STATE OFFICIALS CLOSE CRANFORD-BASED FIRST STATE BANK OVER POOR ASSET QUALITY

By Eliot Caroom/Star-Ledger
October 17, 2011

State officials yesterday closed Cranford-based First State Bank and the Federal Deposit Insurance Corporation announced Northfield Bank of Staten Island will take over so customers won’t lose access to their money.

It was the first New Jersey bank closure in about a year, said Department of Banking and Insurance spokesman Marshall McKnight.

“This has been an issue that’s gone back a couple of years,” McKnight said, adding banking regulators had issued several orders to the bank.

First State Bank, opened in 2006, had two branches, in Cranford and Westfield. A statement from DOBI late yesterday said that both branches will reopen today as branches of Northfield Bank and depositors of First State Bank will automatically become depositors of the Northfield Bank.

“Unfortunately, First State’s poor asset quality made today’s action necessary to protect consumers,” said DOBI Commissioner Tom Considine. “First State Bank’s sale to Northfield is a good result and this transaction will be completely seamless to First State Bank customers. While we never like to see a bank close, this was the best option.”

The choice of Northfield Bank to run First State was made by the FDIC, McKnight said.

“We are pleased to welcome First State Bank customers to Northfield and believe they will benefit from being with a well-capitalized institution, strategically focused on the marketplace, that offers a wide range of innovative business and personal financial products and services,” said John Alexander, chairman and CEO of Northfield Bank in a statement. “Our team is working closely with the FDIC to ensure a smooth transition for First State Bank deposit and loan customers.”

Northfield already has 21 branches in New Jersey, Staten Island, Brooklyn and Manhattan.

“Most of the banks here in New Jersey are adequately capitalized,” said McKnight. “We continue to monitor our state-chartered banks.”

The FDIC also announced yesterday the closing of banks in Georgia and North Carolina, bringing the number of bank closures this year to 79.