Close

Form 8-K 1ST SOURCE CORP For: Oct 20

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/24/2024

1. TSLA
2. ENPH
3. TXN
4. V
5. SPOT
6. KMB
7. FI
8. MSCI
9. STX
10. TMO


October 20, 2016 4:16 PM 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): October 20, 2016
 
 form8_k0a01a01a01a04.jpg
 
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 October 20, 2016, 1st Source Corporation issued a press release that announced its third quarter earnings for 2016. 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 October 20, 2016, with respect to 1st Source Corporation’s financial results for the third quarter ended September 30, 2016.

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: October 20, 2016
 
/s/ CHRISTOPHER J. MURPHY III
 
 
Christopher J. Murphy III
 
 
Chairman of the Board and CEO
 
 
 
 
 
 
Date: October 20, 2016
 
/s/ ANDREA G. SHORT
 
 
Andrea G. Short
 
 
Treasurer and Chief Financial Officer
 
 
Principal Accounting Officer





Exhibit 99.1

For:
Immediate Release
Contact:
Andrea Short
 
October 20, 2016
 
574-235-2000

1st Source Corporation Announces Third Quarter Earnings,
Cash Dividend Declared
QUARTERLY HIGHLIGHTS
•
Net income improved to $14.26 million and diluted net income per common share improved to $0.55 from the prior year's quarter.
•
Return on average assets of 1.05% and return on average common shareholders' equity of 8.47%.
•
Net charge-offs of $4.63 million and nonperforming assets to loans and leases of 0.68%.
•
Average loans and leases grew $278.36 million or 7.12% from the third quarter of 2015.
•
Average deposits grew $357.46 million or 8.95% from the third quarter of 2015.
•
Net interest income increased $0.49 million or 1.15% from the third quarter of 2015.
•
Noninterest income increased $1.53 million or 7.25% from the third quarter of 2015 (increased 4.96% excluding equipment rental income).
•
Noninterest expenses increased slightly from the third quarter of 2015 (decreased 1.75% excluding leased equipment depreciation).
South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported net income of $14.26 million for the third quarter of 2016, compared to $13.93 million reported in the third quarter a year ago bringing the 2016 year-to-date net income to $42.56 million compared to $43.07 million in 2015. The year-to-date net income comparison was negatively impacted by a reduction in net interest recoveries of $1.45 million, a higher provision for loan and lease losses of $2.93 million, and by the writedown of an available-for-sale equity investment. These negatives were partially offset by gains of $1.86 million on a Volcker Rule required liquidation of a partnership investment and gains of $0.99 million on the sale of investment securities available-for-sale.
Diluted net income per common share for the third quarter of 2016 was $0.55, versus $0.53 in the third quarter of 2015. Diluted net income per common share was $1.63 for the first nine months of 2016 and 2015.
At its October 2016 meeting, the Board of Directors approved a cash dividend of $0.18 per common share. The cash dividend is payable to shareholders of record on November 1, 2016 and will be paid on November 11, 2016. This brings dividends this year to $0.720 per common share compared to $0.671 per common share at the same time last year.
According to Christopher J. Murphy III, Chairman, “We again saw healthy growth in loans, leases and deposits this quarter as we continued to add new clients to the bank. Average loans and leases were up a solid 7.12% from a year ago along with a strong average deposit increase of 8.95% during that same period. We had a steady performance overall, with expenses held flat and net income up slightly for the quarter compared to third quarter 2015.”

- 1 -


“While we are pleased with this growth, recent consolidation of clients in some of the industries we serve is likely to lead to payoffs and reduced opportunities in these industries. Also, continued low interest rates are a challenge to holding our net interest margin stable.”
“Earlier this month, we opened our 81st banking center in a fast growing area of Elkhart, Indiana, and next month we will open a new larger office in the heart of downtown Warsaw, Indiana, replacing our current downtown location. As always, we remain committed to helping our clients achieve security, build wealth and realize their dreams by giving straight talk and sound advice, keeping their best interests in mind for the long term.” Mr. Murphy concluded.

