For: | Immediate Release | Contact: | Larry Lentych | ||||
October 22, 2009 | Andrea Short | ||||||
574 235 2000 | |||||||
1ST SOURCE ANNOUNCES THIRD QUARTER PROFITS
DIVIDEND ANNOUNCED
South Bend, IN – South Bend, IN - 1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today announced third quarter net income of $6.73 million compared to $4.47 million in the third quarter 2008. For the first three quarters of the year, net income was $19.27 million versus $21.07 million a year earlier. Diluted net income per common share for the third quarter of 2009 was $0.21 versus $0.18 a year earlier while diluted net income per common share for the first three quarters was $0.60 compared to $0.86 in 2008. Diluted net income per common share was reduced by $0.07 for the third quarter of 2009 and $0.20 for the nine months ending September 30, 2009, due to the preferred stock dividends and the accretion of the discount on the preferred stock issued to the U.S. Government under the TARP Program. The preferred stock was issued in January 2009 and therefore did not impact the three or nine month periods ending September 30, 2008.
At the October meeting, the Board of Directors approved a cash dividend of $0.16 per common share, equal to the dividend a year earlier. The cash dividend will be payable on November 16, 2009, to shareholders of record on November 6, 2009.
Christopher J. Murphy III, Chairman of 1st Source, commented, “As the recession continues to buffet our markets, we continue to experience larger nonperforming asset ratios and larger charge-offs. Fortunately, we have maintained and continue to support strong reserves. Our local markets have been hit hard by layoffs and rising unemployment and there is also some stress 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 overall downturn in the economy, which then affects us. Although this year’s third quarter compares favorably to a year ago, the net income in the third quarter of 2008 was impacted by losses on investments in Fannie Mae and Freddie Mac preferred stock. ”
Mr. Murphy continued, “During the quarter, we provided $6.47 million to our loan and lease loss reserve, while net-charge-offs were $4.09 million. Our reserve for loan and lease losses is 2.76 percent of loans and leases compared to 2.28 percent a year earlier. We will expense approximately $7.75 million in FDIC insurance fees this year compared to $1.60 million in 2008. With all of that said, our capital ratios
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remain very strong, our overall expenses are down, and we are a profitable organization that continues to provide our clients with expert service, straight talk and sound advice every day. Many in the financial world would like to be in our position,” concluded Mr. Murphy.
As of September 30, 2009, the 1st Source common equity-to-assets ratio was 10.64 percent compared to 10.00 percent a year ago and its tangible equity-to-assets ratio was 8.77 percent compared to 8.08 percent a year earlier. Common shareholders' equity was $469.72 million, up 6.51 percent from the $441.01 million reported a year ago. Total assets at the end of the third quarter of 2009 were $4.41 billion, up slightly from a year ago. Total loans and leases were $3.09 billion, down 6.66 percent and total deposits were $3.49 billion, up 4.07 percent over the comparable figures at the end of the third quarter of 2008.
Noninterest income for the third quarter was $20.26 million, up 63.62 percent from the same period in 2008. For the nine months, noninterest income was $63.51 million, up 18.11 percent from 2008. The increase in noninterest income was a result of significant improvements in investment securities and other investment gains (losses) due to a reduction in other than temporary impairment and partnership gains.
Noninterest expense for the third quarter was $36.57 million, a decrease from the $38.32 million reported in the third quarter a year earlier. Noninterest expense for the first nine months of 2009 was $112.56 million versus $114.61 million for the same period of 2008. The leading factors in the year-to-date change were reduced salaries and benefits and professional fees partially offset by higher FDIC insurance costs. The FDIC has announced that it will require the industry to prepay its next three years of estimated FDIC insurance in December of this year. Using the currently applicable rates for FDIC insurance, we will likely remit $21.57 million to the FDIC this December. This prepayment will not affect earnings in 2009, rather it will be ratably expensed in fiscal years 2010, 2011, and 2012.
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 76 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.
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
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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.
