INDIANAPOLIS, Oct. 14, 2003 (PRIMEZONE) -- First Indiana Corporation (Nasdaq:FINB) today announced a net loss of $2.4 million, or $0.16 per diluted share for the quarter ended September 30, 2003. Earnings for the third quarter of the previous year were $6.8 million, or $0.43 per diluted share. For the nine months ended September 30, 2003, First Indiana's earnings were $557,000, or $0.04 per diluted share, compared with $20.1 million, or $1.27 per diluted share, for the same period in 2002.
Performance in the third quarter of 2003 was significantly impacted by the previously reported charge to increase the allowance for loan losses. Marni McKinney, vice chairman and chief executive officer, said, "The increase in our allowance is reflective of the results from the findings of the independent evaluation of our commercial loan portfolio, our continued evaluation of the risks in our loan portfolio, and the factors contained in our revised approach for calculating the allowance for loan losses." The provision for loan losses was $13.5 million for the third quarter of 2003, compared with $3.0 million for the third quarter of 2002. For the nine months ended September 30, 2003, the provision for loan losses was $35.9 million, compared with $9.8 million for the same period in 2002.
The Corporation's ratio of allowance for loan losses to loans at September 30, 2003, was 3.15 percent. The ratio of allowance for loan losses to non-performing loans at September 30, 2003, was 138 percent.
Net loan charge-offs for the third quarter of 2003 were $2.3 million, compared with $2.0 million for the third quarter 2002. Net charge-offs on business loans were $1.3 million and net charge-offs on consumer loans were $1.1 million for the third quarter of 2003. Net loan charge-offs for the nine months ended September 30, 2003 were $24.6 million, compared with $8.5 million for the same period in 2002.
Said McKinney, "We were pleased that there were no charge-offs, other than in the normal course of business, that surfaced during the quarter. We feel the Corporation is now well positioned to continue to grow its national bank franchise."
Non-performing assets were $45.6 million at September 30, 2003, compared with $44.2 million at June 30, 2003 and $41.3 million at September 30, 2002. An increase of $3.4 million in non-performing business loans over June 30, 2003, was partially offset by improvements in non-performing assets secured by residential real estate.
Net interest margin was 3.62 percent for the third quarter of 2003, compared with 3.86 percent for the second quarter of 2003 and 3.88 percent for the third quarter of 2002. The decline in net interest margin in the third quarter of 2003 reflects the 25 basis point rate cut by the Federal Reserve Board late in the second quarter of 2003, which placed pressure on net interest margin. Net interest margin was 3.74 percent for the nine months ended September 30, 2003, compared with 3.75 percent for the same period in 2002.
Net interest income was $18.8 million for the three months ended September 30, 2003, compared with $19.4 million for the three months ended September 30, 2002. For the nine months ended September 30, 2003, net interest income was $58.6 million, compared with $55.1 million for the same period in 2002.
The Corporation continued to experience weak commercial loan demand and heavy prepayments on consumer and residential loans. Loans outstanding averaged $1.85 billion for the third quarter of 2003, compared with $1.92 billion for the second quarter of 2003. First Indiana's average core demand and savings deposits increased 9.5 percent on an annualized basis to $860.6 million for the third quarter of 2003 from $840.7 million for the second quarter of 2003, reflecting the success of the Corporation's continuing long-term strategy of building relationships with business and personal clients.
Non-interest income for the third quarter of 2003 was $12.5 million, compared with $11.1 million for the same period last year. Targeted areas of deposit fees, trust fees, and Somerset fees increased for the quarter as a result of the emphasis placed on developing fee income. Non-interest income as a percent of revenue was 40.0 percent in the third quarter of 2003, compared with 36.4 percent in the third quarter of 2002. Non-interest income for the nine months ended September 30, 2003, was $39.0 million, compared with $35.6 million for the same period last year.
Non-interest expense was $21.4 million for the third quarter of 2003, compared with $19.7 million for the second quarter of 2003 and $16.8 million for the third quarter of 2002. Included in third quarter 2003 non-interest expense is a $1 million increase in salary expense resulting from an adjustment in the accrual for salaries. Additionally, non-interest expense increased for the third quarter of 2003 over the third quarter of 2002 due to the MetroBanCorp acquisition in January 2003 and additional staff expenses including wages, incentive accruals, and employee benefits expense.
First Indiana Bank remains "well-capitalized," the highest rating pursuant to the interagency guidelines for capital at national banks. The Corporation's tangible capital ratio was 7.81 percent at September 30, 2003, which compares favorably to a 6.87 percent median tangible capital ratio for publicly traded Midwest banks with $1 billion to $10 billion in assets at June 30, 2003.
