SOUTH BEND, Ind.--(BUSINESS WIRE)--
1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source
Bank, today reported record net income of $39.30 million for the year
2006, an increase of 16.43 percent over the $33.75 million reported
for the year 2005. Diluted net income per common share for 2006
amounted to $1.72, up 17.81 percent compared to $1.46 diluted net
income per common share for 2005.
Net income was $8.12 million for the fourth quarter of 2006, down
10.73 percent compared to the $9.10 million of net income reported for
the fourth quarter of 2005. Diluted net income per common share for
the fourth quarter of 2006 amounted to $0.36, compared to $0.39 per
common share reported in the fourth quarter of 2005. (All common share
and per common share information has been adjusted for a 10% stock
dividend declared on July 27, 2006.)
The Board of Directors approved a fourth quarter cash dividend of
$0.14 per share. The cash dividend is payable on February 15, 2007 to
shareholders of record on February 5, 2007, and is an increase of
10.24 percent over the cash dividend announced one year ago.
Christopher J. Murphy III, Chairman of 1st Source Corporation,
commented, "We are pleased to have ended the year with record net
income of $39.30 million for 1st Source Corporation and with record
assets of over $3.81 billion. During the fourth quarter, we opened in
a new market, Kalamazoo; added a banking center in our traditional
market - Heritage Square Martin's; and debuted a new regional
headquarters, 1st Source Center, in downtown Fort Wayne."
"Between the fourth quarter of 2005 and the fourth quarter of
2006, we have noted significant margin pressure. Our income was down
slightly in the quarter compared to fourth quarter 2005 due to lower
mortgage banking income and increased expenses in the investment of a
major core systems replacement project that allows us to grow for many
years to come. While we have begun to see results from our banking
center expansion, the costs are larger than the returns from these
investments to date."
Mr. Murphy concluded, "We've seen strong loan growth in our
commercial, small business and specialty finance areas; our assets
under management for our trust and personal asset management area
continue to expand and we continue to hold the number one deposit
market share in our traditional 15 county market. We are continuing to
grow and working on increasing our margins while holding costs down.
We are committed to being the number one bank in our region."
1st Source's reserve for loan and lease losses as of December 31,
2006, was 2.18 percent of total loans and leases, compared to 2.38
percent as of December 31, 2005. Net charge-offs were $0.10 million
for the fourth quarter 2006, compared to net recoveries of $0.87
million a year ago. Net recoveries for the year were $2.84 million
compared to net recoveries of $0.88 million in 2005. The ratio of
nonperforming assets to net loans and leases was 0.64 percent on
December 31, 2006, compared to 0.87 percent on December 31, 2005.
Noninterest income for the fourth quarter of 2006 was $17.69
million, a marginal increase, as compared to the fourth quarter of
2005. During the fourth quarter of 2006 increases in equipment rental
income and trust fees were mostly offset by a decline in mortgage
banking income. Overall, for the year of 2006 as compared to the year
2005, noninterest income increased to $76.59 million, up 11.75 percent
from 2005. For the year 2006 increases in the operating lease
portfolio resulted in increased equipment rental income; market
valuation adjustments resulted in gains on venture partnership
investments; growth in assets under management and an increase in IRA
custodian revenue resulted in increased trust fee income; and
increased service charges on deposit accounts resulted in increased
overdraft and NSF fees.
Noninterest expense for the fourth quarter of 2006 was $32.60
million an increase of 5.64 percent as compared to the fourth quarter
of 2005. The increase in the fourth quarter of 2006 as compared to the
fourth quarter of 2005 was primarily due to higher depreciation on
leased equipment expense, furniture and equipment expense, and
professional fees. For the year, noninterest expense was $126.21
million, up 2.25 percent from one year ago. The predominate factors
behind the increase in noninterest expense for the year 2006 as
compared to the year 2005 were lower gains and valuation adjustments
on repossessed assets, higher depreciation expense on leased
equipment, and an increase in professional fees and software costs
which were mainly related to the core system conversion project. These
increases were offset somewhat by a decrease in salaries and employee
benefits which was largely due to a one-time reduction in the accrual
for stock-based compensation expense taken in the first quarter of
2006 related to the adoption of a new accounting standard.
As of December 31, 2006, the 1st Source common equity-to-assets
ratio was 9.69 percent, compared to 9.84 percent a year ago.
Shareholders' equity was $368.90 million, up from $345.58 million a
year ago. Total assets at the end of the fourth quarter of 2006 were
$3.81 billion, up 8.43 percent compared to the same period last year.
Total loans and leases were up 9.71 percent and total deposits were up
11.02 percent from the comparable figures at the end of the fourth
quarter of 2005.
