UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 17, 2003
Second Bancorp Incorporated
| Ohio | 0-15624 | 34-1547453 | ||
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| (State of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 108 Main Avenue S.W., Warren, Ohio | 44482-1311 | |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 330-841-0123
Item 12. Results of Operations and Financial Condition
On October 16, 2003, the Company issued the following press release:
SECOND BANCORP
REPORTS THIRD QUARTER EARNINGS
Warren, Ohio, October 16, 2003—SECOND BANCORP INCORPORATED (Nasdaq “SECD”, “SECDP”) reported third quarter 2003 net income of $4,907,000, down 11% from the $5,536,000 earned during the same period last year. Year-to-date earnings were $19,006,000, an increase of 30.4% over net income reported for the first nine months of 2002. Diluted earnings for the quarter were $.51 per share, 7% lower than the $.55 reported last year and, for the first three quarters of the year, were $1.97 per share, 36% higher than the $1.45 reported for the same period last year. Year-to-date 2003 earnings include a one time $3.65 million (or $.38 per diluted share) after-tax gain on the sale of two banking centers completed during the first quarter. Excluding this non-recurring gain-on-sale, earnings for the year’s first nine months were $15,354,000 or $1.59 per diluted share, 8.9% above year-ago results.
Chief Financial Officer and Treasurer David L. Kellerman indicated “In addition to core business activity, third quarter earnings were influenced by $3,566,000 in gains on the sale of securities as the Company reduced its holdings of longer duration securities to minimize portfolio risk as interest rates rise. Financial performance for the quarter was also affected by our large mortgage servicing rights (MSR) portfolio which, net of hedging activity intended to reduce volatility in that line of business, produced a loss of $3,229,000 for the reporting period compared to gains of $1,513,000 in the prior quarter. Combined net mortgage banking activities, which include the gain on sale of mortgage loans, generated a loss of $1.2 million for the third quarter of 2003 versus gains of $2.1 million for the same quarter last year and $6.6 million for the linked quarter. Net mortgage activities generated profit of $9.8 million for the first nine months of 2003 versus $3.7 million for the same period last year.”
Page 1 of 12
Reflecting the Company’s financial results for the quarter, key performance ratios were generally restrained. Return on average assets (ROA) was .98% compared to 1.25% for the same period last year and return on average equity (ROE) was 14.56% for the quarter compared to 16.22% a year earlier. Year-to-date, ROA was 1.31% (1.06% excluding the first quarter non-recurring gain on sale) compared to 1.12% in 2002 and ROE was 18.57% (15.00% excluding the referenced first quarter event) compared to 14.59% a year ago. The Company’s net interest margin for the quarter was 3.06%, 43 basis points less than the 3.49% reported last year.
Excluding securities gains, non-interest income for the quarter was $3.49 million versus $6.33 million for the same period last year largely reflecting the loss in net MSR valuation referred to in Mr. Kellerman’s comments above. Also contributing to lower non-interest income was MSR amortization during the quarter which increased to $2.7 million from $1.1 million for last year’s third quarter. Those items more than offset a $1.5 million increase in gains-on-sale of loans from the same quarter last year. Non-interest expenses for the third quarter were $13.1 million, 6.7% lower than was reported for the prior quarter but 10.4% higher than a year ago primarily reflecting increased salaries and other operating expenses.
President and Chief Executive Officer Rick L. Blossom stated “The combination of persistently low short-term interest rates and generally rising long-term rates during recent months have begun to have a negative impact on Second Bancorp’s earnings performance. That impact is the result of a compressed net interest margin and a significant reduction in revenue generated by our important mortgage lending line of business. Margin compression continues to reduce the profitability of our $1.3 billion loan and $600 million securities portfolios and rising interest rates have largely eliminated mortgage re-financing activity and, therefore, fee income generated by the sale of loans in the secondary market. While we are developing strategies to reduce the effect of these banking realities, we expect them to restrain earnings in the fourth quarter. Consequently, and excluding the first quarter gain on the sale of branches, we may miss our most recent $2.08 to $2.13 per share earnings guidance for 2003 by as much as 10%.”
Credit quality remains a focal point for Second Bancorp. Though net loan charge-offs for the quarter were 20% lower than a year ago, non-performing loans continued to grow in absolute terms and as a percentage of total loans. Non-performing loans at quarter-end reached $22.6 million, $2.2 million higher than at the end of the prior quarter and were 1.68% of total loans compared to 1.65% at the end of the second quarter. The Company’s reserve for loan losses as a percentage of period-end loans was 1.41%, slightly lower than was reported for the prior quarter.
The Company also reported that its Board of Directors declared a nineteen cent ($.19) per common share dividend payable October 31, 2003 to shareholders of record on October 15. That dividend is unchanged from the second quarter of this year and is 5.6% higher than the dividend paid for last year’s third quarter.
This announcement contains forward-looking statements that involve risk and uncertainties, including changes in general economic and financial market conditions and the Company’s ability to execute its business plans. Although management believes the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially.
Second Bancorp is a $2.0 billion financial holding company providing a full range of commercial and consumer banking, wealth management, insurance and investment products and services to communities in a nine county area of Northeastern Ohio through subsidiaries Second National Bank and Stouffer-Herzog Insurance Agency, Inc. Additional information about Second Bancorp can be found on the Web at www.secondbancorp.com.
CONTACT: Christopher Stanitz, Executive Vice President, General Counsel and Secretary, at 330.841.0234 (phone), 330.841.0489 (fax), or cstanitz@secondnationalbank.com.
