For: Immediate Release Contact: Larry Lentych
April 23, 2009 574 235 2000
Andrea Short
574 235 2000
1ST SOURCE CORPORATION COMPLETES PROFITABLE FIRST QUARTER, |
CASH DIVIDEND DECLARED |
South Bend, IN -- 1st Source Corporation (Nasdaq: SRCE), parent company of 1st Source Bank, today reported net income of $6.25 million for the first quarter of 2009, compared to $9.35 million for the first quarter a year ago. Diluted net income per common share for the first quarter of 2009 amounted to $0.20, versus $0.38 for the first quarter of 2008.
At its April meeting, the Board of Directors approved a first quarter cash dividend of $0.14 per common share, equal to the dividend paid a year earlier. The cash dividend will be payable on May 15, 2009, to shareholders of record May 5, 2009.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented on the first quarter by saying, "The downturn in the economy is hitting our market area hard with some of the highest unemployment numbers in the country being reported in northern Indiana and southern Michigan. Last quarter we stated that ‘we continued to build reserves for losses inherent in our loan portfolio as this economy continues to deteriorate causing layoffs and rising unemployment in our local community banking markets and stresses among our specialty finance clients.’ While the Bank steered clear of sub-prime and construction or real estate development loans, our clients have been affected by the economy, and therefore, so have we. During the quarter, we saw an increase in our nonperforming assets and provided $7.79 million to our loan and lease loss reserve, while net-charge-offs were $3.20 million. Our reserve for loan and lease losses grew to 2.62 percent of total loans and leases compared to 2.11 percent a year earlier. On the plus side, we were positively impacted in the first quarter by a $2.60 million reduction in our tax contingency reserve due to the resolution of tax audits."
"It was also a quarter of positive recognition for 1st Source and the wonderful work done by my colleagues. We were named among the Best Places to Work in Indiana by the Indiana State Chamber of Commerce, we came in at #30 in the Top 150 Performers among banking institutions according to the Bank Performance Scorecard published by Bank Director Magazine, and 1st Source was named among The 100 Most Trustworthy Companies by Forbes from a field of over 12,000 publicly traded companies due to the quality of our financial reporting and our governance processes. I'm proud of my colleagues throughout the company and the effort each one makes in understanding our clients' individual goals and
helping to achieve them. Although our earnings are not where we would like them to be, our deposits and loans are up slightly, our customer counts are growing, and we are preparing for the future," concluded Murphy.
Return on average common shareholders’ equity for 1st Source Corporation was 4.31 percent compared to 8.56 percent for the first quarter of 2008, and return on average total assets was 0.56 percent compared to 0.86 percent a year ago. As of March 31, 2009, the common equity-to-assets ratio for 1st Source was 10.07 percent, up from 9.87 percent a year ago. Common shareholders’ equity was $463.21 million, up 5.20 percent from March 31, 2008. At the end of March 2009, total assets were $4.60 billion, up 3.11 percent from a year ago. Loans and leases increased 0.78 percent and deposits increased 1.22 percent from a year ago. During the first quarter of 2009, we sold preferred, non-voting shares of our stock valued at $111.00 million to the U.S. Treasury Department as part of the Treasury Department's Capital Purchase Program.
For the first quarter of 2009, 1st Source’s provision for loan and lease losses was $7.79 million compared to $1.54 million for the first quarter of 2008. Net charge-offs were $3.20 million for the first quarter of 2009 compared to $0.71 million for the first quarter of 2008. The reserve for loan and lease losses as of March 31, 2009, was 2.62 percent of total loans and leases compared to 2.11 percent a year earlier. The ratio of nonperforming assets to net loans and leases was 2.09 percent on March 31, 2009, compared to 0.57 percent for the same period last year. As of March 31, 2009, nonperforming assets included $3.36 million of former bank premises held for sale.
Tax-equivalent net interest income was $31.64 million for the first quarter of 2009, down 4.74 percent from 2008's first quarter, and the net interest margin was 3.03 percent compared to 3.33 percent in the first quarter of 2008.
Noninterest income for the three-month period ended March 31, 2009 was $20.55 million, a decrease of 2.27 percent as compared to the first quarter of 2008 as increases in mortgage banking income and equipment rental income, were more than offset by decreases in trust fees, service charges on deposit accounts and insurance commissions.
Noninterest expense for the three-month period ended March 31, 2009 was $38.64 million, an increase of 1.95 percent as compared to the first quarter of 2008. Noninterest expense increased primarily due to an increase of $1.27 million in FDIC insurance premiums.
