Attached files
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| 8-K - 1ST SOURCE FORM 8K - 4TH QTR PRESS RELEASE - 1ST SOURCE CORP | form8_k.htm |
| Exhibit 99.1 | |||
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For:
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Immediate Release
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Contact:
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Andrea Short
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January 22, 2013
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574-235-2000
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1st Source Corporation Reports Record Annual Earnings,
History of Increased Dividends Continues
South Bend, IN - 1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today announced record net income of $49.63 million for the year of 2012, an increase of 2.98% over the $48.20 million in 2011. The annual net income sets a record as the highest in company history. Fourth quarter net income was $12.35 million, up 10.41% compared to $11.18 million in the fourth quarter of 2011, due to higher mortgage banking income along with reduced loan and lease collection and repossession expenses.
Diluted net income per common share for the year was $2.02, an all-time record and an increase of 3.06% over the $1.96 per common share a year earlier. Diluted net income per common share for the fourth quarter was $0.50, up 11.11% compared to $0.45 per common share reported in the fourth quarter of the previous year.
At the January 2013 meeting, the Board of Directors approved a cash dividend of $0.17 per common share. The cash dividend is payable on February 15, 2013 to shareholders of record on February 4, 2013. Dividends for 2012 increased 3.13% over the previous year and achieved 25 years of consecutive dividend growth.
Christopher J. Murphy, III, Chairman of 1st Source, commented, "In spite of the rocky economy, 2012 was a good year for 1st Source Corporation. We set a record for annual net income. We continue our record of 25 years of consecutive dividend growth which puts us in a very select group nationally.”
“We also had a busy fourth quarter. New banking centers were opened in Nappanee and Columbia City, Indiana; mobile banking and purchase rewards for our checking account clients were rolled out; and 1st Source Mortgage Express was introduced – a quick and easy online mortgage application that is especially handy for our clients wishing to refinance.”
“Credit continues to improve. Our 30 day delinquency rate ended 2012 at 0.16% of total loans and leases; our net charge-offs for 2012 were 0.13% to average net loans and leases; while our net charge-offs in dollars were $4.09 million compared to $8.36 million a year earlier. Credit performance is strong, but our net interest margin is being squeezed. We continue to focus on controlling expenses to compensate.”
“At 1st Source, we strive to be distinctively convenient, provide straight talk and sound advice for our clients, and always keep their best interests in mind – treating them in a very personal way. I am proud of what my colleagues throughout the Bank have accomplished this year. It is their focus and dedication to serving our clients well that has led to our success.” Mr. Murphy concluded.
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The net interest margin was 3.64% for the fourth quarter of 2012 versus 3.66% for the same period in 2011. The net interest margin was 3.69% for the years ending December 31, 2012 and 2011. Tax-equivalent net interest income was $39.00 million for the fourth quarter of 2012, compared to $37.89 million for 2011’s fourth quarter. For the twelve months of 2012, tax-equivalent net interest income was $153.84 million, compared to $150.91 million for the twelve months of 2011.
As of December 31, 2012, the common equity-to-assets ratio was 12.28%, compared to 11.98% at December 31, 2011 and its tangible common equity-to-tangible assets ratio was 10.56% at December 31, 2012 compared to 10.18% at December 31, 2011. Common shareholders’ equity was $558.66 million, up from $523.92 million a year ago. Total assets at the end of 2012 were $4.55 billion, up 4.04% from the same period last year. Total loans and leases at December 31, 2012 were $3.33 billion, up 7.67%, and total deposits at December 31, 2012 were $3.62 billion, up 2.96% from the comparable figures at the end of 2011.
Reserve for loan and lease losses as of December 31, 2012 was 2.50% of total loans and leases, compared to 2.64% as of December 31, 2011. Net charge-offs were $0.98 million for the fourth quarter 2012, compared to $2.17 million in the fourth quarter 2011. Net charge-offs for the full year were $4.09 million in 2012 compared to $8.36 million in 2011. The ratio of nonperforming assets to net loans and leases was 1.25% on December 31, 2012, compared to 2.28% on December 31, 2011.
Noninterest income for the fourth quarter of 2012 was $20.57 million, up 1.52% compared to $20.27 million for the fourth quarter of 2011. The fourth quarter increase was a result of higher mortgage banking income and investment securities and other investment gains offset by lower equipment rental income. For the year, noninterest income was $81.19 million, up slightly from the $80.87 million in 2011. The year-to-date increase was due to higher mortgage banking income and insurance commissions reduced by lower equipment rental income and investment securities and other investment gains.
