Chemical Banking Corp. extended the deadline for due-diligence reviews on its $3.5 billion-asset New Jersey bank to Feb. 22.

The move comes amid intense jockeying by the four companies said to be bidding for the bank, which serves southern and central New Jersey. Chemical announced last December that it would sell the units as part of a companywide cost-cutting plan. The deadline originally was to expire Feb. 9.

First Fidelity Bancorp., CoreStates Financial Corp., Midlantic Corp., and PNC Bank Corp. are the four banks left in the final round of bidding, investment bankers said.

At least one bidder - PNC - is said to have submitted a joint bid with a smaller institution. PNC reportedly teamed with UJB Financial Corp. UJB's bid was rejected in the preliminary round.

While the portfolio does not include nonperforming assets, one investment banker said concerns about loan quality will result in a final bids that are 10% to 20% less than the $550 million minimum that was first reported last month.

He said direct auto loans and the inclusion of some northern New Jersey loans in the southern bank were the chief cause of concern. The investment banker said loan retention would be difficult if loans were sold separately from the branches that originated them.

Other sources familiar with the bidding dismissed these statements as an attempt to muddy the waters for other bidders. Another investment banker said that while the assets may not fetch $550 million, the winning bid will be well within 20% of that.

First Fidelity, which is represented by Goldman, Sachs & Co. in its bid, is understood to have bid significantly higher than $550 million during the preliminary bidding last month, but to have backtracked on that figure.

First Fidelity did not return calls seeking comment.

Another market source said the bidders were pleased with the quality of the indirect auto loans and the rest of the portfolio. The loan-to-deposit ratio is 80%, this source added.

An investment banker advising one of the bidders said Chemical Securities Inc., Chemical's investment banking subsidiary that is advising the money-center on the sale, was slow in sending information to the bidders.

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