New Jersey saw its first banking failure of 2011 as regulators closed a quarter billion dollar banking institution. First State Bank, Cranford, New Jersey, was closed today by the NJ Department of Banking, which appointed the FDIC as receiver. The failed Bank was sold to Northfield Bank, Staten Island, New York, which will assume all of First State’s deposits.
Depositors of First State will have full access to their money over the weekend through the use of checks, ATM and debit cards. The two branches of First State will reopen on Saturday as branches of Northfield Bank.
First State Bank was a commercial bank founded in 2002 by a group of local businessmen. 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.
First State Bank went public in early 2008 shortly before the banking industry entered a full blown meltdown. The Bank’s stock steadily declined and closed today at 20 cents. The value of shareholders stock was permanently wiped out today when regulators closed First State.
At June 30, 2011, First State had total assets of $204.4 million and total deposits of $201.2 million. Northfield Bank agreed to purchase all of the assets of First State Bank.
This was the first purchase of a failed bank by Northfield Bank which has over $1.3 billion in assets and is profitable. Northfield Bank was founded in 1887, is publicly traded and has 19 branches in New York and New Jersey.
First State Bank becomes the nation’s 79th banking failure of 2011 and the first in New Jersey. The loss to the FDIC Deposit Insurance Fund on the failure of First State is $45.8 million.