FINB First Ind Corp (MM)

INDIANAPOLIS, Aug. 7 /PRNewswire-FirstCall/ -- First Indiana Corporation today announced net income of $3.9 million, or $0.24 per diluted share, for the quarter ended June 30, 2007. Net income for the second quarter of the previous year was $6.7 million, or $0.40 per diluted share. For the six months ended June 30, 2007, First Indiana's net income was $10.0 million or $0.60 per diluted share, compared with net income from continuing operations of $12.6 million or $0.75 per diluted share for the same period in 2006. Included in second quarter and year-to-date 2007 net income is a $3.4 million pre-tax charge to sale of loans revenue, which equates to a negative $0.13 per diluted share. This charge includes $1.3 million in losses on the repurchase of previously sold home equity loans and $2.1 million to establish a loss reserve for future repurchases of previously sold home equity loans. Given second quarter's losses and the fact that future losses are probable and can be reasonably estimated, the Bank established a loss reserve which management believes is adequate to cover such losses. Annualized return on average assets for the second quarter of 2007 was 0.74 percent, compared with 1.35 percent for the second quarter of 2006. Annualized return on average equity for the second quarter of 2007 was 8.80 percent, compared with 15.33 percent for the second quarter of 2006. On July 9, 2007, First Indiana and Marshall & Ilsley Corporation announced the signing of a definitive agreement for Marshall & Ilsley Corporation to acquire First Indiana Corporation. Under the agreement, Marshall & Ilsley Corporation will purchase First Indiana Corporation for $32 per share in cash or an aggregate of approximately $529 million. The transaction is expected to be completed in the fourth quarter of 2007 or first quarter of 2008, subject to the affirmative vote of First Indiana Corporation shareholders, regulatory approvals, and other customary conditions. As previously announced, First Indiana had engaged BKD, LLP to serve as the company's independent auditor, replacing KPMG, LLP. However, following the announcement of the pending acquisition of First Indiana by Marshall & Ilsley Corporation, BKD, LLP declined to accept engagement as the company's independent auditor. KPMG has since been engaged to return as auditors for First Indiana until the acquisition is complete. "Although we had opted to work with a smaller regional firm just this past June, our parting from KPMG was friendly as shown by how quickly they returned to the role of our auditor," said Robert H. Warrington, president and chief executive officer. "We understand BKD's decision not to finalize an engagement that would require investing in an initial learning curve for a business relationship that would only last a short period of time. There were no other issues in our parting from BKD." 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. Founded in 1915, First Indiana Bank is a national bank with 32 offices in central Indiana. Information about First Indiana is available at (317) 269-1200, or at http://www.firstindiana.com/, which is not a part of this news release. This document may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date. The forward- looking statements are based on management's expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Information concerning factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements is available in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2006, and subsequent filings with the United