INDIANAPOLIS, July 16, 2003 (PRIMEZONE) -- First Indiana Corporation (Nasdaq:FINB) today announced a net loss of $1.7 million, or $0.11 per diluted share, for the quarter ended June 30, 2003. Earnings for the second quarter of the previous year were $6.9 million, or $0.43 per diluted share. For the six months ended June 30, 2003, First Indiana's earnings were $3.0 million, or $0.19 per diluted share, compared to $13.3 million, or $0.84 per diluted share, for the same period in 2002.
Performance in the second quarter of 2003 was significantly impacted by loan charge-offs of $15.4 million relating to two commercial loan clients. First, a large contractor in the Indianapolis area experienced significant cash flow difficulty. As a result, this loan was placed on non-accrual status and was charged down to liquidation value in the second quarter of 2003. Second quarter charge-offs also reflect the completion of management's review of the under-collateralized loans in one of the Bank's out-of-state offices, previously disclosed during the first quarter of 2003, for which a provision of $2.0 million was provided at that time.
The second quarter provision for loan losses of $16.1 million was driven by the two major items discussed above. Excluding the after-tax effect of $8.3 million from these charge-offs, earnings in the second quarter of 2003 were $6.6 million, or $0.42 per diluted share. This non-GAAP information is provided to demonstrate the impact of these two credits on the reported second quarter 2003 net loss. First Indiana remains "well-capitalized," the highest rating pursuant to the interagency guidelines for capital at national banks.
The Corporation has engaged an independent evaluation firm to examine the commercial loan portfolio in detail with regard to its internal loan grading and documentation and to deliver a written report to the board of directors.
In addition, Owen B. (Bud) Melton, Jr., president and chief operating officer of the Corporation and president and chief executive officer of the Bank, announced that he will retire from the Corporation and the Bank, effective December 31, 2003. Marni McKinney, vice chairman and chief executive officer of the Corporation, said, "Bud's skill sets are many. He has served the Corporation and the Bank well during his 25-year tenure here and is a valuable resource to Bob McKinney and me." McKinney indicated that the Corporation has engaged a national executive recruiting firm to conduct a search for Melton's replacement.
The Corporation also announced today that David L. Maraman, who has 31 years of banking experience, has been elected the chief lending officer of the Bank, effective July 23, 2003. In addition, he will assume the role of acting chief credit officer until a permanent chief credit officer is named. It is expected that a new chief credit officer will be named after determination of the new Bank chief executive officer. McKinney said, "David is a great fit for this position. He has acted both as senior vice president for credit policy for a major bank and in his most recent position was instrumental in achieving significant commercial loan growth coupled with sound credit quality."
Non-performing assets were $44.1 million at June 30, 2003, compared to $55.5 million at March 31, 2003 and $42.0 million at June 30, 2002. Business non-performing loans of $11.4 million at June 30, 2003 include remaining loan balances of $1.6 million relating to the large contractor mentioned above, and single-family construction and commercial real estate non-performing loans include remaining loan balances of $6.7 million relating to the out-of-state builder mentioned above.
The provision for loan losses was $16.1 million for the second quarter 2003, compared to $4.2 million for the second quarter 2002. For the six months ended June 30, 2003, the provision for loan losses was $22.3 million, compared to $6.8 million for the same period in 2002.
Net loan charge-offs for the second quarter 2003 were $18.0 million, compared to $5.0 million for the second quarter 2002. Included in net charge-offs for the second quarter of 2003 were the charge-offs outlined above and a $1.5 million charge-off for a business loan for which an allowance had been previously established. Net loan charge-offs for the six months ended June 30, 2003 were $22.3 million, compared to $6.6 million for the same period in 2002.
Net interest margin increased to 3.86 percent for the second quarter of 2003, compared with 3.73 percent for the first quarter of 2003 and 3.76 percent for the second quarter of 2002, reflective of the Corporation's asset sensitive position. However, the 25 basis point rate cut by the Federal Reserve Board late in the second quarter of 2003 will place pressure on net interest margin in the near term.
Net interest income was $20.3 million for the three months ended June 30, 2003, compared with $18.5 million for the three months ended June 30, 2002. For the six months ended June 30, 2003, net interest income was $39.8 million, compared with $35.7 million for the same period in 2002.
First Indiana's average core demand and savings deposits increased 11 percent on an annualized basis to $840.7 million for the second quarter of 2003 from $818.5 million for the first quarter of 2003. This increase resulted largely from continued emphasis on acquisition of low cost core deposits of checking, savings, and money market accounts.
