美联储-银行商标 Trademarks in Banking 2024

FinanceandEconomicsDiscussionSeries

FederalReserveBoard,Washington,D.C.

ISSN1936-2854(Print)

ISSN2767-3898(Online)

TrademarksinBanking

RyuichiroIzumi,AntonisKotidis,PaulE.Soto

2024-044

Pleasecitethispaperas:

Izumi,Ryuichiro,AntonisKotidis,andPaulE.Soto(2024).“TrademarksinBanking,”FinanceandEconomicsDiscussionSeries2024-044.Washington:BoardofGovernorsoftheFederalReserveSystem,

/10.17016/FEDS.2024.044

.

NOTE:StafworkingpapersintheFinanceandEconomicsDiscussionSeries(FEDS)arepreliminarymaterialscirculatedtostimulatediscussionandcriticalcomment.TheanalysisandconclusionssetfortharethoseoftheauthorsanddonotindicateconcurrencebyothermembersoftheresearchstafortheBoardofGovernors.ReferencesinpublicationstotheFinanceandEconomicsDiscussionSeries(otherthanacknowledgement)shouldbeclearedwiththeauthor(s)toprotectthetentativecharacterofthesepapers.

1

TrademarksinBanking*

RyuichiroIzumiAntonisKotidisPaulE.SotoMay23,2024

Abstract

OneinfivebanksintheUnitedStatesshareasimilarname.Thiscanincreasethelikelihoodofconfusionamongcustomersintheeventofanidiosyncraticshocktoasimilarlynamedbank.

Wefindthatbanksthatsharetheirnamewithafailedbankexperienceahalfpercentdropintransactiondepositsrelativetobankswithsimilarcharacteristicsbutdifferentname.Thiseffectdoublesforfailuresthatarecoveredinmedia.Werationalizeourfindingsviaamodeloffinancialcontagionwithoutfundamentallinkages.Ourmodelexplainsthatwhendistinguishingbanksismorecostlyduetosimilartrademarks,depositorsaremorelikelytoconfusetheirbanks’conditionresultinginfinancialcontagion.

Keywords:Trademarks,Banking,BankRuns,BankFailuresJELClassifications:G21;G14;G30

*IzumiisatWesleyanUniversity.KotidisandSotoareattheFederalReserveBoard.WethankTomazCajner,ToddKeister,AndreasLehnertandSkandervandenHeuvelforhelpfulcomments.TheanalysisandconclusionssetforthherearethoseoftheauthorsanddonotindicateconcurrencebyothermembersoftheresearchstaffortheBoardofGovernors.

2

1Introduction

Atrademarkisasign-logo,soundorcolor-usedbyafirmtoidentifyaproductorservice.Unlikeapatent,whichisapropertyinterestheldbytheproprietor,trademarkscreatedistinctiveness.Theyconveyinformationaboutthequalityofaproductorservice,evenwhenqualityisnotobservable.Assuch,theyhelpresolveaninformationasymmetryproblem(e.g.,

Akerlof,

1970)

.Duetotheirabilitytoconveyinformation,thelawprotectstheownersoftrademarksfromtheuseofsimilarmarks.Consumersmayalsobenefitbecauseownersmaybeincentivizedtodeliverahigherlevelofqualityconsistentwiththeoriesoftrademarksastradeableassets(e.g.,

Shapiro,

1982,

Landes

andPosner,

1987,

AghionandHowitt,

1992,

Tirole,

1996)

.

Afirm’snameisthemostimportanttrademark(e.g.,

Tadelis,

1999)

.Despiteextensivelegalprotections,itisnotuncommonforfirmstousesimilarlysoundingnames.Theuseofsimilarlysoundingnames,however,canincreasethelikelihoodofconfusionamongcustomersifasimilarlynamedfirmexperiencesstress.Thisissueisprobablymoreacuteinthebankingindustry,wherespilloverstothesystemasawholearemorelikelyduetobanks’roleasliquidityproviders(e.g.,

Kashyap,Rajan,andStein,

2002)

.

