First Home Savings Bank of Pennsville, N.J., has recouped $670,000 embezzled by a former employee who worked at a thrift the institution acquired in 1992.
The $400 million-asset First Home recently reached a settlement with the insurance company that indemnified Fidelity Mutual Savings and Loan Association, a troubled thrift it acquired in July 1992.
The recovery comes several months after First Home reached an out-of- court settlement against two accounting firms that performed audits on Fidelity Mutual. The settlement netted $880,000 in the fourth quarter.
First Home received a check for the embezzlement claim last Friday, and it will go directly to the first quarter's bottom line.
Robert A. DiValerio, senior executive vice president with First Home, said company officials knew about the embezzlement before acquiring Fidelity Mutual, which had $80 million in assets and was based in Westmont, N.J.
He said Fidelity Mutual was a severely undercapitalized institution monitored closely by the Office of Thrift Supervision.
"The concern that we had . . . was whether or not there were continuing problems related to the defalcation." he said.
Mr. DiValerio said that before the acquisition a number of depositors told bank officials there was a problem with their certificates of deposit.
He said the Fidelity Mutual executive, who eventually served time in jail, issued bogus CDs over a 17-year period that paid high interest rates and were not taxable. He coaxed customers to come to deal only with him.
First Home earned $4.2 million for the year, up from $4.1 million in 1993. Fourth-quarter earnings of $1.7 million were boosted by the settlement with the accounting firms.
Results for the year, however, were hurt by rising interest rates, which led to losses totaling $644,000 related to the sale of loans originated for sale in the secondary market.
The company also posted an unrealized loss of $3.4 million on securities available for sale, which reduced stockholders' equity to $23.1 million.
