1st Source Corporation up 85.88 Percent in 2nd Quarter, Increased Dividend Announced.SOUTH BEND South Bend, city (1990 pop. 105,511), seat of St. Joseph co., N Ind., on the great south bend of the St. Joseph River, in a farming and mint-growing region; inc. as a city 1865. , Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. . -- 1st Source Corporation (Nasdaq:SRCE SRCE Source ), parent company of 1st Source Bank, today reported net income of $8.72 million for the second quarter of 2004, up 85.88 percent over the $4.69 million reported in the second quarter of 2003. During the first six months of 2004, net income for 1st Source Corporation was $13.80 million, a 50.79 percent increase over the $9.15 million reported for the same period in 2003. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per common share for the second quarter of 2004 amounted to $0.42, up 90.91 percent compared with $0.22 reported in the second quarter of 2003. Diluted net income per share for the first two quarters of 2004 was $0.66, an increase of 53.49 percent over the $0.43 reported in the same period a year ago. Earnings for the second quarter of 2004 represent a return on average common shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of 11.03 percent, as compared to 5.95 percent for the second quarter of 2003. Return on average total assets for the second quarter of 2004 was 1.08 percent versus 0.57 percent reported in the second quarter of 2003. Christopher J. Murphy III, Chairman and Chief Executive Officer, reported that at the July July: see month. meeting, the Board of Directors approved an increase in the cash dividend for the second quarter to $0.11 per share from $0.10 per share last quarter. This is a 10.00 percent increase from the previous quarter's dividend and a 22.22 percent increase over the second quarter dividend of 2003. The increased cash dividend is reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the improving performance of the company and will be payable on August 16, 2004, to shareholders of record August 9, 2004. Mr. Murphy commented, "1st Source's financial performance continues to improve. We have worked diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to strengthen our credit quality which has shown steady progress over the past year. We are still affected by decreased interest margins and volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the valuation of our mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. rights portfolio, but this quarter that volatility had a positive effect." Murphy concluded, "We have also continued to look for opportunities to grow our customer base and opened a new banking center on South Bend's south side in April. We continue to review and upgrade our systems and processes to help us provide outstanding customer service and better manage our businesses." 1st Source's reserve for loan losses as of June June: see month. 30, 2004 was 3.14 percent of total loans compared to 3.22 percent at the end of the first quarter of 2004 and 3.01 percent for the second quarter a year ago. 1st Source's provision for loan losses was $0.48 million this quarter compared to $4.90 million for the second quarter of 2003. Net charge-offs were $0.48 million for the second quarter 2004 compared to $6.48 million for the second quarter of 2003. The ratio of nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. to net loans and leases was 1.22 percent on June 30, 2004, compared to 2.65 percent on June 30, 2003. Tax-equivalent net interest income was $26.02 million for the second quarter of 2004, down 5.41 percent from 2003's second quarter. The net interest margin was 3.45 percent for the second quarter of 2004 versus 3.66 percent for the same period in 2003. For the first six months of 2004, tax-equivalent interest income was $52.49 million compared to $54.82 million for the first six months of 2003, a decrease of 4.24 percent. The net interest margin was 3.49 percent for the six months ending June 30, 2004, versus 3.69 percent for the same period in 2003. Noninterest income for the second quarter of 2004 was $20.22 million, down 7.74 percent from the second quarter of 2003. In the second quarter, equipment rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time decreased due to the shrinkage Shrinkage The amount by which inventory on hand is shorter than the amount of inventory recorded. Notes: The missing inventory could be due to theft, damage, or book keeping errors. of the operating lease Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. portfolio, while other income decreased with the elimination of securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. income, as 1st Source no longer securitizes any of its loan portfolio. Trading security income also declined in the second quarter. Mortgage banking income increased in the second quarter of 2004 compared to a year ago as mortgage servicing rights impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. recoveries of $3.78 million offset both a reduction in mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real volume and reduced gains on the sale of mortgage loans into the