UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________.
Commission File Number: 0-6835
IRWIN FINANCIAL CORPORATION
(Exact Name of Corporation as Specified in its Charter)
|
Indiana |
35-1286807 |
|
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
|
500 Washington Street Columbus, Indiana |
47201 |
|
(Address of Principal Executive Offices) |
(Zip Code) |
|
(812) 376-1909 |
www.irwinfinancial.com |
|
(Corporation's Telephone Number, Including Area Code) |
(Web Site) |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[ X ] Yes [
] No
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act
[ X ] Yes [
] No
As of May 9, 2003, there were outstanding 27,923,939 common shares, no par value, of the Registrant.
FORM 10-Q
TABLE OF CONTENTS
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PAGE NO. |
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PART I |
FINANCIAL INFORMATION | |
|
Item 1 |
3 |
|
|
Item 2 |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
14 |
|
Item 3 |
42 |
|
|
Item 4 |
42 |
|
|
PART II |
||
|
Item 1 |
42 |
|
|
Item 2 |
42 |
|
|
Item 6 |
43 |
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| Signatures |
46 |
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| Certifications |
47 |
|
PART 1. FINANCIAL INFORMATION.
Item 1. Financial Statements.
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
March 31, |
December 31, |
|
(In thousands except for shares) |
||
|
Assets: |
||
|
Cash and cash equivalents |
$ 132,332 |
$ 157,771 |
|
Interest-bearing deposits with financial institutions |
42,176 |
34,951 |
|
Trading assets |
132,663 |
157,514 |
|
Investment securities - held-to-maturity (Market value: |
||
|
$5,338 in 2003 and $5,644 in 2002) |
4,966 |
5,349 |
|
Investment securities - available-for-sale |
62,834 |
62,599 |
|
Loans held for sale |
1,631,829 |
1,314,849 |
|
Loans and leases, net of unearned income - Note 2 |
2,987,030 |
2,815,276 |
|
Less: Allowance for loan and lease losses - Note 3 |
(54,184 ) |
(50,936 ) |
|
2,932,846 |
2,764,340 |
|
|
Servicing assets - Note 4 |
211,612 |
174,935 |
|
Accounts receivable |
44,949 |
55,928 |
|
Accrued interest receivable |
15,583 |
15,264 |
|
Premises and equipment, net |
32,498 |
32,398 |
|
Other assets |
121,644 |
135,028 |
|
Total assets |
$ 5,365,932 |
$ 4,910,926 |
|
Liabilities and Shareholders' Equity: |
||
|
Deposits Noninterest-bearing |
|
|
|
Interest-bearing |
1,215,656 |
1,170,660 |
|
Certificates of deposit over $100,000 |
884,459 |
701,870 |
|
3,025,603 |
2,694,344 |
|
|
Short-term borrowings - Note 5 |
810,674 |
993,124 |
|
Long-term debt |
30,067 |
30,070 |
|
Collateralized debt - Note 6 |
711,067 |
391,425 |
|
Company-obligated mandatorily redeemable preferred |
|
|
|
Convertible securities of subsidiary trusts |
51,750 |
51,750 |
|
Other liabilities |
182,878 |
207,552 |
|
Total liabilities |
4,993,289 |
4,549,515 |
|
Commitments and contingencies - Note 9 |
|
|
|
Shareholders' equity |
|
|
|
Common stock, no par value - authorized 40,000,000 shares; issued |
|
|
|
Additional paid-in capital |
3,225 |
3,606 |
|
Deferred compensation |
(558) |
(240) |
|
Accumulated other comprehensive loss, net of deferred income tax |
|
|
|
Retained earnings |
297,490 |
287,662 |
|
411,633 |
401,886 |
|
|
Less treasury stock, at cost |
(40,153 ) |
(41,331 ) |
|
Total shareholders' equity |
371,480 |
360,555 |
|
Total liabilities and shareholders' equity |
$ 5,365,932 |
$ 4,910,926 |
The accompanying notes are an integral part of the consolidated financial statements.