Page 2 of 12
Second Bancorp Incorporated and Subsidiaries
Financial Highlights
Quarterly Data
(Dollars in thousands, except per share data)
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | |||||||||||||||||
Earnings: |
|||||||||||||||||||||
Net interest income |
$ | 13,817 | $ | 13,790 | $ | 14,083 | $ | 13,946 | $ | 13,954 | |||||||||||
Provision for loan losses |
1,096 | 2,855 | 2,173 | 2,350 | 1,573 | ||||||||||||||||
Non-interest income |
3,491 | 10,700 | 14,211 | 7,314 | 6,329 | ||||||||||||||||
Security gains (losses) |
3,566 | 0 | 51 | (67 | ) | 832 | |||||||||||||||
Trading account losses |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||
Non-interest expense |
13,076 | 14,016 | 13,673 | 14,575 | 11,841 | ||||||||||||||||
Federal income taxes |
1,795 | 2,181 | 3,838 | 840 | 2,165 | ||||||||||||||||
Net income |
$ | 4,907 | $ | 5,438 | $ | 8,661 | $ | 3,428 | $ | 5,536 | |||||||||||
Per share: |
|||||||||||||||||||||
Basic earnings |
0.52 | 0.57 | 0.90 | 0.35 | 0.56 | ||||||||||||||||
Diluted earnings |
0.51 | 0.57 | 0.89 | 0.34 | 0.55 | ||||||||||||||||
Common dividends |
0.19 | 0.19 | 0.19 | 0.18 | 0.18 | ||||||||||||||||
Book value |
14.34 | 14.81 | 14.36 | 13.91 | 14.14 | ||||||||||||||||
Tangible book value |
12.05 | 12.40 | 11.95 | 11.69 | 11.99 | ||||||||||||||||
Market value |
27.24 | 25.80 | 22.15 | 26.50 | 26.73 | ||||||||||||||||
Weighted average shares outstanding: |
|||||||||||||||||||||
Basic |
9,476,371 | 9,468,639 | 9,621,709 | 9,835,995 | 9,876,844 | ||||||||||||||||
Diluted |
9,611,796 | 9,558,994 | 9,715,561 | 9,967,373 | 9,993,241 | ||||||||||||||||
Period end balance sheet: |
|||||||||||||||||||||
Assets |
$ | 2,074,750 | $ | 1,926,233 | $ | 1,909,027 | $ | 1,894,775 | $ | 1,825,235 | |||||||||||
Securities |
602,893 | 556,434 | 539,309 | 523,669 | 535,174 | ||||||||||||||||
Total loans |
1,301,618 | 1,199,630 | 1,215,481 | 1,167,791 | 1,153,581 | ||||||||||||||||
Allowance for loan losses |
18,372 | 18,030 | 17,756 | 17,595 | 17,443 | ||||||||||||||||
Deposits |
1,165,281 | 1,172,816 | 1,121,866 | 1,195,112 | 1,181,281 | ||||||||||||||||
Total shareholders’ equity |
135,799 | 140,215 | 136,369 | 136,334 | 139,682 | ||||||||||||||||
Tier I capital |
144,583 | 140,335 | 137,595 | 138,000 | 139,983 | ||||||||||||||||
Tier I ratio |
10.4 | % | 10.8 | % | 10.5 | % | 10.8 | % | 10.7 | % | |||||||||||
Total capital |
161,946 | 156,613 | 154,010 | 153,925 | 156,401 | ||||||||||||||||
Total capital ratio |
11.7 | % | 12.0 | % | 11.7 | % | 12.1 | % | 11.9 | % | |||||||||||
Total risk-adjusted assets |
1,388,065 | 1,300,512 | 1,311,849 | 1,272,335 | 1,312,414 | ||||||||||||||||
Tier I leverage ratio |
7.8 | % | 7.6 | % | 7.5 | % | 7.7 | % | 8.4 | % | |||||||||||
Average balance sheet: |
|||||||||||||||||||||
Assets |
$ | 2,004,789 | $ | 1,908,978 | $ | 1,869,524 | $ | 1,825,714 | $ | 1,770,928 | |||||||||||
Earning assets |
1,871,145 | 1,789,611 | 1,750,900 | 1,712,604 | 1,657,438 | ||||||||||||||||
Loans |
1,245,980 | 1,197,300 | 1,177,617 | 1,171,162 | 1,108,133 | ||||||||||||||||
Deposits |
1,157,817 | 1,159,719 | 1,135,681 | 1,180,609 | 1,173,188 | ||||||||||||||||
Shareholders’ equity |
134,844 | 139,269 | 135,254 | 137,229 | 136,494 | ||||||||||||||||
Key ratios: (%) |
|||||||||||||||||||||
Return on average assets (ROA) |
0.98 | 1.14 | 1.85 | 0.75 | 1.25 | ||||||||||||||||
Return on average shareholders’ equity (ROE) |
14.56 | 15.62 | 25.61 | 9.99 | 16.22 | ||||||||||||||||
Net interest margin |
3.06 | 3.19 | 3.33 | 3.38 | 3.49 | ||||||||||||||||
Net overhead |
2.05 | 0.74 | (0.12 | ) | 1.70 | 1.33 | |||||||||||||||
Efficiency ratio |
73.49 | 56.10 | 47.48 | 66.94 | 56.94 | ||||||||||||||||
Credit quality: |
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Non-accrual loans |
$ | 12,735 | $ | 12,238 | $ | 12,709 | $ | 13,123 | $ | 12,756 | |||||||||||
Restructured loans |
461 | 340 | 374 | 378 | 259 | ||||||||||||||||
90 day past due and accruing |
8,625 | 7,231 | 6,623 | 5,692 | 6,995 | ||||||||||||||||
Non-performing loans |
21,821 | 19,809 | 19,706 | 19,193 | 20,010 | ||||||||||||||||
Other real estate owned |
753 | 621 | 1,270 | 1,371 | 1,593 | ||||||||||||||||
Non-performing assets |
$ | 22,574 | $ | 20,430 | $ | 20,976 | $ | 20,564 | $ | 21,603 | |||||||||||
Charge-offs |
$ | 918 | $ | 2,721 | $ | 2,213 | $ | 2,558 | $ | 1,116 | |||||||||||
Recoveries |
165 | 139 | 201 | 360 | 176 | ||||||||||||||||
Net charge-offs |
$ | 753 | $ | 2,582 | $ | 2,012 | $ | 2,198 | $ | 940 | |||||||||||
Allowance for loan losses as a percent
of period-end loans (%) |
1.41 | 1.50 | 1.46 | 1.51 | 1.51 | ||||||||||||||||
Net charge-offs (annualized) as a percent
of average loans (%) |
0.24 | 0.86 | 0.68 | 0.75 | 0.34 | ||||||||||||||||
Non-performing loans as a percent of loans |
1.68 | 1.65 | 1.62 | 1.64 | 1.73 | ||||||||||||||||
Non-performing assets as a percent of assets |
1.09 | 1.06 | 1.10 | 1.09 | 1.18 | ||||||||||||||||
Page 3 of 12
Second Bancorp Incorporated and Subsidiaries
Financial Highlights
Year-to-Date Data
(Dollars in thousands, except per share data)
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | ||||||||||||||||||
Earnings: |
||||||||||||||||||||||
Net interest income |
$ | 41,690 | $ | 27,873 | $ | 14,083 | $ | 56,460 | $ | 42,514 | ||||||||||||
Provision for loan losses |
6,124 | 5,028 | 2,173 | 6,159 | 3,809 | |||||||||||||||||
Non-interest income |