Non-interest income for the second quarter 2003 was $12.5 million, compared with $12.0 million for the same period last year. Targeted business segments of deposit fees, trust fees, and sale of loans increased for the quarter. However, as a result of increasing residential and home equity loan prepayment speeds, loan servicing fees were reduced and impairment in capitalized loan servicing rights increased, causing a decrease in loan servicing income during the second quarter of 2003 compared to the second quarter of 2002. Non-interest income for the six months ended June 30, 2003 was $26.5 million, compared with $24.4 million for the same period last year.
Non-interest expense was $19.7 million for the second quarter of 2003, compared to $19.8 million for the first quarter of 2003 and $15.3 million for the second quarter of 2002. The increase over the second quarter of 2002 is primarily due to the inclusion of MetroBanCorp expenses after the acquisition date of January 13, 2003. Approximately $300,000 in expenses were directly associated with the integration of MetroBank year-to-date, with $200,000 of those expenses being incurred during the second quarter of 2003.
MetroBank branches began operating under the First Indiana Bank name and the integration of MetroBank was completed during the second quarter of 2003. The MetroBanCorp merger is expected to be accretive in 2003.
Marni McKinney, Bud Melton, and William J. Brunner, chief financial officer, will host a conference call to discuss second quarter financial results on Thursday, July 17, 8:00 a.m. EST (Indianapolis time.) (Indianapolis is one hour earlier than New York.) To participate, please call (800) 278-9857 and ask for First Indiana second quarter earnings. A replay of the call will be available 11:00 a.m. EST on Thursday, July 17, through 5:00 p.m., Friday, July 25. To hear the replay, call (800) 642-1687 and use conference ID: 1141532.
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 Six Months Ended
June 30 June 30
------------------------- -------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net Interest
Income $ 20,250 $ 18,473 $ 39,791 $ 35,667
Provision for
Loan Losses 16,091 4,159 22,328 6,769
Non-Interest
Income 12,534 11,955 26,453 24,449
Non-Interest
Expense 19,661 15,293 39,420 32,383
Net Earnings
(Loss) (1,723) 6,896 3,005 13,279
Basic Earnings
(Loss) Per
Share $ (0.11) $ 0.44 $ 0.19 $ 0.86
Diluted
Earnings
(Loss) Per
Share (0.11) 0.43 0.19 0.84
Dividends Per
Share 0.165 0.160 0.330 0.320
Net Interest
Margin 3.86% 3.76% 3.80% 3.68%
Efficiency
Ratio 59.97 50.26 59.51 53.87
Annualized
Return on
Average Assets (0.31) 1.34 0.27 1.31
Annualized
Return on
Average Equity (3.07) 12.80 2.69 12.53
Average Shares
Outstanding 15,540,010 15,546,223 15,556,731 15,510,241
Average
Diluted
Shares
Outstanding 15,540,010 15,899,768 15,682,268 15,813,105
At June 30
------------------------------
2003 2002
---------- -----------
Assets $2,250,394 $2,097,338
Loans 1,903,850 1,810,094
Deposits 1,545,584 1,383,548
Shareholders' Equity 217,541 218,063
Shareholders' Equity/Assets 9.67% 10.40%
Shareholders' Equity Per Share $ 14.00 $ 14.01
Market Closing Price 17.16 21.77
Shares Outstanding 15,542,061 15,565,894
Condensed Consolidated Balance Sheets
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
June 30 December 31 June 30
2003 2002 2002
---------- ---------- ----------
Assets
Cash $ 68,065 $ 76,050 $ 62,464
Interest-Bearing Due from
Banks 8,949 -- --
Federal Funds Sold -- -- --
Securities Available for Sale 155,024 138,457 145,085
Federal Home Loan Bank and
Federal Reserve Bank Stock 25,097 22,491 22,491
Loans
Business 594,909 501,213 495,427
