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One for the Books
Connecticut Bank of Commerce fails; assets acquired by Hudson United
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Business New Haven
7/8/2002
By: BNH
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On June 26, state and federal banking regulators shut down the Connecticut Bank of Commerce.
On that day, State Banking Commissioner John P. Burke declared that the financial condition of Stamford-based bank was such that it would be “unsafe and unsound” for it to continue operations. Burke successfully petitioned the Superior Court for the Judicial District of Fairfield County to name the Federal Deposit Insurance Corp. (FDIC) as receiver. Burke noted that each depositor would continue to be insured by the FDIC up to the $100,000 limit.
On June 27, bank and regulatory personnel were in place at CBC bank offices to respond to customer telephone inquiries explaining how they may access their deposit accounts.
Burke explained that his department's action was necessary because the bank's capital would be depleted after providing for considerable loan losses that were recently identified by bank regulators. Information filed with the Superior Court indicated that the bank had a deficit capital position of $7,461,000.
According to Burke, the bank had been under increased regulatory scrutiny since 1999, and despite efforts to recapitalize the bank, its financial condition had continued to erode.
The Connecticut Bank of Commerce is the former Amity Bank, originally based in Woodbridge. It changed its name to the Connecticut Bank of Commerce in January 1993, and later relocated its main office to Stamford. It maintained branches in Branford and Woodbridge, as well as two in Manhattan.
On June 28, Hudson United Bank (HU) agreed to acquire the CBC's deposit accounts and Connecticut branches. The Stamford, Branford and Woodbridge branches were expected to reopen July 1 (after this edition went to press) under HUB ownership.
In a a purchase-and-assumption transaction with the FDIC as receiver, HU assumed the CBC's insured deposits and acquired $30.6 million of the failed bank's consumer loans as well as its five branch offices.
According to the FDIC, Connecticut Bank of Commerce reported about $213 million of insured deposits at the end of March. HU paid a premium of $17.3 million. Hudson United has the right for 30 days to put back to the FDIC the consumer assets it acquired.
“The Connecticut Bank of Commerce/FDIC acquisition provides significant business development and market share growth opportunities for Hudson United Bank,” said Kenneth T. Neilson, HU's chairman, president and CEO.
“We are expanding our presence in two very important markets,” he added. “We will add to our existing 31 branch offices in New York and enter the Manhattan marketplace. We will further build out our already solid presence in Connecticut with over 40 branch offices within the state.”
The Connecticut Bank of Commerce is the first bank failure in Connecticut since 1996.
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