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
|
|
For the Three Months Ended March 31, |
||
|
|
2003 |
2002 |
|
|
(In thousands, except per share) |
|||
|
Interest income: |
|||
|
Loans and leases |
$ 58,124 |
$ 47,547 |
|
|
Loans held for sale |
22,896 |
9,937 |
|
|
Trading account |
6,963 |
9,279 |
|
|
Investment securities |
862 |
756 |
|
|
Federal funds sold |
36 |
18 |
|
|
Total interest income |
88,881 |
67,537 |
|
|
Interest expense: |
|||
|
Deposits |
11,249 |
14,134 |
|
|
Short-term borrowings |
4,067 |
3,599 |
|
|
Long-term and collateralized debt |
3,646 |
569 |
|
|
Preferred securities distribution |
5,528 |
4,820 |
|
|
Total interest expense |
24,490 |
23,122 |
|
|
Net interest income |
64,391 |
44,415 |
|
|
Provision for loan and lease losses |
9,243 |
10,332 |
|
|
Net interest income after provision for loan and lease losses |
55,148 |
34,083 |
|
|
Other income: |
|||
|
Loan servicing fees |
21,892 |
18,657 |
|
|
Amortization and impairment of servicing assets -- Note 4 |
(33,864 ) |
(3,293 ) |
|
|
Net loan administration income (loss) |
(11,972 ) |
15,364 |
|
|
Gain from sales of loans |
95,511 |
47,697 |
|
|
Gain (loss) on sale of mortgage servicing assets |
4 |
(93) |
|
|
Trading losses |
(17,789) |
(7,303) |
|
|
Derivative gains (losses), net |
314 |
(8,155) |
|
|
Other |
3,531 |
4,040 |
|
|
69,599 |
51,550 |
||
|
Other expense: |
|||
|
Salaries |
56,423 |
34,219 |
|
|
Pension and other employee benefits |
10,923 |
9,010 |
|
|
Office expense |
5,192 |
4,178 |
|
|
Premises and equipment |
10,302 |
8,495 |
|
|
Marketing and development |
3,694 |
2,720 |
|
|
Professional fees |
2,805 |
3,060 |
|
|
Other |
16,261 |
8,477 |
|
|
105,600 |
70,159 |
||
|
Income before income taxes |
19,147 |
15,474 |
|
|
Provision for income taxes |
7,371 |
6,023 |
|
|
Income before cumulative effect of change in accounting principle |
11,776 |
9,451 |
|
|
Cumulative effect of change in accounting principle, net of tax |
-- |
495 |
|
|
Net income |
$ 11,776 |
$ 9,946 |
|
|
Earnings per share before cumulative effect of change in accounting principle: - Note 7 |
|
|
|
|
Diluted |
$ 0.41 |
$ 0.37 |
|
|
Earnings per share: - Note 7 |
|
|
|
|
Diluted |
$ 0.41 |
$ 0.39 |
|
|
Dividends per share |
$ 0.0700 |
$ 0.0675 |
|
The accompanying notes are an integral part of the consolidated financial statements.
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
For the Three Months Ended March 31, 2003, and 2002
|
|
|
|
Accumulated |
|
|
|
|
|
|
(In thousands, except shares) |
||||||||
|
Balance January 1, 2003 |
$ 360,555 |
$ 287,662 |
$ (1,142) |
$ (240) |
$ 3,606 |
$ 112,000 |
$ -- |
$ (41,331) |
|
Net income |
11,776 |
11,776 |
||||||
|
Unrealized gain on investment securities net of $15 tax liability |
|
|
||||||
|
Unrealized loss on interest rate cap net of $20 tax benefit |
|
|
||||||
|
Foreign currency adjustment net of $247 tax liability |
|
|
||||||
|
Minimum SERP liability net of $170 tax liability |
|
|
||||||
|
Total comprehensive income |
|
|||||||
|
Deferred compensation |
(318) |
(318) |
||||||
|
Cash dividends |
(1,948) |
(1,948) |
||||||
|
Tax benefit on stock option exercises |
|
|
||||||
|
Treasury stock: |
||||||||
|
Purchase of 6,672 shares |
(115) |
(115) |
||||||
|
Sales of 63,211 shares |
994 |
|
|
|
(299 ) |
|
|
1,293 |
|
Balance March 31, 2003 |
$ 371,480 |
$ 297,490 |
$ (546) |
$ (558) |
$ 3,225 |
$ 112,000 |
$ -- |
$ (40,153) |
|
Balance January 1, 2002 |
$ 231,665 |
$ 241,725 |
$ (325) |
$ (449) |
$ 4,426 |
$ 29,965 |
$ 1,386 |
$ (45,063) |
|
Net income |
9,946 |
9,946 |
||||||
|
Unrealized loss on investment securities net of $20 tax benefit |
|
|
||||||
|
Foreign currency adjustment net of $4 tax benefit |
|
|
||||||
|
Total comprehensive income |
|
|||||||
|
Deferred compensation |
30 |
30 |
||||||
|
Cash dividends |
(1,859) |
(1,859) |
||||||
|
Sales of 6,210,000 shares of common stock |
|
|
||||||
|
