The Pittsburgh Press from Pittsburgh, Pennsylvania • Page 18

Equibank Carves Out Niche In Smaller Loan -r in Market Hanlrinv hCCOmine 1110! CO AUn hankine is becoming more com If borrowers are looking for a break in er's account and the quality of his finan interest rates, they may be in for a disappointment. Neither Plumb nor Liberati sees a drop soon. In fact, the prime may go higher and remain there until early next year, they feel. "Commercial loan demand is beginning to slacken, although it is still relatively strong," Liberati said. However, the bankers agreed that businessmen are "learning to live with double-digit prime." On another front, high mortgage rates haven't discouraged borrowers, Plumb noted.

Last year Equibank's residential mortgage loans rose $100 million from the previous year. The Pittsburgh 'ress ways focused on small and medium-sized companies. Richard W. Plumb, an executive vice president of Equibank, conceded loans in this category are the "lifeblood" of the bank. "Sixty percent of our loans are for amounts of $100,000 or less," he said.

Equibank's stake in small business was emphasized in the recently issued annual report of Equimark which owns the bank. The shareholders' epistle featured a salute to small business a tribute to some of the bank's key customers. The obvious question: Why didn't Equibank follow the other banks in cutting the base lending rate for small customers? Plumb fielded it quickly. "We were already there," he replied, although he conceded "some adjustments" had to be made to remain competitive. The current prime is a lofty 11 percent.

This is the most favorable interst rate for a loan. It is supposedly reserved for corporate giants, like General Motors and IBM. Banks usually charge smaller commercial borrowers IV2, two percent or more above prime. Even firms that qualify for the "cut-rate" prime are probably paying more to borrow than big corporations. But Plumb said "good-risk" borrow- By WILLIAM H.

WYLIE Press Business Editor When the prime lending rate hit 10 "2 percent last fall, Mellon Bank gave a break to small borrowers. The bank said it acted to make it easier for small firms to weather the bor rowing squeeze. Specifically, Mellon reduced the base lending rate for companies with as sets of $1.5 million or less to l'4 percent below prime. Two other large banks here, Pittsburgh National and Ilninn NaHnnal quickly followed LIBERATI suit. Since then more than 80 big banks in the U.S.

have done so. These banks have received a lot of favorable publicity. In fact, the Small Business Administration gave Mellon an award for spearheading the effort. Conspicuous by its absence from the prime-cutting announcements was Equibank, the city's fourth largest commercial bank, whose lending activity has al- 1 if cial statement to how many services he buys from the bank. Last year commercial loans at Equibank increased 29 percent to $465 million, according to the annual report.

Since most of the bank's loans are made to small and medium-sized companies, Equibank obviously plays a key role in financing small business here. Citing a study by the University of Pittsburgh's Bureau of Business Research, Equimark's annual report says there are more than 39,000 smaller businesses in the Pittsburgh region. Included are 2,200 manufacturing firms and 27,000 retail and wholesale concerns. Anthony W. Liberati, a senior vice president at Equibank, said the bank put its dollars to work to save 300 jobs last year when Copperweld closed its bime-tallics plant in Glassport.

"The plant, which will be operated by Barholt Industries, is being transformed into a facility to repair and rebuild coal hopper cars," he explained. A $4.8 million financial package, of which Equibank has the largest piece, is making this possible. Also involved are the Allegheny County Industrial Development Authority, the federal Department of Housing and Urban Development and Allegheny County. BUSINESS-LABOR RICHARD W. PLUMB 'We were already ers, even smaller ones, might pay 11 percent (prime) plus a half percent at Equibank.

Borrowing rates depend on several factors, he explained. Considerations range from the size of a borrow Financier Sindona Left Twisting Trail Of Dealings In Franklin Bank Collapse A-18 "loans" from the Swiss bank to Loew and Lawton to buy all one million shares of Franklin. Three months later, the grand jury said, Sindona (and his associate, Carlo Bordoni, who also was indicted) used the same ploy to take. $15 million out of Franklin and put it back into Banca Unione. This time, however, the grand jury said, Sindona's associate.

