Two troubled Northeastern institutions with a combined $5.5 billion in assets will soon be seized by federal regulators, sources said Thursday.
First Constitution Bank of New Haven, Conn., could be seized and sold as early as today, the sources said. The seizure of Howard Savings Bank of Livingston, N.J., is likely by next week, they said.
Several major New York, New Jersey, and New England banking companies were understood to be interested in buying the institutions.
The seizure of First Constitution, the main subsidiary of First Constitution Financial Corp., has been expected since Sept. 2, when it said it could not carry out a recapitalization plan it had filed with regulators.
Howard, which has $3.5 billion in assets, disclosed Sept. 18 that it was unable to meet regulators' demands to increase capital.
Both institutions had been struggling to overcome real estate loan problems.
Officials at Howard did not return phone calls. An official at First Constitution said it would be inappropriate to comment on the possibility of a seizure. A spokesman for The Federal Deposit Insurance Corp. declined to comment.
Fueling speculation that First Constitution would be seized today were help-wanted advertisements in the Monday and Tuesday editions of the New Haven Register, seeking financial and clerical specialists for temporary work starting today.
Bankers said the job qualifications appeared to match the FDIC's needs in closing a bank.
A call to Olsten Temporary Services, which placed the ad, was not returned.
According to one source, the FDIC plans to assume about one-quarter of First Constitution's $400 million real estate portfolio as part of a loss-sharing agreement.
Among the companies said to be interested in First Constitution are Chase Manhattan Corp.; Bank of Boston Corp.; Fleet Financial Group; Shawmut National Corp.; New Haven Savings Bank; Webster Financial Corp., Waterbury, Conn.; and Centerbank, Hartford.
A spokeswoman for New Haven Savings Bank said the thrift was not interested in acquiring First Constitution. Officials for the other rumored acquirers declined comment or did not return telephone calls.
Potential Buyers |Cautious'
In the case of Howard, a source said the FDIC is looking for a buyer willing to accept 20% of the losses that result from problem loans assumed from the thrift. However, the source added that potential buyers have so far resisted taking on so much risk.
"Everyone's being very cautious" about Howard because of the high degree of nonperforming assets, a source said.
First Fidelity Bancorp, Bank of New York, Chase Manhattan Corp., Chemical Banking Corp., National Westminster Bancorp, UJB Financial Corp. CoreStates Financial and PNC Financial Corp. have been identified as likely bidders for Howard.