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N.J. DEPARTMENT OF BANKING: BROADWAY BANK & TRUST RESCUE COMPLETED

 N.J. DEPARTMENT OF BANKING: BROADWAY BANK & TRUST RESCUE COMPLETED
 PATERSON, N.J., March 13 /PRNewswire/ -- New Jersey Banking Commissioner Jeff Connor today seized Broadway Bank & Trust Company, headquartered in Paterson, declaring it unsafe and unsound and in violation of numerous provisions of Department of Banking cease and desist orders.
 Connor immediately appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of the institution, which in turn transferred the insured deposits of the bank to Hudson United Bank, headquartered in Union City, N.J.
 "For customers of Broadway Bank & Trust with $100,000 or less on deposit, the takeover of Broadway by the larger and more viable banking network of Hudson United Bank has got to be welcomed news because those depositors won't lose any of their money," Connor said. "It has been widely reported that Broadway had serious financial troubles, reports that would understandably make depositors uneasy. With today's action, we've protected insured depositors and stabilized what was becoming an increasingly troubling situation."
 Connor said that all eight former Broadway Bank & Trust locations will remain in operation as Hudson United Bank branches, and due to the need for a deposit accounting within each office location to effect a smooth transition, normal hours for each location will resume on Monday. Depositors will, however, be able to have limited access to their accounts by using automatic teller machines (ATMs) or the drive-through windows of the Broadway locations during each branch's normal Saturday drive-through hours. Broadway locations include the main office in Paterson and branches in Montvale, Little Falls, Kinnelon, Teaneck, Wayne, Fairfield and Midland Park.
 The commissioner added that for those relatively few depositors with more than the FDIC insured amount of $100,000, they will receive up to the $100,000 insured amount and would typically have to look to the proceeds of an asset liquidation to be performed by the FDIC. "To the extent any of these uninsured depositors are business accounts, we have initiated discussions between Hudson United and the New Jersey Economic Development Authority to extend loans to business depositors to cover potential losses, a loan that would be made by Hudson United and a portion of which would be guaranteed by the EDA," Connor said. "Nothing like this business loan coverage plan has ever been tried in New Jersey, so I am as proud of this innovation as I am optimistic that we will be able to develop a guaranteed loan product to cover these types of uninsured depositors. I should add that we are especially grateful to Paterson Mayor William Pascrell for acting as a guiding force in resolving the banking challenges facing Paterson." The commissioner noted that business customers with more than $100,000 on deposit at Broadway should contact Michael Russo of HUBCO at 201-348-2419 on Monday, March 16, to discuss the possibility of using the plan. The total amount of uninsured deposits is below $5 million, and is expected to be reduced even further as deposit reviews continue.
 Connor explained that Broadway depositors needed the protection of a takeover because the bank was in an unsafe and unsound condition and no longer viable enough to operate on its own. With assets of $386.5 million, Broadway lost $25.8 million last year, pushing its Tier 1 capital into a negative position. The institution, which was chartered by the Department of Banking in 1929, was in violation of two existing Department of Banking cease and desist orders, and showed no chance of turning itself around despite the efforts of new management. The misjudgements of former management were a key factor in driving Broadway into its condition, the clearest example being the bank's high exposure in loans to purchase vacation time-shares. Connor explained that a Department of Banking examination uncovered these and other misjudgements, and the department moved quickly through formal enforcement mechanisms to contain and manage the damage to the bank.
 Former Broadway customers now enjoy access to Hudson United's banking network, which spans Bergen, Essex, Hudson, Middlesex and Passaic counties. With more than $1 billion in assets and 28 branch locations, Hudson United made $4.5 million last year, compared to $2.1 million in 1990.
 /delval/
 -0- 3/13/92
 /CONTACT: Christopher W. Cooney of the N.J. Department of Banking, 609-292-7001, or 609-397-4802/ CO: New Jersey Department of Banking; Broadway Bank & Trust Company;
 Hudson United Bank ST: New Jersey IN: FIN SU:


JS-MK -- PH035 -- 7910 03/13/92 15:52 EST
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Publication:PR Newswire
Date:Mar 13, 1992
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