South Bend, IN -- 1st Source Corporation (Nasdaq: SRCE), parent company of 1st Source Bank, today reported net income of $10.61 million for the first quarter of 2011, up 9.60% compared to the $9.68 million reported in the first quarter a year ago. Diluted net income per common share for the first quarter of 2011 amounted to $0.43, up 30.30% over the $0.33 for the first quarter of 2010. Diluted net income improved $0.07 per common share due to redeeming all preferred stock in December 2010 issued to the Treasury as part of the Capital Purchase Program in January 2009.
At the April 2011 meeting, the Board of Directors approved a first quarter cash dividend of $0.16 per common share, an increase of 6.67% over the dividend declared in the same period a year earlier. The cash dividend will be payable on May 16, 2011, to shareholders of record May 6, 2011.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented on the first quarter by saying, "We continue to make steady progress with our performance. The economic environment in the geographic markets we serve seems to be slowly improving along with the increasingly positive outlooks we are hearing from our clients. All of our colleagues are focused on providing straight talk and sound advice as well as excellent customer service, ensuring we deliver a good value to our clients while we continue to help them work through these challenging times.”
Mr. Murphy continued, “Credit quality reflects the improvement across the region as is evidenced by our ratio of nonperforming assets to net loans and leases dropping to 2.81% this quarter from 2.98% a year ago and net charge offs decreasing to $2.91 million for the quarter versus $4.80 million a year ago. Expense control remains good, and the net interest margin has increased to 3.71%. All in all, the first quarter was a good start to the year for 1st Source Corporation.”
Return on average common shareholders’ equity for 1st Source Corporation was 8.73% compared to 6.82% for the first quarter of 2010, and return on average total assets was 0.97% compared to 0.88% a year ago. As of March 31, 2011, the 1st Source common equity-to-assets ratio was 11.12%, up from 10.66% a year ago and its tangible common equity-to-tangible assets ratio was 9.29% compared to 8.81% a year earlier. Common shareholders’ equity was $490.47 million, up 3.52% from March 31, 2010. At the end of March 2011, total assets were $4.41 billion, down slightly from the $4.45 billion a year ago. Loans and leases decreased 1.75% and deposits increased 1.97% from a year ago.
For the first quarter of 2011, 1st Source’s provision for loan and lease losses was $2.20 million compared to $4.39 million for the first quarter of 2010. Net charge-offs were $2.91 million for the first quarter of 2011 compared to $4.80 million for the first quarter of 2010. The reserve for loan and lease losses as of March 31, 2011, was 2.82% of total loans and leases compared to 2.83% a year earlier. The ratio of nonperforming assets to net loans and leases was 2.81% on March 31, 2011, compared to 2.98% for the same period last year. As of March 31, 2011, nonperforming assets included $1.20 million of former bank premises held for sale.
Tax-equivalent net interest income was $37.57 million for the first quarter of 2011, up 5.00% from 2010's first quarter, and the net interest margin was 3.71% compared to 3.50% in the first quarter of 2010. Noninterest income for the three-month period ended March 31, 2011 was $18.95 million, a decrease of 9.41% as compared to the first quarter of 2010. Noninterest income decreased primarily due to declines in equipment rental income and lower investment securities and other investment gains.
Noninterest expense for the three-month period ended March 31, 2011 was $38.48 million, an increase of 3.68% as compared to the first quarter of 2010. Noninterest expense increased as a result of a charge of $1.68 million for a provision for unfunded loan commitments. This increase was offset by reductions in depreciation on leased equipment and professional fees.
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, 22 specialty finance locations nationwide, 8 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 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.