Solid Quarter For 1st Source Corporation, Dividend Declared

1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reported net income of $13.94 million for the second quarter of 2013, up 10.94% over the $12.57 million earned in the second quarter of 2012. Year to date, net income was $26.35 million, up 8.50% compared to the first six months of last year. Diluted net income per common share for the second quarter amounted to $0.56, up 9.80% compared to $0.51 for the second quarter of 2012. Diluted net income per common share for the first half of 2013 was $1.07, an increase of 8.08%, compared to the $0.99 earned a year earlier.

At its July meeting, the Board of Directors approved a cash dividend of $0.17 per common share. The dividend is payable to shareholders of record on August 5, 2013 and will be paid on August 15, 2013.

Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “The second quarter saw solid growth in loans and leases, deposits and total assets, as well as strong performance in our overall credit quality. The slowly improving economy and our focus on relationship banking are having a positive impact on our results. We are very pleased with the results of this quarter and the first six months.”

Mr. Murphy continued, “It was also a quarter to celebrate for additional reasons. In June, we kicked off the 150th anniversary of the Bank’s founding with an all-employee celebration. The event featured videos of our clients relating why we were important in their lives, some vintage television commercials showing how we presented ourselves to the market over the years, and a dynamic presentation on the philosophy of ethics and sustainable values as the basis for our next 150 years. The celebration culminated in an activity which demonstrated how all of our colleagues across the Bank are important and meaningful in connecting as a team to serve our clients and was a terrific way to start the Bank’s next 150 years.” Mr. Murphy concluded.

As of June 30, 2013, the 1st Source common equity-to-assets ratio was 12.24% compared to 12.09% a year ago and its tangible common equity to tangible assets ratio was 10.56% compared to 10.32% a year earlier. Total assets at June 30, 2013 were $4.64 billion, up 3.39% from a year earlier. Total loans and leases were $3.49 billion, up 6.81% from June 30, 2012. Total deposits were $3.70 billion, up 3.20% from the comparable figures at June 30, 2012.

The 1st Source reserve for loan and lease losses as of June 30, 2013 was 2.45% of total loans and leases compared to 2.55% at June 30, 2012. Net recoveries were $0.39 million in the second quarter 2013, compared with net charge-offs of $1.15 million in the same quarter a year ago. Year-to-date, net recoveries of $0.33 million have been recorded in 2013, compared to net charge-offs of $2.65 million for the first half of 2012. The ratio of nonperforming assets to net loans and leases was 1.01% as of June 30, 2013, down from 1.67% on June 30, 2012.

The net interest margin was 3.65% for the second quarter of 2012 versus 3.70% for the same period in 2012. The net interest margin was 3.64% for the six months ending June 30, 2013, versus 3.74% for the same period in 2012. Tax-equivalent net interest income was $39.32 million for the second quarter of 2013, compared to $38.50 million for 2012’s second quarter. For the first six months of 2013, tax-equivalent net interest income was $77.54 million, compared to $76.42 million for the first six months of 2012.

Noninterest income for the second quarter of 2013 was $20.12 million, up 1.67% from the same period in 2012. The increase for the quarter is mainly attributed to higher mortgage banking income. For the first six months of 2013, noninterest income was $39.07 million, down 3.09% compared to 2012. Noninterest income decreased primarily as a result of lower equipment rental income.

Noninterest expense was $35.74 million for the second quarter of 2013, down 2.28% from the second quarter of 2012. For the first six months of 2013, noninterest expense was $72.29 million, down 3.12% compared with $74.63 million for the same period in 2012. Noninterest expense decreased primarily as a result of lower salary and employee benefit expenses and reduced depreciation on leased equipment.

1st Source serves the northern half of Indiana and southwest Michigan with its community banking, insurance and wealth management services, and nationally and internationally with specialty financing and leasing services. 1st Source distinguishes itself with highly personalized service and a comprehensive range of consumer and commercial banking services delivered through its community bank offices. 1st Source Bank provides services for businesses nationally by offering specialized financing of automobiles for leasing and rental agencies, medium and heavy duty trucks, construction and environmental equipment, and nationally and internationally, for new and used private and cargo aircraft. The Corporation includes 76 community banking centers, 9 trust and wealth management locations, and 9 1st Source Insurance offices located within 17 counties of northern Indiana and southwestern Michigan and 22 specialty finance locations nationwide. With a history dating back to 1863, 1st Source Bank has a tradition of providing superior service to clients while playing a leadership role in assuring a strong social safety net and continued economic development in the communities it serves.

In addition to the results presented in accordance with generally accepted accounting principles in the United States of America, this press release contains certain non-GAAP financial measures. 1st Source Corporation believes that providing non-GAAP financial measures provides investors with information useful to understanding our financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including measures based on “tangible equity” which is “common shareholders’ equity” excluding intangible assets.

