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| 8-K - 8-K PRESS RELEASE - 1ST SOURCE CORP | srce-2015930pr8k.htm |
Exhibit 99.1
For: | Immediate Release | Contact: | Andrea Short |
October 22, 2015 | 574-235-2000 | ||
Third Quarter Earnings Steady at 1st Source Corporation,
Cash Dividend Declared
South Bend, IN - 1st Source Corporation (NASDAQ:SRCE), parent company of 1st Source Bank, today reported net income of $13.93 million for the third quarter of 2015, down $1.02 million or 6.82% from the $14.95 million earned in the third quarter of 2014. Year to date, net income was $43.07 million, stable compared to the first nine months of last year. The single largest factor in the difference between 2015 and 2014 was a one-time income tax benefit of $1.18 million in the third quarter of 2014. Diluted net income per common share for the third quarter amounted to $0.53, down 5.36% compared to the $0.56 in the third quarter of 2014. Diluted net income per common share for the first three quarters of 2015 was $1.63, an increase of 1.24% compared to the $1.61 earned a year earlier. (All share and per share information has been adjusted for a 10% stock dividend declared on July 22, 2015 and issued on August 14, 2015, unless otherwise noted.)
At its October 2015 meeting, the Board of Directors approved a cash dividend of $0.18 per common share. The cash dividend is payable to shareholders of record on November 3, 2015 and will be paid on November 13, 2015.
"Overall it was a steady quarter for 1st Source as we continued to see pressure on our earnings due to the ongoing low interest rate environment, the impact from our investments in future growth and increases in health care costs," said Christopher J. Murphy, III, Chairman. "Despite these challenges, at the close of the quarter we had strong loan growth and we have continued to add new clients and grow deposits. We remain focused on the long-term by investing in our banking centers, information technology and our people, while delivering on our mission of helping our clients achieve security, build wealth and realize their dreams."
"Earlier this month The MSR Group, a top research firm specializing in customer experience in retail banking, identified 1st Source as offering the best customer experience in its banking centers in the Midwest. To award this recognition they interviewed thousands of customers of their clients and of the top 50 banks in the country. We are very proud that this award confirms our commitment shared and practiced by all of our colleagues to deliver outstanding client service. We also celebrated the grand opening of new banking centers in New Haven, Indiana and Portage, Michigan, and we broke ground on a new banking center in Valparaiso, Indiana. Additionally, we rolled out new products like Apple Pay® and Popmoney® giving clients more flexibility in how they make purchases and pay other people," Mr. Murphy concluded.
The net interest margin was down slightly to 3.57% for the third quarter of 2015 versus 3.58% for the same period in 2014. The net interest margin was 3.60% for the nine months ended September 30, 2015, versus 3.59% for the same period in 2014. Tax-equivalent net interest income was $42.63 million for the third quarter of 2015, compared to the $41.17 million for 2014’s third quarter. For the first nine months of 2015, tax equivalent net interest income was $124.55 million, compared to $120.88 million for the first nine months of 2014.
The reserve for loan and lease losses as of September 30, 2015 was 2.22% of total loans and leases compared to 2.39% at September 30, 2014. Net recoveries of $0.04 million were recorded for the third quarter of 2015 compared
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with net charge-offs of $2.58 million in the same quarter a year ago. Year to date, net recoveries of $0.39 million have been recorded in 2015, compared to net charge-offs of $0.66 million for the first nine months of 2014. The provision for loan and lease losses was $0.99 million for the third quarter of 2015, compared with $1.21 million for the same period in 2014. For the first nine months of 2015, the provision for loan and lease losses was $2.16 million compared with $4.55 million for the first nine months of 2014. The ratio of nonperforming assets to net loans and leases improved to 0.66% as of September 30, 2015, compared to 0.94% on September 30, 2014.
Total assets at the end of the third quarter of 2015 were $5.11 billion, up 5.91% from the $4.82 billion a year ago. Total loans and leases were $3.96 billion, up 8.24% from September 30, 2014. Total deposits were $4.02 billion, up 4.78% from the comparable figure at September 30, 2014. As of September 30, 2015, the common equity-to-assets ratio was 12.52%, compared to 12.51% a year ago and the tangible common equity-to-tangible assets ratio was 11.04% compared to 10.93% a year earlier.
Noninterest income for the third quarter of 2015 was $21.13 million, an increase of 8.97% from the same period in 2014. For the first nine months of 2015, noninterest income was $62.41 million, up 7.59% compared to 2014. Noninterest income increased primarily as a result of higher equipment rental income.
