Merchants National Bank of Bangor

March 16, 2017*** *** called me on March 1, and demanded we reimburse him $43,for all costs relating to the settlement of two loans booked in mid-Both loans were to purchase and construct two separate propertiesHis partner in the two projects was *** ** *** ***
Merchants Bank approved the financing to the two projects based on a number of conditionsMonies were initially disbursed for the acquisition piece, however, in order for the Bank to disburse any more funds, the relationship manager needed to obtain a participating bank for the construction portion given the total financing amount was above Merchants Bank's lending limitHence, that was a condition of the financing from the start and is noted in the documentation executed by the borrowersAs well, executed leases needed to be supplied to the Bank as a conditionAs with any real estate transition, appraisals needed to be performed and title insurance needed to be obtained in order to transact the financingOn the *** *** *** loan, the financing was conditioned on a signed lease with the Borough of Fountain HillAn appraisal was performed based on the tenant being the BoroughAfter the loan was advanced and the appraisal complete, the Borough backed out of the deal and borrowers needed to come up with an alternative use for the propertyThey were now going to convert the property to a multi-unit apartment building, which would then require a new appraisal based on a different use of the buildingThe *** *** *** *** loan was booked on August 16, also with the same covenants and conditions as the *** *** *** loanThe only difference is that the Bank required an executed lease from *** *** (the tenant) which was not received until November As with the *** *** loan, Merchants Bank needed a participant in the loan so as not to exceed our lending limitThe relationship manager on the account contacted local financial institutions to participate with Merchants Bank with no one agreeing to assist in the financingI have recently confirmed that decision with several of the banks that were initially approachedHence, our Bank could no longer advance on the construction piece since the amount would be over our lending limit.In summary, *** *** did not meet all the conditions he agreed upon at the inception of the loansThe costs incurred (appraisals, title insurance, recording fees, origination fees, etc.) are all required costs for a Real Estate transactionAs a means to satisfy *** ***' request, we offered to reduce the rates on several other loans he has with Merchants BankThe rate reductions would recoup between $15,and $20,in loan origination fees over the term of the loans*** *** rejected that offer.We refuse to reimburse him for costs which he would have to incur with any Real Estate transactionI discussed this with *** ***' partner, *** *** *** and he fully understood the circumstances involved and has not pursued the Bank for the costsI have also attached a memo from the relationship manager detailing both transactions.Sincerely,Rocco AChief Executive Officer

March 16, 2017[redacted] called me on March 1, 2017 and demanded we reimburse him $43,905.55 for all costs relating to the settlement of two loans booked in mid-2016. Both loans were to purchase and construct two separate properties. His partner in the two projects was [redacted]....

Merchants Bank approved the financing to the two projects based on a number of conditions. Monies were initially disbursed for the acquisition piece, however, in order for the Bank to disburse any more funds, the relationship manager needed to obtain a participating bank for the construction portion given the total financing amount was above Merchants Bank's lending limit. Hence, that was a condition of the financing from the start and is noted in the documentation executed by the borrowers. As well, executed leases needed to be supplied to the Bank as a condition. As with any real estate transition, appraisals needed to be performed and title insurance needed to be obtained in order to transact the financing. On the [redacted] loan, the financing was conditioned on a signed lease with the Borough of Fountain Hill. An appraisal was performed based on the tenant being the Borough. After the loan was advanced and the appraisal complete, the Borough backed out of the deal and borrowers needed to come up with an alternative use for the property. They were now going to convert the property to a multi-unit apartment building, which would then require a new appraisal based on a different use of the building. The [redacted] loan was booked on August 16, 2016 also with the same covenants and conditions as the [redacted] loan. The only difference is that the Bank required an executed lease from [redacted] (the tenant) which was not received until November 2016. As with the [redacted] loan, Merchants Bank needed a participant in the loan so as not to exceed our lending limit. The relationship manager on the account contacted 6 local financial institutions to participate with Merchants Bank with no one agreeing to assist in the financing. I have recently confirmed that decision with several of the banks that were initially approached. Hence, our Bank could no longer advance on the construction piece since the amount would be over our lending limit.In summary, [redacted] did not meet all the conditions he agreed upon at the inception of the loans. The costs incurred (appraisals, title insurance, recording fees, origination fees, etc.) are all normal required costs for a Real Estate transaction. As a means to satisfy [redacted]' request, we offered to reduce the rates on several other loans he has with Merchants Bank. The rate reductions would recoup between $15,000 and $20,000 in loan origination fees over the term of the loans. [redacted] rejected that offer.We refuse to reimburse him for costs which he would have to incur with any Real Estate transaction. I discussed this with [redacted]' partner, [redacted] and he fully understood the circumstances involved and has not pursued the Bank for the costs. I have also attached a memo from the relationship manager detailing both transactions.Sincerely,Rocco A. Chief Executive Officer