Tax benefit on stock option exercises |
|
|
||||||
|
Treasury stock: |
||||||||
|
Purchase of 613 shares |
(10) |
(10) |
||||||
|
Sales of 27,580 shares |
385 |
|
|
|
6 |
|
|
379 |
|
Balance March 31, 2002 |
$ 322,505 |
$ 249,812 |
$ (360) |
$ (419) |
$ 4,444 |
$ 112,336 |
$ 1,386 |
$ (44,694 ) |
The accompanying notes are an integral part of the consolidated financial statements.
IRWIN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
For the Three Months Ended March 31, |
|
|
|
2003 |
2002 |
|
(In thousands) |
||
|
Net income |
$ 11,776 |
$ 9,946 |
|
Adjustments to reconcile net income to cash |
||
|
(used) provided by operating activities: |
||
|
Depreciation, amortization, and accretion, net |
2,754 |
3,123 |
|
Amortization and impairment of servicing assets |
33,864 |
3,293 |
|
Provision for loan and lease losses |
9,243 |
10,332 |
|
Gain from sale of loans held for sale |
(95,511) |
(47,697) |
|
Originations of loans held for sale |
(5,837,368) |
(1,949,394) |
|
Proceeds from the sale of loans held for sale |
5,545,358 |
1,976,422 |
|
Net decrease in trading assets |
24,851 |
7,947 |
|
Decrease in accounts receivable |
10,979 |
8,303 |
|
Other, net |
(11,780) |
5,454 |
|
Net cash (used) provided by operating activities |
(305,834 ) |
27,729 |
|
Lending and investing activities: |
||
|
Proceeds from maturities/calls of investment securities: |
||
|
Held-to-maturity |
383 |
286 |
|
Available-for-sale |
15,258 |
975 |
|
Purchase of investment securities: |
||
|
Available-for-sale |
(15,440) |
(39) |
|
Net increase in interest-bearing deposits with financial institutions |
(7,225) |
(2,764) |
|
Net increase in loans, excluding sales |
(1,170,749) |
(376,881) |
|
Sales of loans |
993,000 |
234,502 |
|
Other, net |
(2,060 ) |
(1,361 ) |
|
Net cash used by lending and investing activities |
(186,833 ) |
(145,282 ) |
|
Financing activities: |
||
|
Net increase (decrease) in deposits |
331,259 |
(51,021) |
|
Net (decrease) increase in short-term borrowings |
(182,450) |
52,288 |
|
Repayments of long-term debt |
(3) |
-- |
|
Net proceeds from issuance of collateralized borrowings |
319,642 |
-- |
|
Proceeds from sale of stock for equity offering |
-- |
82,371 |
|
Purchase of treasury stock for employee benefit plans |
(115) |
(10) |
|
Proceeds from sale of stock for employee benefit plans |
912 |
397 |
|
Dividends paid |
(1,948 ) |
(1,859 ) |
|
Net cash provided by financing activities |
467,297 |
82,166 |
|
Effect of exchange rate changes on cash |
(69 ) |
(47 ) |
|
Net decrease in cash and cash equivalents |
(25,439) |
(35,434) |
|
Cash and cash equivalents at beginning of period |
157,771 |
158,291 |
|
Cash and cash equivalents at end of period |
$ 132,332 |
$ 122,857 |
|
Supplemental disclosures of cash flow information: |
||
|
Cash paid during the period: |
||
|
Interest |
$ 24,469 |
$ 23,796 |
|
Income taxes |
$ 13,651 |
$ 865 |
The accompanying notes are an integral part of the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
Consolidation: Irwin Financial Corporation and its subsidiaries provide financial services throughout the United States and Canada. We are engaged in the mortgage banking, commercial banking, home equity lending, commercial finance, and venture capital lines of business. Intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Trading Assets: Trading assets are stated at fair value. Unrealized gains and losses are included in earnings. Included in trading assets are residual interests. In the past, when we sold receivables in securitizations of home equity loans and lines of credit, we retained residual interests, a servicing asset, one or more subordinated tranches, and in some cases a cash reserve account, all of which are retained interests in the securitized receivables. Gain or loss on the sale of the receivables depends in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair value at the date of transfer.