THIRD QUARTER 2016 FINANCIAL RESULTS
Loans
Average loans and leases of $4.19 billion increased $278.36 million, or 7.12% in the third quarter of 2016 from the year ago quarter and have increased $84.23 million, or 2.05% from the second quarter. Year to date average loans and leases of $4.10 billion increased $305.36 million, or 8.04% from the first nine months of 2015.
Deposits
Average deposits of $4.35 billion grew $357.46 million, or 8.95% for the quarter ended September 30, 2016 from the year ago quarter and have increased $52.85 million, or 1.23% compared to the second quarter. Average deposits for the first nine months of 2016 were $4.27 billion an increase of $355.35 million or 9.08% from the same period a year ago.
Net Interest Income and Net Interest Margin
Third quarter 2016 net interest income of $42.69 million increased $0.49 million, or 1.15% from the third quarter a year ago and increased $0.40 million, or 0.95% from the second quarter.
For the first nine months of 2016, net interest income was $126.28 million, an increase of $2.97 million, or 2.41% compared to the same period a year ago. Net interest recoveries for the first nine months of 2016 were down $1.45 million from the first nine months of 2015, resulting in a 4 basis point reduction to the net interest margin.
Third quarter 2016 net interest margin was 3.35%, a decrease of 19 basis points from the 3.54% for the same period in 2015 and decreased 6 basis points from the 3.41% in the second quarter. Third quarter 2016 net interest margin on a fully tax-equivalent basis was 3.39%, a decrease of 18 basis points from the 3.57% for the same period in 2015 and decreased 6 basis points from the 3.45% in the second quarter.
Net interest margin for the first nine months of 2016 was 3.39%, a decrease of 17 basis points from the 3.56% for the same period in 2015. Net interest margin on a fully tax-equivalent basis for the first nine months of 2016 was 3.43%, a decrease of 17 basis points from the 3.60% for the same period in 2015.

- 2 -


Noninterest Income
Noninterest income increased $1.53 million or 7.25% and $4.18 million or 6.69% in the three and nine month periods ended September 30, 2016, respectively over the same periods a year ago. The increase in noninterest income during the third quarter was mainly due to higher equipment rental income related to an increase in the average equipment rental portfolio and gains on the sale of available-for-sale equity securities, which was offset by lower monogram fund income and decreased customer swap fees. The increase in noninterest income during the first nine months of 2016 was primarily due to higher equipment rental income related to an increase in the average equipment rental portfolio, gains on the liquidation of a partnership investment required by the Volcker Rule and gains on the sale of available-for-sale equity securities, which was offset by lower monogram fund income, an other than temporary writedown on an available-for-sale equity security and decreased customer swap fees.
Noninterest Expense
Noninterest expense was flat for the quarter ended September 30, 2016 and increased $4.51 million or 3.85% for the first nine months of 2016, respectively over the comparable periods a year ago. The increase in noninterest expense was primarily due to higher depreciation on leased equipment, furniture and equipment and increased loan and lease collection and repossession expenses offset by reduced residential mortgage foreclosure expenses, business development and marketing and lower FDIC insurance assessments. Depreciation on leased equipment was higher as a result of an increase in the average equipment rental portfolio. Excluding depreciation on leased equipment, noninterest expenses were up 1.67%. Furniture and equipment expense was higher due to increased software maintenance costs, depreciation on new equipment with banking center remodels and computer processing charges. Loan and lease collection and repossession expenses increased mainly due to lower recoveries on repurchased mortgage loans, fewer gains on the sale of other real estate owned and repossessions.
Credit
The reserve for loan and lease losses as of September 30, 2016 was 2.13% of total loans and leases compared to 2.20% at June 30, 2016 and 2.22% at September 30, 2015. Net charge-offs of $4.63 million were recorded for the third quarter of 2016 compared with net recoveries of $0.04 million in the same quarter a year ago. Year to date, net charge-offs of $4.31 million have been recorded in 2016, compared to net recoveries of $0.39 million for the first nine months of 2015.
Due primarily to an increase in loan and lease outstandings, the provision for loan and lease losses for the third quarter 2016 increased $1.08 million compared with the same period in 2015 and was comparable to the second quarter. The provision for loan and lease losses for the first nine months of 2016 was $5.09 million up $2.93 million from the same period in 2015.
The ratio of nonperforming assets to net loans and leases was 0.68% as of September 30, 2016, comparable to the 0.66% on September 30, 2015 and up from the 0.49% on June 30, 2016.

- 3 -


Capital
As of September 30, 2016 and June 30, 2016, the common equity-to-assets ratio was 12.30%, compared to 12.52% a year ago. The tangible common equity-to-tangible assets ratio was 10.93% at September 30, 2016 and 10.90% at June 30, 2016 compared to 11.04% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 12.35% at September 30, 2016 compared to 12.20% at June 30, 2016 and 12.48% a year ago. During 2016, the Company repurchased $8.03 million of common stock in several open market transactions.
ABOUT 1ST SOURCE CORPORATION
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 81 community banking centers in 17 counties, 8 trust and wealth management locations, 10 1st Source Insurance offices, as well as 22 specialty finance locations nationwide.
FORWARD LOOKING STATEMENTS
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.

