Connecticut's Webster Bank holds a thrift charter, but you wouldn't know that from its name.
The Waterbury-based institution is one of the few thrifts to use a little-noticed regulatory change allowing them to drop "savings" or "FSB" from their corporate titles.
The convergence of bank and thrift names is the most recent step in a process that has already seen savings institutions become more banklike in products and services.
In January 1993, with no fanfare, the Office of Thrift Supervision dropped regulations requiring thrifts to include a reference to "savings" in their corporate name.
But almost three years later, many thrifts still don't know about the option.
"I'd dump 'FSB' like a hot potato," said Gary E. Wegner, president and chief executive of Baraboo Federal Bank FSB in Baraboo, Wis. "It just confuses people."
David J. Totaro, senior vice president of New York's Dime Bancorp, said the rule change will help "savings banks discard the image of being a single-service institution and ... create an image of an institution that offers the types of services that are typically found at larger commercial banks."
Under the new regulations, the Office of Thrift Supervision gradually has allowed thrifts to choose new names that make no reference to a savings institution. Most recently, that's included Webster Bank, the thrift subsidiary of Webster Financial Corp., which changed its name from First Federal Bank FSB a month ago.
And one of the nation's only new savings and loan associations just opened in Broken Arrow, Okla., under the name Federal BankCentre.
But few of the nation's 1,460 OTS-regulated thrifts have taken advantage of their newfound freedom. In fact, one Washington attorney said he knew of fewer than 10 institutions that have dropped "Savings" or "FSB" from their names.
That's because although the amendment was published in the Federal Register, it was never publicly announced by the thrift-supervision agency, nor was it clearly disseminated to thrift institutions by their trade group, America's Community Bankers.
"We told them that certain regulations were either amended or deleted from OTS's regulations," said Community Bankers spokesman James Eberle. "What we didn't do was go far enough to tell them practically what that meant."
"If OTS did come out with something on that, they did keep it quiet," said C. William Landefeld, who as president of Citizens Savings Bank FSB in Normal, Ill., is scheduled to take over the trade group's leadership next year. "That's one of the reasons we have FSB in our name. If we hadn't had to do it, we would never have done it."
The change was one of 68 revisions buried in a major regulatory relief package. Other changes were considered more significant, including reducing a thrift's board to a minimum of five directors from seven.
The Federal Home Loan Bank Board imposed the "savings-FSB" name requirement in 1984 after becoming concerned that thrifts could confuse customers by advertising themselves as "banks."
The new rules only restrict thrifts from misrepresenting their identity or services as being those of a commercial bank. The regulation doesn't detail what would fall into this category, and OTS officials said they'd handle such situations on a case-by-case basis.
"These restrictions on corporate title and name used in advertisements are not necessary for consumer protection and have become increasingly anachronistic since the bank and thrift insurance funds are governed under the same ground rules," the OTS wrote in its regulation.
Unfamiliarity with the change is most common among small community institutions that can't afford in-house attorneys or lobbyists to follow regulatory and legislative changes. Generally, the nation's larger thrifts knew about the provision but chose not to do anything.
Mr. Wegner, for example, said he didn't know about the change despite being a "fairly astute follower" of publications from America's Community Bankers.
Since the regulation went into effect, he said, Baraboo Federal has put up five new signs at its branches, including one that went up Monday. All of them include "FSB."
"I wouldn't have put the FSB on there if I didn't have to," he said. "I didn't know that. I'd much rather have just Baraboo Federal Bank."
Officials at New York's Dime Bancorp, on the other hand, knew of the new rule and considered a name change but recognized that the thrift is already publicly known as simply "The Dime," and "we didn't see that as necessary to change at this time," said Mr. Totaro.
Regulatory counsel Dawn Causey of America's Community Bankers questioned whether high costs would deter institutions from making name changes, which require printing new documents, buying new signs, and developing new advertisements.
And, she said, a name change is likely to help only in markets where all of a thrift's competitors are banks or there's a strong public stigma against savings institutions, which is rare today. Otherwise, changing a name could actually harm an established identity.
"A lot of savings banks operate in markets like New England, where the savings bank consumer is a different customer than the commercial bank customer, so they want to make it clear that they are a savings bank," said Karen Shaw Petrou, president of ISD/Shaw. "It's not like an S&L, where the name is a marketing disaster."
Officials at the American Bankers Association and the Independent Bankers Association of America, who admit that they, too, were unaware of the change, also downplayed it.
"This whole event has been pretty much overtaken by circumstances," said Ron Ence, Independent Bankers lobbyist. "There's been an attempt to dovetail regulations between banks and thrifts and for the most part that's been happening. The whole issue of what an institution is called, if it's not moot now, will be in the near future."
But in fact, those institutions that have already changed their names see the step as beneficial for exactly that reason. With the future of the federal thrift industry hanging in the air, dropping any reference to "savings" also leaves the institutions prepared for life as a bank.
"If we were to change our charter to a commercial bank, we wouldn't have the additional expense of stationery, printing documents and so on that we did have before," said Lee Gagnon, Webster's chief operating officer.