For the second time a New Jersey bank was forced to shutter its doors, as State and federal regulators closed First BankAmericano, a small community bank based in Elizabeth. The other New Jersey bank shut down was Citizens Community bank, which only consisted of a single branch in Ridgewood.
First BankAmericano was a 12-year-old institution with six branch offices, was set up to serve the Hispanic community in the area. They have been taken over by another small community bank named Crown Bank, which inherits the deposits, assets and debts of First BankAmericano.
Regulators assured account holders of First BankAmericano that their accounts will continue to be insured by the Federal Deposit Insurance Corp., and shouldn’t have any adverse effect from the transition of business to Crown Bank.
The attorney for First BankAmericano expressed dismay at the decision, as Crown Bank had offered to acquire the bank for $1 million, and this deal will cost the Deposit Insurance Fund of the FDIC $15 million, in spite of assertions this is the cheapest route to take.
First BankAmericano grabbed the attention of regulators in August 2007 when what was identified as poor “lending practices and loose banking procedures” was noted. In response, directors of the bank brought in a new management team, after being told they weren’t doing their jobs with lack of proper supervision by the board.
By then it was evidently too little too late, and poor quality of assets weren’t able to be overcome, even though corrective measures were instituted.
Assets for First BankAmericano as of the end of June stood at $163 million, with deposits totalling $155 million. Outstanding loans stood at $110 million during that same period of time.
