A Michigan community bank restated 1997 earnings last week, saying it was a victim of a check-kiting scheme that could cost it $2.5 million.

Franklin Bank in Southfield said it was setting aside $2.8 million to cover its expected loss and legal fees. The adjustment, which boosted Franklin's loss reserve to $4 million, sliced its 1997 after-tax income nearly in half, to $2 million from $3.9 million.

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