28,402 | 24,911 | 14,211 | 22,853 | 15,539 | |||||||||||||||||
Security gains (losses) |
3,617 | 51 | 51 | 592 | 659 | |||||||||||||||||
Trading account losses |
0 | 0 | 0 | (20 | ) | (20 | ) | |||||||||||||||
Non-interest expense |
40,765 | 27,689 | 13,673 | 49,496 | 34,921 | |||||||||||||||||
Federal income taxes |
7,814 | 6,019 | 3,838 | 6,230 | 5,390 | |||||||||||||||||
Net income |
$ | 19,006 | $ | 14,099 | $ | 8,661 | $ | 18,000 | $ | 14,572 | ||||||||||||
Per share: |
||||||||||||||||||||||
Basic earnings |
1.99 | 1.48 | 0.90 | 1.82 | 1.47 | |||||||||||||||||
Diluted earnings |
1.97 | 1.46 | 0.89 | 1.79 | 1.45 | |||||||||||||||||
Common dividends |
0.57 | 0.38 | 0.19 | 0.72 | 0.54 | |||||||||||||||||
Book value |
14.34 | 14.81 | 14.36 | 13.97 | 14.14 | |||||||||||||||||
Tangible book value |
12.05 | 12.40 | 11.95 | 11.75 | 11.99 | |||||||||||||||||
Market value |
27.24 | 25.80 | 22.15 | 26.50 | 26.73 | |||||||||||||||||
Weighted average shares outstanding: |
||||||||||||||||||||||
Basic |
9,526,891 | 9,552,569 | 9,621,709 | 9,905,832 | 9,929,276 | |||||||||||||||||
Diluted |
9,632,429 | 9,645,041 | 9,715,561 | 10,040,001 | 10,051,077 | |||||||||||||||||
Period end balance sheet: |
||||||||||||||||||||||
Assets |
$ | 2,074,750 | $ | 1,926,233 | $ | 1,909,027 | $ | 1,894,775 | $ | 1,825,235 | ||||||||||||
Securities |
602,893 | 556,434 | 539,309 | 523,669 | 535,174 | |||||||||||||||||
Total loans |
1,301,618 | 1,199,630 | 1,215,481 | 1,167,791 | 1,153,581 | |||||||||||||||||
Allowance for loan losses |
18,372 | 18,030 | 17,756 | 17,595 | 17,443 | |||||||||||||||||
Deposits |
1,165,281 | 1,172,816 | 1,121,866 | 1,195,112 | 1,181,281 | |||||||||||||||||
Total shareholders’ equity |
135,799 | 140,215 | 136,369 | 136,334 | 139,682 | |||||||||||||||||
Tier I capital |
144,583 | 140,335 | 137,595 | 138,000 | 139,983 | |||||||||||||||||
Tier I ratio |
10.4 | % | 10.8 | % | 10.5 | % | 10.8 | % | 10.7 | % | ||||||||||||
Total capital |
161,946 | 156,613 | 154,010 | 153,925 | 156,401 | |||||||||||||||||
Total capital ratio |
11.7 | % | 12.0 | % | 11.7 | % | 12.1 | % | 11.9 | % | ||||||||||||
Total risk-adjusted assets |
1,388,065 | 1,300,512 | 1,311,849 | 1,272,335 | 1,312,414 | |||||||||||||||||
Tier I leverage ratio |
7.8 | % | 7.6 | % | 7.5 | % | 7.7 | % | 8.4 | % | ||||||||||||
Average balance sheet: |
||||||||||||||||||||||
Assets |
$ | 1,928,259 | $ | 1,889,360 | $ | 1,869,524 | $ | 1,754,156 | $ | 1,730,190 | ||||||||||||
Earning assets |
1,804,326 | 1,770,363 | 1,750,900 | 1,642,907 | 1,619,420 | |||||||||||||||||
Loans |
1,207,216 | 1,187,513 | 1,177,617 | 1,121,777 | 1,105,135 | |||||||||||||||||
Deposits |
1,151,153 | 1,147,766 | 1,135,681 | 1,159,350 | 1,152,186 | |||||||||||||||||
Shareholders’ equity |
136,454 | 137,273 | 135,254 | 134,178 | 133,150 | |||||||||||||||||
Key ratios: (%) |
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Return on average assets (ROA) |
1.31 | 1.49 | 1.85 | 1.03 | 1.12 | |||||||||||||||||
Return on average shareholders’ equity (ROE) |
18.57 | 20.54 | 25.61 | 13.42 | 14.59 | |||||||||||||||||
Net interest margin |
3.19 | 3.26 | 3.33 | 3.56 | 3.63 | |||||||||||||||||
Net overhead |
0.91 | 0.31 | (0.12 | ) | 1.62 | 1.60 | ||||||||||||||||
Efficiency ratio |
56.95 | 51.48 | 47.48 | 60.81 | 58.57 | |||||||||||||||||
Credit quality: |
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Non-accrual loans |
$ | 12,735 | $ | 12,238 | $ | 12,709 | $ | 13,123 | $ | 12,756 | ||||||||||||
Restructured loans |
461 | 340 | 374 | 378 | 259 | |||||||||||||||||
90 day past due and accruing |
8,625 | 7,231 | 6,623 | 5,692 | 6,995 | |||||||||||||||||
Non-performing loans |
21,821 | 19,809 | 19,706 | 19,193 | 20,010 | |||||||||||||||||
Other real estate owned |
753 | 621 | 1,270 | 1,371 | 1,593 | |||||||||||||||||
Non-performing assets |
$ | 22,574 | $ | 20,430 | $ | 20,976 | $ | 20,564 | $ | 21,603 | ||||||||||||
Charge-offs |
$ | 5,852 | $ | 4,934 | $ | 2,213 | $ | 6,584 | $ | 4,026 | ||||||||||||
Recoveries |
505 | 340 | 201 | 1,325 | 965 | |||||||||||||||||
Net charge-offs |
$ | 5,347 | $ | 4,594 | $ | 2,012 | $ | 5,259 | $ | 3,061 | ||||||||||||
Allowance for loan losses as a percent
of period-end loans (%) |
1.41 | 1.50 | 1.46 | 1.51 | 1.51 | |||||||||||||||||
Net charge-offs (annualized) as a percent
of average loans (%) |
0.59 | 0.77 | 0.68 | 0.47 | 0.37 | |||||||||||||||||
Non-performing loans as a percent of loans |
1.68 | 1.65 | 1.62 | 1.64 | 1.73 | |||||||||||||||||
Non-performing assets as a percent of assets |
1.09 | 1.06 | 1.10 | 1.09 | 1.18 | |||||||||||||||||
Page 4 of 12
Second Bancorp Incorporated and Subsidiaries
Consolidated Statements of Income
Quarterly Data
(Dollars in thousands, except per share data)
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | |||||||||||||||||||
INTEREST INCOME |
|||||||||||||||||||||||
Loans (including fees): |
|||||||||||||||||||||||
Taxable |
$ | 18,950 | $ | 18,814 | $ | 18,605 | $ | 19,637 | $ | 19,598 | |||||||||||||
Exempt from federal income taxes |
212 | 206 | 211 | 219 | 227 | ||||||||||||||||||
Securities: |
|||||||||||||||||||||||
Taxable |
5,348 | 5,518 | 6,234 | 5,566 | 5,963 | ||||||||||||||||||
Exempt from federal income taxes |
689 | 714 | 728 | 735 | 722 | ||||||||||||||||||
Federal funds sold and other temp. investments |
30 | 136 | 123 | 154 | 324 | ||||||||||||||||||
Total interest income |
25,229 | 25,388 | 25,901 | 26,311 | 26,834 | ||||||||||||||||||
