JERSEY CITY -- Bank customers rarely get unsolicited advice over the phone about how to manage their accounts from the chairman and chief executive officer.

But at Trust Company of New Jersey things are, to the say the least, unusual.

Siggi B. Wilzig, the bank's feisty leader, has run the company as if it were his personal business, phoning customers, getting out into the community, and drumming up loan volume.

But after doubling the bank's assets to $2.3 billion in rive years, regulators are demanding that he change his style.

The New Jersey Department of Banking and the Federal Deposit Insurance Corp. slapped a cease-and-desist order on Trust Co. last month, criticizing management for holding onto nonperforming assets too long, operating the bank with insufficient capital, and failing to supervise internal operations.

Regulators have also called for a review of senior management's abilities to make and collect loans and they have mandated that the bank "retain qualified management."

The order comes a year after Mr. Wilzig didn't fully meet the demands set out in a memorandum of understanding with regulators.

Regulators say it's their policy to keep the specifics of the cease-and-desist order confidential. They won't mention how many nonperformers are on Trust Co.'s books. Mr. Wilzig did not disclose the information in public filings, and would not answer requests about the size of his nonperforming asset portfolio from the American Banker.

However, at yearend 1993, Mr. Wilzig reported $15.7 million in reserves for other real estate owned. In 1992, there was no reserve, according to Trust Co.'s 1993 annual report.

Now, Mr. Wilzig is contemplating selling the bank. He says three competitors have expressed interest in it.

As the second largest state-chartered bank in New Jersey, with 43 branches in eight Northern New Jersey counties, Mr. Wilzig says Trust Co. is very attractive. "That's why it's no coincidence that banks have come to us. We just want a little time to polish the apple," he says.

As a result, Mr. Wilzig is cleaning up his assets and bringing the bank's computer system toward the 21st century, another problem regulators complain about, he says.

"Our people would keep 10 and 15-year-old things in their folders. It's an old-fashioned way. That's something for a $500 million bank, a little country bank," says the diminutive self-made millionaire, as he pats the unruly hairs of his pompadour.

He has also brought in new management. In September, Mr. Wilzig gave up his title as president to Fred Moses, a former president of United Jersey Bank, the Hackensack Subsidiary of $14.4 billion-asset UJB Financial Corp.

He also brought in a chief financial officer, Michael Marinelli, who had been CFO at Constellation Bank until it was acquired by CoreStates Financial Corp.

The only option for survival is to grow through acquisition. "The bank will make a decision if it's for sale or if it will expand," Mr. Wilzig says. He says the cease-and-desist order is not pushing him one way or the other.

But acquiring banks hasn't been his cup of tea. He's never bought one in his 22-year tenure, a fact he enjoys boasting about.

Elizabeth Summers, an analyst at Ryan, Beck & Co. in West Orange, says selling the bank may not be as easy as Mr. Wilzig thinks.

For one thing, Trust Co.'s burgeoning nonperforming asset portfolio exists at a time when banks in the Garden State are reporting sharp declines in nonperformers.

Ms. Summers adds that the bank's ratio of nonperforming assets to equity capital plus reserves remains higher than the 35% average of New Jersey banks. Trust Co.'s was 57% as of Dec. 31, she said.

"When was the last time you've seen a cease-and-desist order in the last year in New Jersey? The economy has stabilized," she points out.

Mr. Wilzig says the problem assets consist of only about a dozen apartment houses, some including stores.

In addition, he restated his yearend earnings for 1993 in June, changing a profit of $17.1 million to a loss of $3 million, due primarily to a sharp increase in loan loss reserves.

He has also sold over the last two years more than $21 million of other real estate owned to Wilshire Oil Co. of Texas, a gas and oil concern that is now run by his daughter, Sherry. Mr. Wilzig used to own Wilshire Oil himself.

Trust Co. financed the OREO sale with about $20 million in loans, according to the bank's annual reports for 1992 and 1993.

"What's the impact of nonperforming loans that were sold to a company owned by family of the seller? How does that affect the valuation on the part of the acquirer?" asks Ms. Summers.

Mr. Wilzig is known by many as a maverick banker. He is the state's only CEO who doesn't belong to the New Jersey Bankers Association.

For Mr. Wilzig, survival has always meant independence, a characteristic as indelibly a part of his personality as the number from Auscwitz which is tattooed on his arm. Mr. Wilzig, 68, says he watched the Nazis beat his father to death. His mother died in the Auschwitz gas chambers.

When Mr. Wilzig came to the U.S. in 1947, he made money working odd jobs. In the 1960s, he persuaded 20 investors to purchase 17% of the stock in Wilshire Oil. Months later he took over the company and quadrupled revenues in 17 years.

He went after Trust Co. in 1967, using Wilshire money to buy 9.9% of the stock in the bank as pan of a plan to diversify the oil company's business lines.

The Federal Reserve Board didn't like an oil company running a bank and told Mr. Wilzig he had to sell his interest in one or the other. Mr. Wilzig didn't like regulators telling him how to run his businesses. After a 12-year battle that went to the U.S. Supreme Court, Mr. Wilzig lost and divested himself of Wilshire.

Mr. Wilzig's drive for independence may turn out to be his Achilles heel. "His biggest weakness is he's failed to surround himself with quality people," says a source who is a competitor and member of some of the same local business organizations.

According to this source, the only other officers who maintain responsibilities typical of senior executives are Mr. Wilzig's two sons: Ivan, a senior vice president for business development, and Alan, first vice president, branch administration.

"Three people can't run a $2.3 billion bank," the source says.

Mr. Wilzig says he has tried to hire a No. 2 man, but he hasn't liked what he's seen. "They didn't have to convince us that we need a chief financial officer and a president," he says about regulators. "We've been looking for them for three and one-half years. We're not idiots!"

He says he held onto the nonperforming assets merely to wait for a better real estate market. "We did not want to do what the others did, sell it in bulk. We sell a few pieces at a time. When times were bad, the majority of banks, nearly all of them, took losses between 40% and 60%. We didn't do that. In fact, in two and one-half years, we sold $31 million of real estate and made something like a $2.5 million profit."

Ms. Summers says if Mr. Wilzig puts the troubled bank on the block, potential buyers balk at paying a hefty price for it.

Meanwhile, Trust Co. investors are starting to worry. The bank's stock has dropped from more than $15 a share to just over $13 in the last two months. Its market value has dropped from two times book value to 1.72 times.

Ms. Summers says it is time for Mr. Wilzig to retire.

"Do I think it would be a good idea to sell the bank? Yes," she says emphatically.Trust Company of New JerseyAt a GlanceCEO Siggi B. WilzigHeadquarters Jersey CityAssets $2.3 billionNet income* $3.8 millionBranches 43* Sept. 30Source: Trust Company of New Jersey

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