UJB Seeking to Fill Top Post As Loan Problems Surface

UJB Financial Corp. is looking for a new officer to head private banking, following the resignation of Donald Lewis amid a rising tide of bad loans.

Mr. Lewis, who had led the division for three years, stepped down this spring. The New Jersey banking company said only that it was time for another leader in the division.

While officers of UJB consider bankers within and outside the bank for the post, L. David Lyons is heading private banking at the company's Hackensack bank. He is also being considered for the top job.

Sources close to the bank suggest that Mr. Lewis was forced to shoulder responsibility for losses in his division. New Jersey has been hard hit by the recession, and UJB's private banking division has not escaped the fallout.

"Basically, the last recession clearly has hurt a lot of historically and formerly high-net-worth individuals," said Stephen H. Paneyko, senior executive vice president in charge of commercial lending.

Threat of Fraud Seen as Increasing

Mr. Paneyko, who oversees the private banking division, said the biggest problem loan in the department appeared to involve fraud on the part of one borrower, whom he declined to identify. Fraud, private bankers say, is a growing threat as clients who had strong cash flows face difficulty meeting debt obligations because of tbe economic downturn.

While making $1.9 million in the first quarter, UJB Financial had $570 million in nonperforming loans. Private banking accounted for less than 5% of that total, Mr. Paneyko said.

Since the corporation's private banking loan portfolio is $273 million, losses in the area could be as high as 10% of the outstanding loans - well above the level reported by other private banks.

A Credit-Driven Business

Despite the losses, "private banking is going to continue to be very much credit driven," Mr. Paneyko said. The bank may decide, however, to shift private banking to the investment management side of the bank from the commercial lending side, he said.

United Jersey, like many other commercial banks with private banking activities, is trying to integrate divisions throughout the bank to give more comprehensive service to affluent clients.

Princeton-based UJB has $300 million in assets under management and is making a push to attract more clients, specifically lawyers, accountants, and other professionals. The holding company has $13 billion in assets and 270 offices in New Jersey and eastern Pennsylvania.

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