History of the Broad National Bank
by Donald M. Karp (formerly Chairman & Chief Executive Officer)
The unique bank in the history of the City of Newark, New Jersey, was Broad National Bank. It was organized by a group of labor leaders in June of 1925. It merged into Independence Community Bank of Brooklyn, New York, in August of 1999.
During its experience, it survived the Great Depression, other recessions, severe bank dislocations, the Second World War, the Korean War, the Vietnam War and the wars of politics in the city of Newark, New Jersey, and the nation.
The founder of the Bank was Arthur A. Quinn, a dynamic individual who was a State Senator for the county of Middlesex. He was also the New Jersey leader of the American Federation of Labor.
He was a very well respected individual who pioneered legislation favorable to labor unions and the workingman in general; and he was quite well known in New Jersey where more than once he was seriously considered as a candidate for governor.
In 1925, there was a trend with respect to the formation of labor banks, that is, banks organized by labor unions and intended to serve members of unions and their families. There was a belief that other banks did not offer the services and the kind of devotion to members of organized labor that only a bank created from the labor movement could provide.
Unfortunately, the Great Depression of 1929 occurred not too many years after the organization of the Bank. Many of the banks, which were organized as labor banks, did not survive the Bank Holiday. ordained by President Roosevelt early in his administration; but this bank did.
Broad National Bank was organized under the name of Labor Co-Operative National Bank, and then changed its name to Labor National Bank, and then to Union National Bank in Newark, then to Broad National Bank in Newark and finally to Broad National Bank, which later formed a holding company, Broad National Bancorporation to own the Broad National Bank.
Its first headquarters was at 9-11 Franklin Street in Newark, which was a building which housed offices relating to the administration of labor matters in the State of New Jersey.
Among the 27 original incorporators, aside from Arthur Quinn who served as its first President and Chairman, was William J. Brennan, the Police Commissioner of Newark and father of William J. Brennan Jr., who became a Justice of the New Jersey Supreme Court and later one of the most influential justices in the history of the United States Supreme Court, serving approximately 30 years in that position. Also a member of the original Board of Directors of the Bank was Melinda Scott of the Organized Textile Workers of America who, it is believed, was the first woman to serve as a Bank Director in New Jersey and, perhaps, in the country.
At the time that the Bank was founded, Calvin Coolidge was President, there was harness racing in Newark's Weequahic Park, Marie Dressler, Reginald Denny, Jack Holt, and Richard Barthelmess were all featured performers in Newark; and the New York Giants were in first place in the National League.
Another prominent Director was Henry Carless, Esq. who was General Counsel of the Bank. He was quite well known in the state for drafting the first legislation relating to the rights of employees and labor unions, including workmen's compensation laws.
In 1960, ground was broken at 905 Broad Street, across the street from Newark's landmark City Hall, for the Bank to move to that location. It had left its original location of Franklin Street some years previous to that, having been located in a building which it had constructed for its own use at 214 Market Street. Both the Franklin Street and Market Street buildings still stand, though the Market Street building at this point is vacant. The building was originally occupied in 1930, not the best time for banking expansion.
The fact that the bank survived the bleak and disastrous days of the 1930's is a testament to its conservative approach to banking and financing. It is believed that there is only one other bank, which survives today having been a labor bank, that being the Amalgamated Bank of New York.
Also included among those who were present at the inauguration of the Bank were such leading Newarkers as Henry F. Hilfers, Adam Zusi, and Silas D. Scudder. The opening of the Bank was greeted with great enthusiasm; and depositors received it well. The Bank prospered in its early years and fulfilled the needs of both the labor and other communities of the City of Newark and surrounding localities.
It should be noted that at the time of its organization, banking laws did not permit institutions to simply open anywhere, In fact, it was quite difficult to obtain a bank charter. Broad National Bank, under all of its names, was always a national bank. Banks, national or state, were not permitted to branch outside of the city of their origin for many years.
Only in recent years have banks been able to first expand to contiguous counties, then statewide, and now, nationally.
Hence, the charter of the Bank was quite valuable for many years, probably until 1967 when Newark suffered the riots which achieved national attention. Since then, of course, Newark has been rebuilt in large part and has accomplished a renaissance. At the time of the merger with Independence Community Bank, not only was Broad National Bank THE local bank of Newark, but it had a solid capital base and had, for some years, been able to respond well to the challenges of urban banking in one of the more demanding municipalities in the nation.
To be sure, when Broad National Bank became part of Independence Community Bank, few, if any, of the banks, which were here at the time of its organization still survived in their original form. For instance, the giants, such as National State Bank, National Newark and Essex Banking Company, and Fidelity Union Trust Company had long since been merged into other banks; and The Howard Savings Institution and Carteret, which were among the largest savings bank banks in the State of New Jersey did not survive at all, being victims of the banking problems of the early 1990's.
