Fairfield First in Connecticut Goes to the Brink Once Again

New trouble surfaced last week for Connecticut's battered Fairfield First Bank and Trust Co.

A month after its board appointed a new president to restore it to health, Fairfield First restated its 1995 earnings, reporting a loss of $5.1 million. That compares with a loss of $2.5 million in 1994.

The higher losses stemmed from an increase in the $64 million-asset bank's loan-loss provision and writedowns on foreclosed properties.

As a result, the bank's capital also declined to $251,063, yielding a capital ratio of only 1.9%. That means the bank is considered "critically undercapitalized" by regulators, and has 90 days to boost its equity above 2% or face the possibility of a government seizure.

This is the second time in a year that Fairfield First has faced disaster. Last spring, the bank was about to be closed by the Federal Deposit Insurance Corp., but was rescued by a last-minute offering in May that netted $4.8 million. That included the injection of about $1 million by investors Trevor I. Bell, B. Ahmed Jelani, and Leonard P. Hubbard.

Fairfield First has been operating under a cease-and-desist order from federal and state regulators since July 1991.

"Fairfield First has been a continuing saga of a troubled institution for years," said John Carusone, president of Hartford's Bank Analysis Center. "It continues to try keep its head above water, but I query whether that's possible in this competitive environment."

To counter the latest erosion of capital, the bank's board is planning a new stock offering, and is currently contacting investment bankers and drafting a circular. President and chief executive Robert J. Oca declined to specify how much the bank hoped to raise, except to say that it would be "sufficient capital to meet regulatory guidelines."

The loss follows the appointment last month of Mr. Oca as the new president and chief executive of Fairfield First. He replaced Mr. Jelani, who joined the bank's management team last May but resigned recently.

Mr. Oca, who has 20 years of banking experience just in Fairfield County, was president and chief executive of Connecticut Community Bank in Greenwich before the bank was bought by Gateway Financial Corp. in 1989. Prior to that, he worked in several positions at the Connecticut Bank and Trust Co., later acquired by Fleet Financial Group.

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