To obtain fair value of residual interests, quoted market prices are used if available. However, quotes are generally not available for residual interests, so we generally estimate fair value based on the present value of expected cash flows using estimates of the key assumptions -- prepayment speeds, credit losses, and discount rates commensurate with the risks involved -- that management believes market participants would use to value similar assets. Adjustments to carrying values are recorded as trading gains or losses. An adjustment of $17.8 million was recorded in the first quarter of 2003 to write down the residual interests due to increased prepayment speeds and expected credit losses.
Cash and Cash Equivalents Defined: For purposes of the statement of cash flows, we consider cash and due from banks to be cash equivalents.
Stock-Based Employee Compensation: At March 31, 2003, we have two stock-based employee compensation plans. We use the intrinsic value method to account for our plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. No stock-based employee compensation cost is reflected in net income for any of the periods presented, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The Board of Directors has not chosen to expense stock options. The Board wishes to analyze new guidance from the FASB, SEC or other relevant authority regarding the standardization of valuation methods, should such guidance be forthcoming. In the absence of a uniform valuation method for public companies, we will continue to disclose in this footnote the impact of expensing stock options, using our valuation m
ethod, which is based on a Black-Scholes model using several assumptions management believes to be reasonable. The following table illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation," using our valuation method to stock-based employee compensation:
|
For the three months ended March 31, |
||
|
|
2003 |
2002 |
|
(In thousands) |
||
|
Net income as reported |
$ 11,776 |
$ 9,946 |
|
Deduct: Total stock-based employee compensation expense |
|
|
|
Pro forma net income |
$ 11,129 |
$ 9,323 |
|
Basic earnings per share |
|
|
|
Pro forma |
$ 0.40 |
$ 0.38 |
|
Diluted earnings per share |
|
|
|
Pro forma |
$ 0.39 |
$ 0.37 |
Recent Accounting Developments
In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" which requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. The primary beneficiary is the party that absorbs a majority of expected losses, receives a majority of expected residual returns, or both, as a result of holding variable interests, which are the ownership, contractual, or other pecuniary interests in the entity. They are required to disclose the (a) nature, purpose, size, and activities of the variable interest entity, (b) the carrying amount and classification of assets that are collateral, and (c) any lack of recourse by creditors to the primary beneficiary. If a primary interest is not held, but a significant variable interest is held, disclosure requirements include (1) the nature, purpose, size and activities of the va
riable interest entity, (2) exposure to loss, (3) the date and nature of involvement with the entity. This interpretation applies immediately to variable interests created or obtained after January 31, 2003 for interim periods beginning after June 15, 2003. Prior to 2002, we used securitization structures involving qualified special purpose entities (QSPEs) which are exempt from the requirements of this interpretation. As a result, management does not believe the implementation of Interpretation No. 46 will have a material effect on our earnings or financial position.
Reclassifications: Certain amounts in the 2002 consolidated financial statements have been reclassified to conform to the 2003 presentation. These changes had no impact on previously reported net income or shareholders' equity.
