Indiana Business Bancorp in Indianapolis swung to a loss in the second quarter as its provision spiked.
The $89.9 million-asset company reported a loss of $484,678, or 32 cents a share, after reporting net income of $37,907, or 3 cents a share, a year earlier. It attributed the loss to an increase in its loan-loss provision to $706,250, from $40,000 in the second quarter of 2009.
The increased provision was primarily related to a single commercial real estate loan that was restructured, after the underlying real estate was reappraised in June. The value of the property decreased significantly since the original appraisal in 2006, and the book value of the restructured loan was written down to reflect the change, Indiana Business said Friday.
Total loans declined by $4 million, to $70.7 million, and net interest income fell 9.7% as the company sold off problem loans.
The company did not disclose its levels of nonperforming assets, but Chief Executive John Young said in a press release that the bank continues to work with borrowers to restructure or renegotiate debt, in hopes of returning those assets to performing status.