South Bend, IN -- 1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reports net income of $14.87 million for the second quarter of 2011, an increase of 90.70% over the $7.80 million reported in the second quarter of 2010. For the first six months of 2011, net income for 1st Source Corporation is $25.47 million, up 45.78% compared to $17.47 million reported for the same period in 2010. Diluted net income per common share for the second quarter amounts to $0.61 compared with $0.25, an increase of 144.00% over the second quarter of 2010. Diluted net income per common share for the first half of 2011 is $1.04, up 82.46% over the $0.57 earned a year earlier.
At its July meeting, the Board of Directors approved a cash dividend of $0.16 per common share, an increase of 6.67% over the third quarter a year ago. The dividend is payable to shareholders of record on August 5, 2011 and will be paid on August 15, 2011.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “I am quite pleased with our performance this quarter. Our colleagues’ focus on working to ensure the success of our clients and providing distinctive convenience in our market has led to our strong performance. We are also benefiting from a focus on attracting new clients to the Bank by understanding their needs, offering sound advice during these unsettling times, ensuring our products and services are up-to-date and competitive, and always keeping our clients’ best interests in mind. We know our success is a mirror of our clients’ success so we continue to work hard to help make them successful.”
Mr. Murphy continued, “During the quarter, credit has continued to show improvement. Our non-performing assets decreased $11.22 million or 12.79% from the same period a year ago. We charged-off $1.22 million during the quarter which is down from second quarter last year. The net provision for loan and lease losses for the second quarter totaled $67,000 versus $5.80 million a year ago and the quarter end reserve for loan and lease losses is $85.01 million compared to a year end 2010 reserve of $86.87 million. Additionally, our net interest margin increased from 2010 levels to 3.72% for the quarter, while expenses have been held in check. The margin was positively impacted by interest recoveries on non-accrual loans and lower funding costs. Even with these good results, we still see choppy times ahead from the global economy and little to no growth in the national economy overall. As a result, we continue to keep a close watch on our loan portfolios and on our expenses. Moreover, the regulatory burden continues to grow and recent enactments will have a long range impact on the profitability of certain lines of business throughout the banking industry. As always, we will adjust accordingly,” Mr. Murphy concluded.
As of June 30, 2011, the 1st Source common equity-to-assets ratio is 11.61% compared to 10.68% a year ago and its tangible equity to assets ratio is 9.78% compared to 8.88% a year earlier. Total assets at June 30, 2011 are $4.35 billion, down 3.89% from a year earlier. Total loans and leases are $3.12 billion, down slightly from June 30, 2010. Total deposits are $3.52 billion, down 2.39% from the comparable figures at June 30, 2010.
The 1st Source reserve for loan and lease losses as of June 30, 2011 is 2.73% of total loans and leases compared to 2.81% at June 30, 2010. Net charge-offs are $1.22 million in the second quarter 2011, compared with net charge-offs of $5.61 million in the same quarter a year ago. Year-to-date, net charge-offs of $4.13 million have been recorded in 2011, compared to net charge-offs of $10.41 million for the first half of 2010. The ratio of nonperforming assets to net loans and leases is 2.39% as of June 30, 2011, down from 2.71% on June 30, 2010.
The net interest margin is 3.72% for the second quarter of 2011 versus 3.57% for the same period in 2010. The net interest margin is 3.72% for the six months ending June 30, 2011, versus 3.53% for the same period in 2010. Tax-equivalent net interest income is $38.23 million for the second quarter of 2011, compared to $37.11 million for 2010’s second quarter. For the first six months of 2011, tax-equivalent net interest income is $75.80 million, compared to $72.89 million for the first six months of 2010.
Noninterest income for the second quarter of 2011 is $21.42 million, up 3.99% from the same period in 2010. For the first six months, noninterest income is $40.38 million, down 2.76% from 2010. Noninterest income increased in the second quarter primarily as a result of gains on sale of investment securities offset by lower service charges on deposit accounts and lower equipment rental income. Noninterest income decreased for the first six months of 2011 due to declines in service charges on deposit accounts and lower equipment rental income.
Noninterest expense is $35.94 million for the second quarter of 2011, down 9.35% from the second quarter of 2010. For the first six months, noninterest expense is $74.42 million, down 3.05% compared with $76.76 million for the same period in 2010. The leading factors in the decrease are reduced loan and lease collection and repossession expense, depreciation expense on leased equipment, and FDIC and other insurance expense.
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 75 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.