Wednesday, June 4, 2003

Mortgage rates go even farther into basement

Industry notes: Banking

By Jeff McKinney
The Cincinnati Enquirer

Several Tristate lenders, including the area's largest, were offering mortgages at record-low rates again, the Cincinnati Area Board of Realtors reported Tuesday.

The average 30-year, fixed-rate mortgage with no points (an upfront fee) was at 5.45 percent, according to a survey of about 20 lenders by the Realtors. The monthly payment on a $100,000 loan: $564.66. That rate is down from 5.52 percent last week.

That rate is the lowest since the group began tracking the rates in 1985. It also was the 10th low mark of 2003.

The average rate for this year a year ago was 6.82 percent. The monthly payment on $100,000 was $653.52 at that rate.

The 15-year fixed rate, a popular option for refinancing and cutting interest off longer-term mortgages, dropped to 4.98 percent.

Provident rated tops in fair-lending practices

Making fair-lending a priority helped Provident Bank receive another high rating for its outreach efforts to low- and moderate-income residents.

Provident has earned an "outstanding" rating after regulators' most recent review of the Cincinnati bank's fair-lending practices.

The rating, covering the bank's efforts in that area the past two years, marks the fifth time in the last six examinations Provident has received the top Community Reinvestment Act (CRA) award.

Cincinnati's six other large banks are being reviewed or will soon be under that process again.

Other banks with large Tristate operations have received outstanding or satisfactory ratings for the their local CRA efforts, including Key, PNC, U.S. Bank, Fifth Third, Huntington and Bank One.

Amin Akbar, Provident's senior vice president of corporate community development, said fair lending is treated as a key line of business.

Banks robust despite bad economy, scandals

The weak economy and accounting scandals haven't hurt U.S. banks, which are in good health with record profits, Federal Reserve Governor Susan Bies said recently in Asheville, N.C.

Insured commercial banks earned a record $24.6 billion in the first quarter of 2003 as robust growth in core deposits and mortgage lending offset soft loan demand from businesses, she said.

Fed officials had found deficiencies in the quality of internal controls at "a few problem institutions," Bies said.

Regulators are talking to other banking agencies about their concerns and are considering issuing more detailed guidance on how banks can strengthen internal risk management practices, she said.

PNC parent may have its credit rating cut

The parent of PNC Bank might have its credit ratings cut after it agreed to pay $115 million to settle federal securities fraud charges.

Moody's Investor Service is considering cutting PNC Financial Services Group Inc.'s ratings after the banking company's PNC ICLC Corp. unit, a non-bank subsidiary, fraudulently transferred $762 million in bad loans and other venture-capital investments to off-balance-sheet entities, the Justice Department told Bloomberg News.

The Pittsburgh-based bank, which operates 47 branches in Greater Cincinnati, agreed to pay $90 million to satisfy investor claims and $25 million in penalties.

PNC has been under tighter scrutiny since a July 18 agreement with federal banking regulators and the U.S. Securities and Exchange Commission for how it accounted for the loans. PNC said it will take a pretax write off against profits of $120 million to pay settlement costs and related legal costs.

Enquirer news services contributed. E-mail

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