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Form 8-K 1ST SOURCE CORP For: Apr 23

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April 23, 2015 9:38 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
 
 
FORM 8-K
 
 
 
CURRENT REPORT
 
 
 
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
Date of Report (Date of earliest event reported): April 23, 2015
 
 
 
1st Source Corporation
(Exact name of registrant as specified in its charter)
 
 
 
Indiana
0-6233
35-1068133
(State or other jurisdiction of incorporation)
(Commission File No.)
(I.R.S. Employer Identification No.)
 
 
 
100 North Michigan Street, South Bend, Indiana 46601
(Address of principal executive offices)     (Zip Code)
 
 
 
574-235-2000
(Registrant's telephone number, including area code)
 
 
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




ITEM 2.02    Results of Operations and Financial Condition.

On April 23, 2015, 1st Source Corporation issued a press release that announced its first quarter earnings for 2015. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

ITEM 9.01    Financial Statements and Exhibits.
 
Exhibit 99.1: Press release dated April 23, 2015, with respect to 1st Source Corporation’s financial results for the first quarter ended March 31, 2015.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
1st SOURCE CORPORATION
 
 
(Registrant)
 
 
 
 
 
 
Date: April 23, 2015
 
/s/ CHRISTOPHER J. MURPHY III
 
 
Christopher J. Murphy III
 
 
Chairman of the Board and CEO
 
 
 
 
 
 
Date: April 23, 2015
 
/s/ ANDREA G. SHORT
 
 
Andrea G. Short
 
 
Treasurer and Chief Financial Officer
 
 
Principal Accounting Officer






Exhibit 99.1

For:
Immediate Release
Contact:
Andrea Short
 
April 23, 2015
 
574-235-2000


First Quarter Earnings Steady at 1st Source Corporation,
Dividend Declared

South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today announced net income of $13.51 million for the first quarter of 2015 compared to $13.63 million reported in the first quarter a year ago. Diluted net income per common share for the first quarter of 2015 was $0.56, up 1.82% over the $0.55 in the first quarter of 2014.
At its April 2015 meeting, the Board of Directors approved a cash dividend of $0.18 per common share. The cash dividend is payable on May 15, 2015 to shareholders of record on May 5, 2015.
Christopher J. Murphy, III, Chairman and Chief Executive Officer, commented, "We saw solid growth in our deposits this quarter as we continue to add new client relationships throughout the bank. Credit quality remains strong as does our loan pipeline and we look forward to a steadily improving economy in the coming months. Capital ratios are also strong and exceed the new minimum Well Capitalized requirements on a fully phased-in basis."
"During the quarter we held a ground breaking in Portage, Michigan, to celebrate our second banking center in the greater Kalamazoo area. We look forward to growing in this market and providing greater convenience for our clients there. As always, we remain committed to our mission of helping our clients achieve security, build wealth and realize their dreams."
The net interest margin held close to last years level at 3.58% for the first quarter of 2015 versus 3.59% for the same period in 2014. Tax-equivalent net interest income was $39.85 million for the first quarter of 2015, compared to the $39.09 million from 2014’s first quarter.
The reserve for loan and lease losses as of March 31, 2015 was 2.30% of total loans and leases compared to 2.38% at March 31, 2014. Net charge-offs of $0.33 million were recorded for the first quarter of 2015 compared with net recoveries of $0.70 million in the same quarter a year ago. The ratio of nonperforming assets to net loans and leases improved to 0.73% as of March 31, 2015, compared to 0.98% on March 31, 2014.
Total assets at the end of the first quarter of 2015 were $4.86 billion, up 1.87% from the $4.77 billion a year ago. Total loans and leases were $3.70 billion, up 3.45% from March 31, 2014. Total deposits were $3.87 billion, up 4.37% from the comparable figure at March 31, 2014. As of March 31, 2015, the common equity-to-assets ratio was 12.84%, compared to 12.50% a year ago and the tangible common equity-to-tangible assets ratio was 11.29% compared to 10.89% a year earlier.
Noninterest income for the three-month period ended March 31, 2015 was $19.75 million, an increase of 1.81% as compared to the first quarter of 2014. The increase for the quarter was mainly attributed to increased equipment rental income and gains on partnership investments.