INTEREST EXPENSE |
|||||||||||||||||||||||
Deposits |
5,118 | 5,563 | 5,779 | 6,771 | 7,526 | ||||||||||||||||||
Federal funds purchased and securities
sold under agreements to repurchase |
613 | 596 | 581 | 700 | 597 | ||||||||||||||||||
Note Payable |
50 | 54 | 63 | 28 | 10 | ||||||||||||||||||
Other borrowed funds |
2 | 3 | 3 | 14 | 10 | ||||||||||||||||||
Federal Home Loan Bank advances |
4,895 | 4,649 | 4,659 | 4,119 | 4,003 | ||||||||||||||||||
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust |
734 | 733 | 733 | 733 | 734 | ||||||||||||||||||
Total interest expense |
11,412 | 11,598 | 11,818 | 12,365 | 12,880 | ||||||||||||||||||
Net interest income |
13,817 | 13,790 | 14,083 | 13,946 | 13,954 | ||||||||||||||||||
Provision for loan losses |
1,096 | 2,855 | 2,173 | 2,350 | 1,573 | ||||||||||||||||||
Net interest income after
provision for loan losses |
12,721 | 10,935 | 11,910 | 11,596 | 12,381 | ||||||||||||||||||
NON-INTEREST INCOME |
|||||||||||||||||||||||
Gain on sale of loans |
3,920 | 6,310 | 4,342 | 5,462 | 2,421 | ||||||||||||||||||
Service charges on deposit accounts |
1,549 | 1,555 | 1,527 | 1,587 | 1,505 | ||||||||||||||||||
Trust fees |
631 | 563 | 609 | 637 | 596 | ||||||||||||||||||
Security gains (losses) |
3,566 | 0 | 51 | (67 | ) | 832 | |||||||||||||||||
Gain on sale of banking centers |
0 | 0 | 5,619 | 0 | 0 | ||||||||||||||||||
Other operating income |
(2,609 | ) | 2,272 | 2,114 | (372 | ) | 1,807 | ||||||||||||||||
Total non-interest income |
7,057 | 10,700 | 14,262 | 7,247 | 7,161 | ||||||||||||||||||
NON-INTEREST EXPENSE |
|||||||||||||||||||||||
Salaries and employee benefits |
6,701 | 7,642 | 7,604 | 7,217 | 6,494 | ||||||||||||||||||
Net occupancy |
1,180 | 1,125 | 1,199 | 1,099 | 1,119 | ||||||||||||||||||
Equipment |
1,045 | 1,059 | 1,039 | 742 | 931 | ||||||||||||||||||
Professional services |
707 | 1,138 | 767 | 648 | 563 | ||||||||||||||||||
Assessment on deposits and other taxes |
501 | 388 | 392 | 354 | 384 | ||||||||||||||||||
Amortization of intangible assets |
113 | 112 | 118 | 144 | 110 | ||||||||||||||||||
Merger costs |
0 | 0 | 0 | 10 | 124 | ||||||||||||||||||
Banking center reconfiguration |
0 | 0 | 0 | 2,096 | 0 | ||||||||||||||||||
Other operating expenses |
2,829 | 2,552 | 2,554 | 2,265 | 2,116 | ||||||||||||||||||
Total non-interest expense |
13,076 | 14,016 | 13,673 | 14,575 | 11,841 | ||||||||||||||||||
Income before federal income taxes |
6,702 | 7,619 | 12,499 | 4,268 | 7,701 | ||||||||||||||||||
Income tax expense |
1,795 | 2,181 | 3,838 | 840 | 2,165 | ||||||||||||||||||
Income before accounting change |
$ | 4,907 | $ | 5,438 | $ | 8,661 | $ | 3,428 | $ | 5,536 | |||||||||||||
NET INCOME PER COMMON SHARE: |
|||||||||||||||||||||||
Basic |
$ | 0.52 | $ | 0.57 | $ | 0.90 | $ | 0.35 | $ | 0.56 | |||||||||||||
Diluted |
$ | 0.51 | $ | 0.57 | $ | 0.89 | $ | 0.34 | $ | 0.55 | |||||||||||||
Weighted average common shares outstanding: |
|||||||||||||||||||||||
Basic |
9,476,371 | 9,468,639 | 9,621,709 | 9,835,995 | 9,876,844 | ||||||||||||||||||
Diluted |
9,611,796 | 9,558,994 | 9,715,561 | 9,967,373 | 9,993,241 | ||||||||||||||||||
Note: Fully taxable equivalent adjustment |
$ | 485 | $ | 495 | $ | 506 | $ | 514 | $ | 511 | |||||||||||||
Page 5 of 12
Second Bancorp Incorporated and Subsidiaries
Consolidated Statements of Income
Year-to-Date Data
(Dollars in thousands, except per share data)
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | |||||||||||||||||||
INTEREST INCOME |
|||||||||||||||||||||||
Loans (including fees): |
|||||||||||||||||||||||
Taxable |
$ | 56,369 | $ | 37,419 | $ | 18,605 | $ | 79,671 | $ | 60,034 | |||||||||||||
Exempt from federal income taxes |
629 | 417 | 211 | 922 | 703 | ||||||||||||||||||
Securities: |
|||||||||||||||||||||||
Taxable |
17,100 | 11,752 | 6,234 | 22,648 | 17,082 | ||||||||||||||||||
Exempt from federal income taxes |
2,131 | 1,442 | 728 | 2,946 | 2,211 | ||||||||||||||||||
Federal funds sold and other temp. investments |
289 | 259 | 123 | 1,085 | 931 | ||||||||||||||||||
Total interest income |
76,518 | 51,289 | 25,901 | 107,272 | 80,961 | ||||||||||||||||||
INTEREST EXPENSE |
|||||||||||||||||||||||
Deposits |
16,460 | 11,342 | 5,779 | 29,400 | 22,629 | ||||||||||||||||||
Federal funds purchased and securities
sold under agreements to repurchase |
1,790 | 1,177 | 581 | 2,499 | 1,799 | ||||||||||||||||||
Note Payable |
167 | 117 | 63 | 38 | 10 | ||||||||||||||||||
Other borrowed funds |
8 | 6 | 3 | 42 | 28 | ||||||||||||||||||
Federal Home Loan Bank advances |
14,203 | 9,308 | 4,659 | 15,900 | 11,781 | ||||||||||||||||||
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust |
2,200 | 1,466 | 733 | 2,933 | 2,200 | ||||||||||||||||||
Total interest expense |
34,828 | 23,416 | 11,818 | 50,812 | 38,447 | ||||||||||||||||||
Net interest income |
41,690 | 27,873 | 14,083 | 56,460 | 42,514 | ||||||||||||||||||
Provision for loan losses |
6,124 | 5,028 | 2,173 | 6,159 | 3,809 | ||||||||||||||||||
Net interest income after
provision for loan losses |
35,566 | 22,845 | 11,910 | 50,301 | 38,705 | ||||||||||||||||||
NON-INTEREST INCOME |
|||||||||||||||||||||||
Gain on sale of loans |
14,572 | 10,652 | 4,342 | 11,136 | 5,674 | ||||||||||||||||||
Service charges on deposit accounts |
4,631 | 3,082 | 1,527 | 5,823 | 4,236 | ||||||||||||||||||
Trust fees |
1,803 | 1,172 | 609 | 2,715 | 2,078 | ||||||||||||||||||
Trading account losses |