McKinney; Owen B. Melton, Jr., president and COO; and William J. Brunner, chief financial officer, will host a conference call to discuss third quarter financial results on Wednesday, October 15, at 8:00 a.m. EST (Indianapolis time.) To participate, please call (800) 278-9857 and ask for First Indiana third quarter earnings. A replay of the call will be available from 10:00 a.m. EST on Wednesday, October 15, through 5:00 p.m., Friday, October 24. To hear the replay, call (800) 642-1687 and use conference ID: 2852886.
First Indiana Corporation (Nasdaq:FINB) is a full-service financial services company offering comprehensive financial solutions to businesses and individuals. It is the holding company for First Indiana Bank, N.A., the largest commercial bank headquartered in Indianapolis, and Somerset, an accounting and consulting firm. Founded in 1915, First Indiana Bank is a national bank with 33 offices in Central Indiana, plus construction and consumer loan offices in Indiana, Arizona, Florida, Illinois, North Carolina, and Ohio. First Indiana also originates consumer loans in 46 states through a national independent agent network. Through Somerset and FirstTrust Indiana, First Indiana offers a full array of tax planning, accounting, consulting, retirement and estate planning, and investment advisory and trust services. Information about First Indiana is available at (317) 269-1200, or at www.firstindiana.com, which is not a part of this news release. Statements contained in this news release that are not historical facts may constitute forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended) which involve significant risks and uncertainties. First Indiana intends such forward-looking statements to be covered by the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking these safe-harbor provisions. The ability to predict results or the actual effect of future plans or strategies is inherently uncertain, and involves a number of risks and uncertainties. In particular, among the factors that could cause actual results to differ materially are general economic conditions, unforeseen international political events, changes in interest rates (including reductions or increases in lending rates established by the Board of Governors of the Federal Reserve System), changes in consumers' investment decisions due to shifts in interest rates, loss of deposits and loans to other savings and financial institutions, substantial changes in financial markets, changes in real estate values and the real estate market, regulatory changes, or unanticipated results in pending legal proceedings or regulatory filings. The fact that there are various risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements.
Financial Highlights
First Indiana Corporation and Subsidiaries
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- -----------------------
2003 2002 2003 2002
----------- ---------- ---------- -----------
Net Interest
Income $ 18,779 $ 19,401 $ 58,570 $ 55,068
Provision for
Loan Losses 13,548 2,982 35,876 9,751
Non-Interest
Income 12,511 11,111 38,964 35,560
Non-Interest
Expense 21,391 16,767 60,811 49,150
Net Earnings
(Loss) (2,448) 6,842 557 20,121
Basic Earnings
(Loss) Per
Share $ (0.16) $ 0.44 $ 0.04 $ 1.30
Diluted
Earnings
(Loss) Per
Share (0.16) 0.43 0.04 1.27
Dividends Per
Share 0.165 0.160 0.495 0.480
Net Interest
Margin 3.62% 3.88% 3.74% 3.75%
Efficiency
Ratio 68.36 54.95 62.35 54.23
Annualized
Return on
Average Assets (0.44) 1.29 0.03 1.30
Annualized
Return on
Average Equity (4.43) 12.21 0.33 12.42
Average Shares
Outstanding 15,590,021 15,576,745 15,567,949 15,532,653
Average Diluted
Shares
Outstanding 15,590,021 15,851,161 15,709,462 15,825,930
At September 30
-------------------------
2003 2002
----------- ------------
Assets $ 2,205,375 $ 2,132,631
Loans 1,825,308 1,847,504
Deposits 1,517,606 1,414,788
Shareholders'
Equity 210,784 223,541
