Exhibit 99.1
|
| | | |
| For: | Immediate Release | Contact: | Andrea Short |
| | July 24, 2014 | | 574-235-2000 |
Second Quarter Earnings Increase at 1st Source Corporation,
Dividend Declared
South Bend, IN - 1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reported net income of $14.49 million for the second quarter of 2014, up 3.96% over the $13.94 million earned in the second quarter of 2013. Year to date, net income was $28.13 million, up 6.76% compared to the first six months of last year. Diluted net income per common share for the second quarter amounted to $0.59, up 5.36% compared to $0.56 for the second quarter of 2013. Diluted net income per common share for the first half of 2014 was $1.15, an increase of 7.48%, compared to the $1.07 earned a year earlier.
At its July meeting, the Board of Directors approved a cash dividend of $0.18 per common share. The dividend is payable to shareholders of record on August 5, 2014 and will be paid on August 15, 2014.
According to Christopher J. Murphy, III, Chairman, "1st Source Corporation turned in a solid performance in the second quarter. Loan growth was healthy, up $145.97 million this quarter over the previous quarter, and up $230.15 million over the same quarter a year ago. In spite of somewhat lower yields, we have successfully maintained our net interest margin which held steady at 3.59%. Similar to national trends, in our markets we are seeing a consolidation of clients and a return of some of our competitors to loan structure and pricing practices that were prominent before the financial market meltdown in 2008. If this continues, it could put further pressure on interest margins and adversely impact credit quality across the country."
"Also, we opened a new banking center at the University of Notre Dame, along with the installation of 5 additional ATMs on the campus. This enhances our ability to better serve students, faculty and staff, as well as the University's administrative offices. We are remodeling some of the banking centers in our system to serve our clients more conveniently and effectively. Four of the banking centers have been completed and more are scheduled to finish in September," Mr. Murphy concluded.
Total assets were $4.93 billion, up 6.19% from a year earlier. Total loans and leases were $3.72 billion, up 6.59% from June 30, 2013. Total deposits were $3.82 billion, up 3.11% from the comparable figures at June 30, 2013. As of June 30, 2014, the common equity-to-assets ratio was 12.06%, down from 12.24% a year ago and the tangible common equity-to-tangible assets ratio was 10.50% compared to 10.56% a year earlier.
The net interest margin was 3.59% for the second quarter of 2014 versus 3.65% for the same period in 2013. The net interest margin was 3.59% for the six months ended June 30, 2014, versus 3.64% for the same period in 2013. Tax-equivalent net interest income was $40.62 million for the second quarter of 2014, compared to the $39.32 million from 2013's second quarter. For the first six months of 2014, tax-equivalent net interest income was $79.71 million, compared to $77.54 million for the first six months of 2013.
The reserve for loan and lease losses as of June 30, 2014 was 2.38% of total loans and leases compared to 2.45% at June 30, 2013. Net recoveries of $1.22 million were recorded for the second quarter of 2014, compared with net recoveries of $0.39 million in the same quarter a year ago. Year-to-date, net recoveries of $1.92 million have been recorded in 2014, compared to net recoveries of $0.33 million for the first half of 2013. The provision for loan and lease losses was $2.54 million for the second quarter of 2014, compared with $1.29 million from the same period in 2013. For the first six months of 2014, the provision for loan and lease losses was $3.35 million compared with $2.05 million for the first six months of 2013. The ratio of nonperforming assets to net loans and leases was 1.08% as of June 30, 2014 up from 1.01% on June 30, 2013.
Noninterest income for the second quarter of 2014 was $19.22 million, down 4.47% from same period in 2013. The decrease for the quarter was mainly attributed to lower mortgage banking income. For the first six months of 2014, noninterest income was $38.62 million, down 1.15% compared to 2013 primarily as a result of lower mortgage banking income and losses on partnership investments.
