First Internet Bancorp, the parent of First Internet Bank of Indiana, today reported its first quarterly loss in eight years as borrowers continue to struggle to repay their loans.
The Indianapolis-based bank posted a loss of $209,445 in the first quarter, compared with profit of $369,939 in the same quarter a year ago.
Revenue increased 10 percent, to $3 million, as the bank improved yields on consumer and commercial loans.
First Internet Bancorp was founded in 1999 and has $545 million in assets. The bank became profitable two years after its founding and hadn’t suffered a quarterly loss since.
Increased charge-offs of consumer loans led to the quarterly loss, the bank said.
“This loss is truly a defensive posture because we did increase our loan-loss reserves,” Nicole Lorch, vice president, marketing and technology, said this morning. “It’s a cushion to protect ourselves against potential future loan losses.”
First Internet Bancorp increased its provision for loan losses by more than doubling it from a year earlier, to $2 million.
“While the financial health of our borrowers is outside our immediate control, we put an emphasis on the factors we are able to influence,” company CEO David Becker said in a written statement.
The bank continues to work with its borrowers “in every way possible” to meet their credit obligations, he said. At the same time, it continues to move forward with new lending programs to improve its financial performance.
Earlier this month, the bank began offering a jumbo-mortgage program at a time when many financial institutions have abandoned the lending option, Becker said. A jumbo loan exceeds Fannie Mae’s and Freddie Mac’s lending limit, currently at $227,150.
First Internet shares were trading at $9.50 late this morning, up 25 cents from yesterday’s close.