 independent banks whose names begin with the words "First National."
Many large multistate banks have simply avoided the issue by creating names that no one else has thought of - such as Crestar Financial Corp., which is based in Richmond, Va.
If the First Bank dispute in Texas is any indication, the name goes to the bank that had it first in a definable geographic market. The judge ruled that differences in typeface or logo were not enough to overcome the potential for customer confusion and a lessening of the value of First Bank's moniker.
"The law was on our side," said Robert Samra, a Dallas lawyer who argued the case for the McKinney bank. The case was decided on summary judgment, without a trial.
The case was a sweet victory for Mr. Brooks, who immediately became uneasy about name confusion when $3.5 billion-asset First Banks bought a controlling interest in BankTexas. Early last year, he asked BankTexas management in writing if it would be changing the bank's name. A BankTexas official replied by phone that it wouldn't be, Mr. Brooks said.
"They lied," he said. "Within 10 days, they announced they'd be changing their name. We told them we would not allow it, but they were nonresponsive to our concerns, to say the least.
"They acted truly like a large, multistate, multibillion-dollar holding company that has no regard for small community banks."