Shareholders'
Equity/Assets 9.56% 10.48%
Shareholders'
Equity Per Share $ 13.51 $ 14.39
Market Closing
Price 18.51 18.33
Shares
Outstanding 15,596,658 15,538,802
Condensed Consolidated Balance Sheets
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
September 30 June 30 September 30
2003 2003 2002
------------ ----------- ------------
Assets
Cash $ 63,111 $ 68,065 $ 65,088
Interest-Bearing
Due from Banks 7,346 8,949 --
Securities Available
for Sale 208,092 155,024 143,252
Federal Home Loan
Bank and Federal
Reserve Bank Stock 25,377 25,097 22,491
Loans
Business 551,398 594,909 515,478
Consumer 624,287 638,982 671,292
Residential Mortgage 289,034 298,789 292,276
Single-Family
Construction 196,728 203,735 222,679
Commercial Real
Estate 163,861 167,435 145,779
----------- ----------- -----------
Total Loans 1,825,308 1,903,850 1,847,504
Allowance for
Loan Losses (57,498) (46,247) (38,349)
----------- ----------- -----------
Net Loans 1,767,810 1,857,603 1,809,155
Premises and
Equipment 25,884 26,278 20,645
Accrued Interest
Receivable 9,072 10,361 11,177
Mortgage Servicing
Rights 7,913 8,368 9,421
Goodwill 36,968 36,901 13,045
Other Intangible
Assets 4,805 4,989 --
Other Assets 48,997 48,759 38,357
----------- ----------- -----------
Total Assets $ 2,205,375 $ 2,250,394 $ 2,132,631
=========== =========== ===========
Liabilities
Non-Interest-Bearing
Deposits $ 231,649 $ 253,571 $ 170,887
Interest-Bearing
Deposits
Demand Deposits 223,055 212,023 159,881
Savings Deposits 407,217 427,572 395,811
Certificates of
Deposit 655,685 652,418 688,209
----------- ----------- -----------
Total Interest-Bearing
Deposits 1,285,957 1,292,013 1,243,901
----------- ----------- -----------
Total Deposits 1,517,606 1,545,584 1,414,788
Short-Term
Borrowings 156,912 150,832 138,185
Federal Home Loan
Bank Advances 256,511 278,550 319,532
Trust Preferred
Securities 23,601 23,578 --
Accrued Interest
Payable 1,957 2,554 2,631
Advances by Borrowers
for Taxes and
Insurance 3,467 2,736 5,909
Other Liabilities 34,537 29,019 28,045
----------- ----------- -----------
Total Liabilities 1,994,591 2,032,853 1,909,090
----------- ----------- -----------
Shareholders' Equity
Common Stock 175 174 172
Capital Surplus 46,402 44,472 42,594
Retained Earnings 185,306 192,005 196,160
Accumulated Other
Comprehensive
Income 2,632 3,795 4,848
Treasury Stock
at Cost (23,731) (22,905) (20,233)
----------- ----------- -----------
Total Shareholders'
Equity 210,784 217,541 223,541
----------- ----------- -----------
Total Liabilities
and Shareholders'
Equity $ 2,205,375 $ 2,250,394 $ 2,132,631
=========== =========== ===========
Condensed Consolidated Statements of Earnings
First Indiana Corporation and Subsidiaries
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
Interest Income
Loans $ 25,374 $ 29,577 $ 80,450 $ 87,948
Securities
Available
for Sale 1,976 2,079 5,868 6,494
Dividends on
FRB and FHLB
Stock 275 353 943 1,036
Federal Funds
Sold -- -- 3 15
Interest-Bearing
Due from Banks 14 -- 43 --
-------- -------- -------- --------
Total Interest
Income 27,639 32,009 87,307 95,493
Interest Expense
Deposits 5,796 8,726 19,636 28,698
Short-Term
Borrowings 313 671 1,085 1,593
Federal Home
Loan Bank
Advances 2,350 3,211 7,167 10,134
Trust Preferred
Securities 401 -- 849 --
-------- -------- -------- --------
Total Interest
Expense 8,860 12,608 28,737 40,425
-------- -------- -------- --------
Net Interest
Income 18,779 19,401 58,570 55,068
Provision for
Loan Losses 13,548 2,982 35,876 9,751
-------- -------- -------- --------
Net Interest
Income After
Provision for
Loan Losses 5,231 16,419 22,694 45,317
Non-Interest
Income
Loan and
Deposit Charges 4,608 4,230 13,415 11,637
Loan Servicing
Income (Expense) (55) (22) (320) 412
Loan Fees 785 545 2,004 1,942
Trust Fees 777 637 2,212 1,965
Somerset Fees 2,248 1,864 9,478 8,686
Investment
Product Sales
Commissions 473 685 1,307 2,220