1st Source Corporation is the largest locally controlled financial
institution headquartered in the Northern Indiana-Southwestern
Michigan area. While delivering a comprehensive range of consumer and
commercial banking services, 1st Source Bank 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 67 banking centers in 16 counties, one
Trustcorp Mortgage office located in each state of Indiana and Ohio,
and 24 locations nationwide for the 1st Source Bank Specialty Finance
Group. 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 in
which it serves.
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."
Marketmakers in 1st Source common shares are Citigroup Global Markets,
Inc.; Crowell, Weedon & Co.; FTN Midwest Securities Corp.; Goldman,
Sachs & Company; Keefe, Bruyette & Woods, Inc.; Lehman Brothers, Inc.;
Morgan Stanley & Company, Inc.; Sandler O'Neill & Partners; and
Stifel, Nicolaus & Company, Inc.
1st Source's floating rate cumulative trust preferred security is
traded on the Nasdaq Stock Market under the symbol "SRCEO". The rate
for the first quarter 2007 is 7.25 percent. Marketmakers in those
securities are Howe, Barnes Investments, Inc. and Stifel, Nicolaus &
Company.
Except for historical information contained herein, the matters
discussed in this document express "forward-looking statements."
Generally, the words "believe," "expect," "intend," "estimate,"
"anticipate," "project," "will" 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.
1st SOURCE CORPORATION
4th QUARTER 2006 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except for per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
2006 2005 2006 2005
----------- ----------- ----------- -----------
END OF PERIOD
BALANCES
Assets $ 3,807,315 $ 3,511,277
Loans and leases 2,702,537 2,463,431
Deposits 3,048,284 2,745,587
Reserve for loan
and lease losses 58,802 58,697
Intangible assets 19,418 21,381
Common
shareholders'
equity 368,904 345,576
AVERAGE BALANCES
Assets $ 3,742,787 $ 3,389,502 $ 3,552,301 $ 3,373,137
Earning assets 3,506,946 3,161,149 3,315,104 3,152,235
Investments 680,983 637,582 644,099 702,606
Loans and leases 2,648,292 2,407,290 2,566,217 2,348,690
Deposits 2,966,604 2,639,051 2,770,548 2,610,398
Interest bearing
liabilities 2,982,497 2,596,432 2,780,142 2,590,486
Common
shareholders'
equity 368,940 342,186 357,759 333,623
INCOME STATEMENT DATA
Net interest
income $ 26,738 $ 25,323 $ 106,433 $ 98,428
Net interest income
- FTE 27,383 25,985 108,977 101,095
Recovery of
provision for loan
and lease losses (98) (719) (2,736) (5,855)
Noninterest income 17,690 17,574 76,585 68,533
Noninterest expense 32,595 30,856 126,211 123,439
Net income 8,123 9,099 39,297 33,751
PER SHARE DATA(a)
Basic net income
per common share $ 0.36 $ 0.40 $ 1.74 $ 1.48
Diluted net income
per common share 0.36 0.39 1.72 1.46
Cash dividends paid
per common share 0.140 0.118 0.534 0.445
Book value per
common share 16.40 15.20 16.40 15.20
Market value - High 33.460 23.720 33.460 23.720
Market value - Low 29.080 19.018 22.636 17.645
Basic weighted
average common
shares outstanding 22,498,061 22,736,501 22,536,844 22,754,501
Diluted weighted
average common
shares outstanding 22,826,381 23,043,931 22,830,093 23,052,812
KEY RATIOS
Return on average
assets 0.86 % 1.07 % 1.11 % 1.00 %
Return on average
common
shareholders'
equity 8.74 10.55 10.98 10.12
Average common
shareholders'
equity to average
assets 9.86 10.10 10.07 9.89
End of period
tangible common
equity to tangible
assets 9.23 9.29 9.23 9.29
Net interest margin 3.10 3.26 3.29 3.21
Efficiency: expense
to revenue 69.60 68.55 65.99 70.69
Net charge-offs
(recoveries) to
average loans and
leases 0.02 (0.14) (0.11) (0.04)
Loan and lease loss
reserve to loans
and leases 2.18 2.38 2.18 2.38
Nonperforming
assets to loans
and leases 0.64 0.87 0.64 0.87
ASSET QUALITY
Loans and leases
past due 90 days
or more $ 116 $ 245
Nonaccrual and
restructured loans
and leases 15,575 16,552
Other real estate 800 960
Repossessions 975 4,284
Equipment owned
under operating
leases 201 0
Total nonperforming
assets 17,667 22,041
(a)Per share figures have been adjusted for 10% stock dividend
declared July 27, 2006.