Consumer 638,982 666,150 672,972
Residential Mortgage 298,789 311,324 278,505
Single-Family Construction 203,735 212,772 220,658
Commercial Real Estate 167,435 146,174 142,532
---------- ---------- ----------
Total Loans 1,903,850 1,837,633 1,810,094
Allowance for Loan Losses (46,247) (44,469) (37,353)
---------- ---------- ----------
Net Loans 1,857,603 1,793,164 1,772,741
Premises and Equipment 26,278 21,528 20,148
Accrued Interest Receivable 10,361 10,771 11,936
Mortgage Servicing Rights 8,368 9,065 9,679
Goodwill 36,901 13,045 13,045
Other Intangible Assets 4,989 -- --
Other Assets 48,759 40,643 39,749
---------- ---------- ----------
Total Assets $2,250,394 $2,125,214 $2,097,338
========== ========== ==========
Liabilities
Non-Interest-Bearing
Deposits $ 253,571 $ 180,389 $ 169,461
Interest-Bearing Deposits
Demand Deposits 212,023 179,751 160,781
Savings Deposits 427,572 398,752 414,581
Certificates of Deposit 652,418 580,312 638,725
---------- ---------- ----------
Total Interest-Bearing
Deposits 1,292,013 1,158,815 1,214,087
---------- ---------- ----------
Total Deposits 1,545,584 1,339,204 1,383,548
Short-Term Borrowings 150,832 170,956 143,142
Federal Home Loan Bank
Advances 278,550 346,532 319,538
Trust Preferred Securities 23,578 11,797 --
Accrued Interest Payable 2,554 2,290 2,942
Advances by Borrowers for
Taxes and Insurance 2,736 1,820 3,403
Other Liabilities 29,019 31,404 26,702
---------- ---------- ----------
Total Liabilities 2,032,853 1,904,003 1,879,275
---------- ---------- ----------
Shareholders' Equity
Common Stock 174 173 172
Capital Surplus 44,472 43,296 43,222
Retained Earnings 192,005 194,738 191,077
Accumulated Other
Comprehensive Income 3,795 4,644 3,825
Treasury Stock at Cost (22,905) (21,640) (20,233)
---------- ---------- ----------
Total Shareholders' Equity 217,541 221,211 218,063
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $2,250,394 $2,125,214 $2,097,338
========== ========== ==========
Condensed Consolidated Statements of Earnings
First Indiana Corporation and Subsidiaries
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
2003 2002 2003 2002
------- ------- ------- -------
Interest Income
Loans $27,318 $29,343 $55,076 $58,371
Securities Available
for Sale 1,863 2,173 3,892 4,415
Dividends on FRB and
FHLB Stock 322 350 668 683
Federal Funds Sold -- 3 3 15
Interest-Bearing Due
from Banks 23 -- 29 --
------- ------- ------- -------
Total Interest Income 29,526 31,869 59,668 63,484
Interest Expense
Deposits 6,449 9,771 13,840 19,972
Short-Term Borrowings 385 527 772 922
Federal Home Loan Bank
Advances 2,216 3,098 4,817 6,923
Trust Preferred Securities 226 -- 448 --
------- ------- ------- -------
Total Interest Expense 9,276 13,396 19,877 27,817
------- ------- ------- -------
Net Interest Income 20,250 18,473 39,791 35,667
Provision for Loan Losses 16,091 4,159 22,328 6,769
------- ------- ------- -------
Net Interest Income After
Provision for Loan Losses 4,159 14,314 17,463 28,898
Non-Interest Income
Loan and Deposit Charges 4,547 3,897 8,807 7,407
Loan Servicing Income
(Expense) (168) 203 (265) 434
Loan Fees 630 792 1,219 1,397
Trust Fees 709 655 1,435 1,328
Somerset Fees 2,531 2,539 7,230 6,822
Investment Product Sales
Commissions 486 927 834 1,535
Sale of Loans 2,895 2,052 5,368 3,933
Sale of Investment
Securities -- 223 7 223
Other 904 667 1,818 1,370
------- ------- ------- -------
Total Non-Interest Income 12,534 11,955 26,453 24,449
Non-Interest Expense
Salaries and Benefits 11,378 8,616 23,541 18,653
Net Occupancy 1,243 1,041 2,392 2,021
Equipment 1,684 1,555 3,357 3,144
Professional Services 1,374 1,025 2,463 2,096
Marketing 629 494 1,246 1,153
Telephone, Supplies,