Sale of Loans 2,865 2,605 8,233 6,538
Sale of
Investment
Securities -- -- 7 223
Other 810 567 2,628 1,937
-------- -------- -------- --------
Total
Non-Interest
Income 12,511 11,111 38,964 35,560
Non-Interest
Expense
Salaries and
Benefits 12,841 9,526 36,382 28,179
Net Occupancy 1,163 1,060 3,555 3,081
Equipment 1,585 1,437 4,942 4,581
Professional
Services 1,635 1,135 4,098 3,231
Marketing 684 518 1,930 1,671
Telephone,
Supplies, and
Postage 971 805 2,973 2,477
Other
Intangible
Asset
Amortization 184 -- 552 --
Other 2,328 2,286 6,379 5,930
-------- -------- -------- --------
Total
Non-Interest
Expense 21,391 16,767 60,811 49,150
-------- -------- -------- --------
Earnings (Loss)
before Income
Taxes (3,649) 10,763 847 31,727
Income Taxes
(Benefit) (1,201) 3,921 290 11,606
-------- -------- -------- --------
Net Earnings
(Loss) $ (2,448) $ 6,842 $ 557 $ 20,121
======== ======== ======== ========
Basic Earnings
(Loss) Per
Share $ (0.16) $ 0.44 $ 0.04 $ 1.30
======== ======== ======== ========
Diluted
Earnings
(Loss) Per
Share $ (0.16) $ 0.43 $ 0.04 $ 1.27
======== ======== ======== ========
Dividends
Per Common
Share $ 0.165 $ 0.160 $ 0.495 $ 0.480
======== ======== ======== ========
Net Interest Margin
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
Three Months Ended
------------------------------------------------------
September 30, 2003 September 30, 2002
-------------------------- --------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- -------- ----- ---------- -------- -----
Assets
Interest-
Bearing Due
from Banks $ 4,844 $ 14 1.12% $ -- $ -- --%
Federal Funds
Sold 96 -- 1.32 -- -- --
Securities
Available for
Sale 183,856 1,976 4.30 144,500 2,079 5.75
FHLB and FRB
Stock 25,310 275 4.36 22,491 353 6.29
Loans
Business 565,204 7,069 4.96 500,692 7,311 5.79
Consumer 633,053 10,201 6.42 684,155 12,622 7.36
Residential
Mortgage 290,705 3,685 5.07 280,990 4,385 6.24
Single-Family
Construction 199,421 2,218 4.41 223,352 3,029 5.38
Commercial
Real Estate 165,932 2,201 5.28 142,338 2,230 6.23
---------- ------- ---------- -------
Total Loans 1,854,315 25,374 5.45 1,831,527 29,577 6.43
---------- ------- ---------- -------
Total
Earning
Assets 2,068,421 27,639 5.32 1,998,518 32,009 6.38
Other Assets 141,874 105,701
---------- ----------
Total Assets $2,210,295 $2,104,219
========== ==========
Liabilities and
Shareholders'
Equity
Interest-
Bearing
Deposits
Demand
Deposits $ 220,487 $ 253 0.46% $ 162,163 $ 342 0.84%
Savings
Deposits 422,011 680 0.64 406,038 1,344 1.31
Certificates
of Deposit 675,267 4,863 2.86 629,837 7,040 4.43
---------- ------- ---------- -------
Total
Interest-
Bearing
Deposits 1,317,765 5,796 1.75 1,198,038 8,726 2.89
Short-Term
Borrowings 130,170 313 0.95 155,317 671 1.71
Federal Home
Loan Bank
Advances 261,202 2,350 3.57 336,439 3,211 3.79
Trust
Preferred
Securities 23,592 401 6.80 -- -- --
---------- ------- ---------- -------
Total
Interest-
Bearing
Liabilities 1,732,729 8,860 2.03 1,689,794 12,608 2.96
Non-Interest-
Bearing
Demand
Deposits 218,144 154,053
Other
Liabilities 40,272 37,969
Shareholders'
Equity 219,150 222,403
---------- ----------
Total
Liabilities
and
Shareholders'
Equity $2,210,295 $2,104,219
========== ==========
Net Interest ------- --------
Income/Spread $18,779 3.29% $ 19,401 3.42%
======= ==== ======== ====
Net Interest
Margin 3.62% 3.88%
==== ====
Net Interest Margin
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
Nine Months Ended
----------------------------------------------------
September 30, 2003 September 30, 2002
-------------------------- -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- -------- ----- --------- ------- ----
Assets
Interest-
Bearing Due
from Banks $ 4,533 $ 42 1.26% $ -- $ -- -- %
Federal Funds
Sold 298 4 1.62 1,440 15 1.42
Securities
Available for
Sale 165,128 5,868 4.74 146,537 6,494 5.91
FHLB and FRB
Stock 24,936 943 5.04 22,491 1,036 6.14
Loans