- 1 -


Noninterest expense for the three-month period ended March 31, 2015 was $38.06 million, an increase of 5.80% as compared to the first quarter of 2014. The increase for the quarter was mainly attributed to increased salaries expense and group insurance costs, higher loan and lease collection and repossession expenses and increased depreciation on leased equipment.
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 80 community banking centers in 17 counties, 8 trust and wealth management locations, 8 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 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.
# # #
(charts attached)

- 2 -


1st SOURCE CORPORATION
 
 
 
 
 
1st QUARTER 2015 FINANCIAL HIGHLIGHTS
 
 
 
 
(Unaudited - Dollars in thousands, except per share data)
 
 
 
 
 
 
Three Months Ended 
 March 31,
 
 
2015
2014
END OF PERIOD BALANCES
 
 
 
 
 
Assets
 
$
4,862,384

 
$
4,773,193

 
Loans and leases
 
3,701,132

 
3,577,568

 
Deposits
 
3,870,460

 
3,708,423

 
Reserve for loan and lease losses
 
85,098

 
85,010

 
Intangible assets
 
85,158

 
86,057

 
Common shareholders’ equity
 
624,505

 
596,586

 
 
 
 
 
 
 
AVERAGE BALANCES
 
 
 
 
 
Assets
 
$
4,820,453

 
$
4,698,167

 
Earning assets
 
4,511,467

 
4,414,390

 
Investments
 
788,561

 
831,598

 
Loans and leases
 
3,674,082

 
3,543,219

 
Deposits
 
3,816,955

 
3,669,955

 
Interest bearing liabilities
 
3,364,623

 
3,340,957

 
Common shareholders’ equity
 
623,397

 
594,687

 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
Net interest income
 
$
39,436

 
$
38,618

 
Net interest income - FTE
 
39,854

 
39,087

 
Provision for loan and lease losses
 
357

 
804

 
Noninterest income
 
19,751

 
19,398

 
Noninterest expense
 
38,061

 
35,973

 
Net income
 
13,511

 
13,632

 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
Basic net income per common share
 
$
0.56

 
$
0.55

 
Diluted net income per common share
 
0.56

 
0.55

 
Common cash dividends declared
 
0.18

 
0.17

 
Book value per common share
 
26.18

 
24.51

 
Tangible book value per common share
 
22.61

 
20.98

 
Market value - High
 
34.49

 
32.60

 
Market value - Low
 
29.65

 
27.56

 
Basic weighted average common shares outstanding
 
23,871,157

 
24,317,446

 
Diluted weighted average common shares outstanding
 
23,871,157

 
24,317,446

 
 
 
 
 
 
 
KEY RATIOS
 
 
 
 
 
Return on average assets
 
1.14

%
1.18

%
Return on average common shareholders’ equity
 
8.79

 
9.30

 
Average common shareholders’ equity to average assets
 
12.93

 
12.66

 
End of period tangible common equity to tangible assets
 
11.29

 
10.89

 
Risk-based capital - Common Equity Tier 1
 
13.09

 
N/A

 
Risk-based capital - Tier 1
 
14.48

 
14.60

 
Risk-based capital - Total
 
15.80

 
15.94

 
Net interest margin
 
3.58

 
3.59

 
Efficiency: expense to revenue
 
62.10

 
58.46

 
Net charge offs to average loans and leases
 
0.04

 
(0.08
)
 
Loan and lease loss reserve to loans and leases
 
2.30

 
2.38

 
Nonperforming assets to loans and leases
 
0.73

 
0.98

 
 
 
 
 
 
 
ASSET QUALITY
 
 
 
 
 
Loans and leases past due 90 days or more
 
$
190

 
$
307

 
Nonaccrual loans and leases
 
21,359

 
24,680

 
Other real estate
 
892

 
2,091

 
Former bank premises held for sale
 
626

 
801

 
Repossessions
 
4,607

 
7,998

 
Equipment owned under operating leases
 
36

 
—

 
Total nonperforming assets
 
$
27,710

 
$
35,877

 

- 3 -


1st SOURCE CORPORATION
 
 
 
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
 
 
(Unaudited - Dollars in thousands)
 
 
 
 
 
 
March 31, 2015
 
March 31, 2014
ASSETS
 
 
 
 
Cash and due from banks
 
$
58,196

 
$
92,465

Federal funds sold and interest bearing deposits with other banks
 
11,068

 
1,362

Investment securities available-for-sale (amortized cost of $778,597 and $826,007 at
 March 31, 2015 and 2014, respectively)
 
796,604

 
839,597

Other investments
 
20,561

 
22,400

Trading account securities
 
208

 
192

Mortgages held for sale
 
22,820

 
10,961

 
 
 
 
 
Loans and leases, net of unearned discount:
 
 
 