0 | 0 | 0 | (20 | ) | (20 | ) | ||||||||||||||||
Security gains (losses) |
3,617 | 51 | 51 | 592 | 659 | ||||||||||||||||||
Gain on sale of banking centers |
5,619 | 5,619 | 5,619 | 0 | 0 | ||||||||||||||||||
Other operating income |
1,777 | 4,386 | 2,114 | 3,179 | 3,551 | ||||||||||||||||||
Total non-interest income |
32,019 | 24,962 | 14,262 | 23,425 | 16,178 | ||||||||||||||||||
NON-INTEREST EXPENSE |
|||||||||||||||||||||||
Salaries and employee benefits |
21,947 | 15,246 | 7,604 | 26,345 | 19,128 | ||||||||||||||||||
Net occupancy |
3,504 | 2,324 | 1,199 | 4,480 | 3,381 | ||||||||||||||||||
Equipment |
3,143 | 2,098 | 1,039 | 3,898 | 3,156 | ||||||||||||||||||
Professional services |
2,612 | 1,905 | 767 | 2,139 | 1,491 | ||||||||||||||||||
Assessment on deposits and other taxes |
1,281 | 780 | 392 | 1,397 | 1,043 | ||||||||||||||||||
Amortization of intangible assets |
343 | 230 | 118 | 475 | 331 | ||||||||||||||||||
Merger costs |
0 | 0 | 0 | 134 | 124 | ||||||||||||||||||
Banking center reconfiguration |
0 | 0 | 0 | 2,096 | 0 | ||||||||||||||||||
Other operating expenses |
7,935 | 5,106 | 2,554 | 8,532 | 6,267 | ||||||||||||||||||
Total non-interest expense |
40,765 | 27,689 | 13,673 | 49,496 | 34,921 | ||||||||||||||||||
Income before federal income taxes |
26,820 | 20,118 | 12,499 | 24,230 | 19,962 | ||||||||||||||||||
Income tax expense |
7,814 | 6,019 | 3,838 | 6,230 | 5,390 | ||||||||||||||||||
Net income |
$ | 19,006 | $ | 14,099 | $ | 8,661 | $ | 18,000 | $ | 14,572 | |||||||||||||
NET INCOME PER COMMON SHARE: |
|||||||||||||||||||||||
Basic |
$ | 1.99 | $ | 1.48 | $ | 0.90 | $ | 1.82 | $ | 1.47 | |||||||||||||
Diluted |
$ | 1.97 | $ | 1.46 | $ | 0.89 | $ | 1.79 | $ | 1.45 | |||||||||||||
Weighted average common shares outstanding: |
|||||||||||||||||||||||
Basic |
9,526,891 | 9,552,569 | 9,621,709 | 9,905,832 | 9,929,276 | ||||||||||||||||||
Diluted |
9,632,429 | 9,645,041 | 9,715,561 | 10,040,001 | 10,051,077 | ||||||||||||||||||
Note: Fully taxable equivalent adjustment |
$ | 1,486 | $ | 1,001 | $ | 506 | $ | 2,083 | $ | 1,569 | |||||||||||||
Page 6 of 12
Second Bancorp Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
| Sept. 30 | June 30 | March 31 | Dec. 31 | Sept. 30 | ||||||||||||||||||||
| 2003 | 2003 | 2003 | 2002 | 2002 | ||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Cash and due from banks |
$ | 57,305 | $ | 42,194 | $ | 43,334 | $ | 60,822 | $ | 40,815 | ||||||||||||||
Federal funds sold and other temp. investments |
13,128 | 44,505 | 29,523 | 61,449 | 15,033 | |||||||||||||||||||
Securities available-for-sale (at market value) |
602,893 | 556,434 | 539,309 | 523,669 | 535,174 | |||||||||||||||||||
Loans: |
||||||||||||||||||||||||
Commercial |
598,762 | 571,788 | 558,499 | 542,693 | 520,175 | |||||||||||||||||||
Consumer |
372,826 | 339,723 | 325,819 | 322,840 | 325,088 | |||||||||||||||||||
Real estate |
330,030 | 288,119 | 331,163 | 302,258 | 308,318 | |||||||||||||||||||
Total loans |
1,301,618 | 1,199,630 | 1,215,481 | 1,167,791 | 1,153,581 | |||||||||||||||||||
Less allowance for loan losses |
18,372 | 18,030 | 17,756 | 17,595 | 17,443 | |||||||||||||||||||
Net loans |
1,283,246 | 1,181,600 | 1,197,725 | 1,150,196 | 1,136,138 | |||||||||||||||||||
Premises and equipment |
17,944 | 17,048 | 16,125 | 16,632 | 16,333 | |||||||||||||||||||
Accrued interest receivable |
8,710 | 8,289 | 9,414 | 8,762 | 9,582 | |||||||||||||||||||
Goodwill and intangible assets |
20,117 | 20,230 | 20,343 | 20,422 | 20,224 | |||||||||||||||||||
Servicing assets |
19,827 | 14,880 | 13,743 | 12,403 | 10,961 | |||||||||||||||||||
Other assets |
51,580 | 41,053 | 39,511 | 40,420 | 40,975 | |||||||||||||||||||
Total assets |
$ | 2,074,750 | $ | 1,926,233 | $ | 1,909,027 | $ | 1,894,775 | $ | 1,825,235 | ||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Demand — non-interest bearing |
$ | 165,242 | $ | 155,285 | $ | 155,892 | $ | 179,714 | $ | 153,341 | ||||||||||||||
Demand — interest bearing |
164,186 | 204,430 | 147,747 | 103,583 | 98,359 | |||||||||||||||||||
Savings |
350,231 | 347,722 | 363,443 | 405,437 | 410,322 | |||||||||||||||||||
Time deposits |
485,622 | 465,379 | 454,784 | 506,378 | 519,259 | |||||||||||||||||||
Total deposits |
1,165,281 | 1,172,816 | 1,121,866 | 1,195,112 | 1,181,281 | |||||||||||||||||||
Federal funds purchased and securities sold under
agreements to repurchase |
238,047 | 175,011 | 206,069 | 138,796 | 166,532 | |||||||||||||||||||
Note payable |
7,750 | 7,750 | 14,000 | 7,000 | 3,000 | |||||||||||||||||||
Other borrowed funds |
1,579 | 1,219 | 155 | 3,863 | 3,788 | |||||||||||||||||||
Accrued expenses and other liabilities |
17,562 | 19,612 | 20,089 | 17,331 | 14,583 | |||||||||||||||||||
Federal Home Loan Bank advances |
478,198 | 379,089 | 379,971 | 365,844 | 285,887 | |||||||||||||||||||
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust |
30,534 | 30,521 | 30,508 | 30,495 | 30,482 | |||||||||||||||||||
Total liabilities |
1,938,951 | 1,786,018 | 1,772,658 | 1,758,441 | 1,685,553 | |||||||||||||||||||
Shareholders’ equity: |
||||||||||||||||||||||||
Common stock, no par value; 30,000,000 shares
authorized; |
42,815 | 41,750 | 41,745 | 41,763 | 40,994 | |||||||||||||||||||
Treasury stock |
(36,173 | ) | (34,771 | ) | (33,740 | ) | (27,180 | ) | (23,631 | ) | ||||||||||||||
Other comprehensive income |
457 | 7,642 | 6,410 | 6,656 | 8,894 | |||||||||||||||||||