- 4 -


NON-GAAP FINANCIAL MEASURES
The accounting and reporting policies of 1st Source conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures are used by management to evaluate and measure the Company’s performance. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity-to-tangible assets ratio and tangible book value per common share. Management believes that these measures provide users of the Company’s financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses and lease depreciation), measures how much it costs to produce one dollar of revenue. Securities gains or losses and lease depreciation are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity-to-tangible assets ratio and tangible book value per common share as useful measurements of the Company’s equity.
See the table marked “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of certain non-GAAP financial measures used by the Company with their most closely related GAAP measures.
# # #
(charts attached)

- 5 -


1st SOURCE CORPORATION
 
 
 
 
 
 
3rd QUARTER 2016 FINANCIAL HIGHLIGHTS
 
 
 
 
 
 
(Unaudited - Dollars in thousands, except per share data)
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
 
2016
2016
2015
 
2016
2015
AVERAGE BALANCES
 
 
 
 
 
 
Assets
$
5,425,530

$
5,343,630

$
5,061,350

 
$
5,326,670

$
4,946,899

Earning assets
5,066,375

4,986,635

4,733,336

 
4,972,604

4,627,111

Investments
821,068

804,856

781,971

 
806,976

787,343

Loans and leases
4,189,340

4,105,111

3,910,981

 
4,101,284

3,795,929

Deposits
4,353,253

4,300,402

3,995,795

 
4,269,284

3,913,931

Interest bearing liabilities
3,734,322

3,709,706

3,489,505

 
3,683,863

3,435,444

Common shareholders’ equity
670,006

659,092

638,965

 
659,603

631,611

 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
 
Net interest income
$
42,694

$
42,293

$
42,209

 
$
126,276

$
123,310

Net interest income - FTE(1)
43,144

42,753

42,625

 
127,647

124,551

Provision for loan and lease losses
2,067

2,049

992

 
5,091

2,160

Noninterest income
22,665

22,297

21,132

 
66,589

62,414

Noninterest expense
41,145

40,034

41,068

 
121,884

117,370

Net income
14,264

14,479

13,928

 
42,561

43,069

 
 
 
 
 
 
 
PER SHARE DATA
 
 
 
 
 
 
Basic net income per common share
$
0.55

$
0.56

$
0.53

 
$
1.63

$
1.63

Diluted net income per common share
0.55

0.56

0.53

 
1.63

1.63

Common cash dividends declared
0.180

0.180

0.164

 
0.540

0.491

Book value per common share
25.91

25.59

24.51

 
25.91

24.51

Tangible book value per common share(1)
22.65

22.32

21.26

 
22.65

21.26

Market value - High
35.99

34.83

32.37

 
35.99

32.37

Market value - Low
31.50

30.32

28.06

 
27.01

26.95

Basic weighted average common shares outstanding
25,867,169

25,853,537

26,164,646

 
25,881,360

26,211,630

Diluted weighted average common shares outstanding
25,867,169

25,853,537

26,164,646

 
25,881,360

26,211,630

 
 
 
 
 
 
 
KEY RATIOS
 
 
 
 
 
 
Return on average assets
1.05
%
1.09
 %
1.09
%
 
1.07
%
1.16
 %
Return on average common shareholders’ equity
8.47

8.84

8.65

 
8.62

9.12

Average common shareholders’ equity to average assets
12.35

12.33

12.62

 
12.38

12.77

End of period tangible common equity to tangible assets(1)
10.93

10.90

11.04

 
10.93

11.04

Risk-based capital - Common Equity Tier 1(2)
12.35

12.20

12.48

 
12.35

12.48

Risk-based capital - Tier 1(2)
13.56

13.41

13.77

 
13.56

13.77

Risk-based capital - Total(2)
14.87

14.73

15.08

 
14.87

15.08

Net interest margin
3.35

3.41

3.54

 
3.39

3.56

Net interest margin - FTE(1)
3.39

3.45

3.57

 
3.43

3.60

Efficiency ratio: expense to revenue
62.95

61.98

64.84

 
63.20

63.20

Efficiency ratio: expense to revenue - adjusted(1)
60.10

58.76

61.98

 
60.36

60.57

Net charge offs to average loans and leases
0.44

(0.01
)
—

 
0.14

(0.01
)
Loan and lease loss reserve to loans and leases
2.13

2.20

2.22

 
2.13

2.22

Nonperforming assets to loans and leases
0.68

0.49

0.66

 
0.68

0.66

 
 