1st Source may be accessed on its home page at “ www.1stsource.com.” Its common stock is traded on the Nasdaq Global Select Market under "SRCE" and appears in the National Market System tables in many daily newspapers under the code name "1st Src". Except for historical information contained herein, the matters discussed in this document express “forward-looking statements.” Generally, the words “believe,” “contemplate,” “seek,” “plan,” “possible,” “assume,” “expect,” “intend,” “targeted,” “continue,” “remain,” “estimate,” “anticipate,” “project,” “will,” “should,” “indicate,” “would,” “may” and similar expressions indicate forward-looking statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.

1st Source may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause 1st Source’s actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors, among others, include changes in laws, regulations or accounting principles generally accepted in the United States; 1st Source’s competitive position within its markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen downturns in the local, regional or national economies or in the industries in which 1st Source has credit concentrations; and other risks discussed in 1st Source’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which filings are available from the SEC. 1st Source undertakes no obligation to publicly update or revise any forward-looking statements.
 

1st SOURCE CORPORATION
2nd QUARTER 2013 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except for per share data)
 
Three Months Ended Six Months Ended
June 30, June 30,
2013   2012 2013   2012
END OF PERIOD BALANCES
Assets $ 4,638,811 $ 4,486,584
Loans and leases 3,493,385 3,270,592
Deposits 3,700,799 3,586,017
Reserve for loan and lease losses 85,690 83,299
Intangible assets 86,915 88,135
Common shareholders' equity 567,753 542,264
 
AVERAGE BALANCES
Assets $ 4,611,953 $ 4,481,703 $ 4,577,806 $ 4,421,182
Earning assets 4,326,264 4,180,012 4,294,509 4,114,421
Investments 843,870 884,062 850,425 886,895
Loans and leases 3,419,723 3,209,539 3,381,093 3,149,704
Deposits 3,719,007 3,588,201 3,691,791 3,538,547
Interest bearing liabilities 3,305,196 3,271,250 3,284,762 3,224,412
Common shareholders' equity 574,867 540,330 570,220 536,529
 
INCOME STATEMENT DATA
Net interest income $ 38,871 $ 37,975 $ 76,625 $ 75,360
Net interest income - FTE 39,324 38,497 77,544 76,420
Provision for loan and lease losses 1,293 2,055 2,050 4,309
Noninterest income 20,121 19,790 39,069 40,313
Noninterest expense 35,744 36,578 72,294 74,626
Net income 13,942 12,567 26,346 24,282
 
PER SHARE DATA
Basic net income per common share $ 0.56 $ 0.51 $ 1.07 $ 0.99
Diluted net income per common share 0.56 0.51 1.07 0.99
Common cash dividends declared 0.17 0.16 0.34 0.32
Book value per common share 23.29 22.34 23.29 22.34
Tangible book value per common share 19.73 18.71 19.73 18.71
Market value - High 25.25 24.86 25.25 26.79
Market value - Low 22.65 20.51 21.88 20.51
Basic weighted average common shares outstanding 24,367,529 24,263,881 24,344,882 24,261,649
Diluted weighted average common shares outstanding 24,368,973 24,273,898 24,346,053 24,272,423
 
KEY RATIOS
Return on average assets 1.21

%

 
1.13

%

 
1.16

%

 
1.10 %
Return on average common shareholders' equity 9.73 9.35 9.32 9.10
Average common shareholders' equity to average assets 12.46 12.06 12.46 12.14
End of period tangible common equity to tangible assets 10.56 10.32 10.56 10.32
Risk-based capital - Tier 1 14.23 14.92 14.23 14.92
Risk-based capital - Total 15.55 16.23 15.55 16.23
Net interest margin 3.65 3.70 3.64 3.74
Efficiency: expense to revenue 59.00 61.31 61.03 62.65
Net charge-offs to average loans and leases (0.05 ) 0.14 (0.02 ) 0.17
Loan and lease loss reserve to loans and leases 2.45 2.55 2.45 2.55
Nonperforming assets to loans and leases 1.01 1.67 1.01 1.67
 
ASSET QUALITY
Loans and leases past due 90 days or more $ 184 $ 439
Nonaccrual loans and leases 29,318 45,777
Other real estate 5,455 7,257
Former bank premises held for sale 951 1,134
Repossessions 137 1,177
Equipment owned under operating leases - 9
Total nonperforming assets 36,045 55,793
 
 

