No. 4: The Signature Bank merges, defends Cavner lawsuit

Trick: The Signature Bank’s star financial adviser Nadia Cavner’s ongoing legal fight with former employer U.S. Bancorp.

Treat: Reaching more than $800 million in assets and the aforementioned merger with Tupelo, Miss.-based BancorpSouth.

“It’s amazing that a bank that’s been open for eight years can be the 13th largest (Missouri-based bank),” President Rob Fulp said in a May interview with Springfield Business Journal. Fulp and CEO David Kunze didn’t return calls seeking comment for this story.

The seeds for The Signature Bank were actually planted nearly 10 years ago when The Bank and Signature Bank were formed separately in 1997. Those institutions merged in 2004 to form The Signature Bank, which operates under Springfield-based parent company City Bancorp.

At the time of the BancorpSouth merger, The Signature Bank boasted six Springfield locations and one St. Louis-area loan office.

Armed with BancorpSouth’s $11.9 billion in assets, The Signature Bank has the power to expand into markets including Kansas City, Columbia, Joplin, Nixa, Ozark and Branson.

State and federal regulators should approve The Signature Bank’s merger early in 2007 with possible branch expansions, spearheaded by Kunze and Fulp, proceeding later in the year. A name change is expected sometime in 2007.

Also included in the merger is The Nadia Cavner Group at The Signature Bank Investment Services. Cavner and four other former U.S. Bancorp employees joined The Signature Bank in September 2005, setting the stage for legal wrangling in 2006.

U.S. Bancorp alleged in a lawsuit that the defendants illegally used confidential client lists – photocopied on rented copiers during the summer of 2005 by interns and staff at off-site locations – to solicit business away from U.S. Bancorp. The suit also says The Signature Bank had knowledge of these actions.

While the lawsuit is scheduled to go to jury trial in March, Cavner has already had to pay two large fines related to the case.

On Feb. 16, federal Judge Richard Dorr ordered Cavner to pay a $51,000 court fine for misrepresentations made during a hearing and in filings during fall 2005.

Later in 2006, the dispute moved to a National Association of Securities Dealers arbitration panel, which ultimately ordered Cavner on Oct. 18 to pay U.S. Bancorp Investments Inc. $325,000 in compensatory damages by Nov. 20.

Commerce Bank Regional President Bob Hammerschmidt said the BancorpSouth merger with The Signature Bank doesn’t signal the start of a new wave of banking mergers, but he said it does fall in line with a longstanding trend of mergers that should continue for the next decade at least.

In 2006 alone, Hammerschmidt said, there have been 250 mergers in the United States. There were 20,000 institutions nationwide 20 years ago, he noted, but there are about 8,500 now.

“It’s a daily battle of survival,” Hammerschmidt said.