By Jeff McKinney
The Cincinnati Enquirer

Hoping to retain existing customers and attract new ones, Fifth Third Bank has launched a free Internet banking and online bill payment system.

The new system, now available to Fifth Third customers in Cincinnati, Northern Kentucky and other large markets where the bank operates, will allow customers to pay everyone from their baby-sitter to family members to utilities online.

Fifth Third said the system would be available to all of its 5.4 million customers by next week. The site at www.53.com also means that Fifth Third customers will no longer be charged 30 cents when using the bill payment option.

Rahul Bawa, vice president of eBusiness at Fifth Third, said the system, which the bank quietly has been working on most of last year, offers options that the previous Internet banking and bill payment sites didn't.

For instance, he said consumers could use a function that allows them to make recurring payments; write checks online and send them directly; and assign payees nicknames for quick reference.

Bawa said Fifth Third would not charge any fees for the services. He said other banks often charge monthly services fees ranging from $4.95 to $6.95 for bill payment services. Fifth Third hopes to make up the lost revenue by selling additional products to retained customers and by attracting new customers to the service.

The latest move by Fifth Third comes as other large regional banks - including Huntington and Key Bank - in recent years have upgraded their Web banking services to win business.

Bank of Kentucky parent posts a record

Revenue growth and expense control helped the parent of The Bank of Kentucky post record profits for 2002 and the fourth quarter.

The Bank of Kentucky Financial Corp. earned $8.4 million, or $1.42 a share, versus $7 million, or $1.16 a share, in 2001.

In the fourth quarter, the Crestview Hills-based bank made $2.3 million, or 39 cents a share, up from $2.1 million, or 35 cents, during the fourth quarter of 2001.

The higher profits came as the bank's annual fee income rose 27 percent to $5.5 million, driven by a 30 percent gain on the sale of mortgages and 36 percent gain on deposit service charges. Its net interest income also rose 17 percent to $3.17 million because of loan growth.

The 2002 results also came as The Bank of Kentucky agreed to pay about $15 million to buy most of the assets and deposits - including eight branches - of Peoples Bank of Northern Kentucky. That entity was forced to sell most of itself last year because of ties to A. William "Bill" Erpenbeck, the former Northern Kentucky homebuilder under federal investigation for bank fraud.

With that deal, The Bank of Kentucky now has assets of $775 million and 25 branches in the Northern Kentucky area.

Peoples Bank gains 65% in first quarter

Higher interest income enabled the parent of Peoples Community Bank to post a 65 percent gain in its fiscal first quarter profits.

Peoples Community Bancorp Inc. earned $966,000, or 39 cents a share, up from $585,000, or 24 cents a share, in the same year-ago period.

The higher profit came as the Ohio banking company benefited from higher net interest income because of loan growth and securities purchases. The increase also came as the bank's operating expenses rose to $2.3 million in the quarter, up from $1.8 million in the same year-ago quarter. The higher expenses primarily came as Peoples continued to expand its branch network, including work on two offices now under construction in Oakley and Cleves.

Peoples Community Bank, which had no ties to the former Peoples Bank of Northern Kentucky, has assets of $619 million and operates 11 branches in Butler, Warren and Hamilton counties.

E-mail jmckinney@enquirer.com