Mr. Gustavel reported that an increase in IIB's provision for loan losses contributed to a net loss of $1.99 million, or a loss of $0.31 per diluted share, for the quarter ended September 30, 2009, compared to net income of $1.64 million, or $0.25 per diluted share, for the same period a year ago. IIB's net loss for the nine months ended September 30, 2009, was $4.67 million, or a loss of $0.75 per diluted share, compared to net income of $4.67 million, or $0.71 per diluted share, for the same nine-month period a year ago. Prior period earnings per share have been restated to reflect the 5% share dividend distributed to shareholders in December 2008.

Chairman Gustavel stated, "The decrease in earnings for the quarter and nine months ended September 30, 2009, was primarily due to the ongoing effects of the deterioration of the real estate markets within the communities the Bank serves as well as the downturn in the local and national economies. While we cannot control the real estate market or the economy, we try to stay ahead of deteriorating credits and asset values by applying conservative estimates in determining our allowance for loan losses. With that in mind, we added $5.5 million to our allowance for loan losses account during the third quarter of 2009. Despite the challenging economic environment, IIB's capital ratios remain well above the threshold required to be considered "Well-Capitalized," with a Total Risk-Based Capital Ratio of 15.02% at September 30, 2009, an increase from 14.45% at June 30, 2009, and 13.63% at September 30, 2008."

IIB's total assets as of September 30, 2009, decreased $94.8 million, or 15.7%, to $509.4 million from $604.2 million at September 30, 2008. Total loans, including loans held-for-sale, at September 30, 2009, decreased $88.6 million, or 17.6%, to $414.6 million from $503.2 million at September 30, 2008. Total deposits and customer repurchase agreements decreased $49.1 million, or 10.3%, to $428.4 million at September 30, 2009, compared to $477.5 million at September 30, 2008.

As of September 30, 2009, the allowance for loan losses account totaled $18.2 million, or 4.41% of total loans, excluding loans held-for-sale. Non-performing assets totaled $22.8 million, or 4.48% of total assets, at September 30, 2009, compared to $13.3 million, or 2.21% of total assets at September 30, 2008, and $31.2 million, or 5.80% of total assets at June 30, 2009.