 
 
 
 
 
 
September 30,
June 30,
March 31,
 
December 31,
September 30,
 
2016
2016
2016
 
2015
2015
END OF PERIOD BALANCES
 
 
 
 
 
 
Assets
$
5,447,911

$
5,379,938

$
5,245,610

 
$
5,187,916

$
5,105,584

Loans and leases
4,179,417

4,152,763

4,031,975

 
3,994,692

3,955,550

Deposits
4,377,038

4,325,084

4,225,148

 
4,139,186

4,019,156

Reserve for loan and lease losses
88,897

91,458

89,296

 
88,112

87,616

Goodwill and intangible assets
84,244

84,386

84,530

 
84,676

84,822

Common shareholders’ equity
670,259

661,756

649,973

 
644,053

639,221

 
 
 
 
 
 
 
ASSET QUALITY
 
 
 
 
 
 
Loans and leases past due 90 days or more
$
611

$
275

$
728

 
$
122

$
411

Nonaccrual loans and leases
19,922

12,579

12,982

 
12,718

18,985

Other real estate
551

452

330

 
736

232

Former bank premises held for sale
—

—

—

 
—

515

Repossessions
8,089

7,619

7,201

 
6,927

6,602

Equipment owned under operating leases
43

107

113

 
121

146

Total nonperforming assets
$
29,216

$
21,032

$
21,354

 
$
20,624

$
26,891

(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
(2) Calculated under banking regulatory guidelines.

- 6 -


1st SOURCE CORPORATION
 
 
 
 
 
 
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
 
 
 
 
 
(Unaudited - Dollars in thousands)
 
 
 
 
 
 
 
 
September 30,
 
June 30,
 
December 31,
 
September 30,
 
2016
 
2016
 
2015
 
2015
ASSETS
 
 
 
 
 
 
 
Cash and due from banks
$
65,724

 
$
58,944

 
$
65,171

 
$
61,124

Federal funds sold and interest bearing deposits with other banks
30,100

 
14,297

 
14,550

 
3,065

Investment securities available-for-sale
828,615

 
814,258

 
791,727

 
784,585

Other investments
22,458

 
21,973

 
21,973

 
21,728

Mortgages held for sale
19,986

 
15,924

 
9,825

 
9,187

Loans and leases, net of unearned discount:
 
 
 
 
 
 
 
Commercial and agricultural
786,167

 
759,175

 
744,749

 
750,780

Auto and light truck
400,809

 
457,586

 
425,236

 
423,147

Medium and heavy duty truck
271,478

 
273,674

 
278,254

 
264,784

Aircraft
836,977

 
822,842

 
778,012

 
794,129

Construction equipment
498,086

 
484,354

 
455,565

 
450,112

Commercial real estate
744,972

 
715,932

 
700,268

 
658,589

Residential real estate and home equity
490,186

 
482,979

 
464,129

 
463,824

Consumer
150,742

 
156,221

 
148,479

 
150,185

Total loans and leases
4,179,417

 
4,152,763

 
3,994,692

 
3,955,550

Reserve for loan and lease losses
(88,897
)
 
(91,458
)
 
(88,112
)
 
(87,616
)
Net loans and leases
4,090,520

 
4,061,305

 
3,906,580

 
3,867,934

Equipment owned under operating leases, net
117,883

 
119,312

 
110,371

 
95,785

Net premises and equipment
54,654

 
54,506

 
53,191

 
51,252

Goodwill and intangible assets
84,244

 
84,386

 
84,676

 
84,822

Accrued income and other assets
133,727

 
135,033

 
129,852

 
126,102

Total assets
$
5,447,911

 
$
5,379,938

 
$
5,187,916

 
$
5,105,584

 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
Noninterest bearing
$
992,776

 
$
944,626

 
$
902,364

 
$
914,152

Interest-bearing deposits:
 
 
 
 
 
 
 
Interest-bearing demand
1,417,692

 
1,391,823

 
1,350,417

 
1,315,809

Savings
799,891

 
779,899

 
745,661

 
735,710

Time
1,166,679

 
1,208,736

 
1,140,744

 
1,053,485

Total interest-bearing deposits
3,384,262

 
3,380,458

 
3,236,822

 
3,105,004

Total deposits
4,377,038

 
4,325,084

 
4,139,186

 
4,019,156

Short-term borrowings:
 
 
 