Severalcasesofrunsonbanksthathavesimilarlysoundingnameswithbanksexperiencingstressprovideausefulillustration.Forexample,followingtherescueannouncementoftheSanFrancisco-basedFirstRepublicBankonMarch17,2023,thestockofPennsylvania-basedRepublicFirstBankcorpplungedbynearly30%.ThismarkedRepublicFirst’sworstsingle-dayperformancesince1994despiteassurancesbythepresidentandCEOofthebankthat“amideverythinggoingon,RepublicBankwouldliketomakeveryclear:weareRepublicBank,Inc.(FRBK-Red/BlueLogo);weareNOTFirstRepublicBank(FRC-GreenLogo)”

.1

Otherbanks–SignatureBankofArkansasandSignatureBankChicago–releasedsimilarstatementsafterSignatureBankNewYorkshowedthefirstsignsofstressinMarch2023.

2

OnJuly25,2008,followingtheclosureoftheFirstNationalBankofReno,Nevada,andtheFirstHeritageBankofNewportBeach,California,bytheOfficeoftheComptrolleroftheCurrency(OCC),thepresidentandCEOofHeritageBankofReno,Nevada,spentdaysassuringcustomerswhosawthenameHeritageinthenewsthathisbankwasfinanciallysound

.3

1BankingDive,“RepublicFirstBankCEOtocustomers,investors:WearenotFirstRepublic”.

2SeeAppendixA.

3RenoGazette,“Bankreopenswithnewname”,29,July2008.

3

TheseepisodesarebynomeansaU.S.orrecentphenomenon.OnSeptember4,2014,inIndia,followingthenewscoveragebyaBengalinewspaperthattheJalpaiguriCooperativeBankLimiteddidnothavetherequiredRBIlicencetobeanactivebank,depositorsbecameconfusedwiththenameandturnedupattheJalpaiguriCentralCooperativeBankbrancheswantingtowithdraw

theirmoney.4

InOctober1934,depositorsranontheAmoybranchoftheNationalIndustrialBankofChina.Thereasonwasarumourthatthebank’sheadofficeinShanghaiwasclosedandthebankhadgoneoutofbusiness.Thetruth,however,wasthatasimilarlysoundingbankinShanghaihad

closedontheexactsameday.5

InSeptember1985,asconcernsmountedoverthehealthofsmallCanadianbanks,arundevelopedattheContinentalBankofCanada.Accordingtoitspresident,“thebankwasalsohurtbystatementsinthemediaconfusingitandatroubledtrustcompanywithasimilarname”,eventuallyresultinginasupportpackagefromagroupoffinancialinstitutionsandtheBankofCanada

.6

Theseexampleshaveonethingincommon:theuseofsimilarlysoundingnamescanincreasethelikelihoodofconfusionamongcustomersintheeventofanidiosyncraticshocktoasimilarlynamedbank.Confusionmaythenleadtorunsevenonwell-managedbanksthatarenotinanywayrelatedtothestressedbank.

Ourpapertakesadeepdiveintothisissue.WestudytheU.S.bankingsystemduetoitsstructureandhistoricalevolution.WhenAmericanbankingwasalocalbusiness,theFirstNationalBankofasmalltownwasdistinctiveenoughandunlikelytobeconfusedbyanotherFirstNationalBanktwotownsover.Infact,theNationalBankActof1864—alandmarkpieceoflegislationthatestablishedtheNationalBankingSystemintheUnitedStates—requiredbankstoincludethe

word“national”intheirnamesandencouragedthemtobearnumbers(ConleyandHunter,

2007)

.Thesenamingconventionshavepersistedintothe21stcentury.Thederegulationofthebankingindustryandtheadventofbranchbankinginthe1990shaveledbankswithsimilarlysoundingnameschoseninthepasttostartcompetinginthesameareas,potentiallyincreasingthelikelihoodofconfusionamongcustomers.ConfusionmayfurtherexacerbateintheeraoftheInternetandrapidcommunications.

4TheTelegraphOnline,“BanklicencescareafterRBInotice-Depositorspanicasofficialsseekcorrectiononbank

nameinnewspaper”.

