Sixteen Pittsburgh banks and thrifts and a community group joined forces last week to provide credit counseling for low-income and moderate-income families.

Although many large banks have their own counseling programs, most small institutions do not, said executives involved in the effort. Most of the 16 banks are smaller institutions.

"Small banks don't have the resources to hire more staff, and train or retrain the staff they have to embrace community development banking," says Gayland B. Cook, president and chief executive of $1,3 billion-asset Integra Bank Pittsburgh.

Integra is one of three large banks participating in the so-called Community/Lender Credit Program.

Michael J. Hagan, president and chief executive of $220 million-asset North Side Deposit Bank, agrees that such programs are not easy for small banks to run - and he believes the new partnership eases the burden.

North Side originally tried credit counseling in 1991.

Working with a community group and the city's credit bureau, the bank's lending and Community Reinvestment Act officers set up shop in a public building, pored over credit reports with area residents and explained home mortgages.

Mr. Hagan says the program was very successful. "We wanted to do another one, but we had problems lining up a place to hold a session, timing all the other things involved, freeing up staff, and so forth."

Community Groups' Role

Contributions for salaries and other expenses by the 16 banks will be based on asset size. But the most important resources might be the intermediary roles community groups will play.

Mr. Hagan attributes the success of North Side's 1991 session to the community group brought in to work with residents.

Integra's Gayland Cook agrees that community groups are crucial to the program.

"Pittsburgh has 78 neighborhoods," he noted, "and if our banks, big or small, each tried to set up counseling programs without community groups, we'd be light years behind where we are now - and we still have a long way to go."

Word of the new program will be disseminated by the 32 grassroots groups belonging to the Pittsburgh Community Reinvestment Group, whose president, Stanley Lowe, led efforts to establish the program.

"For the first time in Pittsburgh, we have lenders who no longer have to say |no' - they just have to defer, at worst," said Mr. Lowe. "I am delighted with the banks that have signed up, and I am saddened that the rest of this city's 54 banks didn't respond at all.

"I know that small banks have small staffs, but I would hope they would be creative enough to relate directly with programs that help them expand. A small staff doesn't mean you can't have the force of a cannon."

One-on-One Guidance

The program will offer counseling to people who have the cash flow to support a mortgage, but are mystified by the process or have failed to clean up problems in their credit histories.

To address those issues, the program will counsel people on a one-on-one basis, Mr. Cook said. He noted that many residents "have no idea what we're talking about when we try to explain mortgages.

"They also tend to see bankers . . . as people who always say |no.' We have to persuade them that taking a year or even three years to fix their credit histories isn't just a way to defer an inevitable |no.'"

The lending program wasn't officially kicked off until May 26, but the news spread by word of mouth. Fifty families have already been counseled, and 400 inquiries have been phoned in, Mr. Hagan said. Consequently, he said, the program's first-year goal - counseling 300 families - will be easily surpassed.

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