| FOR: | Immediate Release | | CONTACT: | | Larry Lentych |
| | January 25, 2007 | | | | 574 235 2000 |
| | | | | | | | |
| | | | | | | Andrea Short |
| | | | | | | 574 235 2000 |
1st Source Corporation Announces Year End Results,
Dividend Declared
South Bend, IN--1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reported record net income of $39.30 million for the year 2006, an increase of 16.43 percent over the $33.75 million reported for the year 2005. Diluted net income per common share for 2006 amounted to $1.72, up 17.81 percent compared to $1.46 diluted net income per common share for 2005.
Net income was $8.12 million for the fourth quarter of 2006, down 10.73 percent compared to the $9.10 million of net income reported for the fourth quarter of 2005. Diluted net income per common share for the fourth quarter of 2006 amounted to $0.36, compared to $0.39 per common share reported in the fourth quarter of 2005. (All common share and per common share information has been adjusted for a 10% stock dividend declared on July 27, 2006.)
The Board of Directors approved a fourth quarter cash dividend of $0.14 per share. The cash dividend is payable on February 15, 2007 to shareholders of record on February 5, 2007, and is an increase of 10.24 percent over the cash dividend announced one year ago.
Christopher J. Murphy III, Chairman of 1st Source Corporation, commented, “We are pleased to have ended the year with record net income of $39.30 million for 1st Source Corporation and with record assets of over $3.81 billion. During the fourth quarter, we opened in a new market, Kalamazoo; added a banking center in our traditional market - Heritage Square Martin’s; and debuted a new regional headquarters, 1st Source Center, in downtown Fort Wayne.”
“Between the fourth quarter of 2005 and the fourth quarter of 2006, we have noted significant margin pressure. Our income was down slightly in the quarter compared to fourth quarter 2005 due to lower mortgage banking income and increased expenses in the investment of a major core systems replacement project that allows us to grow for many years to come. While we have begun to see results from our banking center expansion, the costs are larger than the returns from these investments to date.”
Mr. Murphy concluded, "We've seen strong loan growth in our commercial, small business and specialty finance areas; our assets under management for our trust and personal asset management area continue to expand and we continue to hold the number one deposit market share in our traditional 15 county market. We are continuing to grow and working on increasing our margins while holding costs down. We are committed to being the number one bank in our region.”
1st Source’s reserve for loan and lease losses as of December 31, 2006, was 2.18 percent of total loans and leases, compared to 2.38 percent as of December 31, 2005. Net charge-offs were $0.10 million for the fourth quarter 2006, compared to net recoveries of $0.87 million a year ago. Net recoveries for the year were $2.84 million compared to net recoveries of $0.88 million in 2005. The ratio of nonperforming assets to net loans and leases was 0.64 percent on December 31, 2006, compared to 0.87 percent on December 31, 2005.
Noninterest income for the fourth quarter of 2006 was $17.69 million, a marginal increase, as compared to the fourth quarter of 2005. During the fourth quarter of 2006 increases in equipment rental income and trust fees were mostly offset by a decline in mortgage banking income. Overall, for the year of 2006 as compared to the year 2005, noninterest income increased to $76.59 million, up 11.75 percent from 2005. For the year 2006 increases in the operating lease portfolio resulted in increased equipment rental income; market valuation adjustments resulted in gains on venture partnership investments; growth in assets under management and an increase in IRA custodian revenue resulted in increased trust fee income; and increased service charges on deposit accounts resulted in increased overdraft and NSF fees.
Noninterest expense for the fourth quarter of 2006 was $32.60 million an increase of 5.64 percent as compared to the fourth quarter of 2005. The increase in the fourth quarter of 2006 as compared to the fourth quarter of 2005 was primarily due to higher depreciation on leased equipment expense, furniture and equipment expense, and professional fees. For the year, noninterest expense was $126.21 million, up 2.25 percent from one year ago. The predominate factors behind the increase in noninterest expense for the year 2006 as compared to the year 2005 were lower gains and valuation adjustments on repossessed assets, higher depreciation expense on leased equipment, and an increase in professional fees and software costs which were mainly related to the core system conversion project. These increases were offset somewhat by a decrease in salaries and employee benefits which was largely due to a one-time reduction in the accrual for stock-based compensation expense taken in the first quarter of 2006 related to the adoption of a new accounting standard.
As of December 31, 2006, the 1st Source common equity-to-assets ratio was 9.69 percent, compared to 9.84 percent a year ago. Shareholders’ equity was $368.90 million, up from $345.58 million a year ago. Total assets at the end of the fourth quarter of 2006 were $3.81 billion, up 8.43 percent compared to the same period last year. Total loans and leases were up 9.71 percent and total deposits were up 11.02 percent from the comparable figures at the end of the fourth quarter of 2005.
1st Source Corporation is the largest locally controlled financial institution headquartered in the Northern Indiana-Southwestern Michigan area. While delivering a comprehensive range of consumer and commercial banking services, 1st Source Bank has distinguished itself with highly personalized services. 1st Source Bank also competes for business nationally by offering specialized financing services for new and used private and cargo aircraft, automobiles for leasing and rental agencies, medium and heavy duty trucks, construction and environmental equipment.
The Corporation includes 67 banking centers in 16 counties, one Trustcorp Mortgage office located in each state of Indiana and Ohio, and 24 locations nationwide for the 1st Source Bank Specialty Finance Group. 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 the continued development of the communities in which it serves.
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." Marketmakers in 1st Source common shares are Citigroup Global Markets, Inc.; Crowell, Weedon & Co.; FTN Midwest Securities Corp.; Goldman, Sachs & Company; Keefe, Bruyette & Woods, Inc.; Lehman Brothers, Inc.; Morgan Stanley & Company, Inc.; Sandler O’Neill & Partners; and Stifel, Nicolaus & Company, Inc.
1st Source’s floating rate cumulative trust preferred security is traded on the Nasdaq Stock Market under the symbol “SRCEO”. The rate for the first quarter 2007 is 7.25 percent. Marketmakers in those securities are Howe, Barnes Investments, Inc. and Stifel, Nicolaus & Company.
Except for historical information contained herein, the matters discussed in this document express “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” 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.
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(Charts attached)