As a result of the serious financial decline of the 1930's, the Bank was forced to remove restrictions on the ownership of its stock, which had required it to be held by labor unions or to a great degree by those involved with organized labor, so that wider ownership would be possible. Eventually, that action resulted in the bank becoming a business related bank and not a labor bank.
The character of the Bank also changed radically after Arthur Quinn ceased to be a dominant force in its management.
Successors to him in that office were William J. Egan, an attorney and political leader of the City of Newark and the County of Essex, Milton J. Lesnik, Esq., who had been General Counsel of the Bank, (my father-in-law), Stanley J. Lesnik, the brother of Milton J. Lesnik, who had been a manufacturer of plastics in Newark, who served first as an Acting Chairman, following the sudden death of his brother, from 1975 to 1985; and myself, who had served as General Counsel of the Bank prior to becoming Vice Chairman and then Chairman from 1985 until 1999, having become Chief Executive Officer in 1991, during some of the difficult days of that era of recession and bank regulation.
As part of this submission, there is a listing of Directors who served throughout the history of the Bank. It is an interesting list of individuals; and for a bank relatively small in size from the time of its creation to the time of its merger with a much larger bank, the Directors were well known in New Jersey, efficient and capable people who devoted themselves to the community and to sound banking practices.
To remember a few of those individuals, without wishing to slight anyone, we should mention Brendan Byrne, who served from 1970 to 1971 and who later became a Superior Court Judge and then a two-term Governor of the State of New Jersey. Licinio Cruz, a prominent business leader and later a Newark Judge, Robert Curvin who has been a high ranking official of the Ford Foundation and who was very much involved in the changes which Newark underwent during the unusual year of 1967, William Marfuggi, who became Treasurer of the State of New Jersey, Vincent J. Murphy, who was Mayor of the City of Newark when he was also President of the Bank and who ran unsuccessfully as the Democratic candidate for Governor in the mid-1940's, and Louis A. Reilly, who was The Postmaster of Newark.
The Bank began business with assets of $1 million; and at the time of its merger consisted of 18 different offices in five different counties of New Jersey with assists of about $700,000. More important than assts, however, is what the Bank did for the City of Newark. When other banking institutions either went out of business or left the city in order to avoid the problems of an urban culture, BNB, as we became to be called, just followed good business practice and remained in Newark and contributed in many ways to bringing back the city as a place to work in, making it desirable for other banks to locate here again.
Of course, Newark had rediscovered itself in a different way than it experienced previously. It is not the same city as it was in 1925; but in some ways it is even better. Now it is the home of the New Jersey Performing Arts Center, one of the finest and most diverse of its kind in the nation; it also is the location of the Newark Public Library, the largest and most comprehensive library in New Jersey, The Newark Museum, a world class museum, not to mention other such treasures such as the New Jersey Historical Society, the home office of the Prudential Insurance Company, the home office of IDT, the home office of Public Service, the largest utility of New Jersey, and other entities which have either remained or located here believing Newark to be the place of the future.
Having been associated with the Bank during the years from 1964 through the present, and being vice Chairman of its successor, Independence Community Bank, I can say that nothing has ever been routine or ordinary about banking in Newark. Of course, in later years, the Bank extended to other counties, as indicated above. It should be recalled, however, that when the Bank was created, Prohibition was the order of the day; and Dutch Schultz was a person of power in the area, until being eliminated in gangster fashion during the year 1934, at a place not too distant from the headquarters of the Bank, the Palace Bar and Chop House, on East Park Street, adjacent to the headquarters of PSE&G. Later, the City would also be graced by political factions, which produced all kinds of things, including a race riot and the indictment and convictions of various public officials. Suffice it to say, the Bank maintained its equilibrium throughout these years and throughout these crises and throughout these interruptions in commerce and banking as we would ordinarily know it.
Undoubtedly, many leaders of the day, both reputable and infamous, maintained accounts and did business with the Bank. Whether banking in Newark was really any different than any other urban location is not know, but those associated with Broad National Bank always seemed to believe that there was nothing else like it anywhere.
Of course, it can be said that banks in other locations, both near and far, also were immersed in the problems of the Depression, affected by some of the infamous persons of those years, the times leading up to World War II, Pearl Harbor and all of the tragedy and glory of those days; but it should not be ignored that Newark was and still is a major manufacturing city. Even more so at that time, Newark was extremely important in terms of the defense of the country, per its seaport, and labor force production. For instance, Westinghouse did research with respect to the atomic weapons in Newark, major shipbuilding was done here, and all kinds of companies located here in the extraordinary days following December 7, 1941. The terrible experience of 1967 was also echoed in other parts of the United States, but probably not with as much anger and publicity as here. Hardly as interesting to the man in the street, banking, in general, also underwent extraordinary changes during its years of operation.
