Midlantic Corp. said it has tentatively agreed to pay $6.2 million to settle a shareholder class-action suit which accused the bank's previous chairman and directors of mismanagement.
The suit, filed in March 1990 in New Jersey Federal District Court, said executives at the Edison, N.J.-based bank had not properly reserved for loan losses, had overstated the conservative nature of the bank's credit culture, and had overconcentrated the bank's loan portfolio in real estate.
Shareholders covered in the class-action suit owned Midlantic stock or debt securities between March 27, 1987, and Sept. 21, 1990.
The suit said eight Midlantic directors, including former chairman and chief executive Robert Van Buren, were responsible for the bank's mismanagement.
Since the suit was filed, Mr. Van Buren has been replaced by Garry Scheuring, Midlantic's chairman, chief executive and president since April, 1991.
Of the other seven directors named in the suit, four were outside members of the board who are no longer on it. Richard Rishel, a former top executive at Midlantic's Continental Bank unit in Philadelphia, also has left the board.
Two of the directors named in the lawsuit, former Midlantic president Desmond McDonald and Roy Peraino, former president of the bank's Continental Bank affiliate, remain on the board.