and Postage 958 893 2,002 1,672
Other Intangible Asset
Amortization 184 -- 368 --
Other 2,211 1,669 4,051 3,644
------- ------- ------- -------
Total Non-Interest
Expense 19,661 15,293 39,420 32,383
------- ------- ------- -------
Earnings (Loss) before
Income Taxes (2,968) 10,976 4,496 20,964
Income Taxes (1,245) 4,080 1,491 7,685
======= ======= ======= =======
Net Earnings (Loss) $(1,723) $ 6,896 $ 3,005 $13,279
======= ======= ======= =======
Basic Earnings (Loss)
Per Share $ (0.11) $ 0.44 $ 0.19 $ 0.86
======= ======= ======= =======
Diluted Earnings (Loss)
Per Share $ (0.11) $ 0.43 $ 0.19 $ 0.84
======= ======= ======= =======
Dividends Per Common Share $ 0.165 $ 0.160 $ 0.330 $ 0.320
======= ======= ======= =======
Net Interest Margin
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
Three Months Ended
----------------------------------------------------
June 30, 2003 June 30, 2002
------------------------ -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- ------ ---- ---------- ------ ----
Assets
Interest-Bearing
Due from
Banks $ 6,920 $ 23 1.34% $ -- -- -- %
Federal Funds
Sold 77 -- -- 1,341 3 0.97
Securities
Available
for Sale 150,361 1,863 4.96 146,239 2,173 5.94
FHLB and FRB
Stock 25,029 322 5.15 22,491 350 6.22
Loans
Business 588,215 7,610 5.19 469,760 6,630 5.66
Consumer 661,132 10,971 6.65 681,360 12,825 7.53
Residential
Mortgage 301,105 4,080 5.42 284,780 4,795 6.73
Single-
Family
Construction 207,140 2,357 4.56 225,502 2,982 5.30
Commercial
Real Estate 160,757 2,300 5.73 131,416 2,111 6.44
---------- ------ ---------- ------
Total Loans 1,918,349 27,318 5.71 1,792,818 29,343 6.55
---------- ------ ---------- ------
Total Earning
Assets 2,100,736 29,526 5.63 1,962,889 31,869 6.50
Other Assets 134,499 104,771
---------- ----------
Total Assets $2,235,235 $2,067,660
========== ==========
Liabilities and
Shareholders' Equity
Interest-Bearing
Deposits
Demand
Deposits $ 208,028 $ 308 0.59% $ 168,690 $ 357 0.85%
Savings
Deposits 429,170 780 0.73 425,240 1,430 1.35
Certificates
of Deposit 747,208 5,361 2.88 657,105 7,984 4.87
---------- ------ ---------- ------
Total Interest-
Bearing
Deposits 1,384,406 6,449 1.87 1,251,035 9,771 3.13
Short-Term
Borrowings 137,475 385 1.12 123,207 527 1.72
Federal Home
Loan Bank
Advances 232,077 2,216 3.83 289,490 3,098 4.29
Trust Preferred
Securities 12,460 226 7.24 -- -- --
---------- ------ ---------- ------
Total Interest-
Bearing
Liabilities 1,766,418 9,276 2.11 1,663,732 13,396 3.23
Non-Interest-
Bearing Demand
Deposits 203,461 148,288
Other
Liabilities 40,370 39,635
Shareholders'
Equity 224,986 216,005
---------- ----------
Total Liabilities
and
Shareholders'
Equity $2,235,235 $2,067,660
========== ------ ========== ------
Net Interest
Income/Spread $20,250 3.52% $18,473 3.27%
======= ==== ======= ====
Net Interest
Margin 3.86% 3.76%
==== ====
Six Months Ended
----------------------------------------------------
June 30, 2003 June 30, 2002
------------------------ -------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------- ------ ---- ---------- ------ ----
Assets
Interest-Bearing
Due from
Banks $ 4,375 $ 29 1.33% $ -- $ -- -- %
Federal Funds
Sold 401 3 1.66 2,171 15 1.41
Securities
Available for
Sale 155,609 3,892 5.00 147,573 4,415 5.98
FHLB and FRB
Stock 24,745 668 5.40 22,491 683 6.07
Loans
Business 577,177 14,841 5.19 453,759 12,889 5.73
Consumer 672,860 22,526 6.72 678,080 25,966 7.68
Residential
Mortgage 300,140 8,315 5.54 281,823 9,454 6.71
Single-Family
Construction 208,660 4,915 4.75 224,876 5,925 5.31
Commercial
Real Estate 156,852 4,479 5.74 127,230 4,137 6.54
---------- ------ ---------- ------
Total Loans 1,915,689 55,076 5.78 1,765,768 58,371 6.64
