Monday, November 9, 2009

Bank name confusion can be dangerous (HOME)

This morning, Home Federal Bancorp (HOME) of Idaho put out a press release to reassure depositors and investors that it was in sound financial shape, as people had confused it with troubled lender Home Federal Savings, of Michigan.

NAMPA, Idaho, Nov. 9, 2009 (GLOBE NEWSWIRE) -- Home Federal Bancorp, Inc. (the "Company") (Nasdaq:HOME - News), the parent company of Home Federal Bank ("Home Federal"), clarified today that it has no relationship with a failed bank of similar name in Michigan. Home Federal is based in Nampa, Idaho, and operates 23 full-service banking offices and one commercial loan center in southwestern Idaho, including Boise, and the Tri-County Region of Central Oregon. It is in no way affiliated with a Detroit-based bank of similar name that was recently closed in a transaction between the FDIC and a Louisiana-based bank.

The Company announced the clarification today to prevent confusion among its clientele and shareholders"

The Internet age has brought with it opportunities for banks to attract deposits from far beyond their local geography. But with clientele increasingly detached, many have never visited a branch or spoken to a bank representative. Deposits can be shifted at the click of a mouse. And as deposits go, so goes the institution. That's why we're seeing more and more of these "don't confuse us with so and so" press releases. Spooked depositors can make a run on the bank.

Another one of those releases, from New York-based Sterling Bancorp (STL), distancing itself from troubled Washington state based Sterling Financial (STSA):

NEW YORK, Oct. 16 /PRNewswire-FirstCall/ -- Sterling Bancorp (NYSE: STL - News) said today that it is in no way related to either Sterling Financial Corp. of Spokane, Washington (Nasdaq: STSA - News) or its Sterling Savings Bank subsidiary, nor to any other publicly traded company having Sterling in its name. Sterling Bancorp, the parent company of New York City-based Sterling National Bank, issued this clarification following a release yesterday by Sterling Financial Corp.

Well I guess this is what we get, when literally thousands of banks have similar, uncreative names. A quick perusal (is that a word?) of publicly traded banks shows that "First" would actually be a name that causes more confusion than "Home." And these are larger, public companies. Hundreds/thousands of smaller banks with the same names are out there...

Copyright 2009 AlphaNinja

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