Bordoni, had to make a $105,000 bribe to a bank manager to pull it off. Sindona's Banca Privata Finanziaria owned a small interest in another Milan bank, Banca Per Finanziamenti A Medio Termine, called Interbanca for short. Sindona was on Interbanca's board. Franklin National sent $15 million to Interbanca, which Interbanca confirmed as a time deposit. However, the grand jury said, the bribed general manager, Gino Uglietti.

turned around and shipped the alleged time deposit off to Amincor, which in turn sent the money to Banca Unione. Five months later, Fasco moved to buy 1 million shares of the Chicago-based financial company, Talcott National from William O'Neill Co. for $27.18 million it '7. i '-tt. if 1 tyJirr u-cr ''ifM lit li- vtH GM Transmission Switch Sparks Suit petitive.

Big banks in New York are invading territories of regional banks, Plumb said. This has happened here. Not only are Citibank and Chase Manhattan wooing credit card holders, but they are scratching for business loans, he added. "We may have nationwide branching before we have statewide branching," Plumb quipped. This was a reference to the rapid expansion of big banks across the country, often at the expense of regional banks like Equibank.

He conceded that regional banks invade other banks' turfs, too, but said this happens on a much smaller scale. March 30, 1979 How did Fasco come up with the mon ey? From Banca Unione again, through Amincor. When Sindona decided that Franklin National Corp. should buy Talcott National from Fasco (presumably to come up with funds to put back in Amincor so it could play off the alleged time deposit it held for Banca Unione), Sindona had a problem. Franklin National was running a loss in its foreign exchange trading that creative accounting was hiding.

It needed to show that profit to federal regulators. Once again, it was Banca Unione and Amincor to the rescue. Banca Unione made another $2 million time deposit at Amincor, and Amincor shifted the money to Franklin. Franklin put the money in its coffers and falsified its records to make it look like a $2 million profit in foreign exchange trading with Amincor bank. Franklin, which was not a healthy bank to begin with, finally succumbed a year later when it sustained $30 million in foreign exchange losses, which even Sindona's once vast but crumbling empire evidentlv could not cover.

Post Service which includes the engine, transmission and axle. "The General Motors automatic 200 transmission, which was introduced in the 1976 model year, was designed for use in a variety of vehicle applications, including use in vehicles equipped with 350 cubic inch V-8 engines," the statement "There are now more than 20 different models of the 200 transmission which are utilized across a wide range of General Motors passenger cars. The 200 model transmission used in the Chevette is not the same model that is used in full-sized cars." "At an appropriate time, General Motors will demonstrate that all of the transmissions, including the 200 transmission, used in its vehicles provide quality, performance and durability. General Motors stands behind each of the transmissions utilized in its cars," the statement concluded. The suit asked U.S.

District Court to order GM to identify customers who bought cars with the substituted transmissions and give written notices to customers who purchased cars with THM 200 transmissions. In the Cherolet-Oldsmobile engine switch case, U.S. District Judge Frank McGarr approved a settlement last year in which GM offered to pay a $200 rebate and give transferable warranties to those affected. Boyle appealed the settlement and McGarr's ruling was reversed. GM has since petitioned McGarr for permission to offer the settlement package to any Oldsmobile owners who want to take it and drop out of pending litigation in the engine-switch case.

Allegheny Eyes vame nange Dow Jones Service NEW YORK Allegheny Airlines is planning to change its name to USAir, because it has "outgrown its regional limitations since its routes now extend into Florida, Texas, and Arizona," Edwin Colodny, chairman, reported. Colodny also announced the carrier plans to phase out its fleet of BAC 1-11 planes in the near future "because it is our least efficient." Allegheny currently is flying 30 of the British-made airplanes. Allegheny also flies 45 DC9s and 11 of the 727s, and has on order additional DC-9s and 727s. The DC-9s will replacethe BACl-lls on many flights, Colodny noted. Stock-Buy Expires, Federated Reports Federated Investors Inc.

