Form 8-K 1ST SOURCE CORP For: Oct 23
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E-mailUNITED 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 23, 2014 | ||
� | �  | � |
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�23, 2014, 1st Source Corporation issued a press release that announced its third quarter earnings for 2014. 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�23, 2014, with respect to 1st Source Corporations financial results for the third quarter ended September�30, 2014.
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 23, 2014 | /s/ CHRISTOPHER J. MURPHY III | |
Christopher J. Murphy III | ||
Chairman of the Board and CEO | ||
Date: October 23, 2014 | /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�23, 2014 | 574-235-2000 | ||
Third Quarter Earnings Steady for 1st Source Corporation,
Dividend Declared
South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today announced third quarter net income of $14.95 million, up slightly compared to $14.90 million in the third quarter of 2013. The third quarter 2013 included $2.07 million of interest recoveries and expense reimbursements compared to $0.39 million in interest recoveries in 2014. However, for the first three quarters of the year, net income was $43.07 million versus $41.24 million a year earlier, a 4.44% increase. Diluted net income per common share for the third quarter of 2014 was $0.62 versus $0.60, up 3.33% over the same period in 2013. Diluted net income per common share for the first three quarters was $1.77 in 2014 compared to $1.67, up 5.99% over the previous year.
At its October meeting, the Board of Directors approved a cash dividend of $0.18 per common share. The dividend is payable to shareholders of record on November 5, 2014 and will be paid on November 14, 2014.
According to Christopher J. Murphy, III, Chairman, "1st Source Corporation had a productive third quarter. We completed extensive renovations of 6 banking centers in Fort Wayne, which introduced our new design of side by side banking. This defines everything 1st Source does with our clients - working in partnership with them; sharing information; providing straight talk and sound advice; and helping them achieve security, build wealth and realize their dreams. We will also be opening two new banking centers there before year end. A simultaneous grand reopening was held in early October at all 6 banking centers to celebrate our increased commitment to the Fort Wayne market."
"Our net income for the quarter remained steady over a year ago despite reduced interest recoveries and expense reimbursements that benefited 2013's third quarter. Average loans and leases were up 6.22% in the third quarter from the same period last year, while credit quality remains strong with our nonperforming assets only 0.94% of net loans and leases. Additionally, average deposits were up over the third quarter a year ago, and we continue to add new clients to the Bank overall. Expenses remain in check and under 2013 levels as we're keeping a sharp eye on costs. To deliver for our shareholders, we continue our strategic focus on excellent credit quality, maintaining cost control, and outstanding client service," Murphy concluded.
����Total assets at the end of the third quarter of 2014 were $4.82 billion, up 3.67% from a year ago. Total loans and leases were $3.65 billion, up 5.37% from September 30, 2013. Total deposits were $3.84 billion, up 4.25% from the comparable figures at September 30, 2013. As of September 30, 2014, the common equity-to-assets ratio was 12.51%, compared to 12.44% a year ago and the tangible common equity-to-tangible assets ratio was 10.93% compared to 10.77% a year earlier.
The net interest margin was 3.58% for the third quarter of 2014 versus 3.79% for the same period in 2013. The net interest margin was 3.59% for the nine months ended September 30, 2014, versus 3.69% for the same period in
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2013. Tax-equivalent net interest income was $41.17 million for the third quarter of 2014, compared to the $41.60 million from 2013's third quarter. For the first nine months of 2014, tax-equivalent net interest income was $120.88 million, compared to $119.15 million for the first nine months of 2013.
The reserve for loan and lease losses as of September 30, 2014 was 2.39% of total loans and leases compared to 2.44% at September 30, 2013. Net charge-offs of $2.58 million were recorded for the third quarter of 2014 (primarily due to one relationship) compared with net charge-offs of $0.76 million in the same quarter a year ago. Year-to-date, net charge-offs of $0.66 million have been recorded in 2014, compared to net charge-offs of $0.44 million through September 30, 2013. The ratio of nonperforming assets to net loans and leases was 0.94% as of September 30, 2014, compared to 1.14% on September 30, 2013.
Noninterest income for the third quarter of 2014 was $19.39 million, down 3.80% from the same period in 2013. The decrease for the quarter was mainly attributed to lower trust fees and losses on partnership investments. For the first nine months of 2014, noninterest income was $58.01 million, down 2.05% compared to 2013 primarily as a result of lower mortgage banking income and losses on partnership investments.