1st Source serves the northern half of Indiana and southwest Michigan and is the largest locally controlled financial institution headquartered in the area. While delivering a comprehensive range of consumer and commercial banking services through its community bank offices, 1st Source 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 78 community banking centers in 17 counties, 23 specialty finance locations nationwide, 7 trust and wealth management locations, and 7 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 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". 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 2009 FINANCIAL HIGHLIGHTS | ||||||||
(Unaudited - Dollars in thousands, except for per share data) | ||||||||
Three Months Ended March 31 | ||||||||
2009 | 2008 | |||||||
END OF PERIOD BALANCES | ||||||||
Assets | $ | 4,601,281 | $ | 4,462,320 | ||||
Loans and leases | 3,214,725 | 3,189,841 | ||||||
Deposits | 3,547,868 | 3,505,124 | ||||||
Reserve for loan and lease losses | 84,357 | 67,428 | ||||||
Intangible assets | 91,350 | 93,165 | ||||||
Common shareholders' equity | 463,212 | 440,315 | ||||||
Total shareholders' equity | 567,202 | 440,315 | ||||||
AVERAGE BALANCES | ||||||||
Assets | $ | 4,536,327 | $ | 4,361,737 | ||||
Earning assets | 4,229,221 | 4,010,173 | ||||||
Investments | 778,392 | 764,125 | ||||||
Loans and leases | 3,245,046 | 3,177,595 | ||||||
Deposits | 3,587,073 | 3,377,724 | ||||||
Interest bearing liabilities | 3,510,032 | 3,475,565 | ||||||
Common shareholders' equity | 464,862 | 439,749 | ||||||
Total shareholders' equity | 543,508 | 439,749 | ||||||
INCOME STATEMENT DATA | ||||||||
Net interest income | $ | 30,722 | $ | 32,297 | ||||
Net interest income - FTE | 31,642 | 33,216 | ||||||
Provision for loan and lease losses | 7,785 | 1,539 | ||||||
Noninterest income | 20,549 | 21,027 | ||||||
Noninterest expense | 38,640 | 37,901 | ||||||
Net income | 6,251 | 9,354 | ||||||
Net income available to common shareholders | 4,938 | 9,354 | ||||||
PER SHARE DATA | ||||||||
Basic net income per common share | $ | 0.20 | $ | 0.39 | ||||
Diluted net income per common share | 0.20 | 0.38 | ||||||
Common cash dividends declared | 0.14 | 0.14 | ||||||
Book value per common share | 19.15 | 18.27 | ||||||
Market value - High | 23.92 | 21.81 | ||||||
Market value - Low | 14.16 | 15.13 | ||||||
Basic weighted average common shares outstanding | 24,150,200 | 24,096,274 | ||||||
Diluted weighted average common shares outstanding | 24,158,363 | 24,382,507 | ||||||
KEY RATIOS | ||||||||
Return on average assets | 0.56 | % | 0.86 | % | ||||
Return on average common shareholders' equity | 4.31 | 8.56 | ||||||
Average common shareholders' equity to average assets | 10.25 | 10.08 | ||||||
End of period tangible common equity to tangible assets | 8.25 | 7.95 | ||||||
Risk-based capital - Tier 1 | 15.19 | 10.67 | ||||||
Risk-based capital - Total | 16.48 | 11.93 | ||||||
Net interest margin | 3.03 | 3.33 | ||||||
Efficiency: expense to revenue | 71.10 | 67.92 | ||||||
Net charge-offs to average loans and leases | 0.40 | 0.09 | ||||||
Loan and lease loss reserve to loans and leases | 2.62 | 2.11 | ||||||
Nonperforming assets to loans and leases | 2.09 | 0.57 | ||||||
ASSET QUALITY | ||||||||
Loans and leases past due 90 days or more | $ | 678 | $ | 1,072 | ||||
Nonaccrual and restructured loans and leases | 60,297 | 10,966 | ||||||
Other real estate | 1,495 | 937 | ||||||
Former bank premises held for sale | 3,356 | 3,805 | ||||||
Repossessions | 2,919 | 1,604 | ||||||
Equipment owned under operating leases | 373 | 200 | ||||||
Total nonperforming assets | 69,118 | 18,584 |
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
(Unaudited - Dollars in thousands) | ||||||||
March 31, 2009 | March 31, 2008 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 60,444 | $ | 118,844 | ||||
Federal funds sold and interest bearing deposits with other banks | 8,490 | 90,351 | ||||||
Investment securities available-for-sale (amortized cost of $921,980 and $748,087 at March 31, 2009 and 2008, respectively) | 929,982 | 758,057 | ||||||
Other investments | 18,612 | 14,937 | ||||||
Trading account securities | 99 | - | ||||||
Mortgages held for sale | 126,486 | 37,853 | ||||||
