FINANCE: SALLY POPE DAVIS, an analyst for Goldman, Sachs, says Bank of Tokyo and Mitsubishi Bank, which announced their megamerger last week, seem likely to combine their California units. But the lack of an announcement so far has created uncertainty for Union Bank of California, which is in a spirited recovery from realty-related problems. Back page UNRECOGNIZED LOSSES on bank securities rose by 60% in the fourth quarter, to $19.2 billion, according to a report by Veribanc Inc. based on analysis of Federal Reserve data. Back page WASHINGTON: A BILL that would extend to federal savings and loans the option of voluntary membership in the Federal Home Loan Bank System is expected to be introduced by Rep. Richard Baker. Federal S&Ls now are required by law to own stock in the system. Page 2 THE NET WORTH of the nation's 1,100 mutual thrifts is more than enough to recapitalize the Savings Association Insurance Fund, according to a Florida financial publisher, and should be tapped whenever a mutual converts to the stock form of ownership. Page 3 INVESTMENT PRODUCTS: SHEILA A. PENROSE, a native of England who worked for the British Treasury before joining Northern Trust Corp. in 1977, doesn't fit the standard profile of a top executive at an elite Chicago banking company. But she has moved steadily up the management ladder at Northern Trust. Page 6 REGIONAL BANKING: THE PROXY BATTLE at Compass Bancshares attained new heights of acrimony last week when bank management labeled as "another dirty trick" a videotape being circulated by a dissident director. The tape illustrates a seeming contradiction in the stands taken by Compass' CEO on whether the bank is for sale. Page 8 SMALL BUSINESS: THE SBA's ATTEMPT to end its dependence on congressional appropriations could make its loan programs prohibitively expensive to small business borrowers, some bankers fear. Page 9 FIRST NATIONAL Bank of Chicago said it has made a $1 billion, five-year lending commitment to small businesses as part of a $2 billion program that includes consumer loans. Page 9 COMMUNITY BANKING: PRINCETON NATIONAL Bancorp in Illinois is charging off $2.8 million for mortgage derivatives, which caused about a $2 million loss in the first quarter, the company said. And PSB Holdings of Ohio is taking a $4.5 million charge, including $3.9 million related to the sale of securities. Page 12 OHIO's MID AM Inc. will buy a fast-growing securities broker-dealer, MFI Investments Corp. of Bryan, Ohio - becoming one of the first community banks to make a big bet on Glass-Steagall repeal. Page 13 MORTGAGES: THE NATIONAL Association of Mortgage Brokers decided at a March 25 meeting that it will not move its headquarters to Washington. It will remain in Phoenix, but its executive vice president may move to Washington next year. Page 10 LOS ANGELES led all counties in the nation in mortgage originations last year, according to a study by TRW REDI Property Data. Originations reached $15.01 billion in the county during 1994. Page 10 CREDIT/DEBIT/ATMs: MELLON BANK named David Johns manager of its network services division. Mr. Johns, who had been at Mellon since 1965, will manage merchant card processing and automated teller machine processing. Page 14 MASTERCARD International said four of Australia's major banks, plus a British bank with a presence Down Under, would begin a stored-value chip card pilot in the fourth quarter. Page 15

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