1ST SOURCE CORPORATION REPORTS INCREASE IN FIRST QUARTER INCOME, CASH DIVIDEND DECLARED
South Bend, IN -- 1st Source Corporation (Nasdaq: SRCE), parent company of 1st Source Bank and First National Bank, Valparaiso, today reported net income of $9.35 million for the first quarter of 2008, an increase of 9.75 percent over the $8.52 million from the first quarter a year ago. Diluted net income per common share for the first quarter of 2008 amounted to $0.38, up 2.70 percent over the $0.37 from the first quarter of 2007.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented on the first quarter by saying, "1st Source is pleased to be reporting improved earnings for the first quarter. We have had good performance on credit quality and are working diligently to remain appropriately reserved, well capitalized and flexible enough to bend with the current economic winds. However, 1st Source is not immune from the environment in which we operate. We have not been severely impacted as have many of our peers as we did not participate in sub-prime lending or real estate development lending. But, we are in a number of businesses that could be adversely affected by a prolonged recession and these include financing for heavy duty construction machinery, trucking, aircraft, the recreational vehicle and manufactured housing industry and other durable goods manufacturers. Our credit quality has declined only slightly as evidenced by a relatively normal 30-day delinquency rate of 0.71 percent at the end of March 2008, versus a very good delinquency rate of 0.25 percent at the end of the first quarter a year earlier."
Mr. Murphy continued, "Loan and deposit totals have remained steady with some focused growth. We are carefully managing our rates and loan commitments to improve our net interest margin but find the volatility of the national money markets challenging at best. With short-term rates down, we have seen some improvement in the net interest margin over the fourth quarter of 2007 and as compared to a year ago. In June, we will merge First National Bank, Valparaiso into 1st Source Bank allowing us to offer the full array of 1st Source products and services to all of our clients. This should also help with expense management. In this environment, we must be even more diligent in our focus on reducing costs and increasing our productivity everywhere in the bank.”
"1st Source will continue to focus on three areas - pristine credit quality, rigorous expense control and outstanding client service. Doing each one well should help us safely navigate the turbulent market and financial challenges of the coming year," concluded Mr. Murphy.
At its April meeting, the Board of Directors approved a first quarter cash dividend of $0.14 per common share. The cash dividend will be payable on May 15, 2008, to shareholders of record May 5, 2008.
Return on average common shareholders’ equity for 1st Source Corporation was 8.56 percent compared to 9.24 percent for the first quarter of 2007, and return on average total assets was 0.86 percent compared to 0.94 percent a year ago. As of March 31, 2008, the common equity-to-assets ratio for 1st Source was 9.87 percent, up from 9.86 percent a year ago. Common shareholders’ equity was $440.32 million, up 17.40 percent from March 31, 2007. At the end of March 2008, total assets were $4.46 billion, up 17.33 percent from a year ago. Loans and leases increased 15.93 percent and deposits increased 15.55 percent from a year ago.
For the first quarter of 2008, 1st Source’s provision for loan and lease losses was $1.54 million as compared to a recovery of provision of $0.62 million for the first quarter of 2007. Net charge-offs were $0.71 million for the first quarter of 2008 compared to net recoveries of $0.52 million in the first quarter of 2007. The reserve for loan and lease losses as of March 31, 2008, was 2.11 percent of total loans and leases compared to 2.13 percent as of March 31, 2007. The ratio of nonperforming assets to net loans and leases was 0.57 percent on March 31, 2008, compared to 0.50 percent for the same period last year. At March 31, 2008, nonperforming assets included $3.81 million of former bank premises held for sale.
Tax-equivalent net interest income was $33.22 million for the first quarter of 2008, up 23.18 percent from 2007's first quarter, and the net interest margin improved to 3.33 percent over the 3.17 percent in the first quarter of 2007.
Noninterest income for the three-month period ended March 31, 2008 was $21.03 million, an increase of 20.25 percent as compared to the first quarter of 2007. Noninterest income increased in all categories with equipment rental income and trust fees having the largest increase.
Noninterest expense for the three-month period ended March 31, 2008 was $37.90 million, an increase of 19.19 percent as compared to the first quarter of 2007. The leading factor in the increase in salaries and employee benefits, furniture and equipment expense, and occupancy expense was the acquisition of First National Bank, Valparaiso on May 31, 2007. Additionally, depreciation expense on leased equipment increased in 2008 compared to 2007.
1st Source is the largest locally controlled financial institution headquartered and serving 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 over 75 banking centers in 17 counties, 24 locations nationwide for the 1st Source Bank Specialty Finance Group, plus six 1st Source Insurance offices. 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 Cantor, Fitzgerald & Company; FTN Midwest Research Securities Corporation; Goldman, Sachs Research; Howe Barnes Investments; Keefe, Bruyette & Woods, Inc.; Lehman Brothers Equity Research; Morgan Stanley; Sandler O’Neill & Partners; Stifel, Nicolaus and Company, Incorporated; Susquehanna Financial Group; Timber Hill, Inc. and UBS Securities LLC.
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,” “should,” 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.
# # #
