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First Merchants posts larger loss on fraud charge

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Muncie-based First Merchants Corp. disclosed this week that the bank lost $31.2 million in the second quarter, including $10.2 million it blamed on fraudulent financial statements provided by a large commercial borrower.

First Merchants did not disclose the name of the borrower but said it is pursuing legal action to recover the loss.

The Muncie Star Press reported the loss may have been related to the bank's business relationship with the Eye Center Group, a Muncie-based eye care and surgery practice. In a recent lawsuit to collect unpaid fees, Eye Center Group ophthalmologist Jeffrey Rapkin alleged that the corporation was $21 million in debt.

The quarterly loss of $31.2 million amounted to $1.48 per share compared to a profit of $6.6 million, or 36 cents per share, in the same period a year earlier.

First Merchants' loan charge-offs for the quarter totaled $40.4 million. Commercial real estate and commercial and industrial loans accounted for much of the charge-offs.

"The single largest charge-off, totaling $10.2 million, was taken as a result of fraudulent financial statements provided by a large commercial and industrial borrower," the bank said in a prepared statement.

First Merchants said it boosted provision for loan losses to $59 million, or 2.2 percent of total loans, from 1 percent in the same quarter last year.

Total assets in the second quarter rose 19 percent over the year-ago period, to $4.7 billion. Deposits grew 20 percent, to $3.6 billion, in the same period.

Much of the growth can be attributed to First Merchant's acquisition of Plainfield-based Lincoln Bancorp., which closed late last year. The purchase expanded First Merchant's share of the Indianapolis market.

Lincoln Bancorp, the parent of Lincoln Bank, had Hendricks County locations in Avon, Brownsburg and Plainfield. In Johnson County, Lincoln branches were in Bargersville, Franklin, Greenwood and Trafalgar.
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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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