Business & Tech

Northfield Takes Over Cranford Bank in NJ's First 2011 Bank Failure

First State Bank, with branches in Cranford and Westfield, was closed by the state and is now owned by Northfield in a receivership deal.

The 22 branches of got a little bigger Friday, when the financial institution took over two branches of a failed Cranford bank after it was closed by the state banking department.

First State Bank, with headquarters in Cranford and a branch in Westfield, was closed by the NJ Dept. of Banking and Insurance (NJDOBI) Friday, Oct. 14, because of  their "poor asset quality," according to a NJDOBI statement.

It was the first closing of a bank in New Jersey this year.

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NJDBOI appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for First State, and Northfield took over the bank's two branches with the FDIC's blessing and assumed the $204.4 million in assets and $201.2 million in deposits First State recorded as of June 30.

The two First State branches opened as Northfield on Saturday, Oct. 15, the state banking department said in a press release.

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Customers of the failed bank had complete access to their money at the opening of business on Saturday, officials said.

"While we never like to see a bank close, this was the best option," said NJDOBI Commissioner Tom Corsidine of First State, which opened in 2006.

Northfield Bank said in a statement that First State customers would be able to use Northfield branches as soon as the integration of First State computer information into the Northfield system was completed. Until then, they can access the former First State branches in Cranford and Westfield.

Former First State customers were greeted with an announcement on Northfield's website, including FAQs and instructions to help smooth the acquisition process.

The failure of First State cost the FDIC $45.8 million, according to Problem Bank List (PBL), a website that tracks banks with financial problems.

First State Bank advertised itself as a better alternative to the frustrations of dealing with “mega banks” that were portrayed as slow, non-responsive, remote, and impersonal, PBL said in their assessment. First State went public three years ago "shortly before the banking industry entered a full blown meltdown."

The bank's stock declined until it was worth 20 cents; that value was wiped out when the bank was closed, PBL said.

“Our strong capital and sound operations have positioned Northfield to participate in opportunities such as this,” said Steven M. Klein, Chief Operating and Financial Officer of Northfield in a statement.

This was the first such acquisition for Northfield, which is based in Staten Island and has 22 branches predominantly throughout Union and Middlesex counties, including one in Woodbridge. Northfield was founded in 1887 and has $2 billion in assets, the NJDBOI said. 


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