Northeast Federal Will Appeal Goodwill Ruling by District Court
HARTFORD, Conn. -- Northeast Federal Corp. said the U.S. District Court for the District of Columbia dismissed, on jurisdictional grounds, a lawsuit it filed against the Office of Thrift Supervision and the Federal Deposit Insurance Corp. The company said it will appeal.
The suit sought an injunction requiring the regulators to recognize as regulatory capital certain goodwill the company had accumulated during its 1982 acquisition of three thrifts.
The court said that it lacked jurisdiction and that Northeast could pursue the action in U.S. Claims Court. Northeast said it would appeal to the District of Columbia Circuit Court of Appeals.
Northeast is one of several institutions that sought to overturn the removal of goodwill from capital. The Hartford-based company, which has $4 billion in assets and owns Northeast Savings, said the latest ruling conflicts with seven other recent cases in which district courts had jurisdiction over similar claims.
Northeast also announced that it earned $2.4 million in its first fiscal quarter, which ended June 30. The figure was double that of the 1990 period.
It was the company's fifth consecutive quarterly profit, but chairman George Rutland said the increases cannot be sustained. "We sold earnings assets in order to meet the proposed new higher regulatory core capital requirements," he said. "With less earning assets, our earnings will be lower this fiscal year than last fiscal year."