 
 
 
 
Federal funds purchased and securities sold under agreements to repurchase
167,029

 
161,826

 
130,662

 
139,414

Other short-term borrowings
48,978

 
44,150

 
102,567

 
144,096

Total short-term borrowings
216,007

 
205,976

 
233,229

 
283,510

Long-term debt and mandatorily redeemable securities
64,760

 
64,738

 
57,379

 
57,577

Subordinated notes
58,764

 
58,764

 
58,764

 
58,764

Accrued expenses and other liabilities
61,083

 
63,620

 
55,305

 
47,356

Total liabilities
4,777,652

 
4,718,182

 
4,543,863

 
4,466,363

 
 
 
 
 
 
 
 
SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
Preferred stock; no par value
Authorized 10,000,000 shares; none issued or outstanding
—

 
—

 
—

 
—

Common stock; no par value
Authorized 40,000,000 shares; issued 28,205,674 shares at September 30, 2016, June 30, 2016, December 31, 2015 and September 30, 2015, respectively
436,538

 
436,538

 
436,538

 
436,538

Retained earnings
280,335

 
270,744

 
251,812

 
242,102

Cost of common stock in treasury (2,338,581, 2,342,904, 2,178,090, and 2,123,527 shares at September 30, 2016, June 30, 2016, December 31, 2015, and September 30, 2015, respectively)
(56,262
)
 
(56,357
)
 
(50,852
)
 
(49,120
)
Accumulated other comprehensive income
9,648

 
10,831

 
6,555

 
9,701

Total shareholders’ equity
670,259

 
661,756

 
644,053

 
639,221

Total liabilities and shareholders’ equity
$
5,447,911

 
$
5,379,938

 
$
5,187,916

 
$
5,105,584



- 7 -


1st SOURCE CORPORATION
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
(Unaudited - Dollars in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
 
2016
 
2016
 
2015
 
2016
 
2015
Interest income:
 
 
 
 
 
 
 
 
 
Loans and leases
$
44,965

 
$
43,891

 
$
42,560

 
$
131,592

 
$
124,747

Investment securities, taxable
2,384

 
3,040

 
3,277

 
8,504

 
8,929

Investment securities, tax-exempt
672

 
697

 
738

 
2,061

 
2,261

Other
279

 
309

 
246

 
879

 
730

Total interest income
48,300

 
47,937

 
46,821

 
143,036

 
136,667

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
3,879

 
3,790

 
2,874

 
11,440

 
8,271

Short-term borrowings
150

 
119

 
147

 
430

 
381

Subordinated notes
1,055

 
1,055

 
1,055

 
3,165

 
3,165

Long-term debt and mandatorily redeemable securities
522

 
680

 
536

 
1,725

 
1,540

Total interest expense
5,606

 
5,644

 
4,612

 
16,760

 
13,357

Net interest income
42,694

 
42,293

 
42,209

 
126,276

 
123,310

Provision for loan and lease losses
2,067

 
2,049

 
992

 
5,091

 
2,160

Net interest income after provision for loan and lease losses
40,627

 
40,244

 
41,217

 
121,185

 
121,150

Noninterest income:
 
 
 
 
 
 
 
 
 
Trust fees
4,691

 
5,108

 
4,634

 
14,422

 
14,438

Service charges on deposit accounts
2,366

 
2,276

 
2,413

 
6,749

 
6,977

Debit card
2,745

 
2,816

 
2,583

 
8,160

 
7,610

Mortgage banking
1,334

 
1,115

 
969

 
3,495

 
3,459

Insurance commissions
1,350

 
1,233

 
1,460

 
4,146

 
4,147

Equipment rental
6,657

 
6,517

 
5,881

 
19,247

 
16,302

Gains (losses) on investment securities available-for-sale
989

 
(209
)
 
—

 
790

 
4

Other
2,533

 
3,441

 
3,192

 
9,580

 
9,477

Total noninterest income
22,665

 
22,297

 
21,132

 
66,589

 
62,414

Noninterest expense:
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
22,136