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(charts attached)
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1st SOURCE CORPORATION | ||||||||||||||||
3rd QUARTER 2009 FINANCIAL HIGHLIGHTS | ||||||||||||||||
(Unaudited - Dollars in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||
Assets | $ | 4,413,160 | $ | 4,409,619 | ||||||||||||
Loans and leases | 3,094,030 | 3,314,863 | ||||||||||||||
Deposits | 3,486,714 | 3,350,412 | ||||||||||||||
Reserve for loan and lease losses | 85,504 | 75,606 | ||||||||||||||
Intangible assets | 90,669 | 92,185 | ||||||||||||||
Common shareholders' equity | 469,718 | 441,010 | ||||||||||||||
Total shareholders' equity | 574,330 | 441,010 | ||||||||||||||
AVERAGE BALANCES | ||||||||||||||||
Assets | $ | 4,463,324 | $ | 4,400,009 | $ | 4,508,202 | $ | 4,383,948 | ||||||||
Earning assets | 4,159,318 | 4,075,541 | 4,206,498 | 4,047,131 | ||||||||||||
Investments | 826,468 | 681,972 | 818,498 | 725,301 | ||||||||||||
Loans and leases | 3,130,362 | 3,322,970 | 3,184,394 | 3,251,499 | ||||||||||||
Deposits | 3,536,013 | 3,341,035 | 3,571,280 | 3,369,474 | ||||||||||||
Interest bearing liabilities | 3,390,440 | 3,517,330 | 3,453,618 | 3,493,013 | ||||||||||||
Common shareholders' equity | 469,409 | 444,219 | 467,351 | 443,162 | ||||||||||||
Total shareholders' equity | 573,819 | 444,219 | 563,163 | 443,162 | ||||||||||||
INCOME STATEMENT DATA | ||||||||||||||||
Net interest income | $ | 32,046 | $ | 33,397 | $ | 94,681 | $ | 98,818 | ||||||||
Net interest income - FTE | 33,029 | 34,258 | 97,512 | 101,508 | ||||||||||||
Provision for loan and lease losses | 6,469 | 3,571 | 22,741 | 9,603 | ||||||||||||
Noninterest income | 20,256 | 12,380 | 63,510 | 53,774 | ||||||||||||
Noninterest xxpense | 36,570 | 38,317 | 112,559 | 114,613 | ||||||||||||
Net income | 6,733 | 4,472 | 19,267 | 21,071 | ||||||||||||
Net income available to common shareholders | 5,032 | 4,472 | 14,557 | 21,071 | ||||||||||||
PER SHARE DATA | ||||||||||||||||
Basic net income per common share | $ | 0.21 | $ | 0.19 | $ | 0.60 | $ | 0.87 | ||||||||
Diluted net income per common share | 0.21 | 0.18 | 0.60 | 0.86 | ||||||||||||
Common cash dividends declared | 0.15 | 0.14 | 0.43 | 0.42 | ||||||||||||
Book value per common share | 19.46 | 18.29 | 19.46 | 18.29 | ||||||||||||
Tangible book value per common share | 15.70 | 14.47 | 15.70 | 14.47 | ||||||||||||
Market value - High | 17.94 | 30.00 | 23.92 | 30.00 | ||||||||||||
Market value - Low | 14.52 | 14.54 | 14.16 | 14.54 | ||||||||||||
Basic weighted average common shares outstanding | 24,164,884 | 24,109,960 | 24,166,887 | 24,104,015 | ||||||||||||
Diluted weighted average common shares outstanding | 24,212,042 | 24,381,657 | 24,215,542 | 24,374,811 | ||||||||||||
KEY RATIOS | ||||||||||||||||
Return on average assets | 0.60 | % | 0.40 | % | 0.57 | % | 0.64 | % | ||||||||
Return on average common shareholders' equity | 4.25 | 4.00 | 4.16 | 6.35 | ||||||||||||
Average common shareholders' equity to average assets | 10.52 | 10.10 | 10.37 | 10.11 | ||||||||||||
End of period tangible common equity to tangible assets | 8.77 | 8.08 | 8.77 | 8.08 | ||||||||||||
Risk-based capital - Tier 1 | 16.14 | 11.70 | 16.14 | 11.70 | ||||||||||||
Risk-based capital - Total | 17.43 | 12.98 | 17.43 | 12.98 | ||||||||||||
Net interest margin | 3.15 | 3.34 | 3.10 | 3.35 | ||||||||||||