Noninterest expense was $34.42 million for the second quarter of 2014, down 3.69% from the second quarter of 2013. For the first six months of 2014, noninterest expense was $70.40 million, down 2.63% compared with $72.29 million for the same period in 2013. Noninterest expense decreased primarily as a result of lower loan and lease collection and repossession expenses and reduced salaries and benefits.
1st Source 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.” Since 1863, 1st Source has been committed to the success of the communities it serves. For more information, visit www.1stsource.com.
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, 9 trust and wealth management locations, 8 1st Source Insurance offices, as well as 21 specialty finance locations nationwide. Celebrating 150 years, 1st Source has a history dating back to 1863. The 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 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.
# # #
(charts attached)
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| | | | | | | | | | | | | | | | | | |
| 1st SOURCE CORPORATION | | | | | | | | | | |
| 2nd QUARTER 2014 FINANCIAL HIGHLIGHTS | | | | | | | | | |
| (Unaudited - Dollars in thousands, except per share data) | | | | | | | | |
| | | Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | | 2014 | 2013 | | 2014 | 2013 |
| END OF PERIOD BALANCES | | | | | | | | | | |
| Assets | | | | | | | $ | 4,925,727 |
| | $ | 4,638,811 |
| |
| Loans and leases | | | | | | | 3,723,535 |
| | 3,493,385 |
| |
| Deposits | | | | | | | 3,815,735 |
| | 3,700,799 |
| |
| Reserve for loan and lease losses | | | | | | | 88.776 |
| | 85,690 |
| |
| Intangible assets | | | | | | | 85,796 |
| | 86,915 |
| |
| Common shareholders' equity | | | | | | | 594,218 |
| | 567,753 |
| |
| | | | | | | | | | | |
| AVERAGE BALANCES | | | | | | | | | | |
| Assets | | $ | 4,831,313 |
| | $ | 4,611,953 |
| | | $ | 4,765,107 |
| | $ | 4,577,806 |
| |
| Earning assets | | 4,539,093 |
| | 4,326,264 |
| | | 4,477,086 |
| | 4,294,509 |
| |
| Investments | | 835,755 |
| | 843,870 |
| | | 833,688 |
| | 850,425 |
| |
| Loans and leases | | 3,662,156 |
| | 3,419,723 |
| | | 3,603,016 |
| | 3,381,093 |
| |
| Deposits | | 3,764,043 |
| | 3,719,007 |
| | | 3,717,259 |
| | 3,691,791 |
| |
| Interest bearing liabilities | | 3,451,752 |
| | 3,305,196 |
| | | 3,396,660 |
| | 3,284,762 |
| |
| Common shareholders' equity | | 599,292 |
| | 574,867 |
| | | 597,002 |
| | 570,220 |
| |
| | | | | | | | | | | |
| INCOME STATEMENT DATA | | | | | | | | | | |
| Net interest income | | $ | 40,162 |
| | $ | 38,871 |
| | | $ | 78,780 |
| | $ | 76,625 |
| |
| Net interest income - FTE | | 40,622 |
| | 39,324 |
| | | 79,709 |
| | 77,544 |
| |
| Provision for loan and lease losses | | 2,543 |
| | 1,293 |
| | | 3,347 |
| | 2,050 |
| |
| Noninterest income | | 19,221 |
| | 20,121 |
| | | 38,619 |
| | 39,069 |
| |
| Noninterest expense | | 34,424 |
| | 35,744 |
| | | 70,396 |
| | 72,294 |
| |
| Net income | | 14,494 |