States Securities and Exchange Commission (SEC). Copies of these filings are available at no cost on the SEC's Web site at http://www.sec.gov/ or on the Corporation's Web site at http://www.firstindiana.com/. Management may elect to update forward-looking statements at some future point; however, it specifically disclaims any obligation to do so. Financial Highlights First Indiana Corporation and Subsidiaries (Dollars in Thousands, Except Per Share Data) (Unaudited) For the Three Months Ended ----------------------------------- June 30 December 31 June 30 2007 2006 2006 ------- ----------- -------- Net Interest Income $18,244 $18,179 $17,741 Provision for Loan Losses - - (1,350) Non-Interest Income 3,982 6,530 7,278 Non-Interest Expense 15,782 15,345 15,473 Income from Continuing Operations, Net of Taxes 3,936 6,010 6,703 Income from Discontinued Operations, Net of Taxes - - - Net Income 3,936 6,010 6,703 Basic Earnings Per Share Income from Continuing Operations, Net of Taxes $0.24 $0.36 $0.41 Income from Discontinued Operations, Net of Taxes - - - ----- ----- ----- Net Income $0.24 $0.36 $0.41 ===== ===== ===== Diluted Earnings Per Share Income from Continuing Operations, Net of Taxes $0.24 $0.35 $0.40 Income from Discontinued Operations, Net of Taxes - - - ----- ----- ----- Net Income $0.24 $0.35 $0.40 ===== ===== ===== Dividends Per Share $0.210 $0.200 $0.200 Net Interest Margin 3.65 % 3.65 % 3.77 % Efficiency Ratio (1) 71.01 62.10 61.84 Annualized Return on Average Assets (2) 0.74 1.13 1.35 Annualized Return on Average Equity (2) 8.80 13.20 15.33 Average Basic Shares Outstanding 16,290,559 16,482,585 16,527,680 Average Diluted Shares Outstanding 16,550,383 16,842,036 16,911,788 June 30 December 31 June 30 2007 2006 2006 ---------- ----------- ---------- Assets $2,223,715 $2,162,113 $2,088,700 Loans 1,713,012 1,694,687 1,660,680 Deposits 1,666,392 1,611,055 1,579,074 Shareholders' Equity 178,137 182,094 174,160 Shareholders' Equity/Assets 8.01 % 8.42 % 8.34 % Tangible Equity/Tangible Assets 6.61 % 6.98 % 6.83 % Shareholders' Equity Per Share $10.78 $10.87 $10.43 Market Closing Price 22.12 25.36 26.03 Shares Outstanding 16,525,702 16,767,727 16,694,076 For the Six Months Ended ------------------------- June 30 June 30 2007 2006 -------- --------- Net Interest Income $36,736 $35,595 Provision for Loan Losses - (1,600) Non-Interest Income 10,307 14,718 Non-Interest Expense 31,091 31,645 Income from Continuing Operations, Net of Taxes 9,959 12,613 Income from Discontinued Operations, Net of Taxes - 8,653 Net Income 9,959 21,266 Basic Earnings Per Share Income from Continuing Operations, Net of Taxes $0.61 $0.76 Income from Discontinued Operations, Net of Taxes - 0.52 ----- ----- Net Income $0.61 $1.28 ===== ===== Diluted Earnings Per Share Income from Continuing Operations, Net of Taxes $0.60 $0.75 Income from Discontinued Operations, Net of Taxes - 0.50 ----- ----- Net Income $0.60 $1.25 ===== ===== Dividends Per Share $0.420 $0.400 Net Interest Margin 3.70 % 3.83 % Efficiency Ratio (1) 66.09 62.90 Annualized Return on Average Assets (2) 0.95 2.17 Annualized Return on Average Equity (2) 11.15 24.01 Average Basic Shares Outstanding 16,332,883 16,645,297 Average Diluted Shares Outstanding 16,607,575 17,052,020 Assets Loans Deposits Shareholders' Equity Shareholders' Equity/Assets Tangible Equity/Tangible Assets Shareholders' Equity Per Share Market Closing Price Shares Outstanding (1) Based on continuing operations. (2) Includes earnings from continuing and discontinued operations. Condensed Consolidated Balance Sheets First