uses
  IdReplySMTP;

procedure TForm1.IdSMTPServer1Connect(AContext: TIdContext);
var
  Reply: TIdReplySMTP;
begin
  if IPTemporaryBanned(AContext.Binding.PeerIP) then
  begin
    Reply := TIdReplySMTP.Create(nil);
    try
      if not TIdSMTPServerContext(AContext).Ehlo then
        Reply.SetReply(421, 'IP temporarily banned.')
      else
        Reply.SetEnhReply(421, '4.2.1', 'IP temporarily banned.');
      AContext.Connection.IOHandler.Write(Reply.FormattedReply);
    finally
      Reply.Free;
    end;
    raise Exception.Create('IP temporarily banned.');
  end;
end;

// or optionally
procedure TForm1.IdSMTPServer1Connect(AContext: TIdContext);
var
  Reply: TIdReplySMTP;
begin
  if IPTemporaryBanned(AContext.Binding.PeerIP) then
  begin
    Reply := TIdReplySMTP.Create(nil);
    try
      Reply.Code := 421;
      Reply.Text.Text := 'IP temporarily banned.';
      if TIdSMTPServerContext(AContext).Ehlo then
        Reply.EnhancedCode.ReplyAsStr := '4.2.1';
      AContext.Connection.IOHandler.Write(Reply.FormattedReply);
    finally
      Reply.Free;
    end;
    raise Exception.Create('IP temporarily banned.');
  end;
end;