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. BFS has 138 employees, including part- timers.

Dime recently adopted a plan to broaden its operations, reduce the cost of funding, and substitute higher-yielding for lower-yielding assets. The thrift, which last year merged with Anchor Bancorp., had spent several years sorting its way out of problem real estate loans.

Dime said it plans to sell $1.2 billion in mortgage-backed securities and repurchase up to 5% of its common stock. As of Sept. 30, Dime held $7.6 billion in mortgage-backed securities, including $3.1 billion held for sale.

Since yearend 1995 Dime has cut its portfolio of mortgage-backed securities by $2.6 billion, or 29%, and reduced its borrowings by $1.9 billion. Over the same period, the thrift boosted its loan portfolio by $1.3 billion, or 13%, and increased deposits by $500 million, or 4%.

"They're making some very positive moves," said Kevin T. Timmons, a bank analyst with First Albany Corp. "I wouldn't be surprised to see them making further acquisitions. Picking up a $1 billion to $2 billion franchise would make sense for them if it isn't negative from a shareholder standpoint."

Analysts noted that although the BFS deal is relatively small, it marks another step forward in Dime's efforts to consolidate its position in the New York market.

Dime has 85 branches in the metropolitan area and one branch in Florida. It also has loan origination operations in several regions outside New York.

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