Retained earnings |
128,700 | 125,594 | 121,954 | 115,095 | 113,425 | |||||||||||||||||||
Total shareholders’ equity |
135,799 | 140,215 | 136,369 | 136,334 | 139,682 | |||||||||||||||||||
Total liabilities and shareholders’
equity |
$ | 2,074,750 | $ | 1,926,233 | $ | 1,909,027 | $ | 1,894,775 | $ | 1,825,235 | ||||||||||||||
Miscellaneous data: |
||||||||||||||||||||||||
Common shares issued |
11,108,823 | 11,055,123 | 11,041,083 | 11,041,263 | 11,024,693 | |||||||||||||||||||
Treasury shares |
1,638,032 | 1,586,484 | 1,542,784 | 1,279,009 | 1,147,849 | |||||||||||||||||||
Bank owned life insurance (in other assets) |
$ | 34,149 | $ | 33,769 | $ | 33,489 | $ | 33,086 | $ | 32,677 | ||||||||||||||
Loans serviced for others |
$ | 1,692,880 | $ | 1,631,790 | $ | 1,463,926 | $ | 1,320,316 | $ | 1,121,372 | ||||||||||||||
Goodwill |
$ | 16,647 | $ | 16,647 | $ | 16,647 | $ | 16,708 | $ | 17,344 | ||||||||||||||
Other intangibles |
3,470 | 3,583 | 3,696 | 3,714 | 2,880 | |||||||||||||||||||
Total goodwill and intangible assets |
$ | 20,117 | $ | 20,230 | $ | 20,343 | $ | 20,422 | $ | 20,224 | ||||||||||||||
Mortgage servicing rights (net of allowance) |
$ | 19,378 | $ | 14,429 | $ | 13,299 | $ | 11,967 | $ | 10,516 | ||||||||||||||
Other servicing assets |
449 | 451 | 444 | 436 | 445 | |||||||||||||||||||
| $ | 19,827 | $ | 14,880 | $ | 13,743 | $ | 12,403 | $ | 10,961 | |||||||||||||||
Valuation allowance for mortgage
servicing rights included above |
$ | (2,774 | ) | $ | (6,304 | ) | $ | (4,783 | ) | $ | (3,794 | ) | $ | (3,087 | ) | |||||||||
Page 7 of 12
Second Bancorp Incorporated and Subsidiaries
Consolidated Average Balance Sheets
For the Quarter Ended
(Dollars in Thousands)
| ASSETS | Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | ||||||||||||||||||
Cash and demand balances
due from banks |
$ | 43,675 | $ | 37,686 | $ | 38,392 | $ | 35,454 | $ | 35,266 | |||||||||||||
Federal funds sold and other temp. investments |
14,697 | 50,390 | 44,849 | 47,197 | 80,102 | ||||||||||||||||||
Securities: |
|||||||||||||||||||||||
Trading |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Available-for-sale |
610,468 | 541,921 | 528,434 | 494,245 | 469,203 | ||||||||||||||||||
Total securities |
610,468 | 541,921 | 528,434 | 494,245 | 469,203 | ||||||||||||||||||
Loans: |
|||||||||||||||||||||||
Commercial |
584,553 | 562,499 | 551,882 | 533,996 | 507,412 | ||||||||||||||||||
Consumer |
353,299 | 336,303 | 324,729 | 323,939 | 319,482 | ||||||||||||||||||
Real estate |
308,128 | 298,498 | 301,006 | 313,227 | 281,239 | ||||||||||||||||||
Total loans |
1,245,980 | 1,197,300 | 1,177,617 | 1,171,162 | 1,108,133 | ||||||||||||||||||
Allowance for loan losses |
18,137 | 17,787 | 17,566 | 17,345 | 16,904 | ||||||||||||||||||
Net loans |
1,227,843 | 1,179,513 | 1,160,051 | 1,153,817 | 1,091,229 | ||||||||||||||||||
Premises and equipment |
17,666 | 16,828 | 16,508 | 16,611 | 16,497 | ||||||||||||||||||
Goodwill and intangible assets |
20,166 | 20,282 | 20,461 | 19,676 | 19,400 | ||||||||||||||||||
Servicing assets |
17,377 | 14,859 | 13,310 | 11,832 | 10,184 | ||||||||||||||||||
Other |
52,897 | 47,499 | 47,519 | 46,882 | 48,609 | ||||||||||||||||||
Total assets |
$ | 2,004,789 | $ | 1,908,978 | $ | 1,869,524 | $ | 1,825,714 | $ | 1,770,490 | |||||||||||||
LIABIITIES AND SHAREHOLDERS’ EQUITY |
|||||||||||||||||||||||
Liabilities: |
|||||||||||||||||||||||
Demand deposits (non-interest bearing) |
$ | 161,281 | $ | 159,636 | $ | 153,223 | $ | 156,607 | $ | 145,177 | |||||||||||||
Demand deposits (interest bearing) |
187,231 | 183,323 | 117,469 | 100,240 | 105,903 | ||||||||||||||||||
Savings |
346,965 | 356,281 | 382,673 | 411,109 | 405,813 | ||||||||||||||||||
Time deposits |
462,340 | 460,479 | 482,316 | 512,653 | 516,295 | ||||||||||||||||||
Total deposits |
1,157,817 | 1,159,719 | 1,135,681 | 1,180,609 | 1,173,188 | ||||||||||||||||||
Federal funds purchased and securities sold
under agreements to repurchase |
208,549 | 178,618 | 164,329 | 165,504 | 135,611 | ||||||||||||||||||
Note payable |
7,750 | 8,369 | 9,733 | 4,107 | 1,190 | ||||||||||||||||||
Borrowed funds |
563 | 186 | 455 | 1,281 | 1,757 | ||||||||||||||||||
Accrued expenses and other
liabilities |
17,626 | 18,243 | 17,863 | 14,306 | 13,211 | ||||||||||||||||||
Federal Home Loan Bank advances |
447,116 | 374,061 | 375,710 | 291,957 | 278,568 | ||||||||||||||||||
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust |
30,524 | 30,513 | 30,499 | 30,721 | 30,471 | ||||||||||||||||||
Total liabilities |
1,869,945 | 1,769,709 | 1,734,270 | 1,688,485 | 1,633,996 | ||||||||||||||||||
Shareholders’ equity: |
|||||||||||||||||||||||
Common stock |
42,506 | 41,747 | 41,757 | 41,153 | 39,522 | ||||||||||||||||||
Treasury shares |
(35,646 | ) | (34,127 | ) | (30,666 | ) | (25,050 | ) | (21,641 | ) | |||||||||||||
Other comprehensive income |
939 | 7,434 | 6,778 | 7,032 | 7,951 | ||||||||||||||||||
Retained earnings |
127,045 | 124,215 | 117,385 | 114,094 | 110,662 | ||||||||||||||||||
Total shareholders’ equity |
134,844 | 139,269 | 135,254 | 137,229 | 136,494 | ||||||||||||||||||
Total liabilities and
shareholders’ equity |
$ | 2,004,789 | $ | 1,908,978 | $ | 1,869,524 | $ | 1,825,714 | $ | 1,770,490 | |||||||||||||
Page 8 of 12
Second Bancorp Incorporated and Subsidiaries
Consolidated Average Balance Sheets
For the Year-to-date period ended:
(Dollars in Thousands)