Loans and leases, net of unearned discount | ||||||||
Commercial and agricultural loans | 622,533 | 641,159 | ||||||
Auto, light truck and environmental equipment | 335,267 | 301,879 | ||||||
Medium and heavy duty truck | 228,092 | 281,554 | ||||||
Aircraft financing | 633,372 | 575,676 | ||||||
Construction equipment financing | 354,667 | 370,276 | ||||||
Loans secured by real estate | 917,960 | 876,885 | ||||||
Consumer loans | 122,834 | 142,412 | ||||||
Total loans and leases | 3,214,725 | 3,189,841 | ||||||
Reserve for loan and lease losses | (84,357 | ) | (67,428 | ) | ||||
Net loans and leases | 3,130,368 | 3,122,413 | ||||||
Equipment owned under operating leases, net | 80,224 | 79,844 | ||||||
Net premises and equipment | 39,755 | 44,365 | ||||||
Goodwill and intangible assets | 91,350 | 93,165 | ||||||
Accrued income and other assets | 115,471 | 102,491 | ||||||
Total assets | $ | 4,601,281 | $ | 4,462,320 | ||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Noninterest bearing | $ | 435,482 | $ | 419,287 | ||||
Interest bearing | 3,112,386 | 3,085,837 | ||||||
Total deposits | 3,547,868 | 3,505,124 | ||||||
Federal funds purchased and securities sold under agreements to repurchase | 275,407 | 237,558 | ||||||
Other short-term borrowings | 25,734 | 74,387 | ||||||
Long-term debt and mandatorily redeemable securities | 20,132 | 35,025 | ||||||
Subordinated notes | 89,692 | 89,692 | ||||||
Accrued expenses and other liabilities | 75,246 | 80,219 | ||||||
Total liabilities | 4,034,079 | 4,022,005 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Preferred stock; no par value | 103,990 | - | ||||||
Common stock; no par value | 350,260 | 342,840 | ||||||
Retained earnings | 139,121 | 123,420 | ||||||
Cost of common stock in treasury | (31,140 | ) | (32,091 | ) | ||||
Accumulated other comprehensive income | 4,971 | 6,146 | ||||||
Total shareholders' equity | 567,202 | 440,315 | ||||||
Total liabilities and shareholders' equity | $ | 4,601,281 | $ | 4,462,320 |
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(Unaudited - Dollars in thousands, except per share amounts) | ||||||||
Three Months Ended March 31 | ||||||||
2009 | 2008 | |||||||
Interest income: | ||||||||
Loans and leases | $ | 44,597 | $ | 53,263 | ||||
Investment securities, taxable | 4,036 | 6,447 | ||||||
Investment securities, tax-exempt | 1,710 | 2,105 | ||||||
Other | 333 | 309 | ||||||
Total interest income | 50,676 | 62,124 | ||||||
Interest expense: | ||||||||
Deposits | 17,606 | 25,120 | ||||||
Short-term borrowings | 349 | 2,381 | ||||||
Subordinated notes | 1,647 | 1,772 | ||||||
Long-term debt and mandatorily redeemable securities | 352 | 554 | ||||||
Total interest expense | 19,954 | 29,827 | ||||||
Net interest income | 30,722 | 32,297 | ||||||
Provision for loan and lease losses | 7,785 | 1,539 | ||||||
Net interest income after provision for | ||||||||
loan and lease losses | 22,937 | 30,758 | ||||||
Noninterest income: | ||||||||
Trust fees | 3,804 | 4,262 | ||||||
Service charges on deposit accounts | 4,746 | 5,108 | ||||||
Mortgage banking income | 2,570 | 1,117 | ||||||
Insurance commissions | 1,516 | 1,946 | ||||||
Equipment rental income | 6,147 | 5,749 | ||||||
Other income | 2,235 | 2,222 | ||||||
Investment securities and other investment (losses) gains | (469 | ) | 623 | |||||
Total noninterest income | 20,549 | 21,027 | ||||||
Noninterest expense: | ||||||||
Salaries and employee benefits | 20,086 | 20,634 | ||||||
Net occupancy expense | 2,601 | 2,476 | ||||||
Furniture and equipment expense | 3,481 | 3,978 | ||||||
Depreciation - leased equipment | 4,956 | 4,616 | ||||||
Professional fees | 1,062 | 1,158 | ||||||
Supplies and communication | 1,567 | 1,669 | ||||||
Other expense | 4,887 | 3,370 | ||||||
Total noninterest expense | 38,640 | 37,901 | ||||||
Income before income taxes | 4,846 | 13,884 | ||||||
Income tax (benefit) expense | (1,405 | ) | 4,530 | |||||
Net income | 6,251 | 9,354 | ||||||
Preferred stock dividends and discount accretion | (1,313 | ) | - | |||||
Net income available to common shareholders | $ | 4,938 | $ | 9,354 | ||||
The Nasdaq Global Select Market Symbol: "SRCE" (CUSIP #336901 10 3) | ||||||||
Please contact us at shareholder@1stsource.com |