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Integra Bank's auditor says situation may be dire

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Evansville-based Integra Bank reported a fourth-quarter loss of $35 million, and its auditors say the institution may need an infusion of capital to survive.

Monday’s announcement is the latest ominous news for Integra, which is at risk of becoming the second Hoosier financial institution to fail since the financial crisis began in 2008. Regulators seized the first, Columbus’ Irwin Union Bank and Trust, in September 2009.

Integra and its parent, Evansville-based Integra Bank Corp., have been paying a steep price for aggressively expanding early in the 2000s into commercial real estate loans—a market segment that was decimated when the economy tanked.

"Our core community banking business continued to perform well; however, the persistent weakness in commercial real estate markets continues to put intense pressure on our recovery and has resulted in our current quarterly loss," Mike Alley, chairman and CEO, said in a statement.

The statement noted that Integra’s “auditors have advised management that unless the company is able to obtain firm commitments for a substantial capital infusion” quickly, the auditors’ report “will indicate that there is substantial doubt concerning the company's ability to continue as a going concern.”

Integra Bank Corp.’s board hired Alley, a veteran Indianapolis banker, in May 2009 to try to turn around the ailing institution. He told IBJ in December that a plunge in the value of real estate that Integra holds as collateral on loans has made his task tougher than expected.

Monday’s announcement contained additional bad news:

- Integra Bank’s capital ratios remain below levels required by the Office of the Comptroller of the Currency. In addition, the OCC has rejected a plan Integra submitted to improve those levels.

- Because the bank is inadequately capitalized, it expects to become ineligible to receive additional deposits from units of government in Indiana. Worse, Integra expects the $117 million in public funds it now holds to gradually be transferred to other institutions.

Integra Bank Corp. shares closed Monday at 75 cents each, down 3 cents on the day.

 

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  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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