The John Smith of banks As it expands across US, all-too-common name spells grief for Citizens
Citizens Financial Group markets itself as ''Not your typical bank." But, as the Providence bank found out this week, it actually is all too typical.
A federal appeals court ruled Thursday that Citizens must take its name off branches in parts of Western Pennsylvania, saying the name conflicted too closely with another Citizens bank, this one called Citizens National Bank of Evans City.
New England's Citizens Bank vows to appeal. But meanwhile, as the bank expands across the country, it is finding that it cannot go much of anywhere without bumping into one of the more than 300 other banks with the Citizens name on it.
There are Citizens banks in both Alabama and Oregon. In Louisiana, it's Citizens Bank & Trust, with the motto ''The Timberland Bank." Then there is Illinois' Citizens First National Bank, not to be confused with First Citizens National Bank in Pennsylvania.
Executives at some of the nation's Citizens banks say they have become used to the overlap. ''Our main competitor is Citizens & Northern, and in the next county over, there's a Citizens Trust Co.," said Terry Osborne, executive vice president of First Citizens National Bank, which has 15 branches in north central Pennsylvania and expects New England's Citizens to put its name on a branch in its market soon. ''I don't know that another one would make it any worse."
To complicate matters, Citizens, a Royal Bank of Scotland subsidiary with a thirst for expansion, recently made its biggest acquisition yet: A $10.5 billion merger with Charter One Financial Inc. of Ohio. That put New England's Citizens on a collision course with another large Citizens Bank, this one based in Michigan. A spokesman for the Michigan Citizens said yesterday that the bank would ''defend our right to exclusive use of the Citizens name in our market."
A spokeswoman for the New England Citizens, Melodie Jackson, said that the bank does not plan to change the Charter One name in the Midwest, but that it would switch the Charter One branches in other states, including New York and Pennsylvania. She declined to comment on whether the decision to keep the Charter One name had to do with the other Citizens Bank.
The two different bank names could add up to a significant problem for New England's Citizens as it tries to expand nationally, said Kathleen Seiders, an associate professor of marketing at Boston College. The bank would need different advertising in each region, and it would have a harder time leveraging its expanding footprint to benefit its existing customers, she said.
''Citizens is a regional brand, and they need to become a national brand. This is a barrier they have to overcome," she said.
It's not just bad luck that banks all over the country are named Citizens. Bruce Spitzer, a spokesman for the Massachusetts Bankers Association, said the name probably stems from an earlier time when savings banks oriented toward consumers wanted to separate themselves from commercial banks. He said the name ''Citizens" would have set the banks apart from the ''People's banks," ''Merchants' banks" and ''Farmers' banks" popping up all over the country. At the time, no one expected the problems that could occur when some of the banks began to grow nationally.
In the Pennsylvania case, New England's Citizens ran into trouble almost immediately after entering the region in 2001 though an acquisition of the retail banking operations of Mellon Financial Corp. The Pennsylvania Citizens, which has 15 or so branches, fired off a letter to New England's Citizens to warn the other bank that Pennsylvania's Citizens viewed itself as the only bank with the right to use the name in several Western Pennsylvania counties. New England's Citizens took the issue to court.
The president of the Pennsylvania Citizens, Margaret Irvine Weir, told newspapers at the time that New England's Citizens could have chosen any other name to use in Pennsylvania, and that its decision almost could be an intentional attempt to gain from the Citizens National Bank reputation. She also took a jab at Citizens' parent company, the Royal Bank of Scotland: ''As a foreign-owned institution, they're not even Pennsylvania 'citizens,' " she said.
A three-judge panel of the 3d US Circuit Court of Appeals ruled Thursday that New England's Citizens would not be allowed to use its name on branches in Butler County and possibly elsewhere. The decision reversed an earlier district court decision that the Pennsylvania Citizens should be the one to change and should use Citizens National in the future.
A lawyer for the Pennsylvania Citizens, Frederick Thieman, said the ruling vindicated its argument that two banks with the same name would confuse the consumer. ''We own the name here, and we showed we own the name," he said. ''We're just interested in banking in Western Pennsylvania without confusion."
Sasha Talcott can be reached at stalcott@globe.com. Material from the Associated Press was used in this report.