announced the expiration of its offer to purchase shares of its Class common stock. i The firm said yesterday it purchd shares of Class common stock $6 per share. 1 r- A v. the time through a Zurich bank that Sindona has controlled, according to the 46-page indictment. The indictment gives a rare glimpse of how funds can be shunted in a matter of hours from Milan to New York and be laundered in a Swiss bank way station to conceal the nature of the transfer from both Italian and U.S.

authorities. To understand the admittedly complex transfers, a brief introduction to the institutions involved is necessary. Sindona controlled two banks in Milan (which later were combined, then went bankrupt): Banca Privata Finanziaria and Banca Unione. He controlled one bank in Zurich, Amincor Bank. He also owned what authorities call a shell, or dummy, corporation, a Luxemburg-based company called Fasco International Holding.

Fasco's role in the drama was to receive the funds Sindona allegedly "misapproprated" from his Italian banks, then use them to buy Franklin National the parent of Franklin National Bank. Fasco's only assets for a long time were one million shares of Franklin National Corp. representing 21.6 percent of Franklin's outstanding stock. Later, Fasco would get another $27.18 million from Sindona's banks and use it to buy Talcott National a Chicago-based financial firm. The story began on July 7, 1972, when, the grand jury said, $5 million of general funds and deposits from Sindona's Banca Privata Finanziaria were transferred to a Swiss bank, Privat Kredit.

Although the $5 million was to be used as a down payment on one million shares of Franklin National stock, that is not the way the transaction showed up in Banca Privata's books. Instead, Banca Privato showed that it had made a $5 million time deposit with Privat Kredit. And, the grand jury said, Privat Kredit cabled back to Banca Privata confirmation of the deposit. Privat Kredit then turned around on the same day and made a $5 million loan to Fasco International, under a secret agreement with Privata. The kicker was that Privat Kredit did not have to give back Banca Privata its socalled deposit unless and until Fasco repaid its so-called loan.

In fact, the grand jury said, Privat Kredit was paid a commission for its help in transferring funds from Banca Privata to Fasco. On July 11, Fasco used its $5 million "loan" from Privat Kredit as a down payment on the stock with Loew's Theaters Inc. and Lawton General Corp. That is also the last time the grand jury speaks of Privat Kredit, which apparently was not controlled by Sindona. On July 20,1972, the grand jury, Sindona's Banca Unione sent $18 million of its funds to Sindona's Amincor Bank.

'Banca Unione recorded it as a time deposit with Amincor, which in turn shipped the $18 million to Fasco. On the same day, Banca Privata sent $17 million to Amincor, which then sent the money to Fasco. Fasco in turn gathered in the $35 million and. on the same day (July 20), shipped its $35 million in SURGICAL PRECISION Although he's not a brain surgeon, the work this technician is performing is just as delicate. He's diagnosing and adjusting tiny computer circuits at Honeywell's Phoenix, plant.

"Hospital clean" environments are required for assembly and testing of logic circuitry before it's permanently sealed against contamination. By JAMES L. ROWE JR. NEW YORK Michele Sindona is a troubled financier. His Italian banking empire has collapsed in insolvency.

Long Island's Franklin National Bank, of which he bought effective control in 1972, went bankrupt in 1974. He lost Societa General Immobiliare, a giant real estate operation with worldwide holdings. The Italian government has brought criminal charges against him. accusing him of draining $225 million from a now-bankrupt bank in Milan. A federal judge here has ordered Sindona's extradition to Italy, although the Sicilian-born financier has been free on a $3 million personal recognizance bond while he appeals the order.