Indiana Corporation and Subsidiaries (Dollars in Thousands) June 30 December 31 June 30 2007 2006 2006 (Unaudited) (Unaudited) ----------- ----------- ----------- Assets Cash $48,382 $53,511 $70,322 Interest-Bearing Due from Banks 2,257 6,317 10,885 Federal Funds Sold 95,100 41,500 - Securities Available for Sale 259,681 262,827 244,425 Other Investments 20,006 20,006 26,540 Loans Commercial 997,614 937,827 898,099 Consumer 463,097 488,173 492,771 Residential Mortgage 252,301 268,687 269,810 --------- --------- --------- Total Loans 1,713,012 1,694,687 1,660,680 Allowance for Loan Losses (28,276) (30,463) (36,274) --------- --------- --------- Net Loans 1,684,736 1,664,224 1,624,406 Premises and Equipment 30,396 27,218 25,940 Accrued Interest Receivable 11,160 11,710 10,971 Goodwill 30,682 30,682 30,682 Other Intangible Assets 2,703 2,864 3,035 Other Assets 38,612 41,254 41,494 --------- --------- --------- Total Assets $2,223,715 $2,162,113 $2,088,700 --------- --------- --------- Liabilities Non-Interest-Bearing Deposits $232,779 $242,975 $247,812 Interest-Bearing Deposits Demand Deposits 187,250 194,878 179,541 Savings Deposits 775,711 664,474 618,027 Certificates of Deposit 470,652 508,728 533,694 --------- --------- --------- Total Interest-Bearing Deposits 1,433,613 1,368,080 1,331,262 --------- --------- --------- Total Deposits 1,666,392 1,611,055 1,579,074 Short-Term Borrowings 285,469 277,888 220,545 Federal Home Loan Bank Advances 18,379 19,666 44,682 Subordinated Notes 46,967 46,905 46,843 Accrued Interest Payable 2,805 2,612 2,474 Advances by Borrowers for Taxes and Insurance 2,118 1,265 1,083 Other Liabilities 23,448 20,628 19,839 --------- --------- --------- Total Liabilities 2,045,578 1,980,019 1,914,540 --------- --------- --------- Shareholders' Equity Common Stock 206 205 205 Capital Surplus 19,080 18,121 16,755 Retained Earnings 227,886 225,365 220,370 Accumulated Other Comprehensive Income (Loss) (2,561) (2,908) (4,481) Treasury Stock at Cost (66,474) (58,689) (58,689) --------- --------- --------- Total Shareholders' Equity 178,137 182,094 174,160 --------- --------- --------- Total Liabilities and Shareholders' Equity $2,223,715 $2,162,113 $2,088,700 ========= ========= ========= Condensed Consolidated Statements of Income First Indiana Corporation and Subsidiaries (Dollars in Thousands, Except Per Share Data) (Unaudited) Three Months Ended Six Months Ended ------------------------ ----------------- June 30 March 31 June 30 June 30 June 30 2007 2007 2006 2007 2006 ------- -------- ------- ------- ------- Interest Income Interest-Bearing Due from Banks $29 $34 $120 $63 $223 Federal Funds Sold 290 205 137 495 184 Securities Available for Sale 2,888 2,697 2,471 5,585 4,915 Dividends on Other Investments 233 246 351 479 700 Loans 31,566 31,761 28,969 63,327 56,157 ------ ------ ------ ------ ------ Total Interest Income 35,006 34,943 32,048 69,949 62,179 Interest Expense Deposits 12,972 12,965 10,514 25,937 18,934 Short-Term Borrowings 2,697 2,394 2,288 5,091 4,527 Federal Home Loan Bank Advances 252 254 664 506 1,444 Subordinated Notes 841 838 841 1,679 1,679 ------ ------ ------ ------ ------ Total Interest Expense 16,762 16,451 14,307 33,213 26,584 ------ ------ ------ ------ ------ Net Interest Income 18,244 18,492 17,741 36,736 35,595 Provision for Loan Losses - - (1,350) - (1,600) ------ ------ ------ ------ ------ Net Interest Income after Provision for Loan Losses 18,244 18,492 19,091 36,736 37,195 Non-Interest Income Deposit Charges 5,012 4,196 4,126 9,208 7,989 Loan Fees 228 245 479 474 987 