The New York State Banking Department has issued $153 million to thrift creditors of Nationar, more than 16 months after the New York City check-processing company was seized by regulators.
State Banking Superintendent Neil D. Levin, following a ruling by state Supreme Court Justice Beatrice Shainswit, on June 26 issued about $113.7 million to satisfy 168 priority claims, mostly from thrifts. An additional $39.1 million was disbursed for 420 nonpriority claims.
"This is a major step in the liquidation of Nationar," Mr. Levin said.
The payouts from the state follow months of uncertainty for many former customers of Nationar about just how much they would get back. The state- chartered trust company had operated check-processing, trust, and other back-office services for its customers, mostly thrifts.
Concerns over the company's earnings prompted a run on its deposits in late January 1995, and regulators took possession the next month. The state has sold off most of Nationar's assets since then.
In the June 26 payout, priority claims were paid in full, while only about 40% of each nonpriority claim was paid, at the recommendation of Mr. Levin. No money was paid out to compensate for losses involving equity investments or debentures.
The Banking Department expects to make another distribution to nonpriority creditors by the end of 1996, with a full resolution expected by the end of 1997. So far, 65% of liquid assets have been paid out, with another $75 million still remaining.
"Considering the complexity of it, people are very rightfully pleased with the Banking Department," said Thomas M. O'Brien, president and chief executive of North Side Savings Bank, Floral Park.
Mr. O'Brien noted that although some institutions and other observers had been predicting huge losses for creditors, "at the end of the day, people will be much better off than they ever estimated."
Priority claims were mainly paid out to mutual institutions, Mr. O'Brien said. Under state law, a mutual deposit in a commercial bank that fails receives priority over nonmutual claims.
Mr. O'Brien said North Side, a stock thrift, received checks "of some substance" in the mail for nonpriority claims for itself, its life insurance department, and life insurance departments it recently acquired from Republic Bank for Savings and Crossland Federal Savings Bank.
Independence Savings Bank in Brooklyn received a nonpriority payment, representing 40% of its claim, but officials there are arguing that it should have received priority status. The thrift converted to a mutual holding company form but has never issued stock to the public.
"We believe they're dead wrong because we've always conducted business as a mutual," said Charles J. Hamm, president and chief executive.