Efficiency: expense to revenue | 66.90 | 66.01 | 67.59 | 66.78 | ||||||||||||
Net charge offs to average loans | 0.52 | (0.04 | ) | 0.71 | 0.02 | |||||||||||
Loan and lease loss reserve to loans and leases | 2.76 | 2.28 | 2.76 | 2.28 | ||||||||||||
Nonperforming assets to loans and leases | 2.95 | 0.88 | 2.95 | 0.88 | ||||||||||||
ASSET QUALITY | ||||||||||||||||
Loans and leases past due 90 days or more | $ | 1,125 | $ | 1,476 | ||||||||||||
Nonaccrual and restructured loans and leases | 80,361 | 22,812 | ||||||||||||||
Other real estate | 4,074 | 1,615 | ||||||||||||||
Former bank premises held for sale | 3,095 | 3,821 | ||||||||||||||
Repossessions | 5,672 | 234 | ||||||||||||||
Equipment owned under operating leases | 74 | 40 | ||||||||||||||
Total nonperforming assets | 94,401 | 29,998 |
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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
(Unaudited - Dollars in thousands) | ||||||||
September 30, | September 30, | |||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 56,408 | $ | 75,704 | ||||
Federal funds sold and | ||||||||
interest bearing deposits with other banks | 65,307 | 59,090 | ||||||
Investment securities available-for-sale | ||||||||
(amortized cost of $871,266 and $656,294 | ||||||||
at September 30, 2009 and 2008, respectively) | 886,777 | 658,905 | ||||||
Other investments | 21,012 | 18,612 | ||||||
Trading account securities | 117 | - | ||||||
Mortgages held for sale | 39,364 | 38,700 | ||||||
Loans and leases - net of unearned discount: | ||||||||
Commercial and agricultural loans | 567,476 | 671,019 | ||||||
Auto, light truck and environmental equipment | 313,808 | 337,248 | ||||||
Medium and heavy duty truck | 219,762 | 253,682 | ||||||
Aircraft financing | 633,552 | 608,881 | ||||||
Construction equipment financing | 326,858 | 383,446 | ||||||
Loans secured by real estate | 917,754 | 924,313 | ||||||
Consumer loans | 114,820 | 136,274 | ||||||
Total loans and leases | 3,094,030 | 3,314,863 | ||||||
Reserve for loan and lease losses | (85,504 | ) | (75,606 | ) | ||||
Net loans and leases | 3,008,526 | 3,239,257 | ||||||
Equipment owned under operating leases, net | 91,538 | 87,407 | ||||||
Net premises and equipment | 38,552 | 41,194 | ||||||
Goodwill and intangible assets | 90,669 | 92,185 | ||||||
Accrued income and other assets | 114,890 | 98,565 | ||||||
Total assets | $ | 4,413,160 | $ | 4,409,619 | ||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Noninterest bearing | $ | 425,742 | $ | 374,290 | ||||
Interest bearing | 3,060,972 | 2,976,122 | ||||||
Total deposits | 3,486,714 | 3,350,412 | ||||||
Federal funds purchased and securities | ||||||||
sold under agreements to repurchase | 129,707 | 244,491 | ||||||
Other short-term borrowings | 25,272 | 190,173 | ||||||
Long-term debt and mandatorily redeemable securities | 20,046 | 34,861 | ||||||
Subordinated notes | 89,692 | 89,692 | ||||||
Accrued expenses and other liabilities | 87,399 | 58,980 | ||||||
Total liabilities | 3,838,830 | 3,968,609 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Preferred stock; no par value | 104,612 | - | ||||||
Common stock; no par value | 350,266 | 342,979 | ||||||
Retained earnings | 141,758 | 128,428 | ||||||
Cost of common stock in treasury | (31,943 | ) | (32,019 | ) | ||||
