In a bid to pay lower deposit insurance premiums next year, Bank of Boston Corp. plans to issue $150 million of preferred stock.

The offering would lift the company's main subsidiary closer to the capital level required for the lowest premiums, said John Kahwaty, director of investor relations.

The offering would be among the first spurred at least in part by the Federal Deposit Insurance Corp.'s plan to charge premiums based on a bank's risk profile.

First Union Corp., KeyCorp, and Bank of New York Corp. have already issued subordinated debt this year to beef up the capital ratios of subsidiaries. And others are expected to follow suit.

Sliding Scale

Under the FDIC's proposal, expected to take effect next year, premiums would be determined by capital strength and the results of supervisory exams.

The fees, based on each $100 of domestic deposits, would range from 25 cents for the healthiest banks to 31 cents the weakest. Currently all banks pay, a flat 23-cent premium.

To qualify as "well capitalized" - the highest category in the measurement of capital strength - a bank would need leverage capital equal to 5% of assets, Tier 1 capital equal to 6% of risk-based assets, and total capital equal to 10% of risk-based assets.

"We have the 'well capitalized' benchmark in our sights," said Mr. Kahwaty.

Capital Fell Short

Bank of Boston's flagship subsidiary, First National Bank o Boston, did not meet one of the three requirements as of June 30, because its total capital was 8.3% of assets.

As a result, it faces the prospect of a premium rate that is two or three cents higher, depending on its supervisory rating. Fort a year, that would mean several million dollars in additional premium payments.

A Positive Sign

Mr. Kahwaty said much of the proceeds of the preferred issue would be downstreamed to the bank, but added that they would not be enough to reach the "well capitalized" level. He declined to predict when the bank might reach that benchmark.

The dividend that Bank of Boston is expected to pay on the new issue demonstrates the company's improved standing among investors.

The initial price talk for the preferred stock dividend is 8 5/8%. or about 120 basis points over the 30-year Treasury bond.

By contrast, at the start of the year Bank of Boston's subordinated debt, which has a senior credit standing to preferred stock, was trading at a much wider spread of about 300 basis points over comparable Tresuries, according to Keefe, Bruyette & Woods Inc.

Merrill Lynch is lead under-writer for the new offering. which will comprise six million shares of series E preferred, at $25 a share.

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