Manhattan bank buys Madison National Bankcorp for $33.7M

Madison National Bancorp, a 3-year-old Hauppauge-based institution, has agreed to be acquired by FNBNY Bancorp in Manhattan for about $33.7 million in cash, or about $9.09 a share, the two companies have announced.

It's the second Long Island bank to be acquired since July, when Smithtown Bancorp, reeling from losses in its commercial-loan portfolio, agreed to be purchased by People's United Financial of Connecticut for about $60 million.

Madison has three branches on Long Island and assets of $305.1 million. The bank, which has 50 employees, doesn't plan any layoffs, said Daniel Murphy, chairman and chief executive.

"There's no duplication of positions," he said. "So there's no planned layoffs."

The proposed acquisition of Madison would provide the bank with much-needed capital mandated by stricter regulatory requirements, Murphy said. FNBNY, which is owned by the Modern Capital Partners, a Manhattan equity group, will invest between $200 million and $600 million in Madison, as needed.

"It will enable us to continue on with our business with a greater capital cushion," Murphy said.

Madison's name will be changed to First National Bank of New York.

In June, Madison entered into an agreement with the U.S. Comptroller of the Currency to provide that agency with "its process to manage its concentration of commercial real estate loans."

The bank reported net income of $208,303 in the second quarter ended in June, compared with a loss of $778,298, the year before. But the bank also had to boost by $864,000 the amount of money it set aside for potentially sour loans.

The companies expect the transaction, which is subject to shareholder and regulatory approval, to close in the first quarter of next year.

Separately, FNBNY has purchased 182,260 Madison shares for $1.5 million, or $8.23 a share. And it will purchase another 182,260 shares if the proposed transaction doesn't receive regulatory approval by March 31, the companies said.