First National Bank won't change way it processes transactions

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First National Bank of Pennsylvania, the third biggest retail bank in the Pittsburgh region, will improve its customer disclosures but it will not change its policy of processing check and debit card transactions from highest amount to lowest, according to a settlement in a class-action lawsuit that won preliminary approval from the court Tuesday.

Numerous banks nationwide have faced lawsuits in recent years for re-sequencing customers' debit card purchases from high to low, rather than processing them in the actual order they come in. That practice, long decried by consumer groups, tends to drain an account more quickly and trigger the most overdraft fees.

The settlement with Hermitage, Mercer County-based FNB, filed in U.S. District Court in Pittsburgh on behalf of customers, is in contrast to settlements reached last year with local market leaders PNC and Citizens.

Both of those banks, which were sued in U.S. District Court in Miami, agreed to begin processing debit card transactions chronologically. PNC also agreed to process checks that way.

In addition, PNC agreed to pay $90 million to compensate customers hit with overdraft fees because of high-to-low re-sequencing and Citizens agreed to pay $137.5 million.

Under the settlement with FNB, the bank will set up a $3 million fund, less one-third for attorney fees, to distribute to customers hurt by the high-to-low policy any time between June 1, 2006, and Feb. 8, 2013.

Customers who may be eligible for compensation are to receive notices in the mail.

FNB also agreed to state explicitly in account disclosures that the bank processes check, ATM, point-of-sale and ACH debit items from highest amount to lowest.

The disclosure will inform customers that the practice could trigger "the imposition of additional fees."

A final hearing on the settlement was set for June 21.

A spokeswoman for FNB on Tuesday said the bank decided not to alter the way it processes transactions because, "It was not part of our settlement."

Attorneys for plaintiffs in the case could not be reached for comment.

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Patricia Sabatini: or 412-263-3066.


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