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United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2003

or

(   ) 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 0-14354

FIRST INDIANA CORPORATION
(Exact name of registrant as specified in its charter)


Indiana

35-1692825

(State or other jurisdiction of

(IRS Employer Identification Number)

incorporation or organization)

135 North Pennsylvania Street, Indianapolis, IN

46204

(Address of principal executive office)

(Zip Code)

(317) 269-1200

(Registrant's telephone number, including area code)

        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. Yes (X) No (   )
         Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act). Yes (X) No (   )
         Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class

Shares

Common Stock, par value $0.01 per share

Outstanding at 10/31/2003

15,597,414




FIRST INDIANA CORPORATION AND SUBSIDIARIES
FORM 10-Q
INDEX

Page
Part I Financial Information  
 
  Item 1. Financial Statements
 
  Condensed Consolidated Balance Sheets as of September 30, 2003, December 31, 2002, and September 30, 2002 3 
 
  Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended September 30, 2003 and 2002 4 
 
  Condensed Consolidated Statement of Shareholders' Equity for the Nine Months Ended September 30, 2003 5 
 
  Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002 6 
 
  Notes to Condensed Consolidated Financial Statements 7 
 
  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 
 
  Item 3. Quantitative and Qualitative Disclosures about Market Risk 32 
 
  Item 4. Controls and Procedures 34 
 
Part II Other Information
 
  Item 1. Legal Proceedings 35 
 
  Item 2. Changes in Securities and Use of Proceeds 35 
 
  Item 3. Defaults upon Senior Securities 35 
 
  Item 4. Submission of Matters to a Vote of Security Holders 35 
 
  Item 5. Other Information 35 
 
  Item 6. Exhibits and Reports on Form 8-K 35 
 
  Signatures

2


Condensed Consolidated Balance Sheets
First Indiana Corporation and Subsidiaries
(Dollars in Thousands, Except Per Share Data)
(Unaudited)


September 30
2003
 December 31
2002
 September 30
2002
Assets                
  Cash   $ 63,111   $ 76,050   $ 65,088  
  Interest-Bearing Due from Banks    7,346    --    --  
 
 
 
 
    Cash and Cash Equivalents    70,457    76,050    65,088  
  Securities Available for Sale    208,092    138,457    143,252  
  Federal Home Loan Bank and Federal Reserve Bank Stock    25,377    22,491    22,491  
  Loans  
    Business    551,398    501,213    515,478  
    Consumer    624,287    666,150    671,292  
    Residential Mortgage    289,034    311,324    292,276  
    Single-Family Construction    196,728    212,772    222,679  
    Commercial Real Estate    163,861    146,174    145,779  
 
 
 
 
  Total Loans    1,825,308    1,837,633    1,847,504  
    Allowance for Loan Losses    (57,498 )  (44,469 )  (38,349 )
 
 
 
 
    Net Loans    1,767,810    1,793,164    1,809,155  
  Premises and Equipment    25,884    21,528    20,645  
  Accrued Interest Receivable    9,072    10,771    11,177  
  Mortgage Servicing Rights    7,913    9,065    9,421  
  Goodwill    36,968    13,045    13,045  
  Other Intangible Assets    4,805    --    --  
  Other Assets    48,997    40,643    38,357  
 
 
 
 
    Total Assets   $ 2,205,375   $ 2,125,214   $ 2,132,631  
 
 
 
 
Liabilities  
  Non-Interest-Bearing Deposits   $ 231,649   $ 180,389   $ 170,887  
  Interest-Bearing Deposits  
    Demand Deposits    223,055    179,751    159,881  
    Savings Deposits    407,217    398,752    395,811  
    Certificates of Deposit    655,685    580,312    688,209  
 
 
 
 
      Total Interest-Bearing Deposits    1,285,957    1,158,815    1,243,901  
 
 
 
 
    Total Deposits    1,517,606    1,339,204    1,414,788  
  Short-Term Borrowings    156,912    170,956    138,185  
  Federal Home Loan Bank Advances    256,511    346,532    319,532  
  Trust Preferred Securities    23,601    11,797    --  
  Accrued Interest Payable    1,957    2,290    2,631  
  Advances by Borrowers for Taxes and Insurance    3,467    1,820    5,909  
  Other Liabilities    34,537    31,404    28,045  
 
 
 
 
    Total Liabilities    1,994,591    1,904,003    1,909,090  
 
 
 
 
Shareholders' Equity  
  Preferred Stock, $.01 Par Value: 2,000,000 Shares Authorized; None Issued    --    --    --  
  Common Stock, $.01 Par Value: 33,000,000 Shares Authorized; Issued: 2003 - 17,473,675 Shares; 2002 - 17,295,351 and 17,219,532 Shares    175    173    172  
  Capital Surplus    46,402    43,296    42,594  
  Retained Earnings    185,306    194,738    196,160  
  Accumulated Other Comprehensive Income    2,632    4,644    4,848  
  Treasury Stock at Cost: 2003 - 1,877,017 Shares;2002 - 1,754,891 and 1,680,730 Shares    (23,731 )  (21,640 )  (20,233 )
 
