The Milwaukee area's largest publicly owned thrift has been ordered to pay $1.8 million to seven borrowers who got home improvement loans in 1995.

The plaintiffs had charged that it had been negligent in disbursing the loan funds and had conspired with the contractor to commit theft.

The thrift, St. Francis Bank, and its parent company, St. Francis Capital Corp., Brookfield, Wis., said the judgment was "not supported by facts or law" and vowed to appeal the jury verdict handed down in Milwaukee County Circuit Court last week.

"We let this go to trial because we felt the plaintiffs had next to no probability of prevailing," said William R. Hotz, general counsel at $1.6 billion-asset St. Francis Capital. "But when you're a deep-pocketed bank, you always kind of live in fear of letting anything go to a jury."

The suit was initiated by a group of homeowners referred to St. Francis by a home improvement contracting firm that went out of business in April 1996 before completing its work.

Mr. Hotz said that there was nothing unlawful about the financing, and that the borrowers sued St. Francis because they couldn't sue the contractor, Dreamsbuilt Inc.

"This was a situation where the builder goes belly up, the customers are left high and dry, so they decide to go after the bank," Mr. Hotz said.

The jury awarded actual damages of $150,000 and punitive damages of $1.65 million. In a press release, St. Francis said it will argue to have the punitive damages set aside and may appeal the entire verdict. A hearing has been set for July 8. Given Wisconsin's strict punitive damage law, Mr. Hotz said, he is confident St. Francis will win on appeal.

St. Francis said the verdict would have no effect on its earnings. Net income for the quarter ended March 31 was $3.6 million, compared with $3 million a year earlier.

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