| ASSETS | Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | ||||||||||||||||||
Cash and demand balances
due from banks |
$ | 39,937 | $ | 38,037 | $ | 38,392 | $ | 34,606 | $ | 34,320 | |||||||||||||
Federal funds sold |
36,535 | 47,635 | 44,849 | 68,503 | 75,683 | ||||||||||||||||||
Securities: |
|||||||||||||||||||||||
Trading |
0 | 0 | 0 | 40 | 41 | ||||||||||||||||||
Available-for-sale |
560,575 | 535,215 | 528,434 | 452,587 | 438,561 | ||||||||||||||||||
Total securities |
560,575 | 535,215 | 528,434 | 452,627 | 438,602 | ||||||||||||||||||
Loans: |
|||||||||||||||||||||||
Commercial |
566,431 | 557,220 | 551,882 | 517,185 | 511,520 | ||||||||||||||||||
Consumer |
338,215 | 330,548 | 324,729 | 313,760 | 310,330 | ||||||||||||||||||
Real estate |
302,570 | 299,745 | 301,006 | 290,832 | 283,285 | ||||||||||||||||||
Total loans |
1,207,216 | 1,187,513 | 1,177,617 | 1,121,777 | 1,105,135 | ||||||||||||||||||
Allowance for loan losses |
17,832 | 17,677 | 17,566 | 16,992 | 16,873 | ||||||||||||||||||
Net loans |
1,189,384 | 1,169,836 | 1,160,051 | 1,104,785 | 1,088,262 | ||||||||||||||||||
Premises and equipment |
17,005 | 16,669 | 16,508 | 16,602 | 16,598 | ||||||||||||||||||
Goodwill and intangible assets |
20,302 | 20,371 | 20,461 | 19,018 | 18,797 | ||||||||||||||||||
Servicing assets |
15,197 | 14,089 | 13,310 | 10,520 | 10,078 | ||||||||||||||||||
Other |
49,324 | 47,508 | 47,519 | 47,495 | 47,702 | ||||||||||||||||||
Total assets |
$ | 1,928,259 | $ | 1,889,360 | $ | 1,869,524 | $ | 1,754,156 | $ | 1,730,042 | |||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|||||||||||||||||||||||
Liabilities: |
|||||||||||||||||||||||
Demand deposits (non-interest bearing) |
$ | 158,076 | $ | 156,447 | $ | 153,223 | $ | 146,598 | $ | 143,225 | |||||||||||||
Demand deposits (interest bearing) |
162,930 | 150,578 | 117,469 | 101,222 | 101,553 | ||||||||||||||||||
Savings |
361,842 | 369,404 | 382,673 | 374,313 | 361,913 | ||||||||||||||||||
Time deposits |
468,305 | 471,337 | 482,316 | 537,217 | 545,495 | ||||||||||||||||||
Total deposits |
1,151,153 | 1,147,766 | 1,135,681 | 1,159,350 | 1,152,186 | ||||||||||||||||||
Federal funds purchased and securities sold
under agreements to repurchase |
183,994 | 171,513 | 164,329 | 136,041 | 126,112 | ||||||||||||||||||
Note payable |
8,610 | 9,047 | 9,733 | 1,335 | 401 | ||||||||||||||||||
Borrowed funds |
402 | 320 | 455 | 1,726 | 1,876 | ||||||||||||||||||
Accrued expenses and other
liabilities |
17,910 | 18,054 | 17,863 | 12,000 | 11,223 | ||||||||||||||||||
Federal Home Loan Bank advances |
399,224 | 374,881 | 375,710 | 278,998 | 274,631 | ||||||||||||||||||
Corporation-obligated mandatorily redeemable
capital securities of subsidiary trust |
30,512 | 30,506 | 30,499 | 30,528 | 30,463 | ||||||||||||||||||
Total liabilities |
1,791,805 | 1,752,087 | 1,734,270 | 1,619,978 | 1,596,892 | ||||||||||||||||||
Shareholders’ equity: |
|||||||||||||||||||||||
Common stock |
42,006 | 41,752 | 41,757 | 39,177 | 38,511 | ||||||||||||||||||
Treasury shares |
(33,498 | ) | (32,406 | ) | (30,666 | ) | (20,590 | ) | (19,087 | ) | |||||||||||||
Net unrealized holding gains |
5,029 | 7,108 | 6,778 | 5,996 | 5,647 | ||||||||||||||||||
Retained earnings |
122,917 | 120,819 | 117,385 | 109,595 | 108,079 | ||||||||||||||||||
Total shareholders’ equity |
136,454 | 137,273 | 135,254 | 134,178 | 133,150 | ||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 1,928,259 | $ | 1,889,360 | $ | 1,869,524 | $ | 1,754,156 | $ | 1,730,042 | |||||||||||||
Page 9 of 12
Second Bancorp Incorporated and Subsidiaries
Financial Highlights — Non-GAAP Operating Results
Quarterly Data
(Dollars in thousands, except per share data)
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | |||||||||||||||||||
Earnings: |
|||||||||||||||||||||||
Net interest income |
$ | 13,817 | $ | 13,790 | $ | 14,083 | $ | 13,946 | $ | 13,954 | |||||||||||||
Provision for loan losses |
1,096 | 2,855 | 2,173 | 2,350 | 1,573 | ||||||||||||||||||
Non-interest income |
3,491 | 10,700 | 8,592 | 7,314 | 6,329 | ||||||||||||||||||
Security gains (losses) |
3,566 | 0 | 51 | (67 | ) | 832 | |||||||||||||||||
Trading account losses |
0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Non-interest expense |
13,076 | 14,016 | 13,673 | 12,469 | 11,717 | ||||||||||||||||||
Federal income taxes |
1,795 | 2,181 | 1,871 | 1,577 | 2,208 | ||||||||||||||||||
Net income |
$ | 4,907 | $ | 5,438 | $ | 5,009 | $ | 4,797 | $ | 5,617 | |||||||||||||
Per share: |
|||||||||||||||||||||||
Basic earnings |
$ | 0.52 | $ | 0.57 | $ | 0.52 | $ | 0.49 | $ | 0.57 | |||||||||||||
Diluted earnings |
0.51 | 0.57 | 0.52 | 0.48 | 0.56 | ||||||||||||||||||
Key ratios: (%) |
|||||||||||||||||||||||
Return on average assets (ROA) |
0.98 | 1.14 | 1.07 | 1.05 | 1.27 | ||||||||||||||||||
Return on average
shareholders’ equity (ROE) |
14.56 | 15.62 | 14.81 | 13.98 | 16.46 | ||||||||||||||||||
Net interest margin |
3.06 | 3.19 | 3.33 | 3.38 | 3.49 | ||||||||||||||||||
Net overhead |
2.05 | 0.74 | 1.16 | 1.20 | 1.30 | ||||||||||||||||||
Efficiency ratio |
73.49 | 56.10 | 58.98 | 57.27 | 56.35 | ||||||||||||||||||
Second Bancorp Incorporated and Subsidiaries
Reconciliation of GAAP vs. Non-GAAP Operating Results
Quarterly Data
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | |||||||||||||||||||
Net income |
$ | 4,907 | $ | 5,438 | $ | 8,661 | $ | 3,428 | $ | 5,536 | |||||||||||||
