Magazine article American Banker

Bank of Boston to Acquire a Thrift in Hartford

Magazine article American Banker

Bank of Boston to Acquire a Thrift in Hartford

Article excerpt

In a move that would double its presence in Connecticut, Bank of Boston Corp. has agreed to buy Society for Savings Bancorp for about $195 million in stock.

The price tag -- equal to about 1.3 times Society's book value -- is fairly high, considering that the $2.8 billion-asset thrift company is still rebounding from loan problems.

But analysis applauded the deal, seeing it as aa show of strength by Bank of Boston, which itself is on the mend from the region's donwturn.

Big Presence in Hartford

They said the acquisition makes sense because Society has a big presence in the Hartford area, where Bank of Boston has 10 branches and is eager to expand.

Bank of Boston president Charles K. Gifford said his company plans to make other acquisitions in the state.

The Society deal would be "modestly dilutive" in the first year, pushing down the company's growth in per-share earnings by 4% to 7%, he said.

That helped drive down shares of Bank of Boston by 6% on Monday. The stock closed at $20.375, off $1.25. Shares of Society, meanwhile, rose $2.625 to $15.125.

Bank of Boston has 40 branches and about $2.4 billion in assets in Connecticut. Society has 19 branches in the Hartford area.

Consumer Finance Arm

The deal would also give Bank of Boston a very profitable consumer finance company called Fidelity Acceptance Corp., which has $440 million in assets and is based in Minneapolis.

The deal, however, carries some risk. Society was an aggressive real estate lender in the 1980s and has been struggling with a large porfolio of bad assets, which now represnt 8.6% of loans plus foreclosed real estate.

But under new chief executive Lawrence Connell, Society has been turning around this year. Mr. Gifford said he is confident that Bank of Boston has properly evaluated Society's assets. …

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