Note 2 - Loans and Leases
Loans and leases are summarized as follows:
|
|
March 31, |
December 31, |
|
|
2003 |
2002 |
|
(In thousands) |
||
|
Commercial, financial and agricultural |
$ 1,362,750 |
$ 1,347,962 |
|
Real estate-construction |
326,711 |
314,851 |
|
Real estate-mortgage |
883,558 |
777,865 |
|
Consumer |
33,296 |
27,857 |
|
Direct financing leases |
|
|
|
Foreign |
151,372 |
133,784 |
|
Unearned income |
|
|
|
Foreign |
(22,117 ) |
(19,467 ) |
|
Total |
$ 2,987,030 |
$ 2,815,276 |
Note 3 - Allowance for Loan and Lease Losses
|
As of and for the three months ended |
As of and for the year ended |
|
|
|
March 31, |
December 31, 2002 |
|
(In thousands) |
||
|
Balance at beginning of period |
$ 50,936 |
$ 22,283 |
|
Provision for loan and lease losses |
9,243 |
43,996 |
|
Foreign currency adjustment |
132 |
17 |
|
Recoveries |
725 |
2,870 |
|
Charge-offs |
(6,852 ) |
(18,230 ) |
|
Balance at end of period |
$ 54,184 |
$ 50,936 |
Note 4 - Servicing Assets
Included on the consolidated balance sheet at March 31, 2003 and December 31, 2002 are $211.6 million and $174.9 million, respectively, of capitalized servicing assets. These amounts relate to the principal balances of mortgage and home equity loans serviced by us for investors. Changes in our capitalized servicing assets, net of valuation allowance, are shown below:
|
|
As of and for the three months ended |
As of and for the year ended |
|
|
March 31, |
December 31, 2002 |
|
(In thousands) |
||
|
Beginning balance |
$ 174,935 |
$ 228,624 |
|
Additions |
70,541 |
180,627 |
|
Amortization |
(30,842) |
(62,191) |
|
Impairment |
(3,022) |
(146,370) |
|
Reduction for servicing sales |
-- |
(25,755 ) |
|
$ 211,612 |
$ 174,935 |
|
We have established a valuation allowance to record servicing assets at their fair value. Changes in the allowance are summarized below:
|
March 31, |
December 31, |
|
|
2003 |
2002 |
|
|
(In thousands) |
||
|
Balance at beginning of period |
$ 159,865 |
$ 13,495 |
|
Provision for impairment |
3,022 |
146,370 |
|
Balance at end of period |
$ 162,887 |
$ 159,865 |
Note 5 - Short-term Borrowings
Short-term borrowings are summarized as follows:
|
|
March 31, |
December 31, |
|
|
2003 |
2002 |
|
(In thousands) |
||
|
Drafts payable related to mortgage loan closings |
$ 286,682 |
$ 200,701 |
|
Commercial paper |
16,612 |
14,121 |
|
Federal Home Loan Bank borrowings |
407,000 |
527,000 |
|
Federal funds |
33,000 |
30,000 |
|
Lines of credit and other borrowings |
67,380 |
221,302 |
|
$ 810,674 |
$ 993,124 |
|
Drafts payable related to mortgage loan closings are related to mortgage closings that have not been presented to the banks for payment. When presented for payment, these borrowings will be funded internally or by borrowing from the lines of credit.
The majority of our commercial paper is payable to a company controlled by a significant shareholder and director of the Corporation.
Federal Home Loan Bank borrowings are collateralized by loans and loans held for sale.
We also have lines of credit available to fund loan originations and operations. Interest on the lines of credit is payable monthly or quarterly with variable rates ranging from 1.5% to 2.5% at March 31, 2003.
Note 6 - Collateralized Debt
Beginning in the second quarter of 2002, we began securitizing loans using secured financing structures at our home equity lending line of business. In 2003, we also began securitizing leases at our commercial finance line of business using secured financing structures. Sale treatment was precluded on these transactions as we maintained effective control over the loans and leases securitized. This type of securitization structure results in cash being received, debt being recorded, and the establishment of an allowance for credit losses. The notes associated with these transactions are collateralized by $0.7 billion in leases and home equity loans and home equity lines of credit classified on the balance sheet as loans and leases held for investment (Note 2). The principal and interest on these debt securities are paid using the cash flows from the underlying loans and leases. Accordingly, the timing of the principal payments on these debt securities is dependent on th
e payments received on the underlying collateral. The interest rates on the bonds are at a floating rate. We also received $7.1 million for an interest only senior note on both securitizations at the home lending line of business which as of March 31, 2003 had a combined notional balance of $61.7 million. These senior notes pay interest at 10%, and mature on December 25, 2004 and September 25, 2005.