Adjustments to GAAP to reflect
Non-GAAP Operating Basis: |
|||||||||||||||||||||||
Add non-recurring costs: |
|||||||||||||||||||||||
Sale of banking centers |
0 | 0 | (5,619 | ) | 0 | 0 | |||||||||||||||||
Merger costs |
0 | 0 | 0 | 10 | 124 | ||||||||||||||||||
Banking center reconfiguration |
0 | 0 | 0 | 2,096 | 0 | ||||||||||||||||||
Total adjustments |
0 | 0 | (5,619 | ) | 2,106 | 124 | |||||||||||||||||
Federal income taxes (benefit) |
0 | 0 | (1,967 | ) | 737 | 43 | |||||||||||||||||
Net income |
$ | 4,907 | $ | 5,438 | $ | 5,009 | $ | 4,797 | $ | 5,617 | |||||||||||||
Note: Recap of Income from Mortgage Banking Activities
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | ||||||||||||||||
Gross income from servicing |
$ | 1,052 | $ | 986 | $ | 903 | $ | 764 | $ | 695 | ||||||||||
Amortization of MSRs |
(2,723 | ) | (2,101 | ) | (1,549 | ) | (2,322 | ) | (1,125 | ) | ||||||||||
(Excess amortization) / net servicing income |
(1,671 | ) | (1,115 | ) | (646 | ) | (1,558 | ) | (430 | ) | ||||||||||
Change in valuation allowance MSRs |
3,530 | (1,522 | ) | (989 | ) | (707 | ) | (802 | ) | |||||||||||
Net derivative gain (loss) — non hedging |
(6,759 | ) | 3,035 | 1,805 | (425 | ) | 1,087 | |||||||||||||
Income (loss) from Mortgage Servicing
(included in other operating income) |
$ | (4,900 | ) | $ | 398 | $ | 170 | $ | (2,690 | ) | $ | (145 | ) | |||||||
Gain on sale of mortgage loans (included in
gain on sale of loans) |
3,743 | 6,152 | 4,188 | 5,348 | 2,290 | |||||||||||||||
Net mortgage banking (loss) income |
$ | (1,157 | ) | $ | 6,550 | $ | 4,358 | $ | 2,658 | $ | 2,145 | |||||||||
Page 10 of 12
Second Bancorp Incorporated and Subsidiaries
Financial Highlights — Non-GAAP Operating Results
Year-to-Date Data
(Dollars in thousands, except per share data)
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | |||||||||||||||||||
Earnings: |
|||||||||||||||||||||||
Net interest income |
$ | 41,690 | $ | 27,873 | $ | 14,083 | $ | 56,460 | $ | 42,514 | |||||||||||||
Provision for loan losses |
6,124 | 5,028 | 2,173 | 6,159 | 3,809 | ||||||||||||||||||
Non-interest income |
22,783 | 19,292 | 14,211 | 22,853 | 15,539 | ||||||||||||||||||
Security gains (losses) |
3,617 | 51 | 51 | 592 | 659 | ||||||||||||||||||
Trading account losses |
0 | 0 | 0 | (20 | ) | (20 | ) | ||||||||||||||||
Non-interest expense |
40,765 | 27,689 | 19,292 | 47,266 | 34,797 | ||||||||||||||||||
Federal income taxes |
5,847 | 4,052 | 1,871 | 7,011 | 5,433 | ||||||||||||||||||
Net income |
$ | 15,354 | $ | 10,447 | $ | 5,009 | $ | 19,449 | $ | 14,653 | |||||||||||||
Per share: |
|||||||||||||||||||||||
Basic earnings |
$ | 1.61 | $ | 1.09 | $ | 0.52 | $ | 1.96 | $ | 1.48 | |||||||||||||
Diluted earnings |
1.59 | 1.08 | 0.52 | 1.94 | 1.46 | ||||||||||||||||||
Key ratios: (%) |
|||||||||||||||||||||||
Return on average assets (ROA) |
1.06 | 1.11 | 1.07 | 1.11 | 1.13 | ||||||||||||||||||
Return on average
shareholders’ equity (ROE) |
15.00 | 15.22 | 14.81 | 14.49 | 14.67 | ||||||||||||||||||
Net interest margin |
3.19 | 3.26 | 3.33 | 3.56 | 3.63 | ||||||||||||||||||
Net overhead |
1.33 | 0.95 | 1.16 | 1.49 | 1.59 | ||||||||||||||||||
Efficiency ratio |
61.80 | 57.49 | 58.98 | 58.07 | 58.36 | ||||||||||||||||||
Second Bancorp Incorporated and Subsidiaries
Reconciliation of GAAP vs. Non-GAAP Operating Results
Year-to-Date Data
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | |||||||||||||||||||
Net income |
$ | 19,006 | $ | 14,099 | $ | 8,661 | $ | 18,000 | $ | 14,572 | |||||||||||||
Adjustments to GAAP to reflect
Non-GAAP Operating Basis: |
|||||||||||||||||||||||
Add non-recurring costs: |
|||||||||||||||||||||||
Sale of banking centers |
(5,619 | ) | (5,619 | ) | (5,619 | ) | 0 | 0 | |||||||||||||||
Merger costs |
0 | 0 | 0 | 134 | 124 | ||||||||||||||||||
Banking center reconfiguration |
0 | 0 | 0 | 2,096 | 0 | ||||||||||||||||||
Total adjustments |
(5,619 | ) | (5,619 | ) | (5,619 | ) | 2,230 | 124 | |||||||||||||||
Federal income taxes (benefit) |
(1,967 | ) | (1,967 | ) | (1,967 | ) | 781 | 43 | |||||||||||||||
Net income |
$ | 15,354 | $ | 10,447 | $ | 5,009 | $ | 19,449 | $ | 14,653 | |||||||||||||
Note: Recap of Income from Mortgage Banking Activities
| Sept. 2003 | June 2003 | March 2003 | Dec. 2002 | Sept. 2002 | ||||||||||||||||
Gross income from servicing |
$ | 2,941 | $ | 1,889 | $ | 903 | $ | 2,691 | $ | 1,927 | ||||||||||
Amortization of MSRs |
(6,373 | ) | (3,650 | ) | (1,549 | ) | (4,335 | ) | (2,013 | ) | ||||||||||
(Excess amortization) / net servicing income |
(3,432 | ) | (1,761 | ) | (646 | ) | (1,644 | ) | (86 | ) | ||||||||||
Change in valuation allowance MSRs |
1,019 | (2,511 | ) | (989 | ) | (2,984 | ) | (2,277 | ) | |||||||||||
Net derivative gain (loss) — non hedging |
(1,919 | ) | 4,840 | 1,805 | 567 | 992 | ||||||||||||||
Income (loss) from Mortgage Servicing
(included in other operating income) |
$ | (4,332 | ) | $ | 568 | $ | 170 | $ | (4,061 | ) | $ | (1,371 | ) | |||||||
Gain on sale of mortgage loans (included in
gain on sale of loans) |
14,083 | 10,340 | 4,188 | 10,470 | 5,139 | |||||||||||||||
Net mortgage banking income |
$ | 9,751 | $ | 10,908 | $ | 4,358 | $ | 6,409 | $ | 3,768 | ||||||||||
Page 11 of 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Second Bancorp Incorporated | ||
| Date: October 16, 2003 | /s/ David L. Kellerman | |
|
|
||
|
David L. Kellerman Chief Financial Officer and Treasurer |
||
Page 12 of 12