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Banks gobble TARP money, suffer losses

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Year In Review

The housing meltdown and recession gave banks in Indiana and across the nation their biggest test in decades.

One major Indiana bank failed. Columbus-based Irwin Financial Corp., whose roots date to 1871, was seized this fall by banking regulators, which sold most of its assets and deposits to Hamilton, Ohio-based First Financial Bancorp.

What did the company in was its national home-equity-loan unit, which went into a tailspin after mortgage markets collapsed, piling up $350 million in losses.

Helping many banks weather the 2009 storm was money from the federal government’s Troubled Asset Relief Program, or TARP. Regional banks that dominate the central Indiana market scooped up the funds, as did 17 banks headquartered in the state.

But financial institutions aren’t out of the woods yet. As the year closed, falling prices for commercial real estate were forcing banks to write off an increasing number of troubled business loans, a trend that’s likely to suppress bank earnings for many quarters.

The tough conditions have led many banks to play hardball with struggling business customers they might have been willing to work with in the past. It also has made many institutions slow to lend, pinching firms that need financing for growth.

Banking observers say the pressures ultimately may spur consolidation, thinning the number of local bank competitors. The area has 559 offices spread among 54 institutions, according to the Federal Deposit Insurance Corp.

“You drive around Indy and, on so many good corners, there are four bank branches,” said longtime local banking executive Steve Beck. “There will be some consolidation.”

So far, the tumult hasn’t led to a big shakeup in bank market shares, FDIC data show. But it has brought a big new player to town. On Dec. 31, 2008, Pittsburgh-based PNC Financial Services Group Inc. acquired Cleveland-based National City Corp. for $5.6 billion.

Before their merger, PNC had no presence here, while National City was No. 2 in the city, with 75 branches in the Indianapolis area.•

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

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