How do you make a bank that has focused on Latinos more popular among other potential customers?
You change its name — say from Banco Popular to Popular Community Bank.
Puerto Rico's largest bank is Anglicizing its name outside its home turf. It switched to Popular Community Bank signs last month at its 24 branches in Southern California, where the 117-year-old institution opened its first office in 1975.
"It was taking a lot more effort to get new customers who were not Hispanic to bank with us," said Manuel Chinea, senior vice president of retail operations for Banco Popular North America.
"It was purely a perception issue — they see the name Banco Popular and think it's only for Hispanics."
Other offshore banks operating in California with mainstream English names include two big San Francisco institutions: Bank of the West, which is part of France's BNP Paribas, and Union Bank, whose parent is Mitsubishi UFJ Financial Group in Japan.
Taking a different approach, many Asian and Asian American banks operating in Southern California choose to emphasize their ethnic heritage: Far East National, Cathay, Nara.
Then there are the hybrids, suggesting a multicultural mix: the Chinese American East West and the Latino-oriented Americas United, Pan American and Promérica.
The decision depends on the bank's history and its goals for the future, Banco Popular executives said.
"All along our focus was to be the premier provider of banking services to the Hispanic community," Chinea said. "But there isn't any community in L.A. that's [ethnically] 100% anything.
"We're also located in high-density urban areas where it's very expensive to operate," he added. "So it didn't make sense anymore for us to just do Hispanics."
Banco Popular has been reinventing itself in any case, having suffered major losses on the twin troubles besetting banks as a result of the housing bust: high-risk home loans and lending for construction and development. It's now mainly a commercial real estate and apartment lender in Los Angeles and Orange counties.
The Southern California operations are part of Banco Popular North America. The ultimate parent company is Popular Inc. of San Juan, Puerto Rico, which at $38 billion in total assets is larger than any bank based in Southern California. The name will remain Banco Popular in the home territory.
The name change also comes as the price of Popular's stock, traded on the Nasdaq, has been languishing during the past year. Shares closed Friday at $1.79, nearly half of where it traded in April. At its peak, the stock traded at nearly $29 in late 2004.
Popular has 15 branches in L.A. County, eight in Orange County and one in San Diego County. It also has about 40 offices in the New York-New Jersey area, 20 in Florida and 12 in Illinois. All told, Banco Popular North America has about $9 billion in assets on the U.S. mainland, but it functions as four separate community banks, Chinea said.
It first tested the name change a year ago in Illinois, and was happy to discover there was "no backlash" from Spanish-speaking customers, he said. "None whatsoever."
Non-Latino accounts grew, the number of new accounts opened by Latinos didn't decline and the average balance of these accounts jumped by 10%.
Customers at the bank's Southern California headquarters, on Disneyland Drive in Anaheim beside the 5 Freeway, seemed to be taking the change in stride.
Antonio Monico said he drops by the Anaheim branch regularly to do business with Popular but hadn't registered that it had tweaked its name until he heard an ad while listening to a broadcast of an Angels game (the bank is a team sponsor).
"To tell you the truth, I didn't really notice the change, and I didn't care," Monico said. He said he was considering switching banks in any case — not because of the name, but in part because Popular doesn't have branches in south Orange County, where he lives.
Analyst Joe Gladue at Santa Monica investment bank B. Riley & Co. said Popular is simply recognizing the drawbacks of focusing only on Latinos as it tries to improve its profitability on the mainland.
"I think that people with a Puerto Rican background will still recognize the name and the brand, so Popular loses nothing by changing the brand to make it little more generic sounding," Gladue said.
What's more, Gladue added, the change would make it easier for Popular to sell part of its operations in the future should the economy and banking scene improve, stimulating the interest of potential buyers.
"Popular has suggested that they would like to become more geographically focused on the mainland," Gladue said. "If they can attract interest in their operations in one state or another by becoming a more mainstream community bank, this could facilitate that strategy."
The mainland operations still face one more strategic decision: when and if to become Popular Community Bank instead of Banco Popular in the New York area. Banco Popular opened its first mainland branch in 1961 to serve the giant Puerto Rican population in the Bronx.
"We're keeping New York for the last," Chinea said. "We've been there for 50 years and we know we have the highest brand equity there."