Noninterest expense was $37.65 million for the third quarter of 2014, down 2.02% from the third quarter of 2013. The decrease for the quarter was mainly attributed to lower loan and lease collection and repossession expenses. For the first nine months of 2014, noninterest expense was $108.05 million, down 2.42% compared with $110.72 million for the same period in 2013. Noninterest expense decreased primarily as a result of lower loan and lease collection and repossession expenses and reduced professional fees.
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, construction and environmental equipment. The Corporation includes 78 community banking centers in 17 counties, 9 trust and wealth management locations, 8 1st Source Insurance offices, as well as 21 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,
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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 Sources 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 Sources 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 Sources 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.
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(charts attached)
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1st SOURCE CORPORATION | ||||||||||||||||||
3rd QUARTER 2014 FINANCIAL HIGHLIGHTS | ||||||||||||||||||
(Unaudited - Dollars in thousands, except per share data) | ||||||||||||||||||
Three Months Ended� �September 30, | Nine Months Ended� �September 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||||
Assets | $ | 4,820,793 | $ | 4,649,961 | ||||||||||||||
Loans and leases | 3,654,421 | 3,468,118 | ||||||||||||||||
Deposits | 3,835,972 | 3,679,416 | ||||||||||||||||
Reserve for loan and lease losses | 87,400 | 84,507 | ||||||||||||||||
Intangible assets | 85,583 | 86,629 | ||||||||||||||||
Common shareholders' equity | 603,033 | 578,229 | ||||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||
Assets | $ | 4,856,167 | $ | 4,625,957 | $ | 4,795,794 | $ | 4,594,032 | ||||||||||
Earning assets | 4,562,720 | 4,351,583 | 4,505,944 | 4,313,742 | ||||||||||||||
Investments | 808,591 | 825,476 | 825,230 | 842,017 | ||||||||||||||
Loans and leases | 3,700,708 | 3,483,942 | 3,635,938 | 3,415,752 | ||||||||||||||
Deposits | 3,830,243 | 3,697,869 | 3,755,334 | 3,693,839 | ||||||||||||||
Interest bearing liabilities | 3,427,965 | 3,295,163 | 3,407,210 | 3,288,267 | ||||||||||||||
Common shareholders' equity | 601,444 | 574,589 | 598,499 | 571,692 | ||||||||||||||
INCOME STATEMENT DATA | ||||||||||||||||||
Net interest income | $ | 40,710 | $ | 41,158 | $ | 119,490 | $ | 117,783 | ||||||||||
Net interest income - FTE | 41,174 | 41,604 | 120,883 | 119,148 | ||||||||||||||
Provision for (recovery of) loan and lease losses | 1,206 | (419 | ) | 4,553 | 1,631 | |||||||||||||
Noninterest income | 19,392 | 20,158 | 58,011 | 59,227 | ||||||||||||||
Noninterest expense | 37,653 | 38,430 | 108,049 | 110,724 | ||||||||||||||
Net income | 14,947 | 14,896 | 43,073 | 41,242 | ||||||||||||||
PER SHARE DATA | ||||||||||||||||||
Basic net income per common share | $ | 0.62 | $ | 0.60 | $ | 1.77 | $ | 1.67 | ||||||||||
Diluted net income per common share | 0.62 | 0.60 | 1.77 | 1.67 | ||||||||||||||
Common cash dividends declared | 0.18 | 0.17 | 0.53 | 0.51 | ||||||||||||||
Book value per common share | 25.27 | 23.77 | 25.27 | 23.77 | ||||||||||||||
Tangible book value per common share | 21.68 | 20.21 | 21.68 | 20.21 | ||||||||||||||
Market value - High | 31.92 | 28.82 | 33.21 | 28.82 | ||||||||||||||
Market value - Low | 27.80 | 23.87 | 27.56 | 21.88 | ||||||||||||||
Basic weighted average common shares outstanding | 23,875,331 | 24,366,220 | 24,088,636 | 24,352,073 | ||||||||||||||
