Fiserv Inc. is in talks to acquire Nationar, a New York-based trust company and check processor that was seized by the state's Banking Department last week.
Sources close to the negotiations said Milwaukee-based Fiserv was already seeking to acquire Nationar before it was taken over by the state regulator last Monday.
The Banking Department said it took control of the company, which is owned by 67 New York thrifts, after it suffered a liquidity squeeze and was not able to meet its daily obligations.
Sources said that Nationar had been experiencing cash flow problems over the past few months, and that many thrifts had withdrawn deposits held at the company, precipitating the takeover.
"There were stories going around that the bank was going through some financial stringency, (that) assets were not as liquid as they might have been," said a former Nationar official that declined to be identified.
"I can understand individual depositors causing a run, but I think it's a little surprising that some large institutions did," the former official said.
Nationar, based in New York City, is chartered as a trust company, but its main business is providing check-processing services to savings banks, credit unions and retailers. It processes about $90 million worth of checks per day for its clients, which are mostly based in the New York metropolitan area.
The seizure temporarily disrupted the clearing of checks last Monday, said Clare Sykes, a spokeswoman for the Banking Department.
Before the takeover, Nationar had hired a Fiserv competitor, Affiliated Computer Services Inc., to oversee its check processing operations, Ms. Sykes said. But she added Affiliated withdrew its personnel Tuesday after a dispute with the agency.
"They assisted us for a day and then we agreed to disagree," she said.
Officials at Dallas-based Affiliated could not be reached for comment on whether they were also interested in acquiring Nationar.
The negotiations with Fiserv are continuing, sources said, although the regulator's action may now delay an agreement. "We've got to start rowing the boat all over again," said a source close to the talks.
Nationar, formerly known as the Savings Bank Trust Co., has approximately $1.5 billion in assets and employs about 600 people.
Less than two years ago, Nationar underwent a management shake-up after the firm suffered losses stemming from problems with merging a item processing business the company acquired from Chase Manhattan Corp. in 1992.
The firm has also spent millions of dollars over the past few years upgrading its check-processing technology in the hope that it could attract more business. In 1993, it replaced several incompatible check-sorting systems with equipment from International Business Machines Corp.
Despite its financial problems, Nationar was a pioneer in its use of technology to streamline the paper-strewn world of check processing. In 1992, it was one of the first outsourcing companies to offer its clients so-called image statements, where checking account holders receive laser- printed copies of their canceled checks, a service that can cut a bank's postage costs.
In addition to check clearing, Nationar also provides trust and mutual fund administration services to its member financial institutions, and has about $2 billion under management.
Jonathan D. Epstein contributed to this article.