 
21,194

 
21,835

 
64,681

 
63,554

Net occupancy
2,435

 
2,307

 
2,496

 
7,243

 
7,302

Furniture and equipment
4,898

 
4,811

 
4,604

 
14,499

 
13,471

Depreciation - leased equipment
5,570

 
5,444

 
4,858

 
16,115

 
13,342

Professional fees
1,244

 
1,190

 
1,237

 
3,653

 
3,215

Supplies and communication
1,256

 
1,374

 
1,307

 
4,138

 
4,122

FDIC and other insurance
647

 
911

 
848

 
2,437

 
2,544

Business development and marketing
1,263

 
1,025

 
1,244

 
3,268

 
3,507

Loan and lease collection and repossession
324

 
385

 
416

 
1,136

 
485

Other
1,372

 
1,393

 
2,223

 
4,714

 
5,828

Total noninterest expense
41,145

 
40,034

 
41,068

 
121,884

 
117,370

Income before income taxes
22,147

 
22,507

 
21,281

 
65,890

 
66,194

Income tax expense
7,883

 
8,028

 
7,353

 
23,329

 
23,125

Net income
$
14,264

 
$
14,479

 
$
13,928

 
$
42,561

 
$
43,069

Per common share:
 
 
 
 
 
 
 
 
 
Basic net income per common share
$
0.55

 
$
0.56

 
$
0.53

 
$
1.63

 
$
1.63

Diluted net income per common share
$
0.55

 
$
0.56

 
$
0.53

 
$
1.63

 
$
1.63

Cash dividends
$
0.180

 
$
0.180

 
$
0.164

 
$
0.540

 
$
0.491

Basic weighted average common shares outstanding
25,867,169

 
25,853,537

 
26,164,646

 
25,881,360

 
26,211,630

Diluted weighted average common shares outstanding
25,867,169

 
25,853,537

 
26,164,646

 
25,881,360

 
26,211,630




- 8 -


1st SOURCE CORPORATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
INTEREST RATES AND INTEREST DIFFERENTIAL
 
 
 
 
 
 
 
 
 
 
(Unaudited - Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
September 30, 2016
 
June 30, 2016
 
September 30, 2015
 
Average
Balance
 
Interest Income/Expense
 
Yield/
Rate
 
Average
Balance
 
Interest Income/Expense
 
Yield/
Rate
 
Average
Balance
 
Interest Income/Expense
 
Yield/
Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
$
690,867

 
$
2,384

 
1.37
%
 
$
678,849

 
$
3,040

 
1.80
%
 
$
660,921

 
$
3,277

 
1.97
%
Tax exempt(1)
130,201

 
973

 
2.97
%
 
126,007

 
1,012

 
3.23
%
 
121,050

 
1,087

 
3.56
%
Mortgages held for sale
14,681

 
134

 
3.63
%
 
11,100

 
110

 
3.99
%
 
9,610

 
100

 
4.13
%
Loans and leases, net of unearned discount(1)
4,189,340

 
44,980

 
4.27
%
 
4,105,111

 
43,926

 
4.30
%
 
3,910,981

 
42,527

 
4.31
%
Other investments
41,286

 
279

 
2.69
%
 
65,568

 
309

 
1.90
%
 
30,774

 
246

 
3.17
%
Total earning assets(1)
5,066,375

 
48,750

 
3.83
%
 
4,986,635

 
48,397

 
3.90
%
 
4,733,336

 
47,237

 
3.96
%
Cash and due from banks
60,665

 
 
 
 
 
60,786

 
 
 
 

 
59,172

 
 

 
 

Reserve for loan and lease losses
(92,237
)
 
 
 
 
 
(90,107
)
 
 
 
 

 
(87,109
)
 
 

 
 

Other assets
390,727

 
 
 
 
 
386,316

 
 
 
 

 
355,951

 
 

 
 

Total assets
$
5,425,530

 
 
 
 
 
$
5,343,630

 
 
 
 

 
$
5,061,350

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 

 
 
 
 

 
 

 
 

 
 

Interest-bearing deposits
3,393,457

 
3,879

 
0.45
%
 
3,380,208

 
3,790

 
0.45
%
 
3,107,108

 
2,874

 
0.37
%
Short-term borrowings
217,460

 
150

 
0.27
%
 
204,828

 
119

 
0.23
%
 
266,201

 
147

 
0.22
%
Subordinated notes
58,764

 
1,055

 
7.14
%
 
58,764

 
1,055

 
7.22
%
 
58,764

 
1,055

 
7.12
%
Long-term debt and mandatorily redeemable securities
64,641

 
522

 
3.21
%
 
65,906

 
680

 
4.15
%
 
57,432

 
536

 
3.70
%
Total interest-bearing liabilities
3,734,322

 
5,606

 
0.60
%
 
3,709,706

 
5,644

 
0.61
%
 
3,489,505

 
4,612

 
0.52
%
Noninterest-bearing deposits
959,796

 
 

 
 

 
920,194

 
 

 
 

 
888,687

 
 