| | 13,942 |
| | | 28,126 |
| | 26,346 |
| |
| | | | | | | | | | | |
| PER SHARE DATA | | | | | | | | | | |
| Basic net income per common share | | $ | 0.59 |
| | $ | 0.56 |
| | | $ | 1.15 |
| | $ | 1.07 |
| |
| Diluted net income per common share | | 0.59 |
| | 0.56 |
| | | 1.15 |
| | 1.07 |
| |
| Common cash dividends declared | | 0.18 |
| | 0.17 |
| | | 0.35 |
| | 0.34 |
| |
| Book value per common share | | 24.89 |
| | 23.29 |
| | | 24.89 |
| | 23.29 |
| |
| Tangible book value per common share | | 21.30 |
| | 19.73 |
| | | 21.30 |
| | 19.73 |
| |
| Market value - High | | 33.21 |
| | 25.25 |
| | | 33.21 |
| | 25.25 |
| |
| Market value - Low | | 28.76 |
| | 22.65 |
| | | 27.56 |
| | 21.88 |
| |
| Basic weighted average common shares outstanding | | 24,077,990 |
| | 24,367,529 |
| | | 24,197,057 |
| | 24,344,882 |
| |
| Diluted weighted average common shares outstanding | | 24,077,990 |
| | 24,368,973 |
| | | 24,197,057 |
| | 24,346,053 |
| |
| | | | | | | | | | | |
| KEY RATIOS | | | | | | | | | | |
| Return on average assets | | 1.20 |
| % | 1.21 |
| % | | 1.19 |
| % | 1.16 |
| % |
| Return on average common shareholders' equity | | 9.70 |
| | 9.73 |
| | | 9.50 |
| | 9.32 |
| |
| Average common shareholders' equity to average assets | | 12.40 |
| | 12.46 |
| | | 12.53 |
| | 12.46 |
| |
| End of period tangible common equity to tangible assets | | 10.50 |
| | 10.56 |
| | | 10.50 |
| | 10.56 |
| |
| Risk-based capital - Tier 1 | | 13.97 |
| | 14.23 |
| | | 13.97 |
| | 14.23 |
| |
| Risk-based capital - Total | | 15.28 |
| | 15.55 |
| | | 15.28 |
| | 15.55 |
| |
| Net interest margin | | 3.59 |
| | 3.65 |
| | | 3.59 |
| | 3.64 |
| |
| Efficiency: expense to revenue | | 55.59 |
| | 59.00 |
| | | 57.01 |
| | 61.03 |
| |
| Net charge offs to average loans and leases | | (0.13 | ) | | (0.05 | ) | | | (0.11 | ) | | (0.02 | ) | |
| Loan and lease loss reserve to loans and leases | | 2.38 |
| | 2.45 |
| | | 2.38 |
| | 2.45 |
| |
| Nonperforming assets to loans and leases | | 1.08 |
| | 1.01 |
| | | 1.08 |
| | 1.01 |
| |
| | | | | | | | | | | |
| ASSET QUALITY | | | | | | | | | | |
| Loans and leases past due 90 days or more | | | | | | | $ | 475 |
| | $ | 184 |
| |
| Nonaccrual loans and leases | | | | | | | 32,486 |
| | 29,318 |
| |
| Other real estate | | | | | | | 1,853 |
| | 5,455 |
| |
| Former bank premises held for sale | | | | | | | 801 |
| | 951 |
| |
| Repossessions | | | | | | | 5,455 |
| | 137 |
| |
| Equipment owned under operating leases | | | | | | | 23 |
| | — |
| |
| Total nonperforming assets | | | | | | | $ | 41,093 |
| | $ | 36,045 |
| |
|
| | | | | | | | |
| 1st SOURCE CORPORATION | | | | |
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | | | | |
| (Unaudited - Dollars in thousands) | | | | |
| | | June 30, 2014 | | June 30, 2013 |
| ASSETS | | | | |
| Cash and due from banks | | $ | 110,933 |
| | $ | 64,850 |
|
| Federal funds sold and interest bearing deposits with other banks | | 6,445 |
| | 3,171 |
|