Collateralized debt is summarized as follows:
|
|
Weighted |
|
|
|
|
(In thousands) |
||||
|
Commercial finance line of business |
||||
|
2003 asset backed note |
7/4/2010 |
2.30 |
$ 58,962 |
$ -- |
|
Home equity lending line of business |
||||
|
2003-1 asset backed notes: |
||||
|
Combined variable rate senior note |
2/28/2028 |
1.86 |
231,800 |
-- |
|
Combined variable rate subordinate note |
2/28/2028 |
3.38 |
61,763 |
-- |
|
Unamortized premium |
5,726 |
-- |
||
|
2002-1 asset backed notes: |
||||
|
|
7/25/2023- |
|
|
|
|
Combined variable rate subordinate note |
2/25/2029 |
2.87 |
72,551 |
72,551 |
|
Unamortized premium |
5,471 |
5,877 |
||
|
Total |
$711,067 |
$ 391,425 |
||
Note 7 - Earnings per Share
Earnings per share calculations are summarized as follow:
|
Basic |
Effect of |
Effect of |
Effect of |
Diluted |
|
|
(In thousands, except per share amounts) |
|||||
|
Three Months Ended March 31, 2003 Net income |
|
|
|
|
|
|
Shares |
27,786 |
202 |
|
2,610 |
30,598 |
|
Per-Share Amount |
$ 0.42 |
$ -- |
$ -- |
$ (0.01) |
$ 0.41 |
|
Three Months Ended March 31, 2002 |
|
|
|
|
|
|
Shares |
24,221 |
135 |
96 |
2,610 |
27,062 |
|
Per-Share Amount |
$ 0.39 |
$ -- |
$ -- |
$ (0.02) |
$ 0.37 |
|
Cumulative effect of change in |
|
|
|
|
|
|
Per-Share Amount |
$ 0.02 |
$ 0.02 |
|||
|
Net income |
9,946 |
10,646 |
|||
|
Per-Share Amount |
$ 0.41 |
$ 0.39 |
|||
At March 31, 2003 and 2002, 769,534 and 1,011,473 shares, respectively, related to stock options, were not included in the dilutive earnings per share calculation because the options' exercise price was greater than the market price of the common stock.
Note 8 - Industry Segment Information
We have five principal segments that provide a broad range of financial services. The mortgage banking line of business originates, sells, and services residential first mortgage loans throughout the United States. The commercial banking line of business provides commercial banking services in seven Midwestern and Rocky Mountain states. The home equity lending line of business originates and services home equity loans throughout the United States. The commercial finance line of business originates leases and loans against commercial equipment and real estate throughout the United States (U.S.) and Canada. The venture capital line of business invests in early-stage U.S. technology companies focusing on financial services. Our other segment primarily includes the parent company and eliminations.
The accounting policies of each segment are the same as those described in the "Summary of Significant Accounting Policies." Below is a summary of each segment's revenues, net income, and assets for three months ended March 31, 2003, and 2002:
|
Mortgage |
Commercial |
Home Equity |
Commercial |
Venture |
|
|
|
|
(In thousands) |
|||||||
|
For the Three Months Ended March 31, 2003 |
|
|
|
|
|
|
|
|
Intersegment interest |
-- |
(730) |
-- |
-- |
-- |
730 |
-- |
|
Provision for loan and |
|
|
|
|
|
|
|
|
Other revenue |
80,983 |
5,129 |
(14,981) |
835 |
(2,262) |
(105) |
69,599 |
|
Intersegment revenues |
-- |
-- |
-- |
-- |
150 |
(150) |
-- |
|
Total net revenues |
97,101 |
22,576 |
6,551 |
2,778 |
(2,105) |
(2,154) |
124,747 |
|
Other expense |
64,522 |
13,454 |
21,415 |
3,218 |
108 |
2,883 |
105,600 |
|
Intersegment expenses |
691 |
451 |
966 |
110 |
-- |
(2,218) |
-- |
|
Net income before |
|
|
|
|
|
|
|
|
Income taxes |
12,249 |
3,460 |
(6,332) |
(290) |
(885) |
(831) |
7,371 |
|
Net income (loss) |
$ 19,639 |
$ 5,211 | |||||