5SouthChinaMorningPost,“RunonAmoyBank.TheNationalIndustrialBankofChina.VictimofRumours”,7,November,1934.

6TheGlobeandMail,“Bankreceives$2.9billioninaidCrisisshowsfewsignsofabating”,1,November,1985.

Thefirstpartofthepaperestablishesfactsaboutbanknamesandhowtheyevolvedovertime.Weshowthatthemostprevalentwordsinbanknamesare“bank”andcharterdistinctionssuchas“state”and“national”.Thetypeofbankisalsoacommonfeaturewithwordslike“community”,“savings”,and“trust”beingwidelyused.AsofDecember2022,nearly14%ofbanknamesbeginwiththeword“first”,while11%ofbanknamesbeginwithoneofsevenwords:“citizens”,“peoples”,“farmers”,“united”,“heritage”,“liberty”,or“american”.Nearly210(103)banksbeginwith“FirstNational(State)Bank”.Thesetwophrasesaccountforalmost7%ofallbanknamesin2022.Overall,nearly20%ofbanknamesbeginwithaphraseorstringthatcouldrefertoseveralbanksin2022.Interestingly,thissharehasbeenremarkablystableoverthepastthreedecadesdespitethemassiveconsolidationintheU.S.bankingindustry.

Theprevalenceofnamecommonalitiesmayleadtocustomers’confusioninthefaceofanegativeeventtoasimilarlysoundingbank.Weexplorethisissuenext.Foridentification,wefocusonbankfailuresandcomparedepositsofbanksthatsharetheirnamewiththefailedbank(treatmentgroup)tootherbankswithsimilarbalancesheetcharacteristicsbutdifferentname(controlgroup).Forexample,wecomparedepositsofHorizonBank,Nebraska(treatmentbank)toBankofVernon,Alabama(controlbank)beforeandafterthefailureofHorizonBank,Florida(failedbank).OurpropensityscorematchingalgorithmensuresthatHorizonBank,Nebraska,andBankofVernon,Alabama,havesimilarbalancesheetcharacteristics,includingsize,depositsovertotalassets,loansovertotalassetsandprofitability.WealsoensurethatthatHorizonBank,Nebraska,andHorizonBank,Florida,havenothingincommonbutaname

.7

WethentreatthefailureofHorizonBank,Florida,asanexogenouseventthatmay(ormaynot)impactdepositsofHorizonBank,Nebraska.ThepurposeofthecontrolbankistoinformuswhatwouldhavehappenedtothedepositsoftheNebraskabankintheabsenceofthefailureoftheFloridabank.

Viadifference-in-differencesregressions,wefindstrongeffectsontransactiondeposits

.8.

Trans-actiondepositsasashareoftotalassetsfallnearly0.7%immediatelyaftertheassociatedbankfailureandslowlyriseoverthefollowingtwoyears.Thiseffectisrobusttosaturatedmodelscom-pletewithbankandtimefixedeffects,aswellastheinclusionofbankingdemandcontrolsproxiedbycorporateinvestmentinthespiritof

GulenandIon

(2016)

.Thiseffectisfurtheramplified

bythepublicityeachbankfailurereceives(akintoa”mediamultiplier”(e.g.,

Besley,Fetzer,and

7Mostbanksinoursampleareunitbanks,sononearepartofthesamebankinggroupwhenwestudythem.

8Incontrasttotimeorsavingsdeposits,transactionsdepositscanbewithdrawnondemandandisaproduct

consistentwiththeroleofbanksasliquidityproviders(Kashyapetal.,2002)

4

5

Mueller,

inpress))

.Wefindthatwhenabankfailureismentionedinthenews,transactiondepositsovertotalassetsare,onaverage,nearly0.8%loweraftertheassociatedbankfailureandcandropbyasmuchas1%immediatelyaftertheassociatedbankfailure.Theseresultsarenotdrivenbyspecificbanksortimeperiodsandindicatethatbanksthatshareasimilarnamewithafailedbankexperienceasignificantdeclineintransactiondeposits.