 
 

Other liabilities
61,406

 
 

 
 

 
54,638

 
 

 
 

 
44,193

 
 

 
 

Shareholders’ equity
670,006

 
 

 
 

 
659,092

 
 

 
 

 
638,965

 
 

 
 

Total liabilities and shareholders’ equity
$
5,425,530

 
 

 
 

 
$
5,343,630

 
 

 
 

 
$
5,061,350

 
 

 
 

Less: Fully tax-equivalent adjustments
 
 
(450
)
 
 
 
 
 
(460
)
 
 
 
 
 
(416
)
 
 
Net interest income/margin (GAAP-derived)(1)
 

 
$
42,694

 
3.35
%
 
 

 
$
42,293

 
3.41
%
 
 

 
$
42,209

 
3.54
%
Fully tax-equivalent adjustments
 
 
450

 
 
 
 
 
460

 
 
 
 
 
416

 
 
Net interest income/margin - FTE(1)
 

 
$
43,144

 
3.39
%
 
 

 
$
42,753

 
3.45
%
 
 

 
$
42,625

 
3.57
%
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.

- 9 -


1st SOURCE CORPORATION
 
 
 
 
 
 
 
 
 
 
 
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
INTEREST RATES AND INTEREST DIFFERENTIAL
 
 
 
 
 
(Unaudited - Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
September 30, 2016
 
September 30, 2015
 
Average
Balance
 
Interest Income/Expense
 
Yield/
Rate
 
Average
Balance
 
Interest Income/Expense
 
Yield/
Rate
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Investment securities available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Taxable
$
680,606

 
$
8,504

 
1.67
%
 
$
664,787

 
$
8,929

 
1.80
%
Tax exempt(1)
126,370

 
2,998

 
3.17
%
 
122,556

 
3,332

 
3.63
%
Mortgages held for sale
11,650

 
339

 
3.89
%
 
12,010

 
351

 
3.91
%
Loans and leases, net of unearned discount(1)
4,101,284

 
131,687

 
4.29
%
 
3,795,929

 
124,566

 
4.39
%
Other investments
52,694

 
879

 
2.23
%
 
31,829

 
730

 
3.07
%
Total earning assets(1)
4,972,604

 
144,407

 
3.88
%
 
4,627,111

 
137,908

 
3.98
%
Cash and due from banks
60,103

 
 
 
 
 
61,047

 
 

 
 

Reserve for loan and lease losses
(90,403
)
 
 
 
 
 
(86,321
)
 
 

 
 

Other assets
384,366

 
 
 
 
 
345,062

 
 

 
 

Total assets
$
5,326,670

 
 
 
 
 
$
4,946,899

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 

 
 

 
 

Interest-bearing deposits
3,342,828

 
11,440

 
0.46
%
 
3,077,922

 
8,271

 
0.36
%
Short-term borrowings
217,920

 
430

 
0.26
%
 
241,570

 
381

 
0.21
%
Subordinated notes
58,764

 
3,165

 
7.19
%
 
58,764

 
3,165

 
7.20
%
Long-term debt and mandatorily redeemable securities
64,351

 
1,725

 
3.58
%
 
57,188

 
1,540

 
3.60
%
Total interest-bearing liabilities
3,683,863

 
16,760

 
0.61
%
 
3,435,444

 
13,357

 
0.52
%
Noninterest-bearing deposits
926,456

 
 

 
 

 
836,009

 
 

 
 

Other liabilities
56,748

 
 

 
 

 
43,835

 
 

 
 

Shareholders’ equity
659,603

 
 

 
 

 
631,611

 
 

 
 

Total liabilities and shareholders’ equity
$
5,326,670

 
 

 
 

 
$
4,946,899

 
 

 
 

Less: Fully tax-equivalent adjustments
 
 
(1,371
)
 
 
 
 
 
(1,241
)
 
 
Net interest income/margin (GAAP-derived)(1)
 

 
$
126,276

 
3.39
%
 
 

 
$
123,310

 
3.56
%
Fully tax-equivalent adjustments
 
 
1,371

 
 
 
 
 
1,241

 
 
Net interest income/margin - FTE(1)
 

 
$
127,647

 
3.43
%
 
 

 
$
124,551

 
3.60
%
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.

