1st Source Corporation Second Quarter Income Up, Dividend Reported
South Bend, IN -- 1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reported net income of $7.80 million for the second quarter of 2010, an increase of 24.20% over the $6.28 million reported in the second quarter of 2009. For the first six months of 2010, net income for 1st Source Corporation was $17.47 million, up 39.43% compared to $12.53 million reported for the same period in 2009. Diluted net income per common share for the second quarter amounted to $0.25 compared with $0.19, an increase of 31.58% over the second quarter of 2009. Diluted net income per common share for the first half of 2010 was $0.57, up 46.15% over the $0.39 earned a year earlier.
At its July meeting, the Board of Directors approved a cash dividend of $0.15 per common share, payable on August 16, 2010 to shareholders of record on August 6, 2010.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “I am pleased with our performance in the second quarter. We’ve seen a small decrease in our non-performing assets over each of the last two quarters, and our net charge-offs of loans and leases are down over the same period from a year ago. Also, our net interest margin has been slowly increasing each quarter for the past year. Our capital ratios both with and without TARP are quite strong and exceed the regulatory “well capitalized” minimums. As positive as this is, we still see instability in the economy and will continue to keep close tabs on our loan portfolios and on our expenses. Similarly, we are retaining the TARP investment until we are more convinced that there will not be a second and more severe dip in the economy.”
“Unfortunately, it seems that the stimulus package initiatives instigated by Washington have increased the cost of government while underperforming in their intent. Additionally, Washington continues to increase the regulatory burden on financial institutions without differentiating between smaller community-based banks versus the “big box” mega regional, national and investment banks that caused many of the country’s financial problems. Both of these challenges will have immediate and long range impacts on the cost of doing business for 1st Source as they will for everyone else in our industry. With these thoughts in mind, we will continue to take a very cautious view of the economy, keeping our 2 clients best interests in mind for the long run, while remaining strong, stable, local and personal for our community,” Mr. Murphy concluded.
As of June 30, 2010, the 1st Source common equity-to-assets ratio was 10.68% compared to 10.22% a year ago and the tangible common equity to tangible assets ratio was 8.88% compared to 8.39% a year earlier. Total assets at June 30, 2010 were $4.53 billion, steady from a year earlier. Total loans and leases were $3.13 billion, down slightly from June 30, 2009. Total deposits were $3.61 billion, also down slightly from the comparable figures at June 30, 2009.
The 1st Source reserve for loan and lease losses as of June 30, 2010 was 2.81% of total loans and leases compared to 2.64% at June 30, 2009. Net charge-offs were $5.61 million in the second quarter 2010, compared with net charge-offs of $9.72 million in the same quarter a year ago. Year-to-date, net charge-offs of $10.41 million have been recorded in 2010, compared to net charge-offs of $12.92 million for the first half of 2009. The ratio of nonperforming assets to net loans and leases was 2.71% on June 30, 2010, compared to 2.48% on June 30, 2009.
The net interest margin was 3.57% for the second quarter of 2010 versus 3.11% for the same period in 2009. The net interest margin was 3.53% for the six months ending June 30, 2010, versus 3.07% for the same period in 2009. Tax-equivalent net interest income was $37.11 million for the second quarter of 2010, compared to $32.84 million for 2009’s second quarter. For the first six months of 2010, taxequivalent net interest income was $72.89 million, compared to $64.48 million for the first six months of 2009. The net interest margin increased primarily due to a reduction in the cost of funds as a result of certificates of deposit interest rate re-pricing.
Noninterest income for the second quarter of 2010 was $20.60 million, down 9.29% from the same period in 2009. For the first six months, noninterest income was $41.52 million, down 4.00% from 2009. Noninterest income decreased primarily as a result of lower mortgage banking income due to impairment charges on mortgage servicing rights in the second quarter of 2010 and a reduction in the gain on sale of mortgage loans for the first six months of 2010.
Noninterest expense was $39.65 million for the second quarter of 2010, up 6.16% from the second quarter of 2009. For the first six months, noninterest expense was $76.76 million, up 1.01% compared with $75.99 million for the same period in 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 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, 3 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, 23 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 (GAAP), 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
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