Noninterest expense for the fourth quarter of 2012 was $39.72 million, down 2.62% compared to $40.79 million for the fourth quarter of 2011. The leading factors for the fourth quarter decrease were reduced depreciation on leased equipment and lower loan and lease collection and repossession expenses offset by higher salary and employee benefits expense. For the year ending December 31, 2012, noninterest expense was $151.54 million, down from $152.35 million one year ago. The annual difference was a result of reduced depreciation on leased equipment, reductions to provisions for unfunded loan commitments, loan and lease collection and repossession expenses, and lower net occupancy expenses. These decreases were offset by increased salary and employee benefit expenses and furniture and equipment expenses.
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
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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, 9 trust and wealth management locations, 8 1st Source Insurance offices, as well as 22 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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4th QUARTER 2012 FINANCIAL HIGHLIGHTS
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(Unaudited - Dollars in thousands, except per share data)
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Three Months Ended
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Twelve Months Ended
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December 31
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December 31
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2012
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2011
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2012
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2011
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END OF PERIOD BALANCES
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Assets
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$ | 4,550,693 | $ | 4,374,071 | |||||||||
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Loans and leases
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3,327,553 | 3,090,543 | |||||||||||
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Deposits
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3,624,347 | 3,520,141 | |||||||||||
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Reserve for loan and lease losses
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83,311 | 81,644 | |||||||||||
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Intangible assets
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87,502 | 87,675 | |||||||||||
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Common shareholders' equity
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558,655 | 523,918 | |||||||||||
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AVERAGE BALANCES
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Assets
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$ | 4,548,602 | $ | 4,421,259 | $ | 4,472,879 | $ | 4,402,554 | |||||
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Earning assets
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4,260,643 | 4,102,618 | 4,174,443 | 4,090,297 | |||||||||
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Investments
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900,882 | 858,941 | 882,392 | 899,895 | |||||||||
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Loans and leases
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3,268,948 | 3,063,248 | 3,209,490 | 3,078,581 | |||||||||
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Deposits
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3,635,800 | 3,548,246 | 3,574,211 | 3,555,454 | |||||||||
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Interest bearing liabilities
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3,265,521 | 3,247,367 | 3,239,530 | 3,286,246 | |||||||||
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Common shareholders' equity
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559,307 | 522,267 | 545,631 | 506,939 | |||||||||
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INCOME STATEMENT DATA
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Net interest income
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$ | 38,509 | $ | 37,330 | $ | 151,776 | $ | 148,400 | |||||
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Net interest income - FTE
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39,004 | 37,893 | 153,844 | 150,907 | |||||||||
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Provision for (recovery of) loan and lease losses
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793 | (396 | ) | 5,752 | 3,129 | ||||||||
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Noninterest income
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20,574 | 20,265 | 81,192 | 80,872 | |||||||||
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Noninterest expense
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39,717 | 40,787 | 151,536 | 152,354 | |||||||||
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Net income
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12,346 | 11,182 | 49,633 | 48,195 | |||||||||
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PER SHARE DATA
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Basic net income per common share
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$ | 0.50 | $ | 0.45 | $ | 2.02 | $ | 1.96 | |||||
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Diluted net income per common share
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0.50 | 0.45 | 2.02 | 1.96 | |||||||||
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Common cash dividends declared
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0.17 | 0.16 | 0.66 | 0.64 | |||||||||
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Book value per common share
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23.04 | 21.64 | 23.04 | 21.64 | |||||||||
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Tangible book value per common share
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19.43 | 18.02 | 19.43 | 18.02 | |||||||||
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Market value - High
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23.15 | 26.06 | 26.79 | 26.06 | |||||||||
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Market value - Low
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19.70 | 19.91 | 19.70 | 17.86 | |||||||||
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Basic weighted average common shares outstanding
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24,270,198 | 24,213,834 | 24,267,471 | 24,237,924 | |||||||||
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Diluted weighted average common shares outstanding
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24,279,465 | 24,224,751 | 24,277,328 | 24,247,456 | |||||||||
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KEY RATIOS
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Return on average assets
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1.08 |
%
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1.00 | % |
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1.11 |
%
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1.09 | % | ||||
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Return on average common shareholders' equity
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8.78 | 8.49 | 9.10 | 9.51 | |||||||||
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Average common shareholders' equity to average assets
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12.30 | 11.81 | 12.20 | 11.51 | |||||||||
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End of period tangible common equity to tangible assets
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10.56 | 10.18 | 10.56 | 10.18 | |||||||||
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Risk-based capital - Tier 1
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14.26 | 15.21 | 14.26 | 15.21 | |||||||||
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Risk-based capital - Total
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15.57 | 16.51 | 15.57 | 16.51 | |||||||||
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Net interest margin