- 10 -


1st SOURCE CORPORATION
 
 
 
 
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
 
 
 
(Unaudited - Dollars in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
 
 
2016
2016
2015
 
2016
2015
Calculation of Net Interest Margin
 
 
 
 
 
 
(A)
Interest income (GAAP)
$
48,300

$
47,937

$
46,821

 
$
143,036

$
136,667

 
Fully tax-equivalent adjustments:
 
 
 
 
 
 
(B)
- Loans and leases
150

145

67

 
434

170

(C)
- Tax-exempt investment securities
300

315

349

 
937

1,071

(D)
Interest income - FTE (A+B+C)
48,750

48,397

47,237

 
144,407

137,908

(E)
Interest expense (GAAP)
5,606

5,644

4,612

 
16,760

13,357

(F)
Net interest income (GAAP) (A-E)
42,694

42,293

42,209

 
126,276

123,310

(G)
Net interest income - FTE (D-E)
43,144

42,753

42,625

 
127,647

124,551

(H)
Annualization factor
3.978

4.022

3.967

 
1.336

1.337

(I)
Total earning assets
$
5,066,375

$
4,986,635

$
4,733,336

 
$
4,972,604

$
4,627,111

 
Net interest margin (GAAP-derived) (F*H)/I
3.35
%
3.41
%
3.54
%
 
3.39
%
3.56
%
 
Net interest margin - FTE (G*H)/I
3.39
%
3.45
%
3.57
%
 
3.43
%
3.60
%
 
 
 
 
 
 
 
 
Calculation of Efficiency Ratio
 
 
 
 
 
 
(F)
Net interest income (GAAP)
$
42,694

$
42,293

$
42,209

 
$
126,276

$
123,310

(G)
Net interest income - FTE
43,144

42,753

42,625

 
127,647

124,551

(J)
Plus: noninterest income (GAAP)
22,665

22,297

21,132

 
66,589

62,414

(K)
Less: gains/losses on investment securities and partnership investments
(1,046
)
(743
)
(477
)
 
(2,899
)
(1,881
)
(L)
Less: depreciation - leased equipment
(5,570
)
(5,444
)
(4,858
)
 
(16,115
)
(13,342
)
(M)
Total net revenue (GAAP) (F+J)
65,359

64,590

63,341

 
192,865

185,724

(N)
Total net revenue - adjusted (G+J-K-L)
59,193

58,863

58,422

 
175,222

171,742

(O)
Noninterest expense (GAAP)
41,145

40,034

41,068

 
121,884

117,370

(L)
Less: depreciation - leased equipment
(5,570
)
(5,444
)
(4,858
)
 
(16,115
)
(13,342
)
(P)
Noninterest expense - adjusted (O+L)
35,575

34,590

36,210

 
105,769

104,028

 
Efficiency ratio (GAAP-derived) (O/M)
62.95
%
61.98
%
64.84
%
 
63.20
%
63.20
%
 
Efficiency ratio - adjusted (P/N)
60.10
%
58.76
%
61.98
%
 
60.36
%
60.57
%
 
 
 
 
 
 
 
 
 
 
End of Period
 
 
 
 
 
September 30,
June 30,
September 30,
 
 
 
 
 
2016
2016
2015
 
 
 
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
 
 
 
 
 
(Q)
Total shareholders’ equity (GAAP)
$
670,259

$
661,756

$
639,221

 
 
 
(R)
Less: goodwill and intangible assets
(84,244
)
(84,386
)
(84,822
)
 
 
 
(S)
Total tangible common shareholders’ equity (Q+R)
$
586,015

$
577,370

$
554,399

 
 
 
(T)
Total assets (GAAP)
5,447,911

5,379,938

5,105,584

 
 
 
(R)
Less: goodwill and intangible assets
(84,244
)
(84,386
)
(84,822
)
 
 
 
(U)
Total tangible assets (T+R)
$
5,363,667

$
5,295,552

$
5,020,762

 
 
 
 
Common equity-to-assets ratio (GAAP-derived) (Q/T)
12.30
%
12.30
%
12.52
%
 
 
 
 
Tangible common equity-to-tangible assets ratio (S/U)
10.93
%
10.90
%
11.04
%
 
 
 
 
 
 
 
 
 
 
 
Calculation of Tangible Book Value per Common Share
 
 
 
 
 
 
(Q)
Total shareholders’ equity (GAAP)
$
670,259

$
661,756

$
639,221

 
 
 
(V)
Actual common shares outstanding
25,867,093

25,862,770

26,082,147

 
 
 
 
Book value per common share (GAAP-derived) (Q/V)*1000
$
25.91

$
25.59

$
24.51

 
 
 
 
Tangible common book value per share (S/V)*1000
$
22.65

$
22.32

$
21.26

 
 
 

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

- 11 -

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings