First Eastern Corp. plans to sell Dolphin & Bradbury Inc., a securities dealer subsidiary located in Philadelphia.

Dolphin & Bradbury was purchased by First Eastern Corp., a commercial bank, in 1987 and was part of First Eastern Capital Markets Group, another subsidiary.

E.L. Vergari, chief investment officer of First Eastern Capital, said he expects the firm's two previous owners, John L. Dolphin, president of the subsidiary, and Robert J. Bradbury, a senior vice president, to repurchase it.

The parties in the deal said a price has not yet been determined.

"It's our opinion that the firm does not fit into our long-term plan," said Vergari. "We plan to focus more on the opportunities existing in the northeastern section of the state."

Dolphin & Bradbury is active in the trading and underwriting of tax-exempt-and taxable municipal securities issued by Philadelphia and the metropolitan area.

"While the sale will have a negligible effect on earnings, the additional capital will provide additional liquidity and strength to First Eastern Bank." Vergari said.

In 1991, the combined senior and co-senior manager underwriting of First Eastern Capital Markets, including business generated by Dolphin & Bradbury, totaled $316 million over 38 issues, according to Securities Data Co.

"The move isn't a surprise." said Dolphin. "We entered into a five-year employment agreement with First Eastern in 1987, and it has expired."

Dolphin said First Eastern Corp. has "some cash problems" that can be helped by selling the firm back to him and Bradbury.

"We've really been partners with them for the last five years," Dolphin said. "We'll keep on doing what we're doing now, running a profitable business."

Vergari said a price for the transaction has not been determined, but the two sides "are in final negotiations" and the deal should be closed before the end of this year.

Dolphin echoed this and said the price will be based on the value of Dolphin & Bradbury on Sept. 30, 1992.

He was uncertain as to the final total but said "it will be several million dollars." Dolphin said the move could be very beneficial" for his firm.

"At least now we can get back into the revenue bond business" he said. "Being owned by a bank precluded us from being involved in revenue bonds."

Dolphin said the bank could have been granted the right to underwrite revenue bonds if it had filed under Section 20 of the Federal Reserve Act and set up a separate entity to handle those financings, but the bank did not choose to try that route.

Dolphin & Co. was founded in 1940 by Dolphin's father. In 1962, when the senior Dolphin died, the firm became Dolphin & Bradbury.

Dolphin & Bradbury gained nationwide notice in 1986 when it became the first firm to close successfully on a tax-exempt bond issue that resulted in a call of bonds previously escrowed to maturity. In that deal, the firm was co-senior manager of an issue of $12.54 million of Bristol Township School District, Pa., bonds.

"That was a long time ago," Dolphin said. "We've moved on to bigger and better things."

The deal created commotion because investors believed that escrowed-to-maturity bonds would never be called at the first available date.

The bonds had coupons ranging from 4.75% to 7.20% and refunded escrowed serial bonds bearing coupons of 5.25% to 9.25%, which saved the school district around $700,000, officials at Dolphin & Bradbury said. Dolphin said the firm was not-interested in pursuing such issues in the future.

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