Investment Product Sales Commissions 323 307 187 630 408 Sale of Loans (2,583) 1,182 2,056 (1,401) 4,109 Other 1,002 394 430 1,396 1,225 ----- ----- ----- ----- ------ Total Non-Interest Income 3,982 6,324 7,278 10,307 14,718 Non-Interest Expense Salaries and Benefits 9,322 9,491 9,310 18,813 19,017 Net Occupancy 1,109 1,094 1,003 2,203 1,952 Equipment 1,415 1,316 1,441 2,731 3,600 Professional Services 888 776 943 1,664 1,824 Marketing 614 636 502 1,250 1,006 Telephone, Supplies, and Postage 681 712 699 1,393 1,413 Other Intangible Asset Amortization 80 80 85 160 171 OREO Expenses (Income) 47 (419) 39 (372) (186) Other 1,626 1,623 1,451 3,249 2,848 ------ ------ ------ ------ ------ Total Non-Interest Expense 15,782 15,309 15,473 31,091 31,645 ------ ------ ------ ------ ------ Income from Continuing Operations 6,444 9,507 10,896 15,952 20,268 Income Taxes 2,508 3,485 4,193 5,993 7,655 ------ ------ ------ ------ ------ Income from Continuing Operations, Net of Taxes 3,936 6,022 6,703 9,959 12,613 Discontinued Operations Income from Discontinued Operations - - - - 14,254 Income Taxes - - - - 5,601 ------ ------ ------ ------ ------ Income from Discontinued Operations, Net of Taxes - - - - 8,653 ------ ------ ------ ------ ------ Net Income $3,936 $6,022 $6,703 $9,959 $21,266 ====== ====== ====== ====== ====== Basic Earnings Per Share Income from Continuing Operations, Net of Taxes $0.24 $0.37 $0.41 $0.61 $0.76 Income from Discontinued Operations, Net of Taxes - - - - 0.52 ------ ------ ------ ------ ------ Net Income $0.24 $0.37 $0.41 $0.61 $1.28 ====== ====== ====== ====== ====== Diluted Earnings Per Share Income from Continuing Operations, Net of Taxes $0.24 $0.36 $0.40 $0.60 $0.75 Income from Discontinued Operations, Net of Taxes - - - - 0.50 ------ ------ ------ ------ ------ Net Income $0.24 $0.36 $0.40 $0.60 $1.25 ====== ====== ====== ====== ====== Dividends Per Common Share $0.210 $0.210 $0.200 $0.420 $0.400 ====== ====== ====== ====== ====== Net Interest Margin First Indiana Corporation and Subsidiaries (Dollars in Thousands) (Unaudited) Three Months Ended ------------------------------- June 30, 2007 ------------------------------- Average Yield / Balance Interest Rate ---------- --------- ------- Assets Interest-Bearing Due from Banks $2,290 $29 5.02 % Federal Funds Sold 22,109 290 5.26 Securities Available for Sale 260,241 2,888 4.44 Other Investments 20,006 233 4.65 Loans Commercial 968,899 19,635 8.13 Consumer 472,096 8,503 7.20 Residential Mortgage 255,878 3,428 5.36 --------- ------- Total Loans 1,696,873 31,566 7.46 --------- ------- Total Earning Assets 2,001,519 35,006 7.01 Other Assets 124,034 --------- Total Assets $2,125,553 ========= Liabilities and Shareholders' Equity Interest-Bearing Deposits Demand Deposits $195,282 $598 1.23 % Savings Deposits 686,931 6,496 3.79 Certificates of Deposit 490,867 5,878 4.80 --------- ------- Total Interest-Bearing Deposits 1,373,080 12,972 3.79 Short-Term Borrowings 260,443 2,697 4.15 Federal Home Loan Bank Advances 18,448 252 5.49 Subordinated Notes 46,956 841 7.16 --------- ------- Total Interest-Bearing Liabilities 1,698,927 16,762 3.96 Non-Interest-Bearing Demand Deposits 213,655 Other Liabilities 33,567 Shareholders' Equity 179,404 --------- Total Liabilities and Shareholders' Equity $2,125,553 ========= ------- Net Interest Income/Spread $18,244 3.05 % ======= ======= Net Interest Margin 3.65 % ======= Three Months Ended -------------------------------- June 30, 2006 -------------------------------- Average Yield / Balance Interest Rate --------- ---------- ------- Assets