Sindona's troubles were compounded last week when a federal grand jury here returned a 99-count indictment charging him with fraud both in the acquisition and running of Franklin National Bank. When it failed, finally, after a massive rescue effort by the Federal Reserve Board, Franklin was the 19th largest bank in the United States, the biggest bank ever to fail in the nation's history. Sindona says he is innocent of all charges and the victim of political harassment in Italy as well. The grand jury indictment which federal officials say will not interfere with the extradition proceeding details the intricate steps by which Sindona allegedly looted the Milan banks he controlled to come up with the funds to buy Franklin National, then drained deposits from Franklin National to put funds back in his Italian institutions. All of the funds made the trip from Italy to the U.S.

via Switzerland, most of Profit Rules By Carter needed to rebuild the herds and said the administration is considering moves to deal with the problem. Several companies considered "out of compliance" with the president's program may be named publicly in April, he said. Asked whether the restrictive new rules are turning a voluntary price control program into a mandatory one, Bosworth replied: "There are degrees of voluntarism." Bosworth said he's enlisting other federal agencies in the monitoring program. The Departments of Agriculture and Health, Education and Welfare, will check on food prices, hospital costs and medical fees. The Department of Energy will ride herd on gasoline prices.

"A significant number of business firms are not complying with the program," he said. Earlier in the day, President Carter assured business leaders that the administration has nothing against high corporate profits unless they're based on "excessive" price increases. Equibank offers Unique Plan Equibank is offering a new long-term savings plan beginning Monday, R. W. Plumb, executive vice president for retail banking and bank operations, said.

Plumb said the savings plan, called Sure Future, involves the purchase of a 10-year certificate of deposit, but using the bank's money instead of the customer's. Then each month the customer makes a payment, or has the amount automatically deducted from an Equibank checking account, he added. The accounts are available in amounts of $5,000, $10,000, $20,000, $30,000 or $40,000, he said. The savings plan "may provide federal income tax advantages. But it requires the commitment to save for 10 years," Plumb noted.

On-Line Terminates Datatab Merger Bid On-Line Systems Inc. said it is ending its efforts to acquire Datatab Inc. On-Line gave no reason for terminating its acquisition offer for Datatab. However, On-Line indicated yesterday that it was holdilg merger discussions with United Telecommunications Inc. of Kansas City.

Mo. CHICAGO (UPI) A class-action suit accusing General Motors Corp. of secretly substituting less expensive and desirable transmissions in up to one million cars was filed in federal court here. The suit was filed yesterday by attorney Charles A. "Pat" Boyle, who was involved in a $34 million engine switch suit against the nation's largest automaker about two years ago.

Boyle charged that more than 50,000 cars and perhaps as many as a million were involved in the transmission He said the switches occurred in Buicks, Oldsmobiles and Pontiacs manufactured since 1977. The suit seeks to compel GM to pay unspecified damages to each customer who bought an automobile that was supposed to have a THM 350 Turbohydra-matic transmission but allegedly was equipped with a less expensive, inferior THM 200 transmission. General Motors "intentionally concealed, suppressed and failed to disclose" the transmission substitutions, the suit charged. General Motors officials declined to comment on the specifics of the charge because they said they had not seen the complaint. The giant automaker did, however, issue a statement on its general policy regarding transmissions.

It said, "General Motors cars, whether subcompact or fullsize, are equipped with transmissions that are approved by engineers for use in the particular vehicle and with a particular power train, measure changes in general economic activity and to anticipated future changes in the business cycle. Six of the 10 indicators available for February declined: the average workweek, change in total liquid asses, stock prices, the money supply, new orders and building permits. Three rose: vendor performance, changes in sensitive prices and contracts and orders for new plant and equipment. The layoff rate was unchanged. The department said that the overall index stood at 142.3 of the 1967 average, down from 143.6 in January.

Prudhoe System Contract Awarded PASADENA, Calif. (UPI) Parsons Corp. has obtained a contract to provide design, engineering and procurement for construction of an oil and gas gathering system on the west side of the Prudhoe Bay oilfield in Alaska. Thf contract will amount to about $100 million and was let by a subsidiary of Standard Oil Co. (Ohio).

