Chalk one up for Bank of America Corp. in its quest to keep the names of the numerous banks it and its predecessors acquired within the fold.
Brian Foster, a former Bank of America executive whose start-up bank in Savannah, Ga., is scheduled to open today, had planned to name it Citizens and Southern Bank, and thus revive the name of the onetime Atlanta banking franchise that, after a series of mergers, became part of Bank of America. He planned to name his banks holding company C&S Bancorp.
But the Charlotte, N.C., company cried foul and argued that it still owned the rights to the name. The two companies reached an out-of-court settlement over the weekend in which Bank of America is paying Mr. Fosters company an undisclosed sum of money, according to a joint press release on Tuesday.
One of the weapons that may have helped Bank of America keep the Citizens and Southern name was its issuance last month of prepaid gift cards imprinted with the names of Citizens and Southern and three other former acquisitions.
Bank of America said the move was meant to honor the heritage of the former banks and tap into customers nostalgia, but observers said the company might also be trying to assert its right to the names.
When one company acquires another, the buyer gets all its assets including trademarks but if those trademarks languish for an extended period of time, other businesses can sometimes take them.
Whether or not the gift cards were meant to be the ace up Bank of Americas sleeve is hard to say, but in a phone interview Mr. Foster, who is also a Bank of America shareholder, said that perhaps the company had issued the cards to protect its trademarks. I would certainly be doing things like that to protect my name.
The agreement stipulates that Mr. Fosters company not use either the C&S Bancorp. name or the Internet domain name C&Sbank.com, which he had registered.
The new bank instead has taken the name First Chatham Bank, and its parent is named FCB Financial Corp. Its Internet domain will be named FirstChathambank.com.
Mr. Foster said the money Bank of America will pay to FCB Financial will help defray the costs of signage, stationery, and other items with the C&S logo, but he also said he had been careful about that from the start.
Lets just say we carefully managed that so that we did not spend a lot of money on signage and stationery, he said. We were prepared to make the change if we had to, and well have the First Chatham Bank sign up today.
Mr. Foster, who has been working 14-hour days to prepare for todays opening, said his company received final permits for the FCB names from the Georgia Department of Banking and Finance, and a letter from the FDIC giving him regulatory clearance to open for business effective today.
He did not seem disappointed that the bank would have to change its name. Weve gotten an extremely positive reaction to the name. While the C&S name was certainly well known it originated in Savannah the First Chatham Bank is very meaningful in Chatham County where it is located.
FCB Financial, which will be publicly traded, has sold $15 million of stock in less than two months, with about 80% of it sold in Chatham Country, Mr. Foster said. While that stock was sold under the C&S name, everyone knew that there was a question about the name, he said. We fully disclosed that.
Mr. Foster had previously filed for declaratory judgment for the Citizens name, which he claimed had been abandoned. Bank of America had been threatening us right when we had been selling stock, he had said in an earlier interview.
On Dec. 28 the case, which was to be heard by Judge B. Avant Edenfield of the U.S. District Court for the Southern District of Georgia, was dismissed because the two parties had come to the agreement.
Leslie Bechtell, the deputy commissioner of legal and consumer affairs for the Georgia Banking Department, said that on Jan. 11 the Savannah Morning News ran a legal notice stating Mr. Fosters bank would change its name to First Chatham.
FCB Financial acquired the Savannah branch of Tattnall Bank, including just under $10 million of loans and just over $11 million of deposits, Mr. Foster said.
Walt Moeling, a lawyer with the Georgia firm of Powell, Goldstein, Frazer & Murphy who represents community banks, said such settlements were fairly common in cases like this, where a defendant has spent money on signage, letterhead, and advertising brochures, Mr. Moeling said.
Bank of America has not always been so vigilant in guarding its trademarks, he said. For example, there was the case of Buckhead Bank, the name of a bank that was incorporated in the late 1980s and, after a series of mergers, became part of NationsBank Corp., which bought the old BankAmerica Corp. in the 1998 megamerger that produced the current Bank of America.
In 1997 Milton National Bank decided to open a branch in Buckhead, an affluent neighborhood of Atlanta, and call it Buckhead Bank. We were very concerned we might have a challenge from NationsBank, but we decided the risk was worth it, said Mr. Moeling, who represented Milton National.
We felt if they didnt challenge, we were thrilled to use that name, because we felt it had good connotations in the local market, he said. But by the same token, if they challenged us, we had our own mini-public relations campaign planned to posture us as the victim of large-bank overkill and to generate publicity for the bank that we could never otherwise afford regardless of what name we had.
As it turned out, NationsBank did not challenge the use of the Buckhead name. In 2000 Milton National was bought by BB&T Corp.
Banks have a harder time protecting names that refer to places, Mr. Moeling said. Because its geographic, the trademark laws give you less protection then if you have a more distinct name like C&S.
At this point the Buckhead name, which has now been acquired by two national banking companies, would be difficult to protect if someone else wanted to use it, he said.
