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NEW ENGLAND FEDERAL SAVINGS BANK PLACED UNDER GOVERNMENT CONTROL

NEW ENGLAND FEDERAL SAVINGS BANK PLACED UNDER GOVERNMENT CONTROL
 WASHINGTON, July 17 /PRNewswire/ -- The Office of Thrift Supervision (OTS) today placed New England Federal Savings Bank, Wellesley, Mass., in receivership and chartered a new federal mutual institution to take its place.
 The new institution, New England Federal Savings Association, will assume certain assets and liabilities of the old thrift and will operate in conservatorship under the management of the Resolution Trust Corporation.
 The receivership did not result in any interruption of New England Federal's day-to-day operations. The institution will remain open for business as usual. Holders of insured accounts are not affected by the action, which was taken by OTS to protect insured depositors and the interests of the thrift insurance fund. Deposits remain insured to the $100,000 legal limit.
 OTS initiated the action because New England Federal was operating in an unsafe and unsound condition and has suffered losses that have depleted its capital, with no prospect of replenishment without federal assistance.
 New England Federal Savings Bank's condition is due primarily to an aggressive lending policy implemented by former management between 1987 and 1989, coupled with inadequate underwriting of originated and purchased higher-risk commercial real estate and residential loans.
 The severe decline in the New England real estate market and economy also contributed to the deterioration of the thrift's assets. As of March 31, 1992, assets of $21.1 million, or 14.4 percent of total assets, were classified as substandard, doubtful or loss.
 At the close of the first quarter of 1992, New England Federal failed all three regulatory capital requirements. The thrift reported net losses of $3.7 million for 1990 and $7.6 million for 1991. The institution had been operating under regulatory restrictions since 1990.
 New England Federal Savings Bank was a federally chartered stock institution. Shareholders will retain no interest in the new thrift.
 As of March 31, 1992, New England Federal Savings Bank reported assets of $146.4 million, liabilities of $144.4 million and tangible capital of $1.9 million, for a tangible capital-to-tangible assets ratio of 1.36 percent.
 -0- 7/17/92
 /CONTACT: Roy Jensen, 201-413-7501, or Thomas P. Mason, 202-906-6677, both of the Office of Thrift Supervision/ CO: Office of Thrift Supervision; New England Federal Savings Bank ST: Massachusetts IN: FIN SU:


TW -- DC014 -- 0242 07/17/92 12:04 EDT
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Publication:PR Newswire
Date:Jul 17, 1992
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