Several major expenses caused Indiana Business Bancorp to report a loss of $519,043 in the first quarter, the Indianapolis-based parent of Indiana Business Bank said on Monday.
The loss worked out to 35 cents a share, compared with a profit of $32,252, or 2 cents a share, during the same quarter a year ago.
The bank attributed the loss to an increase in provision expenses and other credit costs.
“As a result of the meltdown in real estate values over the past 18 months, our level of non-performing assets are at an unacceptable level,” President and CEO James S. Young said in a prepared statement. “The credit costs associated with these assets are a significant drag on our operations.”
Net-interest income from loans in the first quarter declined by 1 percent compared with the first three months in 2009. The $7,667 reduction, to $732,883, reflects a smaller loan portfolio. The value of total loans outstanding as of March 31 was almost $6 million lower than in the year-ago period.
Indiana Business Bank’s decision to unload risky loans, coupled with another bank’s repurchase of a group of its loans, led to the decrease in its loan portfolio value.
Deposits, however, increased almost 3 percent, to $74.5 million, compared with the first quarter of 2009.
Young said the bank will continue its strategy of providing loans guaranteed by the U.S. Small Business Administration, and selling those loans to generate “significant” non-interest income.