Intervest Bancshares Corporation (NASDAQ-GS: IBCA) (the "Company") today reported a net loss for the first quarter of 2010 ("Q1-10") of $2.9 million, or $0.35 per diluted common share, compared to net income of $0.5 million, or $0.06 per share, for the first quarter of 2009 ("Q1-09").
The Company's operating results have been affected by the weak economy, high unemployment, increased office and retail vacancy rates and an increasing supply of distressed properties for sale in the marketplace at discounted prices, all of which have significantly reduced commercial and multifamily real estate values both nationally and in the Company's lending areas.
The net loss for Q1-10 was driven by a $7.8 million increase in the provision for loan losses and a $1.7 million increase in noninterest expenses. The total of these items was partially offset by a $3.2 million increase in net interest and dividend income, a $0.4 million increase in noninterest income and a $2.5 million decrease in the provision for income tax expense.
The provision for loan losses increased to $9.7 million in Q1-10 from $1.9 million in Q1-09. The increase was attributable to the downgrading of internal risk ratings on various loans and lower estimates of value on a number of collateral properties. During Q1-10, the Company charged off a total of $14.0 million of loan principal as a result of declining real estate values.
Noninterest expenses increased to $7.6 million in Q1-10 from $5.9 million in Q1-09. The increase was due to a $1.9 million increase in the provision for losses on real estate owned, a $0.4 million increase in FDIC insurance expense due to higher premium rates imposed on all FDIC insured banks, a $0.2 million increase in regulatory and professional fees and a $0.2 million increase in expenses associated with nonperforming assets. The aggregate of these items was partially offset by $1.0 million of expense in Q1-09 that did not recur in Q1-10 from the early retirement of higher cost borrowings. The Company recorded an income tax benefit of $1.8 million in Q1-10 compared to $0.7 million of tax expense in Q1-09. The Company's effective tax rate was 42% in Q1-10, compared to 43% in Q1-09.