 
 
 
    Total Shareholders' Equity    210,784    221,211    223,541  
 
 
 
 
    Total Liabilities and Shareholders' Equity   $ 2,205,375   $ 2,125,214   $ 2,132,631  
 
 
 
 

See Notes to Consolidated Financial Statements

3


Condensed Consolidated Statements of Earnings
First Indiana Corporation and Subsidiaries
(Dollars in Thousands, Except Per Share Data)
(Unaudited)

Three Months Ended September 30
 Nine Months Ended September 30
2003
 2002
 2003
 2002
Interest Income          
  Loans  $ 25,374   $ 29,577   $ 80,450   $87,948  
  Securities Available for Sale  1,976   2,079   5,868   6,494  
  Dividends on FRB and FHLB Stock  275   353   943   1,036  
  Federal Funds Sold  --   --   3   15  
  Interest-Bearing Due from Banks  14   --   43   --  
 
 
 
 
 
    Total Interest Income  27,639   32,009   87,307   95,493  
Interest Expense 
  Deposits  5,796   8,726   19,636   28,698  
  Short-Term Borrowings  313   671   1,085   1,593  
  Federal Home Loan Bank Advances  2,350   3,211   7,167   10,134  
  Trust Preferred Securities  401   --   849   --  
 
 
 
 
 
    Total Interest Expense  8,860   12,608   28,737   40,425  
 
 
 
 
 
Net Interest Income  18,779   19,401   58,570   55,068  
Provision for Loan Losses  13,548   2,982   35,876   9,751  
 
 
 
 
 
Net Interest Income After Provision for Loan Losses  5,231   16,419   22,694   45,317  
Non-Interest Income 
  Loan and Deposit Charges  4,608   4,230   13,415   11,637  
  Loan Servicing Income (Expense)  (55 ) (22 ) (320 ) 412  
  Loan Fees  785   545   2,004   1,942  
  Trust Fees  777   637   2,212   1,965  
  Somerset Fees  2,248   1,864   9,478   8,686  
  Investment Product Sales Commissions  473   685   1,307   2,220  
  Sale of Loans  2,865   2,605   8,233   6,538  
  Sale of Investment Securities  --   --   7   223  
  Other  810   567   2,628   1,937  
 
 
 
 
 
    Total Non-Interest Income  12,511   11,111   38,964   35,560  
Non-Interest Expense 
  Salaries and Benefits  12,841   9,526   36,382   28,179  
  Net Occupancy  1,163   1,060   3,555   3,081  
  Equipment  1,585   1,437   4,942   4,581  
  Professional Services  1,635   1,135   4,098   3,231  
  Marketing  684   518   1,930   1,671  
  Telephone, Supplies, and Postage  971   805   2,973   2,477  
  Other Intangible Asset Amortization  184   --   552   --  
  Other  2,328   2,286   6,379   5,930  
 
 
 
 
 
    Total Non-Interest Expense  21,391   16,767   60,811   49,150  
 
 
 
 
 
Earnings (Loss) before Income Taxes  (3,649 ) 10,763   847   31,727  
Income Taxes (Benefit)  (1,201 ) 3,921   290   11,606  
 
 
 
 
 
Net Earnings (Loss)  $(2,448 ) $   6,842   $      557   $20,121  
 
 
 
 
 
 
Basic Earnings (Loss) Per Share  $  (0.16 ) $     0.44   $     0.04   $    1.30  
 
 
 
 
 
 
Diluted Earnings (Loss) Per Share  $  (0.16 ) $     0.43   $     0.04   $    1.27  
 
 
 
 
 
 
Dividends Per Common Share  $   0.165   $   0.160   $   0.495   $  0.480  
 
 
 
 
 

See Notes to Consolidated Financial Statements

4

Condensed Consolidated Statement of Shareholders’ Equity
First Indiana Corporation and Subsidiaries
(Dollars in Thousands, Except Per Share Data)
(Unaudited)


Accumulated
Common Stock
 Capital Retained Other
Comprehensive		 Treasury Total
Shareholders'
Shares
 Amount
 Surplus
 Earnings
 Income (Loss)
 Stock
 Equity
Balance at December 31, 2002       15,540,460   $ 173   $ 43,296   $ 194,738   $ 4,644   $ (21,640 ) $ 221,211  
Comprehensive Income:  
  Net Earnings    --    --    --    557    --    --    557  
Unrealized Loss on Securities Available for Sale of $3,328, Net of Income Taxes and Reclassification Adjustment of $4, Net of Income Taxes    --    --    --    --    (2,012 )  --    (2,012 )
 
 
Total Comprehensive Income                                           (1,455 )
Dividends on Common Stock - $0.495 per share    --    --    --    (7,711 )  --    --    (7,711 )
Exercise of Stock Options    66,099    --    700    --    --    --    700