Noninterest expense was $41.07 million for the third quarter of 2015, up 9.07% from the third quarter of 2014. For the nine months ended September 30, 2015, noninterest expense was $117.37 million, up 8.63% compared with $108.05 million for the same period in 2014. Noninterest expense increased primarily as a result of higher salary and employee benefits expense, depreciation on leased equipment and other expenses. Salaries expense increased due to more full-time equivalent employees related to the opening of three new banking centers in 2014, two new banking centers in 2015 and temporary summer staffing. Employee benefits expense was up as a result of higher group insurance claims experience in 2015. Depreciation on leased equipment was higher as a result of an increase in the average equipment rental portfolio. Other expenses increased mainly due to higher residential mortgage foreclosure expenses, employment and relocation expenses, write-downs on fixed assets and increased debit card losses.
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, and construction equipment. The Corporation includes 82 community banking centers in 17 counties, 8 trust and wealth management locations, 10 1st Source Insurance offices, as well as 22 specialty finance locations nationwide.
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
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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.
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 2015 FINANCIAL HIGHLIGHTS | ||||||||||||||||||
(Unaudited - Dollars in thousands, except per share data) | ||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||||
Assets | $ | 5,105,584 | $ | 4,820,793 | ||||||||||||||
Loans and leases | 3,955,550 | 3,654,421 | ||||||||||||||||
Deposits | 4,019,156 | 3,835,972 | ||||||||||||||||
Reserve for loan and lease losses | 87,616 | 87,400 | ||||||||||||||||
Intangible assets | 84,822 | 85,583 | ||||||||||||||||
Common shareholders’ equity | 639,221 | 603,033 | ||||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||
Assets | $ | 5,061,350 | $ | 4,856,167 | $ | 4,946,899 | $ | 4,795,794 | ||||||||||
Earning assets | 4,733,336 | 4,562,720 | 4,627,111 | 4,505,944 | ||||||||||||||
Investments | 781,971 | 808,591 | 787,343 | 825,230 | ||||||||||||||
Loans and leases | 3,910,981 | 3,700,708 | 3,795,929 | 3,635,938 | ||||||||||||||
Deposits | 3,995,795 | 3,830,243 | 3,913,931 | 3,755,334 | ||||||||||||||
Interest bearing liabilities | 3,489,505 | 3,427,965 | 3,435,444 | 3,407,210 | ||||||||||||||
Common shareholders’ equity | 638,965 | 601,444 | 631,611 | 598,499 | ||||||||||||||
INCOME STATEMENT DATA | ||||||||||||||||||
Net interest income | $ | 42,209 | $ | 40,710 | $ | 123,310 | $ | 119,490 | ||||||||||
Net interest income - FTE | 42,625 | 41,174 | 124,551 | 120,883 | ||||||||||||||
Provision for loan and lease losses | 992 | 1,206 | 2,160 | 4,553 | ||||||||||||||
Noninterest income | 21,132 | 19,392 | 62,414 | 58,011 | ||||||||||||||
Noninterest expense | 41,068 | 37,653 | 117,370 | 108,049 | ||||||||||||||
Net income | 13,928 | 14,947 | 43,069 | 43,073 | ||||||||||||||
PER SHARE DATA* | ||||||||||||||||||
Basic net income per common share | $ | 0.53 | $ | 0.56 | $ | 1.63 | $ | 1.61 | ||||||||||
Diluted net income per common share | 0.53 | 0.56 | 1.63 | 1.61 | ||||||||||||||
Common cash dividends declared | 0.164 | 0.164 | 0.491 | 0.482 | ||||||||||||||
Book value per common share | 24.51 | 22.97 | 24.51 | 22.97 | ||||||||||||||
Tangible book value per common share | 21.26 | 19.71 | 21.26 | 19.71 | ||||||||||||||
Market value - High | 32.37 | 29.02 | 32.37 | 30.19 | ||||||||||||||
Market value - Low | 28.06 | 25.27 | 26.95 | 25.05 | ||||||||||||||
Basic weighted average common shares outstanding | 26,164,646 | 26,262,864 | 26,211,630 | 26,497,500 | ||||||||||||||