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
December 31, December 31,
2006 2005
------------ ------------
ASSETS
--------------------------------------------
Cash and due from banks $118,131 $124,817
Federal funds sold and interest bearing
deposits with other banks 64,979 68,578
Investment securities available-for-sale
(amortized cost of $709,091 and $637,878
at December 31, 2006 and 2005,
respectively) 708,672 632,625
Mortgages held for sale 50,159 67,224
Loans and leases, net of unearned discount:
Commercial and agricultural loans 478,310 453,197
Auto, light truck and environmental
equipment 317,604 310,786
Medium and heavy duty truck 341,744 302,137
Aircraft financing 498,914 459,645
Construction equipment financing 305,976 224,230
Loans secured by real estate 632,283 601,077
Consumer loans 127,706 112,359
------------ ------------
Total loans and leases 2,702,537 2,463,431
Reserve for loan and lease losses (58,802) (58,697)
------------ ------------
Net loans and leases 2,643,735 2,404,734
Equipment owned under operating leases, net 76,310 58,250
Net premises and equipment 37,326 37,710
Accrued income and other assets 108,003 117,339
------------ ------------
Total assets $3,807,315 $3,511,277
============ ============
LIABILITIES
--------------------------------------------
Deposits:
Noninterest bearing $339,866 $393,494
Interest bearing 2,708,418 2,352,093
------------ ------------
Total deposits 3,048,284 2,745,587
Federal funds purchased and securities sold
under agreements to purchase 195,262 230,756
Other short-term borrowings 27,456 46,713
Long-term debt and mandatorily redeemable
securities 43,761 23,237
Subordinated notes 59,022 59,022
Accrued expenses and other liabilities 64,626 60,386
------------ ------------
Total liabilities 3,438,411 3,165,701
SHAREHOLDERS' EQUITY
--------------------------------------------
Preferred stock; no par value - -
Common stock; no par value 8,336 7,578
Capital surplus 280,827 214,001
Retained earnings 99,572 139,601
Cost of common stock in treasury (19,571) (12,364)
Accumulated other comprehensive loss (260) (3,240)
------------ ------------
Total shareholders' equity 368,904 345,576
------------ ------------
Total liabilities and shareholders' equity $3,807,315 $3,511,277
============ ============
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
Three Months Ended Twelve Months Ended
December 31 December 31
2006 2005 2006 2005
--------- -------- --------- ---------
Interest income:
Loans and leases $48,586 $39,931 $181,363 $147,814
Investment securities,
taxable 5,796 3,543 19,816 14,777
Investment securities, tax-
exempt 1,345 1,333 5,183 5,275
Other 1,711 429 2,632 666
--------- -------- --------- ---------
Total interest income 57,438 45,236 208,994 168,532
Interest expense:
Deposits 26,352 16,243 85,067 56,341
Short-term borrowings 2,653 2,334 11,011 8,628
Subordinated notes 1,092 1,029 4,320 4,008
Long-term debt and
mandatorily redeemable
securities 603 307 2,163 1,127
--------- -------- --------- ---------
Total interest expense 30,700 19,913 102,561 70,104
--------- -------- --------- ---------
Net interest income 26,738 25,323 106,433 98,428
Recovery of provision for loan
and lease losses (98) (719) (2,736) (5,855)
--------- -------- --------- ---------
Net interest income after
recovery of provision for loan
and lease losses 26,836 26,042 109,169 104,283
Noninterest income:
Trust fees 3,486 3,207 13,806 12,877
Service charges on deposit
accounts 4,717 4,905 19,040 17,775
Mortgage banking income 1,804 2,734 11,637 10,868
Insurance commissions 948 1,037 4,574 4,133
Equipment rental income 5,062 4,017 18,972 16,067
Other income 1,681 1,674 6,554 6,463
Investment securities and
other investment (losses)
gains (8) 0 2,002 350
--------- -------- --------- ---------
Total noninterest income 17,690 17,574 76,585 68,533
--------- -------- --------- ---------
Noninterest expense:
Salaries and employee
benefits 16,785 16,470 66,605 69,767
Net occupancy expense 1,911 2,067 7,492 7,749
Furniture and equipment
expense 3,287 2,974 12,316 11,418
Depreciation - leased
equipment 3,998 3,171 14,958 12,895
Supplies and communication 1,468 1,381 5,496 5,462
Other expense 5,146 4,793 19,344 16,148
--------- -------- --------- ---------
Total noninterest expense 32,595 30,856 126,211 123,439
--------- -------- --------- ---------
Income before income taxes 11,931 12,760 59,543 49,377
Income tax expense 3,808 3,661 20,246 15,626
--------- -------- --------- ---------
Net income $8,123 $9,099 $39,297 $33,751
========= ======== ========= =========
Source: 1st Source Corporation
Contact: 1st Source Corporation
Larry Lentych, 574-235-2000
OR
Andrea Short, 574-235-2000