 
Commercial and agricultural
 
712,293

 
698,246

Auto and light truck
 
402,389

 
388,665

Medium and heavy duty truck
 
240,187

 
237,906

Aircraft financing
 
696,943

 
730,803

Construction equipment financing
 
439,530

 
352,796

Commercial real estate
 
615,555

 
588,629

Residential real estate
 
443,375

 
455,678

Consumer
 
150,860

 
124,845

Total loans and leases
 
3,701,132

 
3,577,568

Reserve for loan and lease losses
 
(85,098
)
 
(85,010
)
Net loans and leases
 
3,616,034

 
3,492,558

 
 
 
 
 
Equipment owned under operating leases, net
 
82,640

 
58,468

Net premises and equipment
 
49,701

 
45,856

Goodwill and intangible assets
 
85,158

 
86,057

Accrued income and other assets
 
119,394

 
123,277

 
 
 
 
 
Total assets
 
$
4,862,384

 
$
4,773,193

 
 
 
 
 
LIABILITIES
 
 
 
 
Deposits:
 
 
 
 
Noninterest bearing
 
$
835,403

 
$
750,662

Interest bearing
 
3,035,057

 
2,957,761

Total deposits
 
3,870,460

 
3,708,423

 
 
 
 
 
Short-term borrowings:
 
 
 
 
Federal funds purchased and securities sold under agreements to repurchase
 
123,075

 
168,339

Other short-term borrowings
 
77,071

 
129,308

Total short-term borrowings
 
200,146

 
297,647

Long-term debt and mandatorily redeemable securities
 
57,515

 
59,555

Subordinated notes
 
58,764

 
58,764

Accrued expenses and other liabilities
 
50,994

 
52,218

Total liabilities
 
4,237,879

 
4,176,607

 
 
 
 
 
SHAREHOLDERS’ EQUITY
 
 
 
 
Preferred stock; no par value
 
—

 
—

Common stock; no par value
 
346,535

 
346,535

Retained earnings
 
311,207

 
270,848

Cost of common stock in treasury
 
(44,484
)
 
(29,285
)
Accumulated other comprehensive income
 
11,247

 
8,488

Total shareholders’ equity
 
624,505

 
596,586

 
 
 
 
 
Total liabilities and shareholders’ equity
 
$
4,862,384

 
$
4,773,193


- 4 -


1st SOURCE CORPORATION
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
(Unaudited - Dollars in thousands)
 
 
 
 
 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Interest income:
 
 
 
 
Loans and leases
 
$
39,604

 
$
38,914

Investment securities, taxable
 
3,004

 
3,345

Investment securities, tax-exempt
 
769

 
819

Other
 
255

 
277

Total interest income
 
43,632

 
43,355

 
 
 
 
 
Interest expense:
 
 
 
 
Deposits
 
2,559

 
2,971

Short-term borrowings
 
103

 
136

Subordinated notes
 
1,055

 
1,055

Long-term debt and mandatorily redeemable securities
 
479

 
575

Total interest expense
 
4,196

 
4,737

 
 
 
 
 
Net interest income
 
39,436

 
38,618

Provision for loan and lease losses
 
357

 
804

Net interest income after provision for loan and lease losses
 
39,079

 
37,814

 
 
 
 
 
Noninterest income:
 
 
 
 
Trust fees
 
4,557

 
4,476

Service charges on deposit accounts
 
2,197

 
2,066

Debit card income
 
2,399

 
2,232

Mortgage banking income
 
1,251

 
1,334

Insurance commissions
 
1,305

 
1,563

Equipment rental income
 
5,079

 
4,082

Gains on investment securities available-for-sale
 
—

 
963

Other income
 
2,963

 
2,682

Total noninterest income
 
19,751

 
19,398

 
 
 
 
 
Noninterest expense:
 
 
 
 
Salaries and employee benefits
 
20,925

 
19,482

Net occupancy expense
 
2,461

 
2,437

Furniture and equipment expense
 
4,336

 
4,237

Depreciation - leased equipment
 
4,088

 
3,249

Professional fees
 
870

 
1,128

Supplies and communication
 
1,406

 
1,392

FDIC and other insurance
 
849

 
864

Business development and marketing expense
 
1,049

 
1,684

Loan and lease collection and repossession expense
 
363

 
(494
)
Other expense
 
1,714

 
1,994

Total noninterest expense
 
38,061

 
35,973

 
 
 
 
 
Income before income taxes
 
20,769

 
21,239

Income tax expense
 
7,258

 
7,607

 
 
 
 
 
Net income
 
$
13,511

 
$
13,632

 
 
 
 
 
 
 
 
 
 
The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3)
 
 
 
 
Please contact us at [email protected]
 
 
 
 

- 5 -

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