Diluted weighted average common shares outstanding | 26,164,646 | 26,262,864 | 26,211,630 | 26,497,500 | ||||||||||||||
KEY RATIOS | ||||||||||||||||||
Return on average assets | 1.09 | % | 1.22 | % | 1.16 | % | 1.20 | % | ||||||||||
Return on average common shareholders’ equity | 8.65 | 9.86 | 9.12 | 9.62 | ||||||||||||||
Average common shareholders’ equity to average assets | 12.62 | 12.39 | 12.77 | 12.48 | ||||||||||||||
End of period tangible common equity to tangible assets | 11.04 | 10.93 | 11.04 | 10.93 | ||||||||||||||
Risk-based capital - Common Equity Tier 1 | 12.48 | N/A | 12.48 | N/A | ||||||||||||||
Risk-based capital - Tier 1 | 13.77 | 14.49 | 13.77 | 14.49 | ||||||||||||||
Risk-based capital - Total | 15.08 | 15.80 | 15.08 | 15.80 | ||||||||||||||
Net interest margin | 3.57 | 3.58 | 3.60 | 3.59 | ||||||||||||||
Efficiency: expense to revenue | 61.98 | 60.72 | 60.57 | 58.26 | ||||||||||||||
Net charge offs (recoveries) to average loans and leases | — | 0.28 | (0.01 | ) | 0.02 | |||||||||||||
Loan and lease loss reserve to loans and leases | 2.22 | 2.39 | 2.22 | 2.39 | ||||||||||||||
Nonperforming assets to loans and leases | 0.66 | 0.94 | 0.66 | 0.94 | ||||||||||||||
ASSET QUALITY | ||||||||||||||||||
Loans and leases past due 90 days or more | $ | 411 | $ | 750 | ||||||||||||||
Nonaccrual loans and leases | 18,985 | 26,524 | ||||||||||||||||
Other real estate | 232 | 1,433 | ||||||||||||||||
Former bank premises held for sale | 515 | 801 | ||||||||||||||||
Repossessions | 6,602 | 5,421 | ||||||||||||||||
Equipment owned under operating leases | 146 | 15 | ||||||||||||||||
Total nonperforming assets | $ | 26,891 | $ | 34,944 | ||||||||||||||
*Share and per share figures have been adjusted for 10% stock dividend declared July 22, 2015 and issued on August 14, 2015. | ||||||||||||||||||
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1st SOURCE CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
(Unaudited - Dollars in thousands) | ||||||||
September 30, 2015 | September 30, 2014 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 61,124 | $ | 54,542 | ||||
Federal funds sold and interest bearing deposits with other banks | 3,065 | 27,169 | ||||||
Investment securities available-for-sale (amortized cost of $769,053 and $799,862 at September 30, 2015 and 2014, respectively) | 784,585 | 813,704 | ||||||
Other investments | 21,728 | 23,017 | ||||||
Trading account securities | — | 196 | ||||||
Mortgages held for sale | 9,187 | 13,070 | ||||||
Loans and leases, net of unearned discount: | ||||||||
Commercial and agricultural | 750,780 | 696,209 | ||||||
Auto and light truck | 423,147 | 422,742 | ||||||
Medium and heavy duty truck | 264,784 | 249,014 | ||||||
Aircraft financing | 794,129 | 700,794 | ||||||
Construction equipment financing | 450,112 | 375,069 | ||||||
Commercial real estate | 658,589 | 615,420 | ||||||
Residential real estate | 463,824 | 451,508 | ||||||
Consumer | 150,185 | 143,665 | ||||||
Total loans and leases | 3,955,550 | 3,654,421 | ||||||
Reserve for loan and lease losses | (87,616 | ) | (87,400 | ) | ||||
Net loans and leases | 3,867,934 | 3,567,021 | ||||||
Equipment owned under operating leases, net | 95,785 | 66,013 | ||||||
Net premises and equipment | 51,252 | 47,350 | ||||||
Goodwill and intangible assets | 84,822 | 85,583 | ||||||
Accrued income and other assets | 126,102 | 123,128 | ||||||
Total assets | $ | 5,105,584 | $ | 4,820,793 | ||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Noninterest bearing | $ | 914,152 | $ | 818,679 | ||||
Interest bearing | 3,105,004 | 3,017,293 | ||||||
Total deposits | 4,019,156 | 3,835,972 | ||||||
Short-term borrowings: | ||||||||
Federal funds purchased and securities sold under agreements to repurchase | 139,414 | 106,769 | ||||||
Other short-term borrowings | 144,096 | 109,953 | ||||||
Total short-term borrowings | 283,510 | 216,722 | ||||||
