Carteret Agrees With OTS to Limit Growth
Carteret Savings Bank, the largest thrift in New Jersey, has consented to a regulatory order restraining its growth and expenditures as it tries to build capital.
The consent, announced Friday, was to an order made after Carteret slipped out of compliance with capital standards in the second quarter by setting aside $150 million for possible loan losses. That set-aside, intended to clear the books of problem loans, was part of a restructuring plan unveiled in August.
A capital plan, required under the Office of Thrift Supervision order, was filed with the agency Sept. 30, according to AmBase spokesman Donald E. Reinhard. "It's a combination of expense reductions and seeking ways to bring in capital." As one measure, Carteret laid off 120 employees.
Morristown-based Carteret, with $5.3 billion in assets, is a subsidiary of AmBase Corp.
Carteret's tangible capital totaled $78 million, or 1.4% of assets, at June 30, below the 1.5% requirement. And core capital was $81 million, or 1.5% -- half the 3% requirement.
Goodwill Ruling Appealed
Risk-based capital of $130 million was 4% of assets -- short of the 7.2% needed. Results for the quarter ended Sept. 30 are not available.
Carteret remains tangibly solvent by virtue of a federal judge's ruling in July letting it count $170 million of supervisory goodwill as capital. The OTS has appealed. If the ruling were overturned, Carteret's tangible capital would plunge to negative $73 million, its June 30 financial statements indicate.