Unity Bancorp chief executive steps down

The Star-Ledger, January 1st, 2004

The Star-Ledger Archive COPYRIGHT © The Star-Ledger 2004

Date: 2004/01/01 Thursday Page: 021 Section: BUSINESS Edition: FINAL Size: 763 words

Unity Bancorp chief executive steps down

Anthony Feraro bows to pressure amid probe of $15,000 in expenses

By SAM ALI STAR-LEDGER STAFF

Beleaguered Unity Bancorp Chief Executive Anthony Feraro resigned under pressure yesterday, amid accusations he submitted $15,000 in expense vouchers to pay for personal expenses.

Unity's chief financial officer, James Hughes, 45, who has been the public face of the bank since the Feraro controversy unfolded in November, was named president. David Dallas, 50, the Clinton-based bank's chairman, will assume the title of CEO.

Feraro was hired by Unity's board of directors in November 2000 to clean up the bank's finances and return it to profitability after the $400 million-asset bank landed in hot water with regulators.

Feraro, who has been on a leave of absence pending the outcome of the probe, was not available for comment yesterday.

Under a negotiated settlement with Unity, Feraro will receive a year's salary of $320,000 as a parting gift, but will forgo any severance pay, according to a filing with the Securities and Exchange Commission.

He also will be entitled to medical benefits for himself and his immediate family through the end of 2004, the filing said.

According to Feraro's February 2002 employment contract, the 56-year-old career banker earned an annual salary of $305,000 in 2002, an $85,000 bonus and an additional $9,953 for an automobile allowance.

Under the terms of the contract, Feraro was entitled to receive a lump-sum payment equal to three times his current base salary if there was "a change in control" at the company and he voluntarily resigned or was terminated as a result.

According to Hughes, Unity's independent auditors, KPMG, "mandated" the expense account audit after the bank brought Feraro's vouchers to their attention during a review of third-quarter financial results.

The bank, which operates 13 branches in central New Jersey, has refused to comment on the nature of the expense vouchers Feraro submitted.

In recent interviews with The Star-Ledger, Feraro acknowledged he faced mounting personal expenses, but denied any wrongdoing and maintained his name would be cleared in the end.

Feraro and his wife, Kathy, who live in a palatial home on the grounds of the Stanton Ridge Country Club in Whitehouse Station, had recently renovated their home to make room for a new daughter, Sophia Marie, whom the couple adopted from the Dominican Republic.

While Feraro admitted the adoption had been expensive, he said he did not charge the bank for any personal expenses during his four-year tenure.

Last week, KPMG certified Unity's financial results after a monthlong investigation into Feraro's expense account vouchers revealed nothing that would have a material impact on the company. Unity has so far spent $650,000 on the Feraro expense account inquiry.

The incident was yet another embarrassment for Unity's board of directors, which hired Feraro with the promise that he would clean house and get the bank's books in order after Unity ran into financial trouble in 2000.

In November 1999, Feraro was hired as Unity's chief operating officer at an initial annual salary of $250,000. He was subsequently appointed president and chief executive.

Feraro is the second chief executive to resign under pressure at Unity in the past three years.

In August 2000, Unity's then-chairman and founder, Robert Van Volkenburgh, resigned after regulators started bearing down on the bank for losing too much money following a rapid-fire expansion in 1998 and 1999.

Hughes joined Unity as the bank's CFO in December 2000. He previously worked at the former Summit Bancorp, which was acquired by FleetBoston Financial in 2000, as senior vice president in charge of accounting operations.

Replacing Hughes as CFO is Alan Bedner, a senior vice president at Unity who served as the bank's controller.

Unity was founded in 1991 through the purchase of two branches of a failed savings and loan, First Atlantic Bank.

Its troubles started in 1998 after it drained its capital by expanding too quickly into Middlesex and Union counties, doubling its branch network in a short period of time.

Feraro, a native of Bound Brook, previously worked at Zion's First National Bank in St. Louis as executive vice president.

During his tenure at Unity, he boosted the bank's revenue and profits and watched its stock skyrocket nearly 490 percent. In 2002, the bank was officially given a clean bill of health by state and federal regulators.

URL: Unity Bancorp chief executive steps down

Back