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First Internet Bank suffers first loss since 2000

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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.

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  • Love
    I love FirstIB. I've been a customer since shortly after they started.

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  • Beam Me Up Scotty Banks
    The long term issue with pure play internet banks is their dependence on deposits and loans that tend to be priced higher and without a more local client base which is a provider of less expensive core deposits the cycle is hard to break. BANKALCHEMIST.

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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