Tobetterassesstheeconomicimpact,quantileestimatesacrossalltreatmentbanksinoursamplerevealstrikinginsightsintotheplausiblerangeofeffects.Wefindaone-in-tenchancethatthereductionintransactiondepositsamountsto2.14%,or$2.68million,andaone-in-fourchanceofareductionof1.17%,or$1.47million.Giventhatoursamplecomprisesofrelativelysmallcommunitybanks,roughly$100millionintotalassets,thesefindingsunderscoreasizeableeconomicimpactofname-relatedcontagionrisk.

Weproceedbyexploringtheeffectsonlending.Wefocusonvarioustypesofloansusingthedifference-in-differencessetting,andfindgenerallynoeffect.Whileconsumerloansslightlyreduce(byroughly0.12%),theseresultssuggestthattheeffectappearspredominantlyviabanks’liabilitiesanddonotsignificantlyhampercreditprovisioning.

Werationalizethesefindingsinamodeloffinancialcontagionwithoutfundamentallinkages.Ourbenchmarkmodelisbasedon

DiamondandDybvig

(1983)augmentedtohavearandom

investmentreturnandconsiderstheenvironmentwheretherearetwoex-anteidenticalDiamond-Dybvigbanks.Thebankshavenobalancesheetlinkages,andtheirassetreturnsareindependent.Therealizationoftheirinvestmentreturnsrevealsbeforedepositorsmakeawithdrawaldecision,andeachofthemreceivesaprivatesignalabouttherealization.However,thesignalisnoisy,inthesensethatitmayormaynotrepresenttheircorrespondingbank.Thefocalpointofourmodelistheprobabilitythatthedrawnsignalcorrespondstotheirbank,andwestudyhowtheposteriorbelief,influencedbythissignal,shapestheincentiveofbankruns.Inequilibrium,wefindthatbankrunriskdecreaseswhendepositorsaremorecertainaboutwhethertheirreceivedsignalcorrespondstotheirbank.Whenthesignalismoreprecise,thosewhoreceiveagoodsignalbelievethattheirbankismorelikelytohaveagoodasset,reducingtheincentivetorunonthebank.Whentheydonotrunonthebank,thosereceivingabadsignalalsohavelessincentive,asthefirst-moveradvantagediminishes.However,whenthesignalislessprecise,eventhosewhoreceiveagoodsignalstillhavestrongerincentivestorunonthebank.Thus,inthesensethatanoisiersignalmakesabankrunmorelikelytooccur,wehavecontagionthroughdepositors’beliefs.

Thiscontagionchannelexistsifandonlyifthesignalisimperfect.

Weextendthismodeltoevaluatehowabank’strademarkaffectsthebankrunrisk.Inpartic-ular,weaddanex-antechoiceofattentionallocation,whichdeterminestheprecisionofthesignal.Payingmoreattentionrequiresresourcecosts,andthecostparameterrepresentsthesimilarityofthebanks’trademarks.Inparticular,ifthebankssharesimilartrademarks,payingmoreattentionrequiresmoreresources.Weinterprettheeffectofthisparameterontheequilibriumbankrunriskastrademarkrisk.Whenitiscostlyfordepositorstodistinguishbanks,depositorsrationallychoosetopaylessattention,makingiteasierfortheprivatesignaltobemisidentified,resultinginhigherincentivestorunonthebank.Inotherwords,similarityoftrademarksamplifyfinancialfragility.Lastly,weexploretheroleofapublicsignal,whichweinterpretasmediacoverage.Thispublicsignalappearsifandonlyifatleastonebankhasabadinvestmentreturn,andinthisextension,weshowhowthemediacanamplifythetrademarkrisk.Ourmodelprovidesinsightsintohowfinancialcontagioncanmanifestitselftoincreasedbankrunriskwhendepositorshavethepossibilityofmisidentifyingthebank.

Relatedliterature:Ourpapercontributestoseveralstrandsoftheliterature.First,itcon-tributestotheliteratureontrademarks,whichareintangibleassetsthatincludelogos,soundsorcolors(e.g.

