1st Source To Repurchase Preferred Stock From U.S. Treasury
1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank,
announced today that it has received approval to redeem all of the
111,000 shares of Series A Preferred Stock issued to the Treasury in
1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, announced today that it has received approval to redeem all of the 111,000 shares of Series A Preferred Stock issued to the Treasury in January 2009 under the Capital Purchase Program (the "CPP") of the Emergency Economic Stabilization Act of 2008. 1st Source will repay $111.68 million including accrued and unpaid dividends to redeem the shares and expects to do so on December 29, 2010. As part of the CPP Program, 1st Source also issued a warrant to the United States Treasury to purchase up to $16.65 million of 1st Source common stock, representing approximately 3.3 percent of the common shares outstanding at the time. The Corporation has fifteen days after repayment to take action to repurchase the warrant if it chooses to do so. According to Christopher J. Murphy III, Chairman of 1st Source Corporation, “We are pleased that the economy is slowly improving and that we never needed to rely on the investment from the Treasury Department. The Bank entered this last recession with strong capital and reserves and we continued to maintain them.” “Our participation in the Capital Purchase Program came out of an abundance of caution and a desire to support our government’s efforts to deal with frozen capital markets. We were able to support our clients and our communities throughout these difficult times even without the use of TARP while avoiding many of the problems some other financial institutions encountered by providing our clients with straight talk and sound advice, always keeping their best interests in mind; and we intend to continue to do just that.” Mr. Murphy concluded. The preferred stock that 1st Source will repurchase for $111.00 million currently has a carrying value of $106.14 million (net of a $4.86 million unaccreted discount) on 1st Source’s statement of financial condition. As a result of the repurchase, 1st Source will accelerate the accretion of the $4.86 million discount and record a reduction in retained earnings. Additionally, the reduction will be treated in a manner consistent with that for accrued preferred dividends in reporting net income available for common shareholders in the results of operations for the fourth quarter of 2010.