| Investment securities available-for-sale (amortized cost of $798,708 and $815,626 at June 30, 2014 and 2013, respectively) | | 815,056 |
| | 828,312 |
|
| Other investments | | 23,597 |
| | 22,409 |
|
| Trading account securities | | 198 |
| | 166 |
|
| Mortgages held for sale | | 19,034 |
| | 10,849 |
|
| | | | | |
| Loans and leases, net of unearned discount: | | | | |
| Commercial and agricultural loans | | 720,226 |
| | 660,380 |
|
| Auto and light truck | | 471,080 |
| | 475,209 |
|
| Medium and heavy duty truck | | 243,358 |
| | 213,947 |
|
| Aircraft financing | | 733,194 |
| | 677,510 |
|
| Construction equipment financing | | 369,755 |
| | 311,135 |
|
| Commercial real estate | | 602,321 |
| | 576,810 |
|
| Residential real estate | | 454,845 |
| | 454,983 |
|
| Consumer loans | | 128,756 |
| | 123,411 |
|
| Total loans and leases | | 3,723,535 |
| | 3,493,385 |
|
| Reserve for loan and lease losses | | (88,776 | ) | | (85,690 | ) |
| Net loans and leases | | 3,634,759 |
| | 3,407,695 |
|
| | | | | |
| Equipment owned under operating leases, net | | 63,350 |
| | 52,856 |
|
| Net premises and equipment | | 45,840 |
| | 46,027 |
|
| Goodwill and intangible assets | | 85,796 |
| | 86,915 |
|
| Accrued income and other assets | | 120,719 |
| | 115,561 |
|
| | | | | |
| Total assets | | $ | 4,925,727 |
| | $ | 4,638,811 |
|
| | | | | |
| LIABILITIES | | | | |
| Deposits: | | | | |
| Noninterest bearing | | $ | 768,710 |
| | $ | 698,389 |
|
| Interest bearing | | 3,047,025 |
| | 3,002,410 |
|
| Total deposits | | 3,815,735 |
| | 3,700,799 |
|
| | | | | |
| Short-term borrowings: | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | | 191,545 |
| | 162,778 |
|
| Other short-term borrowings | | 158,457 |
| | 39,126 |
|
| Total short-term borrowings | | 350,002 |
| | 201,904 |
|
| Long-term debt and mandatorily redeemable securities | | 59,726 |
| | 58,216 |
|
| Subordinated notes | | 58,764 |
| | 58,764 |
|
| Accrued expenses and other liabilities | | 47,282 |
| | 51,375 |
|
| Total liabilities | | 4,331,509 |
| | 4,071,058 |
|
| | | | | |
| SHAREHOLDERS' EQUITY | | | | |
| Preferred stock; no par value | | — |
| | — |
|
| Common stock; no par value | | 346,535 |
| | 346,535 |
|
| Retained earnings | | 280,917 |
| | 241,401 |
|
| Cost of common stock in treasury | | (43,445 | ) | | (28,021 | ) |
| Accumulated other comprehensive income | | 10,211 |
| | 7,838 |
|
| Total shareholders' equity | | 594,218 |
| | 567,753 |
|
| | | | | |
| Total liabilities and shareholders' equity | | $ | 4,925,727 |
| | $ | 4,638,811 |
|
|
| | | | | | | | | | | | | | | |
| 1st SOURCE CORPORATION | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | | | |
| (Unaudited - Dollars in thousands) | | | | | | | |
| | Three Months Ended
June 30, | | Six Months Ended
June 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| Interest income: | | | | | | | |
| Loans and leases | $ | 40,401 |
| | $ | 40,112 |
| | $ | 79,316 |
| | $ | 79,282 |
|
| Investment securities, taxable | 3,401 |
| | 3,498 |
| | 6,746 |
| | 7,193 |
|
