Magazine article American Banker

N.Y.'S Dime Paying 10% Premium for Local Thrift

Magazine article American Banker

N.Y.'S Dime Paying 10% Premium for Local Thrift

Article excerpt

New York's Dime Bancorp, seeking to further shore up its burgeoning retail operation in the metropolitan area, announced a deal to buy BFS Bankorp for $92 million in cash.

The deal, at 1.69 times BFS' book value, would bring Dime $410 million in deposits and five branches in Manhattan, Brooklyn, and Queens.

Lawrence J. Toal, Dime's president and chief operating officer, said the acquisition would improve its financial outlook and help extend the thrift company's retail banking presence in the three boroughs.

The price works out to roughly a 10% premium to deposits. Analysts said that may be high by historical standards but has become something of a benchmark since ABN Amro's agreement two weeks ago announced to buy Troy, Mich.-based Standard Federal Bank at that premium.

"Looking at what they're getting, it's very positive," said Thomas O'Donnell, a banking analyst with Smith Barney.

BFS, which like Dime is based in Manhattan, would also help diversify Dime's loan portfolio by adding a significant amount of higher-yielding, multifamily residential loans. Of BFS' $643 million in assets, $585 million is loans.

The transaction is expected to close in the second quarter.

Dime, the nations' sixth-largest thrift company, with nearly $20 billion in assets, is the parent of Dime Savings Bank of New York.

Dime said it would not close any BFS branches, although it does expect to cut BFS' $13.7 million in expenses by 40%.

Analysts predicted that Dime would take those costs out by eliminating positions in the BFS back office. …

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