Long-term debt and mandatorily redeemable securities | 57,577 | 56,171 | ||||||
Subordinated notes | 58,764 | 58,764 | ||||||
Accrued expenses and other liabilities | 47,356 | 50,131 | ||||||
Total liabilities | 4,466,363 | 4,217,760 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Preferred stock; no par value | — | — | ||||||
Common stock; no par value | 436,538 | 346,535 | ||||||
Retained earnings | 242,102 | 291,569 | ||||||
Cost of common stock in treasury | (49,120 | ) | (43,716 | ) | ||||
Accumulated other comprehensive income | 9,701 | 8,645 | ||||||
Total shareholders’ equity | 639,221 | 603,033 | ||||||
Total liabilities and shareholders’ equity | $ | 5,105,584 | $ | 4,820,793 | ||||
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1st SOURCE CORPORATION | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Unaudited - Dollars in thousands) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Interest income: | |||||||||||||||
Loans and leases | $ | 42,560 | $ | 41,118 | $ | 124,747 | $ | 120,434 | |||||||
Investment securities, taxable | 3,277 | 2,962 | 8,929 | 9,708 | |||||||||||
Investment securities, tax-exempt | 738 | 831 | 2,261 | 2,466 | |||||||||||
Other | 246 | 241 | 730 | 750 | |||||||||||
Total interest income | 46,821 | 45,152 | 136,667 | 133,358 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 2,874 | 2,765 | 8,271 | 8,730 | |||||||||||
Short-term borrowings | 147 | 134 | 381 | 440 | |||||||||||
Subordinated notes | 1,055 | 1,055 | 3,165 | 3,165 | |||||||||||
Long-term debt and mandatorily redeemable securities | 536 | 488 | 1,540 | 1,533 | |||||||||||
Total interest expense | 4,612 | 4,442 | 13,357 | 13,868 | |||||||||||
Net interest income | 42,209 | 40,710 | 123,310 | 119,490 | |||||||||||
Provision for loan and lease losses | 992 | 1,206 | 2,160 | 4,553 | |||||||||||
Net interest income after provision for loan and lease losses | 41,217 | 39,504 | 121,150 | 114,937 | |||||||||||
Noninterest income: | |||||||||||||||
Trust fees | 4,634 | 4,499 | 14,438 | 13,930 | |||||||||||
Service charges on deposit accounts | 2,413 | 2,225 | 6,977 | 6,498 | |||||||||||
Debit card income | 2,583 | 2,382 | 7,610 | 7,077 | |||||||||||
Mortgage banking income | 969 | 1,446 | 3,459 | 3,961 | |||||||||||
Insurance commissions | 1,460 | 1,317 | 4,147 | 4,168 | |||||||||||
Equipment rental income | 5,881 | 4,361 | 16,302 | 12,541 | |||||||||||
Gains on investment securities available-for-sale | — | — | 4 | 963 | |||||||||||
Other income | 3,192 | 3,162 | 9,477 | 8,873 | |||||||||||
Total noninterest income | 21,132 | 19,392 | 62,414 | 58,011 | |||||||||||
Noninterest expense: | |||||||||||||||
Salaries and employee benefits | 21,835 | 20,790 | 63,554 | 59,099 | |||||||||||
Net occupancy expense | 2,496 | 2,252 | 7,302 | 6,924 | |||||||||||
Furniture and equipment expense | 4,604 | 4,415 | 13,471 | 13,065 | |||||||||||
Depreciation - leased equipment | 4,858 | 3,571 | 13,342 | 10,110 | |||||||||||
Professional fees | 1,237 | 1,158 | 3,215 | 3,348 | |||||||||||
Supplies and communication | 1,307 | 1,424 | 4,122 | 4,153 | |||||||||||
FDIC and other insurance | 848 | 856 | 2,544 | 2,570 | |||||||||||
Business development and marketing expense | 1,244 | 1,218 | 3,507 | 3,801 | |||||||||||
Loan and lease collection and repossession expense | 416 | 652 | 485 | 140 | |||||||||||
Other expense | 2,223 | 1,317 | 5,828 | 4,839 | |||||||||||
Total noninterest expense | 41,068 | 37,653 | 117,370 | 108,049 | |||||||||||
Income before income taxes | 21,281 | 21,243 | 66,194 | 64,899 | |||||||||||
Income tax expense | 7,353 | 6,296 | 23,125 | 21,826 | |||||||||||
Net income | $ | 13,928 | $ | 14,947 | $ | 43,069 | $ | 43,073 | |||||||
The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3) | |||||||||||||||
Please contact us at shareholder@1stsource.com | |||||||||||||||
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