MilgromandRoberts,

1992)

.Alargetheoreticalliteraturediscusseshowtrademarkscaninformconsumersaboutthequalityofaserviceorproduct(e.g.

Akerlof,

1970;

Economides,

1988)andincentivizefirmstodeliverahigherlevelofqualityconsistentwiththeoriesoftrade

-marksastradeableassets(e.g.

Shapiro,

1982;

LandesandPosner,

1987;

Tirole,

1996;

Marveland

Ye,

2008)

.Theempiricalliteratureontrademarksisconsiderablysmallerandfocusesonthere-lationshipbetweentrademarkingactivityandafirm’smarketvalue.Forexample,inasampleofmanufacturingfirmsbetween1995and2005,

Krasnikov,Mishra,andOrozco

(2009)findthata

firm’strademarkispositivelycorrelatedwithitscashflow,Tobin’sQ,returnonassetsandstockreturns.Similarresultsareobtainedby

Gonz´alez-PedrazandMayordomo

(2012)whostudyU.S

.banksduringthesameperiod.Ourcontributiontothisliteratureistwofold.First,wedocumentfactsontheprevalenceandevolutionofnamesintheU.S.bankingindustryoverthepastthreedecades.Incontrasttosounds,colorsorlogos,afirm’snameisoneofitsmostimportanttrade-

marks(Tadelis,

1999)

.Second,weexplorehowsimilaritiesintrademarkscanleadtodistortionsinfinancialmarkets.Whiletheliteraturemeasuringfirmtrademarksisnascent,afirm’strademark

providessubstantialeconomicvalueandcanmakegoodsandservicesmorerecognizable(Desai,

6

7

Gavrilova,Silva,andSoares,

2022)

.Wecontributebyshowinghowabanksharinganamewitha

failedbankcancausedepositorstorunonanotherwisehealthybank.

Ourpaperalsorelatesinvestors’attentionallocationandfinancialcontagion.Attentionisa

scarcecognitiveresource(Kahneman,

1973),whichinvestorsmustchoosehowtoallocate

.Aseconomicagentsareresource-constrainedbytimeandprocessingmarketnews,theirattentioncanaffectstockprices(e.g.,

DellaVignaandPollet,

2009,

Da,Engelberg,andPengjie,

2011)

.Investors

canalsomisinterpretinformation,potentiallyleadingtothemisvaluationofassets(Hirshleifer,

2001)

.Evenwhennonewinformationisprovided,stocktickerswithsimilarnameshavebeenshown

tocomoveandcanbringpricesfurtherawayfromtheirfundamentals(Rashes,

2001;

Balashovand

Nikiforov,

2019)

.

MondriaandQuintana-Domeque

(2013)explainscontagionbetweenmarkets

throughinvestors’re-balancingattentionbetweenthemwhenamarketexperiencesadisruption.Ourpaperconsiderscontagionthroughinvestors’limitedattentioninthecontextofbankruns.However,neitherattentionchoicesnortrademarkshavebeenconsideredasacontagionchannelofbankfragility.Theclosestcontagionchannelthathasbeenconsideredinthecontextofbankrunsiscorrelationofassetexposures

.9

Whenbankshavecommonassetexposures,informationcancauseabankrun.Anearlymodelofaninformation-basedbankrunis

JacklinandBhattacharya

(1988),

andthen

Chen

(1999)showsthatbankrunscanbetriggeredbyinformationaboutanotherbank

whenbankshaveacommonexposure.Wheninvestorsdonotknowtheirbank’sassetquality,theymayusesignalsaboutthehealthofanotherbanktoassessthedefaultprobabilityoftheirbank,whichinturn,maycauseabankrun.Thiscommonexposurechannelhasbeenfurtherexploredby

AcharyaandYorulmazer

(2008b),

AcharyaandYorulmazer

(2008a),

Manz

(2010),and

Allen,

Babus,andCarletti

(2012)

.Morerecentpapers,

Trevino

(2020)and

AhnertandBertsch

(2022),

alsoconsidertheenvironmentwherebanks’fundamentals,andhenceassetreturns,arecorrelated.Thispaperisthefirsttoexaminecontagionintheabsenceoffundamentallinkagesbetweenbanks.Weinsteadconsiderhowinvestors’beliefs,shapedbythenoiseofsignals,drivecontagion.Theintensityofthisnoiseisdeterminedbytheallocationofattention,whichisinfluencedbytrademarks. Finally,wecontributetotheliteraturestudyingtheeffectofmediaonfinancialmarkets(e.g.

