Magazine article American Banker

Boston Bancorp Moves to Answer Criticism amid Takeover Rumors

Magazine article American Banker

Boston Bancorp Moves to Answer Criticism amid Takeover Rumors

Article excerpt

As reports swirl in the marketplace that Boston Bancorp is negotiating a sale to Bank of Boston, the thrift company is taking action to answer regulatory criticism of its management policies that led to the resignation

of top two executives six months ago.

The $2.1 billion-asset thrift purchased four branches that it had leased

from a limited partnership dominated by former chairman Richard Laine and president Paul Archibald.

That relationship, which dates to a 1987 sale-leaseback arrangement designed as an employee benefit for 48 thrift officers and employees, was a

focal point of regulatory criticism.

The company paid fair-market value of about $6.6 million for the buildings, a spokesman said. The partnership does not own any other branches.

Boston Bancorp also made a lump-sum payment of $1.4 million to help the

partnership repay mortgage loans and compensate limited partners who are still employed by the bank for their share in the partnership. The payment

included mortgage prepayment penalties of about $440,000.

The company said it expects to save about $300,000 annually after taxes

because of the purchase, but the one-time charges reduced Boston's net income for the quarter ended July 31 by about $942,000 after taxes.

The thrift reported net income of $4.5 million for the third quarter, down from $6.2 million for the year-earlier quarter. Net income for the nine-month period was $14.4 million, down from $20.2 million for the same period last year.

Without the one-time charges, Boston's third-quarter earnings would have

been $5.4 million.

The branch purchases come as the company is rumored to be in merger talks with $45 billion-asset Bank of Boston. …

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