Diluted weighted average common shares outstanding | 23,875,331 | 24,367,109 | 24,088,636 | 24,352,854 | ||||||||||||||
KEY RATIOS | ||||||||||||||||||
Return on average assets | 1.22 | % | 1.28 | % | 1.20 | % | 1.20 | % | ||||||||||
Return on average common shareholders' equity | 9.86 | 10.29 | 9.62 | 9.65 | ||||||||||||||
Average common shareholders' equity to average assets | 12.39 | 12.42 | 12.48 | 12.44 | ||||||||||||||
End of period tangible common equity to tangible assets | 10.93 | 10.77 | 10.93 | 10.77 | ||||||||||||||
Risk-based capital - Tier 1 | 14.49 | 14.57 | 14.49 | 14.57 | ||||||||||||||
Risk-based capital - Total | 15.80 | 15.89 | 15.80 | 15.89 | ||||||||||||||
Net interest margin | 3.58 | 3.79 | 3.59 | 3.69 | ||||||||||||||
Efficiency: expense to revenue | 60.72 | 61.55 | 58.26 | 61.21 | ||||||||||||||
Net charge offs to average loans and leases | 0.28 | 0.09 | 0.02 | 0.02 | ||||||||||||||
Loan and lease loss reserve to loans and leases | 2.39 | 2.44 | 2.39 | 2.44 | ||||||||||||||
Nonperforming assets to loans and leases | 0.94 | 1.14 | 0.94 | 1.14 | ||||||||||||||
ASSET QUALITY | ||||||||||||||||||
Loans and leases past due 90 days or more | $ | 750 | $ | 245 | ||||||||||||||
Nonaccrual loans and leases | 26,524 | 31,325 | ||||||||||||||||
Other real estate | 1,433 | 5,002 | ||||||||||||||||
Former bank premises held for sale | 801 | 951 | ||||||||||||||||
Repossessions | 5,421 | 2,811 | ||||||||||||||||
Equipment owned under operating leases | 15 | |||||||||||||||||
Total nonperforming assets | $ | 34,944 | $ | 40,334 | ||||||||||||||
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1st SOURCE CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
(Unaudited - Dollars in thousands) | ||||||||
September�30, 2014 | September�30, 2013 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 54,542 | $ | 90,090 | ||||
Federal funds sold and interest bearing deposits with other banks | 27,169 | 1,676 | ||||||
Investment securities available-for-sale (amortized cost of $799,862 and $819,918 at �September 30, 2014 and 2013, respectively) | 813,704 | 834,348 | ||||||
Other investments | 23,017 | 22,409 | ||||||
Trading account securities | 196 | 177 | ||||||
Mortgages held for sale | 13,070 | 7,157 | ||||||
Loans and leases, net of unearned discount: | ||||||||
Commercial and agricultural loans | 696,209 | 652,180 | ||||||
Auto and light truck | 422,742 | 417,351 | ||||||
Medium and heavy duty truck | 249,014 | 228,028 | ||||||
Aircraft financing | 700,794 | 704,072 | ||||||
Construction equipment financing | 375,069 | 315,346 | ||||||
Commercial real estate | 615,420 | 574,279 | ||||||
Residential real estate | 451,508 | 455,327 | ||||||
Consumer loans | 143,665 | 121,535 | ||||||
Total loans and leases | 3,654,421 | 3,468,118 | ||||||
Reserve for loan and lease losses | (87,400 | ) | (84,507 | ) | ||||
Net loans and leases | 3,567,021 | 3,383,611 | ||||||
Equipment owned under operating leases, net | 66,013 | 61,160 | ||||||
Net premises and equipment | 47,350 | 45,466 | ||||||
Goodwill and intangible assets | 85,583 | 86,629 | ||||||
Accrued income and other assets | 123,128 | 117,238 | ||||||
Total assets | $ | 4,820,793 | $ | 4,649,961 | ||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Noninterest bearing | $ | 818,679 | $ | 725,263 | ||||
Interest bearing | 3,017,293 | 2,954,153 | ||||||
Total deposits | 3,835,972 | 3,679,416 | ||||||
Short-term borrowings: | ||||||||
Federal funds purchased and securities sold under agreements to repurchase | 106,769 | 147,991 | ||||||
Other short-term borrowings | 109,953 | 73,451 | ||||||
Total short-term borrowings | 216,722 | 221,442 | ||||||
Long-term debt and mandatorily redeemable securities | 56,171 | 58,440 | ||||||
Subordinated notes | 58,764 | 58,764 | ||||||
Accrued expenses and other liabilities | 50,131 | 53,670 | ||||||
