A method, system, and apparatus are directed towards computing minimum mean squared error (MMSE) predictive-transform (PT) source coding integrated with subband compression to further improve the performance of low bit rate MMSE PT source coders. A desirable byproduct of the advanced scheme is that the incorporation of joint optimum prediction and transformation from subband to subband is ideally suited to its integration with JPEG2000 to yield even higher compression levels while producing an outstanding objective as well as subjective visual performance.