---------- ------ ---------- ------
Total Earning
Assets 2,100,819 59,668 5.70 1,938,003 63,484 6.58
Other Assets 135,098 105,688
---------- ----------
Total Assets $2,235,917 $2,043,691
========== ==========
Liabilities and
Shareholders' Equity
Interest-Bearing
Deposits
Demand
Deposits $ 197,961 $ 598 0.61% $ 157,129 $ 646 0.83%
Savings
Deposits 432,967 1,787 0.83 436,126 2,998 1.39
Certificates
of Deposit 721,236 11,455 3.20 642,311 16,328 5.13
---------- ------ ---------- ------
Total Interest
Bearing
Deposits 1,352,164 13,840 2.06 1,235,566 19,972 3.26
Short-Term
Borrowings 136,427 772 1.14 109,418 922 1.70
Federal Home
Loan Bank
Advances 270,999 4,817 3.58 294,635 6,923 4.74
Trust
Preferred
Securities 12,133 448 7.38 -- -- --
---------- ------ ---------- ------
Total Interest-
Bearing
Liabilities 1,771,723 19,877 2.26 1,639,619 27,817 3.42
Non-Interest-
Bearing Demand
Deposits 198,730 147,438
Other
Liabilities 40,518 42,890
Shareholders'
Equity 224,946 213,744
---------- ----------
Total Liabilities
and
Shareholders'
Equity $2,235,917 $2,043,691
========== ------ ========== ------
Net Interest
Income/Spread $39,791 3.44% $35,667 3.16%
======= ==== ======= ====
Net Interest
Margin 3.80% 3.68%
==== ====
Loan Charge-Offs and Recoveries
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
Three Months Ended Six Months Ended
----------------- -----------------
June 30, June 30,
2003 2002 2003 2002
------- ------- ------- -------
Allowance for Loan
Losses at Beginning
of Period $48,178 $38,193 $44,469 $37,135
Charge-Offs
Business 13,889 3,217 16,636 3,525
Consumer 1,135 2,023 2,785 3,406
Residential Mortgage 29 20 110 20
Single-Family
Construction 3,640 71 3,923 71
Commercial Real Estate 22 52 22 62
------- ------- ------- -------
Total Charge-Offs 18,715 5,383 23,476 7,084
Recoveries
Business 328 70 639 71
Consumer 234 286 420 399
Residential Mortgage 7 -- 7 --
Single-Family
Construction 124 15 151 49
Commercial Real Estate -- 13 -- 14
------- ------- ------- -------
Total Recoveries 693 384 1,217 533
------- ------- ------- -------
Net Charge-Offs 18,022 4,999 22,259 6,551
Provision for Loan
Losses 16,091 4,159 22,328 6,769
Allowance Related to
Bank Acquired -- -- 1,709 --
------- ------- ------- -------
Allowance for Loan Losses
at End of Period $46,247 $37,353 $46,247 $37,353
======= ======= ======= =======
Net Charge-Offs to
Average Loans (Annualized) 3.77% 1.12% 2.34% 0.74%
Allowance for Loan Losses
to Loans at End of Period 2.43 2.06
Allowance for Loan Losses
to Non-Performing Loans
at End of Period 119.57 108.83
Non-Performing Assets
First Indiana Corporation and Subsidiaries
(Dollars in Thousands)
(Unaudited)
June 30, December 31, June 30,
2003 2002 2002
------- ------- -------
Non-Performing Loans
Non-Accrual Loans
Business $10,966 $20,234 $ 6,310
Consumer 8,323 9,405 12,118
Residential Mortgage 2,718 2,474 3,773
Single-Family Construction 8,833 4,286 5,116
Commercial Real Estate 5,440 2,059 3,127
------- ------- -------
Total Non-Accrual Loans 36,280 38,458 30,444
------- ------- -------
Accruing Loans
Business - Past Due 90 Days
or More 482 1,535 1,148
Consumer - Past Due 90 Days
or More 1,915 3,093 2,683
Single-Family Construction -
Past Due 90 Days or More -- -- 48
------- ------- -------
Total Accruing Loans 2,397 4,628 3,879
------- ------- -------
Total Non-Performing Loans 38,677 43,086 34,323
Other Real Estate Owned, Net 5,473 8,670 7,714
------- ------- -------
Total Non-Performing Assets $44,150 $51,756 $42,037
======= ======= =======
Non-Performing Loans to Loans
at End of Period 2.03% 2.34% 1.90%
Non-Performing Assets to Loans
and OREO at End of Period 2.31 2.80 2.31