Total liabilities | 4,217,760 | 4,071,732 | ||||||
SHAREHOLDERS' EQUITY | ||||||||
Preferred stock; no par value | ||||||||
Common stock; no par value | 346,535 | 346,535 | ||||||
Retained earnings | 291,569 | 252,043 | ||||||
Cost of common stock in treasury | (43,716 | ) | (29,362 | ) | ||||
Accumulated other comprehensive income | 8,645 | 9,013 | ||||||
Total shareholders' equity | 603,033 | 578,229 | ||||||
Total liabilities and shareholders' equity | $ | 4,820,793 | $ | 4,649,961 | ||||
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1st SOURCE CORPORATION | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Unaudited - Dollars in thousands) | |||||||||||||||
Three Months Ended� �September 30, | Nine Months Ended� �September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Interest income: | |||||||||||||||
Loans and leases | $ | 41,118 | $ | 42,392 | $ | 120,434 | $ | 121,674 | |||||||
Investment securities, taxable | 2,962 | 3,581 | 9,708 | 10,774 | |||||||||||
Investment securities, tax-exempt | 831 | 764 | 2,466 | 2,295 | |||||||||||
Other | 241 | 229 | 750 | 712 | |||||||||||
Total interest income | 45,152 | 46,966 | 133,358 | 135,455 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 2,765 | 4,089 | 8,730 | 13,043 | |||||||||||
Short-term borrowings | 134 | 72 | 440 | 149 | |||||||||||
Subordinated notes | 1,055 | 1,055 | 3,165 | 3,165 | |||||||||||
Long-term debt and mandatorily redeemable securities | 488 | 592 | 1,533 | 1,315 | |||||||||||
Total interest expense | 4,442 | 5,808 | 13,868 | 17,672 | |||||||||||
Net interest income | 40,710 | 41,158 | 119,490 | 117,783 | |||||||||||
Provision for (recovery of) loan and lease losses | 1,206 | (419 | ) | 4,553 | 1,631 | ||||||||||
Net interest income after provision for loan and lease losses | 39,504 | 41,577 | 114,937 | 116,152 | |||||||||||
Noninterest income: | |||||||||||||||
Trust fees | 4,499 | 5,260 | 13,930 | 13,800 | |||||||||||
Service charges on deposit accounts | 2,225 | 2,364 | 6,498 | 6,928 | |||||||||||
Debit card income | 2,382 | 2,343 | 7,077 | 6,752 | |||||||||||
Mortgage banking income | 1,446 | 1,103 | 3,961 | 4,667 | |||||||||||
Insurance commissions | 1,317 | 1,292 | 4,168 | 4,131 | |||||||||||
Equipment rental income | 4,361 | 4,000 | 12,541 | 12,098 | |||||||||||
Gains (losses) on investment securities available-for-sale | (28 | ) | 963 | (28 | ) | ||||||||||
Other income | 3,162 | 3,824 | 8,873 | 10,879 | |||||||||||
Total noninterest income | 19,392 | 20,158 | 58,011 | 59,227 | |||||||||||
Noninterest expense: | |||||||||||||||
Salaries and employee benefits | 20,790 | 20,441 | 59,099 | 59,553 | |||||||||||
Net occupancy expense | 2,252 | 2,126 | 6,924 | 6,480 | |||||||||||
Furniture and equipment expense | 4,415 | 4,477 | 13,065 | 12,285 | |||||||||||
Depreciation - leased equipment | 3,571 | 3,246 | 10,110 | 9,745 | |||||||||||
Professional fees | 1,158 | 1,178 | 3,348 | 3,843 | |||||||||||
Supplies and communication | 1,424 | 1,330 | 4,153 | 4,365 | |||||||||||
FDIC and other insurance | 856 | 874 | 2,570 | 2,679 | |||||||||||
Business development and marketing expense | 1,218 | 1,306 | 3,801 | 3,011 | |||||||||||
Loan and lease collection and repossession expense | 652 | 1,530 | 140 | 3,382 | |||||||||||
Other expense | 1,317 | 1,922 | 4,839 | 5,381 | |||||||||||
Total noninterest expense | 37,653 | 38,430 | 108,049 | 110,724 | |||||||||||
Income before income taxes | 21,243 | 23,305 | 64,899 | 64,655 | |||||||||||
Income tax expense | 6,296 | 8,409 | 21,826 | 23,413 | |||||||||||
Net income | $ | 14,947 | $ | 14,896 | $ | 43,073 | $ | 41,242 | |||||||
The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3) | |||||||||||||||
Please contact us at [email protected] | |||||||||||||||
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