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Regulators shut down NY Bank for Business.

The First New York Bank for Business was closed by regulators on Friday the 13th of November, a sad end to a bank founded by local women.

"Everybody knew that they were next on the list and it was just a question of time," said attorney Stuart M. Saft, head of the real estate department and a partner with Wolf Haldenstein Adler Freeman & Herz.

Merchants Bank bought $85.6 million of First New York's assets as well as five bank branches while the FDIC will hold assets with a book value of $462.6 million, said FDIC spokesman Andrew Porterfield.

"We retained most of the assets," he added.

About 550 accounts had a total of $7.9 million in deposits that exceeded the federal insurance limit of $100,000 per depositor per bank. The FDIC Board of Directors voted to pay 50 percent of these deposits and other unsecured creditors' claims immediately. Creditors may received other monies after the disposition of the bank's assets.

Saft did not believe any of the buildings he represents were affected by the 50 percent loss in deposits over $100,000.

"Right after the debacle with American Savings Bank, we sent out letters as to the repercussions of leaving too much money in the bank," he explained.

Other attorneys expressed disbelief that anyone could still have more than $100,000 in any bank account, particularly since Federal Regulators warned they would begin closing banks after the election. "It must be some of the older ladies who put money into the bank originally," speculated one lawyer.

Co-op attorney, Steven M. Goldman, a partner with Summit Solomon & Feldesmen said he represents five co-ops, including Skyview on the Hudson in Riverdale, which he hopes will not be affected by the bank's closing.

First New York Bank, he said, acquired limited partnership ownership interests in these co-ops after it took over control from Coronet Capital.

"We're not concerned about the payment of maintenance but we want to make sure it doesn't affect the operations of the co-ops," Goldman added.

First New York lost $12.9 million last year and another $6 million in the first half of 1992. The bank's most recent chairman, John A. Catsimatidis, resigned Nov. 5, and his own company withdrew an offer to purchase the bank earlier this year.

Martin A. Simon, the chairman who was ousted by the board of directors in August, had been an executive vice president at Bank Leumi when he came to First New York in the late 1980's, bringing with him clients that propelled the local lender to a $700 million powerhouse and changing the nature of the bank which was founded as the First Women's Bank by active local women such as Sarah Kovner.

Simon brought in several real estate developers as clients, including Norman Dansker, head of the Coronet Group, who became a director in 1988 as well as one of its biggest borrowers and deadbeats.

Dansker was one of the city's most active cooperative converters with more than 7,000 units offered for more than $1 billion. He has recently been under investigation by the New York State Attorney General for allegedly using mortgage payments for his own purposes and not paying down underlying cooperative mortgages. Indictments are expected shortly, sources said. A racketeering suit for skimming funds from apartment sales was also brought against him by Union Savings, now under Federal control. Dansker did not return phone calls.

Two years ago, after Simon agreed to take back unsold apartments from Dansker -- including Skyview's -- in satisfaction of $15 million in loans, First New York was among the institutional creditors that forced Dansker into an involuntary bankruptcy proceeding.

At the time, sponsor owned apartment maintenance payments exceeded rent rolls dramatically, sharply reducing Coronet's cashflow. Since then, the value of those units has dropped as the number of conversions increased, more sponsors defaulted and lenders tightened their loan criteria.

The First New York Bank never recovered from its bad real estate loans and was unable to meet capital requirements.

Goldman said the 1,600-unit Skyview has come a long way from the debacle of two years ago.

"Whether the problems are caused by Coronet or the First New York Bank, the resident board members have brought a high standard of professionalism to how they have managed these crises," he said.
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Title Annotation:First New York Bank for Business closed by Federal Deposit Insurance Corp. on November 13, 1992
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Nov 25, 1992
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