Accumulated other comprehensive income | 9,637 | 1,622 | ||||||
Total shareholders' equity | 574,330 | 441,010 | ||||||
Total liabilities and shareholders' equity | $ | 4,413,160 | $ | 4,409,619 |
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CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited - Dollars in thousands) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Interest income: | ||||||||||||||||
Loans and leases | $ | 43,436 | $ | 50,979 | $ | 132,507 | $ | 154,590 | ||||||||
Investment securities, taxable | 4,357 | 4,896 | 12,600 | 17,288 | ||||||||||||
Investment securities, tax-exempt | 1,651 | 1,873 | 5,046 | 5,904 | ||||||||||||
Other | 297 | 317 | 894 | 986 | ||||||||||||
Total interest income | 49,741 | 58,065 | 151,047 | 178,768 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 15,460 | 20,347 | 49,662 | 67,116 | ||||||||||||
Short-term borrowings | 265 | 2,255 | 909 | 6,434 | ||||||||||||
Subordinated notes | 1,648 | 1,648 | 4,942 | 5,067 | ||||||||||||
Long-term debt and mandatorily redeemable securities | 322 | 418 | 853 | 1,333 | ||||||||||||
Total interest expense | 17,695 | 24,668 | 56,366 | 79,950 | ||||||||||||
Net interest income | 32,046 | 33,397 | 94,681 | 98,818 | ||||||||||||
Provision for loan and lease losses | 6,469 | 3,571 | 22,741 | 9,603 | ||||||||||||
Net interest income after provision for | ||||||||||||||||
loan and lease losses | 25,577 | 29,826 | 71,940 | 89,215 | ||||||||||||
Noninterest income: | ||||||||||||||||
Trust fees | 3,782 | 4,939 | 11,473 | 14,155 | ||||||||||||
Service charges on deposit accounts | 5,402 | 5,761 | 15,367 | 16,633 | ||||||||||||
Mortgage banking income | 965 | 959 | 6,874 | 3,493 | ||||||||||||
Insurance commissions | 1,022 | 1,084 | 3,614 | 4,122 | ||||||||||||
Equipment rental income | 6,347 | 6,285 | 18,896 | 17,794 | ||||||||||||
Other income | 2,022 | 2,168 | 6,613 | 6,836 | ||||||||||||
Investment securities and other investment gains (losses) | 716 | (8,816 | ) | 673 | (9,259 | ) | ||||||||||
Total noninterest income | 20,256 | 12,380 | 63,510 | 53,774 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 18,425 | 19,297 | 55,340 | 58,996 | ||||||||||||
Net occupancy expense | 2,221 | 2,332 | 7,095 | 7,289 | ||||||||||||
Furniture and equipment expense | 3,241 | 3,694 | 10,487 | 11,555 | ||||||||||||
Depreciation - leased equipment | 5,021 | 5,041 | 15,065 | 14,266 | ||||||||||||
Professional fees | 1,020 | 2,773 | 2,897 | 6,453 | ||||||||||||
Supplies and communication | 1,473 | 1,812 | 4,468 | 5,163 | ||||||||||||
FDIC and other insurance | 1,582 | 713 | 6,851 | 1,396 | ||||||||||||
Other expense | 3,587 | 2,655 | 10,356 | 9,495 | ||||||||||||
Total noninterest expense | 36,570 | 38,317 | 112,559 | 114,613 | ||||||||||||
Income before income taxes | 9,263 | 3,889 | 22,891 | 28,376 | ||||||||||||
Income tax expense (benefit) | 2,530 | (583 | ) | 3,624 | 7,305 | |||||||||||
Net income | 6,733 | 4,472 | 19,267 | 21,071 | ||||||||||||
Preferred stock dividends and discount accretion | (1,701 | ) | - | (4,710 | ) | - | ||||||||||
Net income available to common shareholders | $ | 5,032 | $ | 4,472 | $ | 14,557 | $ | 21,071 | ||||||||
The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3) | ||||||||||||||||
Please contact us at shareholder@1stsource.com |
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