1st Source Has Strong Earnings in First Quarter, Cash Dividend Declared

SOUTH BEND, Ind.–(EON: Enhanced Online News)–1st Source Corporation (Nasdaq: SRCE), parent company of 1st Source
Bank, today reported net income of $11.72 million for the first quarter
of 2012, up 10.44% compared to the $10.61 million reported in the first
quarter a year ago. Diluted net income per common share for the first
quarter of 2012 amounted to $0.48, up 11.63% over the $0.43 for the
first quarter of 2011.

At its April 2012 meeting, the Board of Directors approved a first
quarter cash dividend of $0.16 per common share. The cash dividend will
be payable on May 15, 2012, to shareholders of record as of May 7, 2012.

Christopher J. Murphy III, Chairman and Chief Executive Officer,
commented on the first quarter by saying, “It was a good quarter for 1st
Source. Our performance was built on the basics – income was up,
expenses were down, and loan loss provisions remained about the same. We
are starting to see our markets strengthen a bit as our loan portfolios
grew 3.12%. Additionally, our net interest margin increased from last
quarter and from a year ago. Credit remains a focus as we work through
the challenges of the last several years.”

Mr. Murphy continued, “It was also a quarter where we saw several large
projects reach fruition – a new business loan system is coming online
that streamlines our processes making us more convenient and efficient
for the commercial customer, and we have enhanced our online offerings
at 1stsource.com so that we can chat – real time – with those who are
visiting our website and respond to their needs.”

“Our steady performance is being noticed by others. During the quarter,
we were recognized as one of the top 45 banks in the country when we
were named to the KBW Honor Roll of Superior Performers over the last
decade. We will remain diligent in providing outstanding client service,
maintaining pristine credit quality, and exercising rigorous cost
control which not only leads to inclusion in these types of
acknowledgments, but more importantly, leads to long-term solid
financial performance.”

Return on average common shareholders’ equity for 1st Source Corporation
was 8.84% compared to 8.73% for the first quarter of 2011, and return on
average total assets was 1.08% compared to 0.97% a year ago. As of March
31, 2012, the 1st Source common equity-to-assets ratio was 12.13%, up
from 11.12% a year ago and its tangible common equity-to-tangible assets
ratio was 10.32% compared to 9.29% a year earlier. Common shareholders’
equity was $531.89 million, up 8.45% from March 31, 2011. At the end of
March 2012, total assets were $4.38 billion, down slightly from the
$4.41 billion a year ago. Loans and leases increased 3.12% and deposits
decreased 2.86% from a year ago.

For the first quarter of 2012, 1st Source provided $2.25 million to the
reserve for loan and lease losses compared to $2.20 million for the
first quarter of 2011. Net charge-offs were $1.50 million for the first
quarter of 2012 compared to $2.91 million for the first quarter of 2011.
The reserve for loan and lease losses as of March 31, 2012, was 2.62% of
total loans and leases compared to 2.82% a year earlier. The ratio of
nonperforming assets to net loans and leases was 2.19% on March 31,
2012, compared to 2.81% for the same period last year. As of March 31,
2012, nonperforming assets included $1.13 million of former bank
premises held for sale.

Tax-equivalent net interest income was $37.92 million for the first
quarter of 2012, up 0.95% from 2011’s first quarter, and the net
interest margin was 3.77% compared to 3.71% in the first quarter of
2011, and 3.66% in the fourth quarter 2011.

Noninterest income for the three-month period ended March 31, 2012 was
$20.52 million, an increase of 8.28% as compared to the first quarter of
2011. Noninterest income increased primarily due to higher mortgage
banking income. During the first quarter of 2012, residential mortgage
loan production volume was $73.54 million compared to $38.85 million in
the first quarter of 2011.

Noninterest expense for the three-month period ended March 31, 2012 was
$38.05 million, a decrease of 1.11% as compared to the first quarter of
2011. Noninterest expense decreased as a result of reduced depreciation
on leased equipment and lower FDIC insurance premiums. These decreases
were offset by higher salary and employee benefit expenses and increased
professional fees.

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 75 community banking centers, 8 trust
and wealth management locations, and 8 1st Source Insurance offices
located within 17 counties of northern Indiana and southwestern Michigan
and 23 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

1st QUARTER 2012 FINANCIAL HIGHLIGHTS

(Unaudited – Dollars in thousands, except per share data)

 

Three Months Ended

March 31,

2012

 

2011

END OF PERIOD BALANCES

Assets

$

4,384,696

$

4,412,376

Loans and leases

3,146,890

3,051,718

Deposits

3,505,674

3,609,007

Reserve for loan and lease losses

82,394

86,160

Intangible assets

88,475

88,650

Common shareholders’ equity

531,891

490,467

 

AVERAGE BALANCES

Assets

$

4,360,662

$

4,420,164

Earning assets

4,048,830

4,108,743

Investments

889,727

956,568

Loans and leases

3,089,868

3,054,013

Deposits

3,488,893

3,600,015

Interest bearing liabilities

3,177,574

3,348,626

Common shareholders’ equity

532,728

492,673

 

INCOME STATEMENT DATA

Net interest income

$

37,385

$

36,860

Net interest income – FTE

37,923

37,566

Provision for loan and lease losses

2,254

2,198

Noninterest income

20,523

18,953

Noninterest expense

38,048

38,476

Net income

11,715

10,608

 

PER SHARE DATA

Basic net income per common share

$

0.48

$

0.43

Diluted net income per common share

0.48

0.43

Common cash dividends declared

0.16

0.16

Book value per common share

21.92

20.18

Tangible book value per common share

18.28

16.53

Market value – High

26.79

20.90

Market value – Low

23.54

17.86

Basic weighted average common shares outstanding

24,259,416

24,271,366

Diluted weighted average common shares outstanding

24,270,866

24,279,517

 