EngelbergandParsons,

2011,

Tetlock,

2007,

Dougal,Engelberg,Garcia,andParsons,

2012,

Gar-

maise,Levi,andLustig,

inpress)

.Ourresultsthatthemediacanexacerbaterisksrelatedto

9

Otherchannelsthatareconsideredintheliteratureincludedirectlinkagesofbalancesheets(AllenandGale,

2000,KiyotakiandMoore,

2002,

Dasgupta,

2004)andcommoninvestorbase(GoldsteinandPauzner,

2004)

.

8

trademarksalignswithrecentworkby

Cookson,Fox,Gil-Bazo,Imbet,andSchiller

(2023),who

findthatactivityonX(formerlyknownasTwitter)amplifiedbalancesheetriskduringthe2023SiliconValleyBankrun,and

Croce,Farroni,andWolfskeil

(2020),whoillustratehowsocialmedia

andnewspapersaccentuatecontagionriskemanatingfromtherecentCOVIDpandemic.Withtheriseofsocialmedia,theeffectoftrademarksandmisinformeddepositorscouldintensifyasinvestors

interpretrepeatedinformationthroughsuch“echochambers”asgenuineinformation(Jiao,Veiga,

andWalther,

2020)

.Ourtheoreticalframeworkaddsanovelperspectivetohowmediacoverageincreasesfragilitydependingontheinformationsetofeconomicagents,similarinspirittomodels

linkingendogenouspublicinformationtovolatilityandcrisisepisodes(AngeletosandWerning,

2006)

.

Theremainderofthepaperisstructuredasfollows.SectionIIdiscussesourdata.SectionIIIpresentsfactsonbanknames,andsectionIVpresentsourmainresults.SectionVpresentsthemodel,andsectionVIconcludes.

2DataandMethodology

ThetwoprimarydatasourcesareCallReportsforcommercialbanksintheUnitedStatesandtheFDICFailedBankdataset.Bothdatasetsarepubliclyavailable.CallReportscontaincompletebanknames,aswellasbalancesheetandincomestatementsdataoncommercialbanks.WealsousethesedatatoidentifybankswithsimilarnamestothoseintheFDICFailedBankdataset.TheFDICFailedBankdatasetcontainsinformationon564banksthatfailedbetween2000and2023.SincethebanknamesintheCallReportsdatacontainabbreviations,theabbreviationsare

elongatedtomatchthefullnameoftheFDICdataset

.10

Usingafuzzymatchingalgorithm,wesearchformatchesbetweentheFDICFailedBankdataset

andtheCallReportsdataonequarterafterthefailureofeachfailedbank.Thisprocessresultsin

10Afterinspectingtheindividualnames,wemakethefollowingsubstitutionstotheCallReportsnames:CountyforCTY;CooperativeforCO-OP;CommunityforCMNTY;FederalSavings&LoanAssociationforFS&LA;Savings&LoanAssociationforS&LA;Building&LoanAssociationforB&LA;BankforBK;StateSavingsBankforSSB;Bank&TrustCompanyforB&TC;FederalSavingsBankforFSB;BankingforBKG;SavingsforSVGandSVGS;CommerceforCMRC;TrustforTR;SavingsBankforSB;StateforST;FinancialforFNCL;NationalAssociationforNA;NationalforNAT;NationalBankforNBandNBANK;MerchantsforMRCH;CompanyforCO;TrustandCompanyforTC.

9

107failedbankssharingthenameofasurvivingbank.These107failedbanksareassociatedwith1,026banksthatsharetheirnamewithafailedbank(treatmentbanks).Wedropanytreatmentbankthatdoesnotcontaindatatwoyearsbeforeandafterthedateofthesimilarlynamedfailedbank.Thisrestrictionreducesthenumberoftreatmentbanksto945.