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3.64 | 3.66 | 3.69 | 3.69 | |||||||||
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Efficiency: expense to revenue
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65.95 | 68.60 | 63.33 | 64.35 | |||||||||
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Net charge-offs to average loans and leases
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0.12 | 0.28 | 0.13 | 0.27 | |||||||||
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Loan and lease loss reserve to loans and leases
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2.50 | 2.64 | 2.50 | 2.64 | |||||||||
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Nonperforming assets to loans and leases
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1.25 | 2.28 | 1.25 | 2.28 | |||||||||
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ASSET QUALITY
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Loans and leases past due 90 days or more
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$ | 442 | $ | 460 | |||||||||
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Nonaccrual loans and leases
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36,417 | 56,440 | |||||||||||
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Other real estate
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4,311 | 7,621 | |||||||||||
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Former bank premises held for sale
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1,034 | 1,134 | |||||||||||
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Repossessions
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63 | 6,792 | |||||||||||
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Equipment owned under operating leases
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- | 29 | |||||||||||
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Total nonperforming assets
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42,267 | 72,476 | |||||||||||
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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
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(Unaudited - Dollars in thousands)
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December 31, 2012
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December 31, 2011
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ASSETS
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Cash and due from banks
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$ | 83,232 | $ | 61,406 | |||
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Federal funds sold and interest bearing deposits with other banks
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702 | 52,921 | |||||
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Investment securities available-for-sale
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(amortized cost of $849,139 and $853,204 at
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December 31, 2012 and 2011, respectively)
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880,764 | 883,000 | |||||
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Other investments
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22,609 | 18,974 | |||||
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Trading account securities
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146 | 132 | |||||
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Mortgages held for sale
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10,879 | 12,644 | |||||
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Loans and leases, net of unearned discount:
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Commercial and agricultural loans
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639,069 | 545,570 | |||||
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Auto, light truck and environmental equipment
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438,147 | 435,965 | |||||
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Medium and heavy duty truck
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172,002 | 159,796 | |||||
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Aircraft financing
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696,479 | 620,782 | |||||
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Construction equipment financing
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278,974 | 261,204 | |||||
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Commercial real estate
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554,968 | 545,457 | |||||
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Residential real estate
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438,641 | 423,606 | |||||
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Consumer loans
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109,273 | 98,163 | |||||
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Total loans and leases
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3,327,553 | 3,090,543 | |||||
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Reserve for loan and lease losses
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(83,311 | ) | (81,644 | ) | |||
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Net loans and leases
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3,244,242 | 3,008,899 | |||||
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Equipment owned under operating leases, net
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52,173 | 69,551 | |||||
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Net premises and equipment
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45,016 | 39,857 | |||||
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Goodwill and intangible assets
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87,502 | 87,675 | |||||
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Accrued income and other assets
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123,428 | 139,012 | |||||
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Total assets
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$ | 4,550,693 | $ | 4,374,071 | |||
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LIABILITIES
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Deposits:
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Noninterest bearing
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$ | 646,380 | $ | 580,101 | |||
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Interest bearing
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2,977,967 | 2,940,040 | |||||
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Total deposits
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3,624,347 | 3,520,141 | |||||
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Short-term borrowings:
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Federal funds purchased and securities sold
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under agreements to purchase
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158,680 | 106,991 | |||||
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Other short-term borrowings
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10,508 | 18,243 | |||||
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Total short-term borrowings
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169,188 | 125,234 | |||||
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Long-term debt and mandatorily redeemable securities
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71,021 | 37,156 | |||||
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Subordinated notes
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58,764 | 89,692 | |||||
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Accrued expenses and other liabilities
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68,718 | 77,930 | |||||
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Total liabilities
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3,992,038 | 3,850,153 | |||||
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SHAREHOLDERS' EQUITY
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Preferred stock; no par value
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- | - | |||||
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Common stock; no par value