New Price, Announced By KENNETH ESKEY Scripps-Howard Staff Writer WASHINGTON The Carter administration is saddling companies with strict new price and profit regulations at a time when it's trying to drum up business support for the president's sagging anti-inflation program. The result is likely to be more complaining about government interference in the economy from businessmen who already feel they're being unfairly accused of profiteering. New price regulations affecting hundreds of companies were announced late yesterday only a few hours after the president's chief inflation fighter, Alfred E. Kahn, told a meeting of 800 manufacturers he needs their help to bring inflation under control. "We are not in the business of regulating profits and we do not intend to be," Kahn told a skeptical audience of corporate executives attending the spring conference here of the National Association of Manufacturers.

Two hours later the director of the Council on Wage and Price Stability, Barry P. Bosworth, announced new price and profit actions that would: Require companies in "selected industries" to provide a complete record of all price increases in the past six months and to report future increases on a periodic basis. "The council is prepared to use its subpoena power if necessary," Bosworth said. Require all firms with sales in excess of $250 million a year to submit reports on price increases for the first six months and the first nine months of the anti-inflation program, which began last October. Bosworth said 1,200 to 1,500 firms are involved.

Make it harder for companies to claim "uncontrollable cost increases" in justifying higher prices. Fewer companies will be permitted to fall back on profit margins rather than prices as a mea-' sure of their compliance with the president's program. Bosworth said his monitors will seek "detailed data" from five highly inflated industries: drugs, dairy products, electrical motors and generators, building materials and lead smelters. He also noted that beef prices have gone "far beyond" any reasonable level WE Unit Wins Pact Westinghouse Electric New Jersey Division, won a $1.5 million U.S. Department of Transportation contract to replace escalators in-'the Pennsylvania Station in Newark, N.J.

fj.9 Economic Decline Ludlum Buys California Firm; Sells Division Allegheny Ludlum Industries Inc. said it has purchased a California company and sold a division of its subsidiary, Che-metron Corp. Allegheny Ludlum said it has completed the agreement for the acquisition of the Kennedy Co. of Altadena, as previously announced last Oct. 17.

Kennedy will be operated with the present management as part of Magnetics and Electronics, one of the companies in Allegheny Ludlum's General Industry Group. Liquid Air Corp. of North America and Allegheny Ludlum jointly announced the consummation of a previously announced agreement for the sale of Che-metron's Industrial Gases Division to Liquid Air. According to the agreement, Liquid Air assumes certain liabilities pertaining to the division, and issues 3,335,000 shares of its common stock. The transaction results in Allegheny Ludlum holding 32.7 percent of the total shares of Liquid Air.

PDM Offer Nets 209,782 Shares Pittsburgh-Des Moines Steel Co. said it has received tenders of 209,782 shares of its outstanding common stock under its offer to repurchase up to 200,000 shares or more of its common at $32.50 a share. The firm said it will buy all shares tendered by the expiration of the offer Wednesday, which amounts to a cash payout of some $6.8 million. Pittsburgh-Des Moines Steel said the number of shares tendered total about 14 percent of the 1,450,000 shares outstanding. Banking Machine Placed In Hospital Pittsburgh National Bank said an automatic banking machine installed at Presbyterian-University Hospital will be open for business Tuesday.

The bank said it is the first banking machine to be located away from one of PNB's offices. Robroy Dividend Directors of Robroy INdustries Inc. declared quarterly dividendf 12 cents a share, $yable April 25 to stockholders of April 11. Largest Since Summer WASHINGTON (UPI) A key government index designed to forecast the future of the economy declined by 0.9 percent last month, the largest drop since last summer, the government reported today. The decline was another signal that the economy is beginning to slow down.

The February drop in the Index of Leading Economic Indicators was the biggest since a 1.1 percent slide last July. It followed an 0.3 percent decline in January, the Commerce Department said. The Commerce Department's index was revised substantially this month, mainly to reflect changes in the way the money supply is measured. Originally, the department reported that the index had declined 0.4 percent in November, 0.1 percent in December and 1.2 percent in January. But the revised figures showed that the November drop was 0.2 percent, the index actually rose in December by 0.4 percent, and then fell again in January by 0.3 percent.

The leadiijg indicators index is comprised of 12 components that, taken together, are utilized by economists to.