Next,wecreateamatchedsampleforacontrolgroupusingapropensityscorematchingalgo-rithm.Thecontrolgroupconsistsofbanksthatdonotshareanamewithtreatmentbanks,butaresimilarinnotablecharacteristics,whichwerestricttosize,depositsovertotalassets,loansovertotalassetsandprofitability(proxiedbyROA).Weperformthematchingusingdatatwoyearspriortotheassociatedbankfailure.Weensurethatthefailedbankisassociatedwithatleasttwosimilarlynamedbankstoensureanaccuratepropensityscorematchingestimate.Thisrestrictionreducesthenumberoftreatmentbanksto899banks.Afterthematchingprocess,wefind894controlbanksthatmeetthematchingcriteria.Itisimportanttonotethatsomecontrolbanksarematchedtomultipletreatmentbanks,resultinginadifferenceinnumbersbetweenthe894controlbanksandthe899treatmentbanks.

SummarystatisticsforthematchedsamplecanbefoundinTable

1.

Thesestatisticsreflectthetwoyearspriortotheassociatedbankfailuretoensurethatthetreatmentandcontrolgroupsaresimilaralongobservables.Overall,thetotalassetsforbothbanksarearound$108millioninbothgroups.Giventhesizeofthesebanks,themajorityoftheirfundingcomesfromdeposits(83%oftotaldepositsintotalassets).Giventhesmallsizeofthebanks,theseareprimarilyretaildeposits.Thetablealsoshowsthattimedepositsovertotalassetsarenearly39%inbothgroups.Transactiondepositsareslightlyhigherinthetreatmentgroupby3%,whileuninsureddepositsrepresentasmallportionofassets,averagingaround1%.Banksinbothgroupshavearound23%ofdepositsbelowthe$250,000accountlimit,and16%overthesamelimit.Ontheassetside,lendinginbothgroupsisapproximately60%oftheirtotalassets,withthemajorityofloansbeingmortgages(40%)followedbyC&I(9%)andconsumerloans(5%).

3FactsonU.S.Banks’Names

TheNationalBankActof1864wasalandmarkpieceoflegislationthatestablishedtheNationalBankingSystemintheUnitedStates.Thislegislationimposedanumberofrequirementson

10

nationalbanks,includingtherequirementthattheyincludetheword“national”intheirname

.11

Italsoencouragedbankstobearnumbersintheirnames.Asaresult,banknameshavebeendescriptiveratherthandistinctiveoverthehistoryofAmericanbankingwithalargenumberofbankstodayhavingsimilarsoundingnames.

Figure

1

showsawordcloudofthemostcommonwordsinbanknamesasofDecember2022.Themostprevalentwordsare“bank”andcharterdistinctionssuchas“state”and“national”.Thetypeofbankisalsoadistinguishingandcommonfeatureinbanknames,withwordslike“community”,“savings”,and“trust”withhighusage.

Table

2

showsthepercentageofbankswithcommonwordsandphrasesintheirnames.Becausenamesareoftenreferredtousingtheirfirstwordorwords(e.g.“CitibankNationalAssociation”isoftenjustreferredtoas“Citibank”or“Citi”),weshowfrequenciesofnamesthatbeginwiththespecifictoken,andalsonamesthatcontainthetokenanywhereintheirbankname.Nearly14%ofbanknamesbeginwiththeword“first”,while11%ofbanksbeginwithoneofsevenwords:“citizens”,“peoples”,“farmers”,“united”,“heritage”,“liberty”,or“american”.Table

2

alsoshowsthataselectnumberofphrasesusedinbanknamescanrefertoasizablenumberofbanks.“FirstNationalBank”and“FirstStateBank”appearinthebeginningof210and103banknames,respectively.Thesetwophrasesaccountfornearly6.6%ofbanknamesin2022.Overall,18%ofbanksbeginwithaphraseorstringthatcouldreferto