Business 573,142 21,910 5.11 469,575 20,200 5.75
Consumer 659,446 32,727 6.62 680,127 38,588 7.57
Residential
Mortgage 296,960 12,000 5.39 281,542 13,839 6.55
Single-Family
Construction 205,546 7,133 4.64 224,362 8,954 5.34
Commercial
Real
Estate 159,912 6,680 5.58 132,323 6,367 6.43
---------- ------- ---------- -------
Total Loans 1,895,006 80,450 5.67 1,787,929 87,948 6.57
---------- ------- ---------- -------
Total Earning
Assets 2,089,901 87,307 5.58 1,958,397 95,493 6.51
Other Assets 137,382 105,692
---------- ----------
Total Assets $2,227,283 $2,064,089
========== ==========
Liabilities and
Shareholders'
Equity
Interest-
Bearing
Deposits
Demand
Deposits $ 205,552 $ 851 0.55% $ 158,826 $ 988 0.83%
Savings
Deposits 429,275 2,467 0.77 425,987 4,342 1.36
Certificates
of Deposit 705,745 16,318 3.09 638,106 23,368 4.90
---------- ------- ---------- -------
Total
Interest-
Bearing
Deposits 1,340,572 19,636 1.96 1,222,919 28,698 3.14
Short-Term
Borrowings 134,318 1,085 1.08 124,885 1,593 1.71
Federal Home
Loan Bank
Advances 267,698 7,167 3.58 308,724 10,134 4.39
Trust
Preferred
Securities 15,995 849 7.10 -- -- --
---------- ------- ---------- -------
Total
Interest-
Bearing
Liabilities 1,758,583 28,737 2.19 1,656,528 40,425 3.26
Non-Interest-
Bearing
Demand
Deposits 205,272 149,667
Other
Liabilities 40,436 41,232
Shareholders'
Equity 222,992 216,662
---------- ----------
Total
Liabilities
and
Shareholders'
Equity $2,227,283 $2,064,089
========== ==========
Net Interest ------- -------
Income/Spread $58,570 3.39% $55,068 3.25%
======= ==== ======= ====
Net Interest
Margin 3.74% 3.75%
==== ====
Loan Charge-Offs and Recoveries
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
----------------- -----------------
2003 2002 2003 2002
------- ------- ------- -------
Allowance for
Loan Losses
at Beginning
of Period $46,247 $37,353 $44,469 $37,135
Charge-Offs
Business 1,298 253 17,934 3,778
Consumer 1,479 1,371 4,264 4,777
Residential
Mortgage 40 73 150 93
Single-Family
Construction -- 372 3,923 443
Commercial
Real Estate -- 288 22 350
------- ------- ------- -------
Total Charge-Offs 2,817 2,357 26,293 9,441
Recoveries
Business 42 96 681 167
Consumer 351 257 771 656
Residential
Mortgage -- 3 7 3
Single-Family
Construction 93 4 244 53
Commercial Real
Estate 34 11 34 25
------- ------- ------- -------
Total
Recoveries 520 371 1,737 904
------- ------- ------- -------
Net
Charge-Offs 2,297 1,986 24,556 8,537
Provision for
Loan Losses 13,548 2,982 35,876 9,751
Allowance Related
to Bank Acquired -- -- 1,709 --
------- ------- ------- -------
Allowance for
Loan Losses
at End of
Period $57,498 $38,349 $57,498 $38,349
======= ======= ======= =======
Net Charge-Offs
to Average Loans
(Annualized) 0.49% 0.43% 1.73% 0.64%
Allowance for
Loan Losses
to Loans at
End of Period 3.15 2.08
Allowance for
Loan Losses to
Non-Performing
Loans at End
of Period 137.97 120.04
Non-Performing Assets
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
September 30 June 30 September 30
2003 2003 2002
------- ------- -------
Non-Performing Loans
Non-Accrual Loans
Business $13,659 $10,966 $ 7,842
Consumer 7,654 8,323 11,173
Residential Mortgage 2,481 2,718 2,389
Single-Family Construction 9,296 8,833 4,932
Commercial Real Estate 5,150 5,440 2,474
------- ------- -------
Total Non-Accrual Loans 38,240 36,280 28,810
------- ------- -------
Accruing Loans Past Due
90 Days or More
Business 1,178 482 76
Consumer 1,847 1,915 3,061
Single-Family
Construction 408 -- --
------- ------- -------
Total Accruing Loans
Past Due 90 Days or More 3,433 2,397 3,137
------- ------- -------
Total Non-Performing Loans 41,673 38,677 31,947
Other Real Estate
Owned, Net 3,877 5,473 9,307
------- ------- -------
Total Non-Performing
Assets $45,550 $44,150 $41,254
======= ======= =======
Non-Performing Loans to
Loans at End of Period 2.28% 2.03% 1.73%
Non-Performing Assets to
Loans and OREO at End
of Period 2.49 2.31 2.22