1st Source Announces Third Quarter Income Increase
South Bend, IN - 1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today announced third quarter net income of $11.20 million an increase of 66.39% over the $6.73 million in the third quarter 2009. For the first three quarters of the year, net income was $28.68 million versus $19.27 million a year earlier, a 48.84% increase. Diluted net income per common share for the third quarter of 2010 was $0.39 versus $0.21, up 85.71% over the same period in 2009. Diluted net income per common share for the first three quarters was $0.96, an increase of 60.00% compared to $0.60 in 2009.
At the October meeting, the Board of Directors approved a cash dividend of $0.16 per common share, payable on November 15, 2010 to shareholders of record on November 5, 2010.
Christopher J. Murphy III, Chairman of 1st Source, commented, “We continue to see improvement in our performance as we focus on the basics in these challenging times. We have concentrated on taking care of our clients, and on offering advice and information to help them weather the downturn.”
“Credit continues to be challenging. During the quarter, we provided $5.58 million to our loan and lease loss reserve, net-charge-offs were $4.08 million, and our nonperforming assets increased somewhat. Our reserve for loan and lease losses was 2.88% of loans and leases compared to 2.76% a year earlier as we continue to maintain strong reserves.”
“Although pleased with the bank’s performance, which is one of the best quarters in our history, we are disappointed that the economy has not improved more quickly and are very concerned about the mounting federal deficit and the impact it all will have on future interest rates. Trying to plan how best to position our investment portfolios with remarkably low rates now, with the probability of dramatically higher rates in the future, is challenging at best. We also worry about the unintended consequences of increasing regulation on community banks. While well intended, each new law and regulation increases costs of serving our clients and makes it more difficult to do so. All of us in banking are being painted with the same brush. We are a community bank focused on meeting the needs of our clients now and for future generations. Our success is built on long-lasting relationships. It is that focus that kept us out of sub-prime lending and offering exotic mortgage instruments. In spite of anything happening in Washington, good or bad, we stay focused on providing outstanding client service, watching expenses, and concentrating on credit quality.” concluded Mr. Murphy.
As of September 30, 2010, the 1st Source common equity-to-assets ratio was 10.82% compared to 10.64% a year ago and the tangible common equity to tangible assets ratio was 9.03% compared to 8.77% a year earlier. Common shareholders' equity was $490.41 million, up 4.40% from the $469.72 million reported a year ago. Total assets at the end of the third quarter of 2010 were $4.53 billion, up 2.70% from a year ago. Total loans and leases were $3.11 billion, relatively flat and total deposits were $3.57 billion, up 2.28% over the comparable figures at the end of the third quarter of 2009.
Noninterest income for the third quarter was $22.75 million, up 12.32% from the same period in 2009. For the nine months, noninterest income was $64.28 million, an increase of 1.20% from 2009. The increase in noninterest income for the third quarter was due to higher mortgage banking income from gains on loan sales and increased refinance activity. The year-to-date increase was primarily due to higher investment securities and other income investment gains offset by lower mortgage banking income in the first six months of the year.
Noninterest expense for the third quarter was $37.81 million, a 3.39% increase from the $36.57 million reported in the third quarter a year earlier. Noninterest expense for the first nine months of 2010 was $114.57 million versus $112.56 million for the same period of 2009. The leading factors in the change were higher employee benefits, professional fees and loan and lease collection and repossession expense offset by reduced furniture and equipment expense and FDIC (special assessment costs occurred in the second quarter of last year) 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 76 community banking centers in 17 counties, 22 specialty finance locations nationwide, 7 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.
Reporter Contacts: Larry Lentych or Andrea Short, (574) 235-2000