For instance, just the advent of something called a Certificate of Deposit was enough to cause all kinds of discussion and speculation when the same was introduced in the 1960's by a Comptroller of the Currency named Saxon. Banks were then subject to different laws. As a result of the Depression, the Glass-Steagle Act made it impossible for banking institutions to engage in certain kinds of business. That law, which was basically revoked just a few years ago, prevented many practices which banks engage in today. Moreover. commercial banks, such as Broad National Bank, were required to provide interest and savings rates lower than savings banks or what we call "thrifts". The change in the law, equalizing what rates bankers could pay to depositors in the 1980's probably precipitated some of the real problems of the 1990's when the line of separation between savings banks and commercial banks was basically eliminated, permitting inexperienced lending, by banks not previously engaged in commercial lending, complicated by an increase in FDIC insurance, all of which produced many bad loans, a serious depletion in bank capital and the demise of many banks, which for one reason or another, were considered unsafe and unsound and were required to sell, merge, or work closely with the government, or just close.
Again, Broad National Bank survived, though it suffered from some of those excesses as well. Through determination and appropriate action, a recovery was possible; and Broad National became a leader in Newark and New Jersey and is now a part of a much larger institution, which still is very much involved in community events in Newark and New Jersey. Independence Community Bank, which was founded in 1850 is approaching some $17 billion in assets following its merger with Staten Island Bancorp. Through its charitable Foundation, the Independence Community Foundation, there has been ever greater participation in the communities served by branches of the Bank.
It is also impressive to realize that for many years Broad National Bank, when it was known as Labor Co-Operative National Bank, Labor National Bank, and then Union National Bank, had only one office and expanded to two offices only in 1960 when it opened its second office at 11 Commerce Street in Newark. That office long ago closed, but it was moved to the Prudential Headquarter Building, which office is still open. Independence Community Bank will be operating approximately 120 offices in New Jersey and New York when the merger with Staten Island Bancorporation is completed, with over half of these branches being in New Jersey.
Any review of Broad National will afford a real look at the history of the communities which it served, particularly Newark. While we have just supplied a brief overview of the situation, there is much more which can be learned about the Bank and its history. It is believed that Newark has benefited greatly by having had a local bank which remained in the city of its birth and which devoted itself to its customers. But more than that, the people who have been involved with banking at Broad National over the years, in one way or another, for either a short or long period of time, must acknowledge that they have been a part of something which any review of the 20th century in this area would find to be truly meaningful, if not profound.
One might find interesting the evolvement of the Bank from a labor bank to a commercial bank devoted to business and the communities which it served. Particularly, the Bank did have strong union affiliations for many years. In fact, the bank was unionized until approximately 1960, a condition quite unusual for a bank. Most banks do not have labor unions, though there are a few which still do.
The Chairman of the Bank from 1950 - 1960 was William J. Egan who was a forceful political leader and attorney during those years. He, as understood, was a teetotaler; but because of his political background and power became the force behind President Franklin Roosevelt's successful action to eliminate the Volstead Act, that is, the removal of Prohibition. Mr. Egan held various positions of influence; and he had an active law practice. In the mid 1950s Milton J. Lesnik, who succeeded Mr. Egan as Chairman, made known to the Board of the Bank at that time the fact that he had, through business involvement, purchased a controlling interest in the Bank. He later became quite friendly with Mr. Egan and, indeed, represented the Egan Estate when William Egan passed away in 1960. Milton Lesnik who had been Counsel to the Bank became Chairman himself in 1960 and embarked upon a real change in the bank by moving it to its location at 905 Broad Street, changing its name and inaugurating various changes and procedures to accomplish modern day banking at that time. He was also an attorney, having graduated from The Harvard Law School in 1939, and he was the Senior Partner of a law firm bearing his name. He served as Chief Executive Officer from 1960 to 1970, the year of his untimely demise. Both he and Egan served as Chairman from 10-year periods; and the Bank changed considerably in character during the terms of both. With assists of only approximately $25 million at the time of his passing in 1970, the stage was set for the later growth of the institution, something which was both necessary and inevitable.
My own involvement with Broad National Bank began in 1964 following my return from active duty as a U.S. Army lieutenant. I am also a lawyer, having graduated from The Cornell Law School in 1961. From 1964 to 1985 I was engaged in the general practice in law in the City of Newark except for a short period of time during which I served as Regional Counsel for the SBA. My many years at BNB permitted me to be involved in civic endeavors. I still am very much involved in those activities, which I believe have been beneficial to the rejuvenation and renaissance of Newark, such as the New Jersey Performing Arts Center, The Newark Museum and the New Jersey Historical Society of which I was Chairman. Board memberships have also included such groups as the Newark Landmarks Committee, Friends of the Newark Public Library, Friends of Channel Thirteen, the Advisory Boards of The New Jersey College of Medicine and Dentistry, and the Newark Conservancy.
Other officers and employees of the Bank during my administration and to this day are active and are encouraged to be active in community endeavors since it has always been believed that a bank should be a part of the fabric of the community which it serves.
Broad National Bank is now a vibrant part of ICBC (Independence Community Bank), and it still contributes to making Newark and its environment a better place.
Past and Present Directors
1930 - 1950 Belfatto, Perry E.
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