Durham fallout haunts Shelby County Bank

SHEBLYVILLE, Ind. (WISH) - Troubles that some say started with risky loans that included some to embattled businessman Tim Durham are impacting the Shelby County Bank. The town of Morristown recently pulled its money out of the bank to comply with federal regulations.

Morristown's outgoing Clerk-Treasurer Tom Reber told the town council this week that he was told by a bank employee that as of Dec. 14, the bank could no longer hold public funds in excess of $250,000 due to new banking regulations, 24-Hour News 8 news partner the Shelbyville News reports. So Reber pulled the town’s money – about $1.5 million in money market and checking accounts – and moved it to Ameriana Bank instead.

Reber said some money was left to pay outstanding checks, but the account will be completely closed out in about a month.

The bank's inability to hold large public funds is a new development for Shelby County Bank and its holding company Blue River Bancshares. Last summer, federal overseers told the company it had to raise more capital to guard against trouble in case the bank too a large hit with its loans, the newspaper reports.

The bank had suffered a $13.4 million net loss, according to a financial report from the bank, primarily from bad loans it had made in Indianapolis and Kentucky. The newspaper reports President Larry Lux said in the summer that he blamed his predecessor, Randy Collier, for reaching out of Shelby County and making risky loans, including some to Indianapolis businessman Tim Durham, now facing charges in connection with his financial dealings .

Shelby County also indicated it planned to pull its remaining money, about $11,000 out of the bank, the newspaper reports.