Tuesday, July 16, 2002
Peoples officers call shareholders meeting
By Patrick Crowley firstname.lastname@example.org
and James McNair email@example.com
The Cincinnati Enquirer
CRESTVIEW HILLS For the first time since the eruption of the $107 million Erpenbeck Co. scandal, shareholders of Peoples Bank of Northern Kentucky will get the chance tonight to quiz top officers about the bank's financial condition and the cost of its relationship with the insolvent home builder.
All 220 of the bank's shareholders have been invited to the meeting, scheduled for 7 p.m. at the bank's main office just off Dixie Highway in Crestview Hills.
Peoples Bank chairman John Yeager said the meeting would mainly serve to inform shareholders that the bank, which had $207 million in assets as of March 31, is in sound financial shape, despite its missteps in loaning money to the Erpenbeck Co. and members of the Erpenbeck family.
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Employees of the Erpenbeck Co., an Edgewood home builder, are under federal investigation, accused of diverting almost $25 million in property closing checks into its accounts at Peoples Bank. A class-action lawsuit filed on behalf of more than 200 home buyers is attempting to hold Peoples liable for the missing money.
We want to try and bring our shareholders up to date, Mr. Yeager said Monday. This has been a very difficult situation to follow. While there has been a lot of newspaper coverage, there are still some people who probably feel out of the loop and there have been some statements made about the bank we want to discuss with our shareholders.
Mr. Yeager, president of Ashley Development in Edgewood, would not go into detail but said lawyers representing title companies and homeowners have questioned the veracity of bank officials and the financial condition of the institution.
Those are kinds of things we want to clear up, Mr. Yeager said.
The key officers meeting with shareholders will be Mr. Yeager, board member Mark Arnzen, a lawyer who also does legal work for the bank, and Merwin Grayson, brought in as president after former president John Finnan and executive vice president Marc Menne were forced to resign April 30.
The former executives were forced from the bank after admitting they operated a side business with their wives called Jams Properties, which purchased model homes from the Erpenbeck Co. and then leased them back to the company. Board members said they were unaware that Jams existed and were concerned about the appearance of a conflict of interest involving top bank executives and the bank's largest customer.
Mr. Yeager said he expects to field some questions about the former executives and their relationship with A. William Bill Erpenbeck.
Asked if any potential buyouts or mergers will be discussed Mr. Yeager would not comment on any specific plans the board is taking or considering.
As directors we are exploring all possibilities, he said. That's all I can really convey at this moment.
News of the federal investigation into the Erpenbeck Co. and Peoples Bank a probe that includes the FBI, the U.S. Attorney's office in Cincinnati and the Federal Deposit Insurance Corp. broke in late April.
Board members and bank executives have said they have been accessible to customers and depositors.
We hope the shareholders understand we are operating in their best interest, Mr. Yeager said. We did nothing wrong. I think the shareholders know that, but we want to reiterate the bank is solid.
Dr. George Miller, a Ft. Mitchell surgeon, and his wife, Paula, are shareholders.
Mrs. Miller said Monday they are curious about what the bank has to say about the situation.
I think they are probably going to try and reassure people that everything with the bank is OK, she said. We've talked to the bank since all this has happened, and I think other shareholders have, too. But the meeting is probably a good idea to let people ask the questions they have.
Joe Peek, professor of international banking and financial economics at the University of Kentucky, said the forum could put Peoples' management on the hot seat.
If I were an owner, I'd want to know what was going on because whatever wealth I've got tied up in it is getting less and less every day, Mr. Peek said. With such a closely held bank, the shares are not very liquid and shareholders can't show their displeasure by selling their shares. The meeting could be very confrontational or it may be very informative. It depends on the extent to which they've kept the owners up to date.
Peoples' shareholders met last on March 25 a month before the Erpenbeck scandal broke. Since then, Peoples has lost about $5 million in deposits and reported a break-even first quarter. The bank's second-quarter report, for the period ended June 30, is expected to show more pronounced effects from Erpenbeck, but isn't due for public viewing until September.
Peoples officers call shareholders meeting
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