Thursday, August 01, 2002
Distance aids other 'Peoples'
Banks not hurt by scandal
By Jeff McKinney, email@example.com
The Cincinnati Enquirer
When the fiasco involving Peoples Bank of Northern Kentucky and the Erpenbeck Co. first broke, Tom Noe was worried that Peoples Community Bank would have a major public relations nightmare on its hands.
It initially appeared that way as West Chester-based Peoples Community received 50 to 60 calls a week for about the first five to six weeks as the scandal escalated. Shareholders and depositors of the bank were concerned and irritated when calling about whether it was connected in any way, said Mr. Noe, chief financial officer at Peoples Community Bank.
Ralph Schmidt, executive vice president of Peoples Building Loan & Savings Co. in downtown Mason, said a few customers asked if his bank had ties to Peoples Bank in Northern Kentucky.|
(Gary Landers photo)
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They all wanted to know, "Are you those guys across the river?'... It was frustrating trying to explain to people that we're a good company, our people (employees) are honest and we're not affiliated with them, he said. Although the calls have virtually stopped since late April, when the scandal broke, the fiasco was a hassle for the bank with 11 branches and $561 million in assets, he said.
But Mr. Noe also said the Peoples Bank of Northern Kentucky/Erpenbeck mess has not caused his bank to lose any depositors, never prompted it to consider changing its name and did not hurt profitability. In fact, Mr. Noe said Peoples Community had its strongest months ever in April and May for attracting new depositors and this week posted record earnings of $918,000 for its fiscal third quarter, up from $763,000 a year earlier.
It caused some noise for us, but not much substance, Mr. Noe said.
He said the bank never even contemplated changing its name, although a shareholder asked shortly after the scandal broke how the institution could operate with a similar name given the circumstances.
We never considered that because it would cost us something like $500,000, Mr. Noe said. We picked Peoples because it's a generic name that has no geographic boundaries.
The episode at Mr. Noe's company is an example of how at least three other financial institutions with Peoples as part of their name are a little amused, frustrated and puzzled by the lingering effects of the Peoples Bank of Northern Kentucky/Erpenbeck fiasco.
For the Peoples Building & Savings Loan Co. in Mason, distance from the other Peoples across the Ohio River proved to be a gift.
Ralph Schmidt, executive vice president at Peoples Building Loan & Savings Co., said his company had a few questions from customers initially about whether it had ties with Peoples Bank, but the scandal caused no major problems.
He said that's most likely because customers who bank at the $32 million-asset thrift are mostly from Warren County and the eastern part of Butler County in areas such as West Chester.
Distance has been a fortunate thing for us in this case. ... We've had no problems with where we're at, Mr. Schmidt said.
Another company operating with some distance is Peoples Federal Savings Bank of Aurora, a small thrift with assets of $121 million and a branch each in Rising Sun, Vevay and Aurora, Ind.
Stuart Suggs, the thrift's chief financial officer, said the scandal caused no problems for his institution because Aurora is an isolated community, and it's just has not been a big issue here, although Aurora is only 25 minutes from downtown Cincinnati.
But Mr. Suggs said he could understand the situation.
We haven't had any problems, but I could see how companies with that name could have problems because people often associate things with your name.
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