KEY RATIOS

Return on average assets

1.08

%

0.97

%

Return on average common shareholders’ equity

8.84

8.73

Average common shareholders’ equity to average assets

12.22

11.15

End of period tangible common equity to tangible assets

10.32

9.29

Risk-based capital – Tier 1

15.19

14.38

Risk-based capital – Total

16.49

15.68

Net interest margin

3.77

3.71

Efficiency: expense to revenue

64.01

66.45

Net charge-offs to average loans and leases

0.20

0.39

Loan and lease loss reserve to loans and leases

2.62

2.82

Nonperforming assets to loans and leases

2.19

2.81

 

ASSET QUALITY

Loans and leases past due 90 days or more

$

393

$

515

Nonaccrual loans and leases

55,027

74,038

Other real estate

7,719

6,813

Former bank premises held for sale

1,134

1,200

Repossessions

6,109

5,482

Equipment owned under operating leases

41

300

Total nonperforming assets

70,423

88,348

 

 

1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited – Dollars in thousands)

 

March 31, 2012

 

March 31, 2011

ASSETS

Cash and due from banks

$

56,707

$

57,271

Federal funds sold and interest bearing deposits with other banks

901

81,661

Investment securities available-for-sale (amortized cost of
$872,783 and $927,522 at March 31, 2012 and 2011, respectively)

901,817

942,221

Other investments

18,974

20,503

Trading account securities

144

146

Mortgages held for sale

18,114

5,467

 

Loans and leases, net of unearned discount:

Commercial and agricultural loans

545,057

547,381

Auto, light truck and environmental equipment

455,873

416,957

Medium and heavy duty truck

175,471

156,022

Aircraft financing

621,500

601,480

Construction equipment financing

271,475

271,490

Commercial real estate

539,112

578,648

Residential real estate

439,562

386,290

Consumer loans

 

98,840

 

 

93,450

 

Total loans and leases

3,146,890

3,051,718

Reserve for loan and lease losses

 

(82,394

)

 

(86,160

)

Net loans and leases

3,064,496

2,965,558

 

Equipment owned under operating leases, net

58,840

81,304

Net premises and equipment

39,963

36,024

Goodwill and intangible assets

88,475

88,650

Accrued income and other assets

 

136,265

 

 

133,571

 

 

Total assets

$

4,384,696

 

$

4,412,376

 

 

LIABILITIES

Deposits:

Noninterest bearing

$

587,324

$

513,315

Interest bearing

 

2,918,350

 

 

3,095,692

 

Total deposits

3,505,674

3,609,007

 

Short-term borrowings:

Federal funds purchased and securities sold under agreements to
purchase

125,010

112,914

Other short-term borrowings

 

18,761

 

 

19,239

 

Total short-term borrowings

143,771

132,153

Long-term debt and mandatorily redeemable securities

39,828

26,717

Subordinated notes

89,692

89,692

Accrued expenses and other liabilities

 

73,840

 

 

64,340

 

Total liabilities

 

3,852,805

 

 

3,921,909

 

 

SHAREHOLDERS’ EQUITY

Preferred stock; no par value

Common stock; no par value

346,535

346,535

Retained earnings

198,175

164,455

Cost of common stock in treasury

(30,757

)

(29,655

)

Accumulated other comprehensive income

 

17,938

 

 

9,132

 

Total shareholders’ equity

 

531,891

 

 

490,467

 

 

Total liabilities and shareholders’ equity

$

4,384,696

 

$

4,412,376

 

 

 

1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited – Dollars in thousands, except per share amounts)

 

Three Months Ended

March 31,

2012

 

2011

Interest income:

 

Loans and leases

$

39,896

$

41,299

Investment securities, taxable

4,327

4,482

Investment securities, tax-exempt

852

1,186

Other

 

226

 

 

243

Total interest income

 

45,301

 

 

47,210

 

Interest expense:

Deposits

5,745

8,355

Short-term borrowings

53

89

Subordinated notes

1,647

1,647

Long-term debt and mandatorily redeemable securities

 

471

 

 

259

Total interest expense

 

7,916

 

 

10,350

 

Net interest income

37,385

36,860

Provision for loan and lease losses

 

2,254

 

 

2,198

Net interest income after provision for loan and lease losses

35,131

34,662

 

Noninterest income:

Trust fees

3,973

3,992

Service charges on deposit accounts

4,505

4,236

Mortgage banking income

1,942

444

Insurance commissions

1,357

1,142

Equipment rental income

5,350

6,038

Other income

3,001

2,971

Investment securities and other investment gains

 

395

 

 

130

Total noninterest income

 

20,523

 

 

18,953

 

Noninterest expense:

Salaries and employee benefits

20,316

18,638

Net occupancy expense

2,160

2,320

Furniture and equipment expense

3,507

3,349

Depreciation – leased equipment

4,311

4,805

Professional fees

1,398

1,096

Supplies and communication

1,393

1,394

FDIC and other insurance

949

1,676

Business development and marketing expense

867

622

Loan and lease collection and repossession expense

1,501

1,324

Other expense

 

1,646

 

 

3,252

Total noninterest expense

 

38,048

 

 

38,476

 

Income before income taxes

17,606

15,139

Income tax expense

 

5,891

 

 

4,531

 

Net income

$

11,715

 

$

10,608

 

 

 

The Nasdaq Global Select Market Symbol: “SRCE” (CUSIP #336901 10 3)

Please contact us at shareholder@1stsource.com

Tags:

Thursday, April 26th, 2012 EN

No comments yet.

Leave a comment

You must be logged in to post a comment.