Interest-Bearing Due from Banks $9,985 $120 4.81 % Federal Funds Sold 11,415 137 4.81 Securities Available for Sale 247,304 2,471 4.00 Other Investments 26,540 351 5.29 Loans Commercial 826,934 16,400 7.95 Consumer 498,756 9,219 7.39 Residential Mortgage 263,744 3,350 5.08 --------- ------- Total Loans 1,589,434 28,969 7.31 --------- ------- Total Earning Assets 1,884,678 32,048 6.81 Other Assets 114,088 --------- Total Assets $1,998,766 ========= Liabilities and Shareholders' Equity Interest-Bearing Deposits Demand Deposits $181,834 $397 0.88 % Savings Deposits 546,117 4,395 3.23 Certificates of Deposit 531,614 5,722 4.32 --------- ------- Total Interest-Bearing Deposits 1,259,565 10,514 3.35 Short-Term Borrowings 216,812 2,288 4.23 Federal Home Loan Bank Advances 53,476 664 4.98 Subordinated Notes 46,834 841 7.18 --------- ------- Total Interest-Bearing Liabilities 1,576,687 14,307 3.64 Non-Interest-Bearing Demand Deposits 217,283 Other Liabilities 29,348 Shareholders' Equity 175,448 -------- Total Liabilities and Shareholders' Equity $1,998,766 ========= ------- Net Interest Income/Spread $17,741 3.17 % ======= ====== Net Interest Margin 3.77 % ====== Net Interest Margin First Indiana Corporation and Subsidiaries (Dollars in Thousands) (Unaudited) Six Months Ended ------------------------------- June 30, 2007 ------------------------------- Average Yield / Balance Interest Rate --------- --------- ------- Assets Interest-Bearing Due from Banks $2,454 $63 5.19 % Federal Funds Sold 18,492 495 5.39 Securities Available for Sale 259,499 5,585 4.30 Other Investments 20,006 479 4.79 Loans Commercial 953,904 39,145 8.28 Consumer 476,284 17,232 7.24 Residential Mortgage 260,085 6,950 5.34 --------- ------- Total Loans 1,690,273 63,327 7.56 --------- ------- Total Earning Assets 1,990,724 69,949 7.06 Other Assets 123,475 --------- Total Assets $2,114,199 ========= Liabilities and Shareholders' Equity Interest-Bearing Deposits Demand Deposits $195,353 $1,246 1.29 % Savings Deposits 681,756 12,799 3.79 Certificates of Deposit 501,259 11,892 4.78 --------- ------- Total Interest-Bearing Deposits 1,378,368 25,937 3.79 Short-Term Borrowings 244,303 5,091 4.20 Federal Home Loan Bank Advances 18,607 506 5.49 Subordinated Notes 46,941 1,679 7.16 --------- ------- Total Interest-Bearing Liabilities 1,688,219 33,213 3.97 Non-Interest-Bearing Demand Deposits 214,202 Other Liabilities 31,654 Shareholders' Equity 180,124 --------- Total Liabilities and Shareholders' Equity $2,114,199 ========= ------- Net Interest Income/Spread $36,736 3.09 % ======= ====== Net Interest Margin 3.70 % ====== Six Months Ended -------------------------------- June 30, 2006 -------------------------------- Average Yield / Balance Interest Rate --------- --------- ------- Assets Interest-Bearing Due from Banks $9,489 $223 4.74 % Federal Funds Sold 7,882 184 4.72 Securities Available for Sale 247,210 4,915 3.98 Other Investments 26,540 700 5.27 Loans Commercial 809,999 31,225 7.77 Consumer 497,985 18,290 7.35 Residential Mortgage 262,495 6,642 5.06 --------- ------- Total Loans 1,570,479 56,157 7.21 --------- ------- Total Earning Assets 1,861,600 62,179 6.71 Other Assets 115,683 --------- Total Assets $1,977,283 ========= Liabilities and Shareholders' Equity Interest-Bearing Deposits Demand Deposits $182,264 $720 0.80 % Savings Deposits 522,743 7,713 2.98 Certificates of Deposit 507,243 10,501 4.17 Total Interest-Bearing Deposits 1,212,250 18,934 3.15 Short-Term Borrowings 228,004 4,527 4.00 Federal Home Loan Bank Advances 59,639 1,444 4.88 Subordinated