WASHINGTON

THE GOVERNMENT announced $35 million in seed money for 31 community development projects. The grants were much less than originally envisioned because Congress refused to appropriate the $382 million it had authorized under 1994 legislation. Page 3

REGIONAL BANKING

MS FINANCIAL became the latest subprime auto lender to hit a pothole. The Jackson, Miss., company reported second-quarter earnings of $142,000, or 1 cent a share, 4 cents below the consensus estimate. Page 4

NORWEST's longtime head of correspondent banking handed off the job to a subordinate and will take a long-planned early retirement at yearend. Page 5

COMMUNITY BANKING

THE MEGAMERGERS of 1995 and acquirers' current preference for nonbanks are seen to be pushing small banks off the radar screens of potential buyers. This could press banks interested in selling to join the wave now. Page 6

THE CONNECTICUT Department of Banking has penalized the brokerage subsidiary of the state bankers association for violating state securities laws. Page 6

CREDIT/DEBIT/ATMs

PNC BANK Corp.'s 10-year contract with the American Automobile Association has proven a setback for the bank's credit card outsourcing partner, Card Issuer Program Management Corp. Their 14-month relationship will end next quarter, said Jerry D. Craft, president and chief executive of Atlanta-based Card Issuer Program Management. Page 16

MELLON BANK, plagued by credit losses in its card business, hired an executive with expertise in risk management to run the operation. Page 16

COMPLIANCE

BANKS ARE benefiting as competition cuts the cost of flood-hazard certification and speeds service. Page 8

VIOLATIONS can be avoided if banks act decisively in the months before new rules take effect. Page 9

MORTGAGES

A REGULATOR offered a plan to prod Fannie Mae and Freddie Mac to pass on more of their subsidy benefits to homebuyers and keep less for shareholders. Page 10

HOMESIDE LENDING, the company formed from Barnett and BankBoston mortgage units, is edging closer to selling stock to the public. Page 11

INVESTMENT PRODUCTS

CORPORATE DEMAND for retirement services has never been stronger, and Northern Trust says it wants a bigger slice of that market. Page 14

BOSTON CO.'s institutional money management unit has won clients after losing big accounts last year. Page 14

FINANCE

HEAVY INSIDER buying of National City shares is fueling talk that it may be poised to sell a private-label credit card business or announce a share repurchase. Back page

FIRST NATIONWIDE's debt went on credit watch at Moody's and Standard & Poor's in response to the thrift's plan to buy California Federal. Back page

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