What's in a name?

Northwestern Financial Review, Feb 5, 2000 by Vandermade, Richard M

Research reveals changing thinking about what we call our banks

On the front of the building that used to house the Farmers and Mechanics Bank on Marquette Avenue in downtown Minneapolis is a WPA-style relief sculpture. It shows a larger-than-life farmer surrounded by the fruits of the earth on one side of the door and an equally giant image of a mechanic surrounded by the tools and machines of the day on the other side. The bank was founded in 1874, before cars and the electric light bulb. The art was created in 1941, near the end of the depression and a few months before Pearl Harbor.

Both the name and the art would be unusual choices for a new bank opening in the year 2000. The building now houses a U.S. Bank branch and displays the U.S. Bank logo. The building provides a good example of how and why banks change their names. These changes are the result of a number of factors.

First of all, the number of banks is decreasing. In 1968 there were 13,479 banks; in 1998 there were 8,756 - a decrease of 35 percent. Multi-bank holding companies, which often have several banks that share a common name, also have reduced the diversity-of bank names.

Secondly, the growth in branch banking and interstate banking has increased the business area that a single head office covers. In that same 30-year span, the number of branches jumped 225 percent to 61,394 from 18,966.

The increased geographical reach of banks is reflected in the names. For example, in Minneapolis, The 1st Bloomington Lake National Bank had a name that specified its location as the intersection of two city streets. In 1984, it became a branch of the First National Bank of Minneapolis. The consolidation of First Banks continued on the state level and eventually First Bank Minneapolis became U.S. Bank in 1997. In a little more than a decade a bank named for a street corner was nationwide.

Rapid consolidation in the banking industry has been occurring since the mid1980s. Although it has been aided by advancing technology, it is primarily a result of the relaxation of branching and interstate banking laws.

The Fifth Northwestern National Bank of Minneapolis changed its name in 1983 to the Norwest Bank CalhounIsles. Maybe it's a sign of the increased competition in banking today that there are no Fifth, Fourth, Third, or Second banks open in the Upper Midwest - only Firsts.

Some changes in bank names reflect the effect of America's melting pot. In 1915 there were 15 German-named banks in Minnesota. Ten years later, in 1925 after World War 1, there were none. In some ways this parallels the experience of many German-Americans of the time. It was a period of hastened assimilation and in some parts of the country there were efforts to bar the teaching of German in schools. Many German-American organizations and much of the German-language press disbanded.

Some of the German-named banks closed and others changed their name. The German American State Bank in Clara City, Minn., became the Citizens State Bank. The German

American State Bank in 150- Howard Lake, Minn., became the American State Bank.

There were nearly as many Scandinavian-named banks as German-named banks in 1915 Minnesota. Their numbers dwindled almost as quickly. The last Scandinavian-named bank in the Ninth District is the Scandia American Bank and Trust in Stanley, N.D.

The flip side of the melting pot effect is that the fastest growing name between 1960 and today was American. In 1960, one in every 55 banks had American in the name; now it's almost one in 30.

Many occupation-named banks like Farmers, Miners and Merchants still exist, but they are declining. And few newly opened banks have opted for such a name. In the Ninth Federal Reserve District, which covers Montana, North Dakota, South Dakota, Minnesota, eastern Wisconsin and the Upper Peninsula of Michigan, there are 55 banks with Farmer in their name. In 1960 there were 124. There are two banks with Miner in their name now, down from eight in 1960.

But the decline in the number of Miners and Farmers banks is paralleled by declines in the number of people working in mines and the number of people working on farms. U.S. Department of Agriculture statistics estimate the total number of farms in Minnesota, Montana, North Dakota, South Dakota and Wisconsin in 1960 to be 440,100. In 1997 the number of farms in that region dropped to 251,000, a decrease of 43 percent. The Iron Mining Association of Minnesota reported that the taconite mines employed 16,000 people in 1979 when production peaked. Although still a dominant industry in Minnesota's Iron Range, by 1996 the jobs figure was down to 6,000.

The fastest growing occupations in the next 10 years, according to the Bureau of Labor Statistics, will be computer engineer, computer support specialist, and systems analyst. If industry changes explain the decline of "occupation" named banks, does that mean we will see a growing number of Computer Professional Banks in the future? Probably not.

One name that is holding its popularity is Security. In. the ninth district, from 1960 to 1998, banks with Security in the name showed an increase as a percent of all banks, even though their overall numbers dropped from 75 to 57.