Solid Quarter for 1st Source Corporation, Dividend Declared

Solid Quarter for 1st Source Corporation, Dividend Declared

SOUTH BEND, Ind.--(BUSINESS WIRE)-- 1st Source Corporation (NAS: 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 EndedSix Months Ended
June 30,June 30,
2013 20122013 2012
END OF PERIOD BALANCES
Assets$4,638,811$4,486,584
Loans and leases3,493,3853,270,592
Deposits3,700,7993,586,017
Reserve for loan and lease losses85,69083,299
Intangible assets86,91588,135
Common shareholders' equity567,753542,264
 
AVERAGE BALANCES
Assets$4,611,953$4,481,703$4,577,806$4,421,182
Earning assets4,326,2644,180,0124,294,5094,114,421
Investments843,870884,062850,425886,895
Loans and leases3,419,7233,209,5393,381,0933,149,704
Deposits3,719,0073,588,2013,691,7913,538,547
Interest bearing liabilities3,305,1963,271,2503,284,7623,224,412
Common shareholders' equity574,867540,330570,220536,529
 
INCOME STATEMENT DATA
Net interest income$38,871$37,975$76,625$75,360
Net interest income - FTE39,32438,49777,54476,420
Provision for loan and lease losses1,2932,0552,0504,309
Noninterest income20,12119,79039,06940,313
Noninterest expense35,74436,57872,29474,626
Net income13,94212,56726,34624,282
 
PER SHARE DATA
Basic net income per common share$0.56$0.51$1.07$0.99
Diluted net income per common share0.560.511.070.99
Common cash dividends declared0.170.160.340.32
Book value per common share23.2922.3423.2922.34
Tangible book value per common share19.7318.7119.7318.71
Market value - High25.2524.8625.2526.79
Market value - Low22.6520.5121.8820.51
Basic weighted average common shares outstanding24,367,52924,263,88124,344,88224,261,649
Diluted weighted average common shares outstanding24,368,97324,273,89824,346,05324,272,423
 
KEY RATIOS
Return on average assets1.21

%

 

1.13

%

 

1.16

%

 

1.10%
Return on average common shareholders' equity9.739.359.329.10
Average common shareholders' equity to average assets12.4612.0612.4612.14
End of period tangible common equity to tangible assets10.5610.3210.5610.32
Risk-based capital - Tier 114.2314.9214.2314.92
Risk-based capital - Total15.5516.2315.5516.23
Net interest margin3.653.703.643.74
Efficiency: expense to revenue59.0061.3161.0362.65
Net charge-offs to average loans and leases(0.05)0.14(0.02)0.17
Loan and lease loss reserve to loans and leases2.452.552.452.55
Nonperforming assets to loans and leases1.011.671.011.67
 
ASSET QUALITY
Loans and leases past due 90 days or more$184$439
Nonaccrual loans and leases29,31845,777
Other real estate5,4557,257
Former bank premises held for sale9511,134
Repossessions1371,177
Equipment owned under operating leases-9
Total nonperforming assets36,04555,793
 
 

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

3,1711,351

Investment securities available-for-sale (amortized cost of $815,826 and $821,323 at June 30, 2013 and 2012, respectively)

828,312852,704
Other investments22,40919,934
Trading account securities166138
Mortgages held for sale10,84917,837
 
Loans and leases, net of unearned discount:
Commercial and agricultural loans660,380555,986
Auto, light truck and environmental equipment510,562508,493
Medium and heavy duty truck178,594172,305
Aircraft financing677,510662,184
Construction equipment financing311,135280,715
Commercial real estate576,810543,692
Residential real estate454,983441,587
Consumer loans 123,411  105,630 
Total loans and leases3,493,3853,270,592
Reserve for loan and lease losses (85,690) (83,299)
Net loans and leases3,407,6953,187,293
 
Equipment owned under operating leases, net52,85658,264
Net premises and equipment46,02740,820
Goodwill and intangible assets86,91588,135
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 deposits3,700,7993,586,017
 
Short-term borrowings:

Federal funds purchased and securities sold under agreements to repurchase

162,778117,461
Other short-term borrowings 39,126  16,467 
Total short-term borrowings201,904133,928
Long-term debt and mandatorily redeemable securities58,21665,506
Subordinated notes58,76489,692
Accrued expenses and other liabilities 51,375  69,177 
Total liabilities 4,071,058  3,944,320 
 

SHAREHOLDERS' EQUITY

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