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).
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.”
“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.
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.
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.
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)
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.
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
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
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
AverageBalance
InterestIncome/Expense
Yield/Rate
AverageBalance
InterestIncome/Expense
Yield/Rate
AverageBalance
InterestIncome/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.
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
AverageBalance
InterestIncome/Expense
Yield/Rate
AverageBalance
InterestIncome/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.
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 shareholder@1stsource.com
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version on businesswire.com: http://www.businesswire.com/news/home/20161020006358/en/
1st Source CorporationAndrea Short, 574-235-2000
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