Wednesday, March 12, 2003

Lenders can get $1 million in special grants

Industry notes: Banking

By Jeff McKinney
The Cincinnati Enquirer

About 60 lenders in Greater Cincinnati are eligible to apply for a $1 million grant that could be used to help minorities and those with special needs to purchase homes.

The Federal Home Loan Bank of Cincinnati is offering the grant to its member as part of its "American Dream Homeownship Challenge," David Hehman, president of the local FHLBank, says.

The commitment is over and above the 10 percent Affordable Housing Program that FHLBank Cincinnati provides for such funding.

The latest program calls for grants of up to $50,000 each to be made available in semi-annual offerings. No more than $500,000 will be offered during any period. Application deadlines for funding are May 1 and Nov. 1. The lenders could use the money to help consumers do everything from finance an entire mortgage or come up with a down payment.

One of 12 district banks, the FHLBank Cincinnati is a $71 billion-asset bank that provides credit and financial services and economic development to 750 member entities in Ohio, Kentucky and Tennessee.

Provident faces three others in class action

Two Pennsylvania firms and a New Jersey lawyer have joined eight others that have filed class-action suits against the parent of Provident Bank.

The law firms of Berger & Montague of Philadelphia and Brodsky & Smith of Bala Cynwd are the latest to file suits against Provident Financial Group Inc., operator of Cincinnati's second-largest hometown bank. A suit also was filed by James S. McKay of Estell Manor, N.J., on his behalf and others.

The suits come after Provident said last week that it would restate profits for the last six years. The bank said it overstated profits by $70 million since 1997 when it improperly accounted for nine auto-lease transactions.

The suits basically have maintained that Provident misled investors by overstating profits. But Provident has said the earnings restatement was the result of a mistake. It plans to defend the suits on the basis that the accounting errors were not intentional.

U.S. Bank pledges to keep subprime loans

The chief executive of the parent of U.S. Bank says the banking giant will keep making subprime loans, despite the struggling economy putting pressure on consumers to repay debt.

Jerry Grundhofer, chairman of U.S. Bancorp, said his bank's goal is to have no charge-offs and instead get paid for the risks it does take.

Banks in general charge consumers higher rates on subprime loans because the risk of making those loans - and setting aside cash to cover them - is higher than on other loans.

Grundhofer, who spoke at the National Collections and Credit Risk Conference, told the American Banker "customers don't need to be perfect to do business with American banks." He also was blunt when it comes to collections on loans. Grundhofer says firmness rather than amiability should be exercised by a bank's agents.

While some employees may find it hard to ask customers to repay loans, Grundhofer said, "That's OK, but they don't belong on your collections payroll."

Franklin opens new location on Glenway

Franklin Savings, one of the area's largest thrifts, has opened a new branch at 5791 Glenway Ave. on Cincinnati's west side. The branch replaces one moved from 5119 Glenway Ave.

"The Western Hills (Franklin branch) has been long overdue to updating," Thomas Siemers, Franklin's president, said. Franklin has had a branch in that area since 1974.

Franklin operates eight branches in Greater Cincinnati.

Fifth Third OKs Tennessee deal

Fifth Third Bank has signed a deal to handle credit card processing transactions for the Tennessee Restaurant Association, a 2,500-member statewide trade group.

The agreement calls for Fifth Third to grant preferred pricing to member restaurants for processing and clearing their credit-card transactions.

The deal allows Fifth Third to generate extra fee income by processing the transactions.


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