| Investment securities, tax-exempt | 816 |
| | 760 |
| | 1,635 |
| | 1,531 |
|
| Other | 232 |
| | 241 |
| | 509 |
| | 483 |
|
| Total interest income | 44,850 |
| | 44,611 |
| | 88,206 |
| | 88,489 |
|
| | | | | | | | |
| Interest expense: | | | | | | | |
| Deposits | 2,994 |
| | 4,412 |
| | 5,965 |
| | 8,954 |
|
| Short-term borrowings | 169 |
| | 45 |
| | 306 |
| | 77 |
|
| Subordinated notes | 1,055 |
| | 1,055 |
| | 2,110 |
| | 2,110 |
|
| Long-term debt and mandatorily redeemable securities | 470 |
| | 228 |
| | 1,045 |
| | 723 |
|
| Total interest expense | 4,688 |
| | 5,740 |
| | 9,426 |
| | 11,864 |
|
| | | | | | | | |
| Net interest income | 40,162 |
| | 38,871 |
| | 78,780 |
| | 76,625 |
|
| Provision for loan and lease losses | 2,543 |
| | 1,293 |
| | 3,347 |
| | 2,050 |
|
| Net interest income after provision for loan and lease losses | 37,619 |
| | 37,578 |
| | 75,433 |
| | 74,575 |
|
| | | | | | | | |
| Noninterest income: | | | | | | | |
| Trust fees | 4,955 |
| | 4,439 |
| | 9,431 |
| | 8,540 |
|
| Service charges on deposit accounts | 2,207 |
| | 2,325 |
| | 4,273 |
| | 4,564 |
|
| Debit card income | 2,463 |
| | 2,344 |
| | 4,695 |
| | 4,409 |
|
| Mortgage banking income | 1,181 |
| | 1,936 |
| | 2,515 |
| | 3,564 |
|
| Insurance commissions | 1,288 |
| | 1,393 |
| | 2,851 |
| | 2,839 |
|
| Equipment rental income | 4,098 |
| | 4,086 |
| | 8,180 |
| | 8,098 |
|
| Gains on investment securities available-for-sale | — |
| | — |
| | 963 |
| | — |
|
| Other income | 3,029 |
| | 3,598 |
| | 5,711 |
| | 7,055 |
|
| Total noninterest income | 19,221 |
| | 20,121 |
| | 38,619 |
| | 39,069 |
|
| | | | | | | | |
| Noninterest expense: | | | | | | | |
| Salaries and employee benefits | 18,827 |
| | 19,176 |
| | 38,309 |
| | 39,112 |
|
| Net occupancy expense | 2,235 |
| | 2,147 |
| | 4,672 |
| | 4,354 |
|
| Furniture and equipment expense | 4,413 |
| | 3,909 |
| | 8,650 |
| | 7,808 |
|
| Depreciation - leased equipment | 3,290 |
| | 3,274 |
| | 6,539 |
| | 6,499 |
|
| Professional fees | 1,062 |
| | 1,310 |
| | 2,190 |
| | 2,665 |
|
| Supplies and communication | 1,337 |
| | 1,499 |
| | 2,729 |
| | 3,035 |
|
| FDIC and other insurance | 850 |
| | 927 |
| | 1,714 |
| | 1,805 |
|
| Business development and marketing expense | 899 |
| | 932 |
| | 2,583 |
| | 1,705 |
|
| Loan and lease collection and repossession expense | (17 | ) | | 1,095 |
| | (512 | ) | | 1,852 |
|
| Other expense | 1,528 |
| | 1,475 |
| | 3,522 |
| | 3,459 |
|
| Total noninterest expense | 34,424 |
| | 35,744 |
| | 70,396 |
| | 72,294 |
|
| | | | | | | | |
| Income before income taxes | 22,416 |
| | 21,955 |
| | 43,656 |
| | 41,350 |
|
| Income tax expense | 7,922 |
| | 8,013 |
| | 15,530 |
| | 15,004 |
|
| | | | | | | | |
| Net income | $ | 14,494 |
| | $ | 13,942 |
| | $ | 28,126 |
| | $ | 26,346 |
|
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| | | | | | | | |
| The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3) | | | | | | |
| Please contact us at shareholder@1stsource.com | | | | | | | |
