Problem loans dragged First Internet Bancorp into the red last year for the first time in nearly a decade.
The Indianapolis-based parent company of First Internet Bank of Indiana on Friday announced a loss of $2.1 million, or $1.12 per share, for 2009, compared with profit of $1.6 million, or 84 cents per share, the previous year.
The annual loss was the first for the 11-year-old company since it became profitable in 2001.
First Internet last year increased its provision for loan losses 140 percent, or by $6.7 million, to $11.6 million. According to First Internet, that reserve included $3 million set aside in December to address a single troubled commercial loan. The bank’s management said it believes it can eventually recover about $2 million of the $3 million.
“Unemployment and the real estate market continue to plague a portion of our customers, commercial and consumer alike,” First Internet Chairman and CEO David Becker said in a prepared statement.
As of Dec. 31, First Internet deposits stood at $411.6 million, a 6-percent decrease from the $439.2 million at the end of 2008. Loans fell 4 percent, from $324.4 million to $312.6 million. Assets dropped from $543 million to $504.6 million.
Despite its problems with soured loans, there were bright spots in First Internet’s 2009 results. Net-interest income grew 12 percent, from $12.3 million in 2008 to $13.7 million in 2009. Non-interest income also increased, from $2.6 million to $2.9 million. First Internet attributed the growth to modestly higher asset yields, lower cost of funds and an increase in the bank’s online mortgage-origination operation.
Much of the bank’s mortgage business was in refinancing, driven by 2009’s low mortgage rates. First Internet does not hold the mortgages it originates on its balance sheet, instead selling them on the secondary market.
Shares of First Internet are priced at $4.26 on the Over the Counter Bulletin Board. One year ago, they were worth $8 per share.