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Net Income at Sky Financial Group Climbs 62.7%
BOWLING GREEN, Ohio -- Sky Financial Group Inc. today reported first quarter net income of $58.7 million, up 62.7% compared with $36.1 million for the first quarter last year. First quarter earnings per diluted share were 62, cents, up from 41 cents per diluted share for the first quarter last year.During the first quarter, Sky completed the sale of its dental finance unit, Sky Financial Solutions, and the results for Sky have been restated for all historical periods to reflect SFS as "discontinued operations." In the first quarter, including the gain on sale of SFS, income from discontinued operations contributed $18.7 million or 20 cents per diluted share."The sale of Sky Financial Solutions was a landmark event for Sky," says Marty E. Adams, chairman and chief executive officer. "Our disciplined approach to our strategic priorities continues to produce earnings growth, and with our balance sheet now strengthened by the sale of SFS, we are completely focused on the growth of our regional financial services structure."The company is particularly looking forward to adding the employees and clients of Second Bancorp to Sky by completing our merger on July 1," Adams continues. "This merger provides us with another great opportunity to leverage our capabilities for growth and profitability."Income from continuing operations for the first quarter was $40 million, up from $35.8 million in the first quarter last year. Diluted earnings per share from continuing operations were 42 cents, up from 41 cents in the same period last year. On a continuing operations basis, annualized return on assets and return on equity for the first quarter were 1.25% and 15.54%, respectively, compared with 1.32% and 17.25%, respectively, for the same period last year.Core operating earnings, which reflect income from continuing operations adjusted to exclude merger-related expenses and significant transactions not representative of ongoing operations, were $40.2 million for the first quarter, up 12.1% versus $35.8 million for the first quarter last year. Core operating earnings per diluted share for the first quarter were $.43, up 4.9% from $.41 for the first quarter last year. For the first quarter, on a core operating earnings basis, annualized return on assets and return on equity were 1.25% and 15.63%, respectively, compared with 1.32% and 17.25%, respectively for the same period last year.Net interest income for the first quarter was $101.8 million, up 12.7% from $90.4 million in the first quarter last year. The net interest margin for the first quarter was 3.71%, down one basis point from last quarter and a decrease of 11 basis points from the first quarter a year ago. The lower net interest margin from the prior year primarily reflects the incremental effect from acquisitions and the impact of the extended low rate environment.Average earning assets increased 15.1% over the first quarter last year from a combination of organic growth and acquisitions. Average loans for the quarter increased 17.9% from last year with organic growth contributing 2.5% in addition to the acquisitions. Average deposits, excluding time deposits, grew 22.1% from the first quarter last year, which included organic growth of 7.6% in addition to the acquisitions. Including time deposits, average total deposits for the first quarter were up 11.6% from the first quarter last year, but declined 3.2% when the acquisitions were excluded.Non-interest revenues were $43.4 million for the first quarter, up 9.1% from $39.8 million in the first quarter last year more than offsetting a reduction in mortgage banking revenues. Excluding mortgage banking and net securities transactions, non-interest revenues were up 21.7% with strong results compared to the same quarter last year. Brokerage and insurance commissions were up 35.1%, trust services income was up 22.9% and service charges on deposits increased 12.1%. For the quarter, in a less favorable rate environment, mortgage originations declined and mortgage banking revenues were down $3.9 million, or 41.8% from the year-ago quarter. Securities transactions included net gains of $1.5 million in the first quarter this year versus $500,000 in the first quarter last year.On April 1, Sky completed the acquisition and merger of EOB Inc. into Sky Insurance. EOB is an insurance agency based in Canton, Ohio, that specializes in the sale and service of group benefit products. On Jan. 8, 2004, Sky announced a definitive agreement to acquire Second Bancorp, Incorporated, headquartered in Warren, Ohio, and its wholly-owned subsidiary Second National Bank. With $2.1 billion in assets, Second operates 33 full-service banking centers and six loan production offices in a nine- county area of northeastern Ohio. The merger is expected to close on July 1, and upon completion, the combined companies will have approximately $14.2 billion in total assets and $10.0 billion in total deposits."With the completion of our sale of Sky Financial Solutions and the contribution to earnings from discontinued operations of 20 cents per diluted share, and including our pending acquisition of Second Bancorp, which anticipates merger-related charges of approximately 4 cents per diluted share, we currently project 2004 diluted earnings per share, on a core operating basis, of $1.80 to $1.86, and on a net income, or GAAP basis, of $1.96 to $2.02 per diluted share," Chief Financial Officer Kevin Thompson says, commenting on the outlook for the remainder of this year.Sky Financial Group is a $12.1 billion diversified financial holding company that operates more than 260 financial centers serving communities in Ohio, Pennsylvania, Michigan, Indiana and West Virginia. Sky's financial service affiliates include: Sky Bank, Sky Trust, Sky Insurance, Meyer & Eckenrode Insurance Group and Sky Access.Visit Sky Financial Group: www.skyfi.com"