N.Y. Bank Loses Home State Bid to Ohio Thrift

New York’s Chemical Bank lost its bid to enter the Ohio banking market Wednesday when Ohio officials said they had accepted a last-minute offer from a Cincinnati savings and loan to take control of Home State Savings Bank, a thrift institution whose collapse in March sparked a run at other Ohio thrifts.

The state accepted the offer for Home State from Hunter Savings Assn. because it called for $5 million less in state subsidies than did the Chemical bid, according to Robert McAlister, Ohio’s state superintendent of savings and loans.

Earlier, the Ohio state legislature had passed a law designed to enable Chemical New York Corp., the holding company that owns the nation’s sixth-largest bank, to acquire Home State and convert it into a commercial bank.

But the state also gave Ohio financial institutions until midnight Tuesday to match or beat Chemical’s offer. Hunter, a subsidiary of Cincinnati financier Carl H. Lindner’s American Financial Corp., submitted the only local bid six hours before the midnight deadline. Both Chemical and Hunter offered to invest $30 million to recapitalize Home State and pay $21 million in premiums to help ensure that Home State depositors could get all of their money back. But Hunter said Home State’s assets were worth $5 million more than Chemical had estimated, reducing the state’s contribution.

The run on state-chartered, privately insured savings and loans that was sparked by Home State’s collapse forced Ohio Gov. Richard F. Celeste to order the nation’s largest banking holiday since the Great Depression.

Home State, with 33 branches in the Cincinnati, Dayton and Columbus areas, had failed after revelations that it was about to incur huge losses resulting from its dealings with E.S.M. Government Securities, a failed Florida securities trading firm. The state government took control of Home State in March and the firm has not reopened since.

State officials said they were pleased that they had found a local buyer for Home State, which remains under state control until the acquisition by Hunter wins court approval. “We finally have a buyer for Home State, and a domestic one, too, which makes it all the sweeter,” said State Rep. Robert Nettle, chairman of the state House Financial Institutions Committee.

McAlister and other state officials said Hunter, which is already federally insured, will apply for federal deposit insurance for Home State, and is likely to merge Home State’s operations into its own.