Georgia-based company buys Pioneer Services

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Pioneer Services is opening a branch at 2710 S. Academy Blvd., Suite 130 on Tuesday. It is relocating from 3273 S. Academy Blvd.

Pioneer Services is a lender that has been in the Colorado Springs area for more than 20 years. It offers products and services exclusively to members of the military, having served more than 1.3 million families from 19 locations near military bases throughout the United States and Germany.

On June 1, parent company Pioneer Financial Services was acquired by MidCountry Financial Corp., a Macon, Ga.-based holding company. The terms of the deal were not disclosed.

Pioneer Services will be the military division of MidCountry Bank.

Banks called to help

Federal bank and thrift regulatory agencies have issued a list of distressed or underserved counties, including more than two-dozen in Colorado, that will receive Community Reinvestment Act consideration.

The Community Reinvestment Act of 1977 encourages depository institutions to help meet the credit needs of their communities.

There are 27 counties in Colorado that are on the list, most because they are remote, rural areas that are underserved. Otero, Kiowa and Washington are some of the counties that claimed distress because of population loss. El Paso and Teller counties were not on the list.

Nontraditional mortgages

The federal bank, thrift and credit union regulatory agencies have issued final illustrations of consumer information intended to help institutions implement the consumer protection portion of the Interagency Guidance on Nontraditional Mortgage Product Risks that was adopted in October.

The consumer protection section of the guidance sets recommended practices to ensure that consumers have clear and balanced information about nontraditional mortgages before choosing a product or selecting a payment option for an existing mortgage.

The illustrations consist of a narrative explanation about nontraditional mortgage products, a chart comparing interest-only and payment option adjustable rate mortgages (ARMs) to a traditional fixed-rate loan and a table that could be included with monthly statements for a payment option ARM showing the impact of various payment options on the loan balance.

Institutions may choose to use the illustrations, provide information based on the illustrations or provide the consumer information described in the guidance in an alternate format.

To view the illustrations, visit www.fdic.gov/news/news/press/2007/pr07044a.pdf

Bomb scare at bank

Last week, a Bank of America employee in Ashland, Mass., misinterpreted a fax about a bank promotion as a bomb threat.

The fax was sent to a group to branches in New England, New York, New Jersey, and was about a small business promotion. The fax contained images of a lighted match and a bomb with a fuse, but the words explaining the promotion did not transmit, according to bank spokesman Ernesto Anguilla.

Suspicions about the message were heightened because the branch received a suspicious package about the same time, according to police. The package contained documents.

Because of the scare, about 15 neighboring businesses were evacuated for about three hours.

In case you missed it …

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. reported net income of $36 billion during the first quarter of 2007. That was slightly below the $36.9 billion earned during the first quarter of 2006, but the fourth-highest ever reported by the industry.

The FDIC cited the housing slump, unfavorable interest rate conditions, slower growth in the U.S. economy and higher levels of problem loans as the main reasons why industry earnings were flat during the first quarter.

Other major findings include:

  • Troubled loans continued to increase: The amount of loans that were non-current — 90 days or more past due or in non-accrual status — increased by $4 billion, or 7 percent, during the first quarter. This is the fourth quarter in a row that non-current loans have increased.
  • Fewer institutions reported earnings growth: The 48 percent of insured banks and thrifts that reported higher earnings during the first quarter compared to a year earlier was the lowest percentage of institutions with earnings gains since 1994. At large institutions, increased expenses for loan losses were the primary factor. Among smaller institutions, narrower net interest margins were most closely associated with earnings declines
  • Loan growth is still slowing: The rate of growth in loans and leases fell for the fourth quarter in a row as the industry’s residential mortgage portfolio shrank for a second consecutive quarter.
  • The deposit insurance fund reserve ratio dropped by one basis point: Estimated insured deposits increased by $84.4 billion during the first quarter, the second-largest quarterly increase during the past five years. The Deposit Insurance Fund (DIF) balance increased by $580 million (1.2 percent) during the quarter. For the third quarter in a row, the ratio of the DIF to insured deposits declined by one basis point, ending the quarter at 1.20 percent.

Sarah Colwell covers banking and finance for the Colorado Springs Business Journal.

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