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
 
  June 30, 2013   June 30, 2012

ASSETS
Cash and due from banks $ 64,850 $ 88,729

Federal funds sold and interest bearing deposits with other banks
3,171 1,351

Investment securities available-for-sale (amortized cost of $815,826 and $821,323 at June 30, 2013 and 2012, respectively)
828,312 852,704
Other investments 22,409 19,934
Trading account securities 166 138
Mortgages held for sale 10,849 17,837
 
Loans and leases, net of unearned discount:
Commercial and agricultural loans 660,380 555,986
Auto, light truck and environmental equipment 510,562 508,493
Medium and heavy duty truck 178,594 172,305
Aircraft financing 677,510 662,184
Construction equipment financing 311,135 280,715
Commercial real estate 576,810 543,692
Residential real estate 454,983 441,587
Consumer loans   123,411     105,630  
Total loans and leases 3,493,385 3,270,592
Reserve for loan and lease losses   (85,690 )   (83,299 )
Net loans and leases 3,407,695 3,187,293
 
Equipment owned under operating leases, net 52,856 58,264
Net premises and equipment 46,027 40,820
Goodwill and intangible assets 86,915 88,135
Accrued income and other assets   115,561     131,379  
 
Total assets $ 4,638,811   $ 4,486,584  
 

LIABILITIES
Deposits:
Noninterest bearing $ 698,389 $ 608,357
Interest bearing   3,002,410     2,977,660  
Total deposits 3,700,799 3,586,017
 
Short-term borrowings:

Federal funds purchased and securities sold under agreements to repurchase
162,778 117,461
Other short-term borrowings   39,126     16,467  
Total short-term borrowings 201,904 133,928
Long-term debt and mandatorily redeemable securities 58,216 65,506
Subordinated notes 58,764 89,692
Accrued expenses and other liabilities   51,375     69,177  
Total liabilities   4,071,058     3,944,320  
 

SHAREHOLDERS' EQUITY
Preferred stock; no par value - -
Common stock; no par value 346,535 346,535
Retained earnings 241,401 206,789
Cost of common stock in treasury (28,021 ) (30,447 )
Accumulated other comprehensive income   7,838     19,387  
Total shareholders' equity   567,753     542,264  
 
Total liabilities and shareholders' equity $ 4,638,811   $ 4,486,584  
 

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
 
  Three Months Ended     Six Months Ended
June 30, June 30,
2013   2012 2013   2012
Interest income:    
Loans and leases $ 40,112 $ 40,318 $ 79,282 $ 80,214
Investment securities, taxable 3,498 4,334 7,193 8,661
Investment securities, tax-exempt 760 848 1,531 1,700
Other   241     231   483     457
Total interest income 44,611 45,731 88,489 91,032
 
Interest expense:
Deposits 4,412 5,704 8,954 11,449
Short-term borrowings 45 47 77 100
Subordinated notes 1,055 1,648 2,110 3,295
Long-term debt and mandatorily redeemable securities   228     357   723     828
Total interest expense   5,740     7,756   11,864     15,672
 
Net interest income 38,871 37,975 76,625 75,360
Provision for loan and lease losses   1,293     2,055   2,050     4,309
Net interest income after provision for loan and lease losses 37,578 35,920 74,575 71,051
 
Noninterest income:
Trust fees 4,439 4,379 8,540 8,352
Service charges on deposit accounts 2,325 2,621 4,564 5,059
Debit card income 2,344 2,194 4,409 4,261
Mortgage banking income 1,936 1,502 3,564 3,444
Insurance commissions 1,393 1,211 2,839 2,568
Equipment rental income 4,086 4,666 8,098 10,016
Investment securities and other investment gains 38 8 211 403
Other income   3,560     3,209   6,844     6,210
Total noninterest income   20,121     19,790   39,069     40,313
 
Noninterest expense:
Salaries and employee benefits 19,176 20,370 39,112 40,686
Net occupancy expense 2,147 1,848 4,354 4,008
Furniture and equipment expense 3,909 3,831 7,808 7,338
Depreciation - leased equipment 3,274 3,803 6,499 8,114
Professional fees 1,310 1,449 2,665 2,847
Supplies and communication 1,499 1,385 3,035 2,778
FDIC and other insurance 927 854 1,805 1,803
Business development and marketing expense 932 1,050 1,705 1,917
Loan and lease collection and repossession expense 1,095 979 1,852 2,480
Other expense   1,475     1,009   3,459     2,655
Total noninterest expense   35,744     36,578   72,294     74,626
 
Income before income taxes 21,955 19,132 41,350 36,738
Income tax expense   8,013     6,565   15,004     12,456
 
Net income $ 13,942   $ 12,567 $ 26,346   $ 24,282
 

The Nasdaq Global Select Market Symbol: "SRCE" (CUSIP #336901 10 3)Please contact us at shareholder@1stsource.com

Copyright Business Wire 2010

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