Notes 46,817 1,679 7.17 --------- ------ Total Interest-Bearing Liabilities 1,546,710 26,584 3.46 Non-Interest-Bearing Demand Deposits 218,919 Other Liabilities 33,070 Shareholders' Equity 178,584 --------- Total Liabilities and Shareholders' Equity $1,977,283 ========= ------- Net Interest Income/Spread $35,595 3.25 % ======= ====== Net Interest Margin 3.83 % ====== Loan Charge-Offs and Recoveries First Indiana Corporation and Subsidiaries (Dollars in Thousands) (Unaudited) Three Months Ended --------------------------------- June 30 March 31 June 30 2007 2007 2006 ------- -------- -------- Allowance for Loan Losses at Beginning of Period $29,373 $30,463 $38,435 Charge-Offs Business 539 682 825 Commercial Real Estate 92 - - Consumer 1,049 1,160 992 Residential Mortgage 47 102 116 ------ ------ ------ Total Charge-Offs 1,727 1,944 1,933 Recoveries Business 275 430 708 Commercial Real Estate - - 1 Single-Family Construction 2 - 49 Consumer 353 406 364 Residential Mortgage - 18 - ------ ------ ------ Total Recoveries 630 854 1,122 ------ ------ ------ Net Charge-Offs 1,097 1,090 811 Provision for Loan Losses - - (1,350) ------ ------ ------ Allowance for Loan Losses at End of Period $28,276 $29,373 $36,274 ====== ====== ====== Net Charge-Offs to Average Loans (Annualized) 0.26 % 0.26 % 0.20 % Allowance for Loan Losses to Loans at End of Period 1.65 1.75 2.18 Allowance for Loan Losses to Non- Performing Loans - at End of Period 394.59 592.80 1,385.81 Six Months Ended --------------------------------- June 30 June 30 2007 2006 ------- ------- Allowance for Loan Losses at Beginning of Period $30,463 $39,168 Charge-Offs Business 1,221 953 Commercial Real Estate 92 - Consumer 2,209 2,117 Residential Mortgage 149 255 ------ ------ Total Charge-Offs 3,671 3,325 Recoveries Business 705 942 Commercial Real Estate - 1 Single-Family Construction 2 50 Consumer 759 1,038 Residential Mortgage 18 - ------ ------ Total Recoveries 1,484 2,031 ------ ------ Net Charge-Offs 2,187 1,294 Provision for Loan Losses - (1,600) ------ ------ Allowance for Loan Losses at End of Period $28,276 $36,274 ====== ====== Net Charge-Offs to Average Loans (Annualized) 0.26 % 0.40 Allowance for Loan Losses to Loans at End of Period Allowance for Loan Losses to Non- Performing Loans at End of Period Non-Performing Assets First Indiana Corporation and Subsidiaries (Dollars in Thousands) June 30, December 31, June 30, 2007 2006 2006 -------- ------------- -------- Non-Performing Loans Non-Accrual Loans Business $1,012 $9,064 $572 Commercial Real Estate 337 723 - Single-Family Construction 804 - - Consumer 2,670 917 1,502 Residential Mortgage 951 705 334 ------ ------ ------ Total Non-Accrual Loans 5,774 11,409 2,408 ------ ------ ------ Accruing Loans Past Due 90 Days or More Business 924 710 24 Commercial Real Estate - 209 186 Consumer 175 445 - Residential Mortgage 293 303 - ------ ------ ------ Total Accruing Loans Past Due 90 Days or More 1,392 1,667 210 ------ ------ ------ Total Non-Performing Loans 7,166 13,076 2,618 Foreclosed Assets - 25 54 ------ ------ ------ Total Non-Performing Assets $7,166 $13,101 $2,672 ====== ====== ====== Non-Performing Loans to Loans at End of Period 0.42 % 0.77 % 0.16 % Non-Performing Assets to Loans and Foreclosed Assets at End of Period 0.42 0.77 0.16 DATASOURCE: First Indiana Corporation CONTACT: Shareholders & Analysts, William J. Brunner, CFO, +1-317-269-1614, or Media, Beth Copeland, +1-317-269-1395, both of First Indiana Corporation Web site: http://www.firstindiana.com/

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