IBJNews

Banks gobble TARP money, suffer losses

Back to TopCommentsE-mailPrintBookmark and Share
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.•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

  2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

  3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

  4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

  5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

ADVERTISEMENT