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346,535 | 346,535 | |||||
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Retained earnings
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223,715 | 190,261 | |||||
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Cost of common stock in treasury
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(31,134 | ) | (31,389 | ) | |||
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Accumulated other comprehensive income
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19,539 | 18,511 | |||||
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Total shareholders' equity
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558,655 | 523,918 | |||||
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Total liabilities and shareholders' equity
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$ | 4,550,693 | $ | 4,374,071 | |||
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CONSOLIDATED STATEMENTS OF INCOME
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(Unaudited - Dollars in thousands)
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Three Months Ended
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Twelve Months Ended
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December 31,
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December 31,
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2012
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2011
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2012
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2011
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Interest income:
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Loans and leases
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$ | 40,552 | $ | 40,236 | $ | 161,376 | $ | 163,986 | |||||||
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Investment securities, taxable
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3,852 | 4,445 | 16,426 | 18,533 | |||||||||||
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Investment securities, tax-exempt
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814 | 889 | 3,340 | 4,013 | |||||||||||
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Other
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255 | 284 | 943 | 991 | |||||||||||
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Total interest income
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45,473 | 45,854 | 182,085 | 187,523 | |||||||||||
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Interest expense:
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Deposits
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5,009 | 6,489 | 21,877 | 30,762 | |||||||||||
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Short-term borrowings
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33 | 60 | 169 | 300 | |||||||||||
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Subordinated notes
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1,542 | 1,647 | 6,484 | 6,589 | |||||||||||
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Long-term debt and mandatorily redeemable securities
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380 | 328 | 1,779 | 1,472 | |||||||||||
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Total interest expense
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6,964 | 8,524 | 30,309 | 39,123 | |||||||||||
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Net interest income
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38,509 | 37,330 | 151,776 | 148,400 | |||||||||||
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Provision for (recovery of) loan and lease losses
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793 | (396 | ) | 5,752 | 3,129 | ||||||||||
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Net interest income after provision for
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(recovery of) loan and lease losses
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37,716 | 37,726 | 146,024 | 145,271 | |||||||||||
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Noninterest income:
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Trust fees
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4,091 | 4,022 | 16,498 | 16,327 | |||||||||||
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Service charges on deposit accounts
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4,779 | 4,866 | 18,807 | 18,488 | |||||||||||
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Mortgage banking income
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2,893 | 1,504 | 8,357 | 3,839 | |||||||||||
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Insurance commissions
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1,443 | 1,377 | 5,494 | 4,793 | |||||||||||
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Equipment rental income
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4,176 | 5,500 | 18,796 | 23,361 | |||||||||||
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Other income
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3,104 | 3,283 | 12,660 | 12,665 | |||||||||||
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Investment securities and other investment gains (losses)
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88 | (287 | ) | 580 | 1,399 | ||||||||||
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Total noninterest income
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20,574 | 20,265 | 81,192 | 80,872 | |||||||||||
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Noninterest expense:
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Salaries and employee benefits
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20,931 | 20,012 | 82,599 | 77,261 | |||||||||||
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Net occupancy expense
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2,159 | 2,106 | 7,819 | 8,714 | |||||||||||
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Furniture and equipment expense
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4,251 | 3,701 | 15,406 | 14,130 | |||||||||||
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Depreciation - leased equipment
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3,293 | 4,400 | 15,202 | 18,650 | |||||||||||
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Professional fees
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1,851 | 2,006 | 6,083 | 5,508 | |||||||||||
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Supplies and communication
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1,536 | 1,431 | 5,701 | 5,453 | |||||||||||
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FDIC and other insurance
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886 | 913 | 3,602 | 4,421 | |||||||||||
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Business development and marketing expense
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1,307 | 1,578 | 4,232 | 4,032 | |||||||||||
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Loan and lease collection and repossession expense
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1,426 | 2,513 | 5,772 | 6,724 | |||||||||||
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Other expense
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2,077 | 2,127 | 5,120 | 7,461 | |||||||||||
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Total noninterest expense
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39,717 | 40,787 | 151,536 | 152,354 | |||||||||||
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Income before income taxes
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18,573 | 17,204 | 75,680 | 73,789 | |||||||||||
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Income tax expense
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6,227 | 6,022 | 26,047 | 25,594 | |||||||||||
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Net income
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$ | 12,346 | $ | 11,182 | $ | 49,633 | $ | 48,195 | |||||||
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The NASDAQ Global Select National Market Symbol: "SRCE" (CUSIP #336901 10 3)
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Please contact us at shareholder@1stsource.com
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