Even before opening their doors as a combined company, two merging North Carolina banks have found themselves in the midst of controversy.
LSB Bancshares Inc. in Lexington, N.C., announced April 5 that it had selected the name "NewBridge Bank" for the $2 billion-asset company that will result from its impending purchase of FNB Financial Services Corp. in Greensboro.
The $125 million deal, announced Feb. 27 and expected to close in the third quarter, would create the sixth-largest bank based in North Carolina, with $1.6 billion of deposits and a 42-branch network — including four in Virginia.
But shortly after unveiling its new name, LSB executives got a letter from an attorney representing the $721 million-asset Bridge Bank in San Jose, Calif., alleging that the name NewBridge Bank would infringe its trademark.
"Your new company's use of the virtually identical trade name, 'NewBridge Bank,' will confuse customers who may believe your services are in some way related to our client's services," Aaron Schur, an associate at Bingham McCutchen LLP in San Francisco, wrote in an April 30 letter. "We therefore demand that you cease and desist any and all present and future use of the trade name."
The lawyer gave LSB until May 11 to comply, warning that failure to do so could result in "forfeiture of profits, treble damages, and attorneys' fees."
But LSB refused to submit and has since asked a federal judge to rule that its chosen name does not violate a trademark.
"There is no likelihood of confusion, mistake, or deception between the use of NewBridge" and Bridge Bank, LSB's attorneys said in a complaint filed May 11 in U.S. District Court in North Carolina. "Were NewBridge to capitulate to the demands of Bridge Bank, NewBridge would be substantially damaged, both monetarily and in terms of lost consumer recognition and goodwill that has already begun to accrue from the introduction of the new brand."
LSB and FNB have already put "significant amounts of time and dollars" into the NewBridge name, their lawyers wrote.
Daniel P. Myers, Bridge Bank's president and chief executive officer, did not return repeated phone calls requesting comment for this article. Mr. Schur did not return phone calls.
Bridge Bank has two full-service branches in Santa Clara County, Calif., and six additional loan production offices, including one in Reston, Va. It offers services in North Carolina through the Internet. Robert F. Lowe, LSB's chairman and chief executive officer, declined to comment on the situation, citing the litigation.
LSB's complaint says that Bridge Bank has not registered a state or federal trademark for its name and that its applications to the U.S. Trademark Office have twice been refused.
"Bridge Bank's claims are unjustified, unreasonable, and not required by law," the complaint read.