secondary market. For the first six months of 2004, noninterest income was $34.24 million, down 18.39 percent from 2003. Significant items affecting comparability between six month periods included decreased income from mortgage banking, equipment rental, securitization and securities trading securities trading, financial activity involving transactions of property such as stocks, bonds, commodities, and currency (see securities). Although the trading of stocks and bonds dates back several centuries in many Western nations, the development of the . Noninterest expense was $31.95 million for the second quarter of 2004, compared with $37.28 million for the second quarter of 2003. For the first six months, noninterest expense was $64.29 million, compared with $72.08 million for the same period in 2003. In general, noninterest expense improvements in 2004 reflect decreases in salaries and employee benefits expense, depreciation on leased equipment, and loan collection and repossession The taking back of an item that has been sold on credit and delivered to the purchaser because the payments have not been made on it. For example, if an individual fails to render prompt payments on a new car, the car might be subject to repossession by the finance company, expenses partially offset by an increase in professional fees which are included in other expense. As of June 30, 2004, the 1st Source common equity-to-assets ratio was 9.50 percent compared to 9.63 percent a year ago. Common shareholders' equity was $314.94 million, down 0.70 percent from the $317.17 million a year ago, due to the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of 103,733 shares of common stock and a decrease of $10.51 million in accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as . The decrease in accumulated other comprehensive income was a result of changes in unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. or loss on securities in the available-for-sale portfolio. Total assets at the end of the second quarter of 2004 were $3.32 billion, up 0.63 percent from the same time last year. Total deposits were down 9.79 percent and total loans were up 6.27 percent over the comparable figures at the end of the second quarter of 2003. 1st Source is the largest locally controlled financial institution headquartered in the northern Indiana-southwestern Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). area. While delivering a comprehensive range of consumer and commercial banking services, 1st Source Bank has distinguished itself with highly personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. services. 1st Source Bank also competes for business nationally by offering specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. financing services for private and cargo aircraft A cargo aircraft is an airplane designed and used for the carriage of goods, rather than passengers. This role demands a number of features that makes a cargo aircraft instantly identifiable; a "fat" looking fuselage, a high-wing to allow the cargo area to sit near the ground, a , automobiles No invention has so transformed the landscape of the United States as the automobile, and no other country has so thoroughly adopted the automobile as its favorite means of transportation. for leasing and rental agencies, medium and heavy duty trucks, construction and environmental equipment. The Corporation includes 61 banking centers in 15 counties, 6 Trustcorp Mortgage offices in Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Ohio and Michigan, and 22 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 customers 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 stock market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. 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 Citigroup U.S. holding company formed in 1998 from the merger of Citicorp (itself a holding company incorporated in 1967) and Travelers Group, Inc. The $70 billion merger included one of the largest U.S. investment banks, Salomon Smith Barney Inc. Global Markets, Inc.; FTN FTN Face the Nation (CBS News) FTN Family Television Network FTN Fido Technology Networks FTN FeedThe.Net (website) FTN Franja Transversal del Norte (Guatemala region) Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians Research Securities; Goldman Gold·man , Emma 1869-1940. Russian-born American anarchist. Jailed repeatedly for her advocacy of birth control and opposition to military conscription, she was deported to the Soviet Union in 1919. , Sachs Sachs , Hans 1494-1576. German writer and Meistersinger noted for his many dramas, poems, and songs. His life inspired Wagner's opera Die Meistersinger von Nürnberg (1868). & Company; Keefe, Bruyette & Woods, Inc.; NatCity Investments, Inc.; Prudential Prudential is the name of two different companies and buildings named after them: Companies:
Depending on the jurisdiction, the division uses different broker dealer subsidiaries of RBC:
In science:
A portion of 1st Source's fixed and floating rate cumulative trust preferred securities are traded on the Nasdaq stock market under the symbols "SRCEP" and "SRCEO," respectively. The rate on the fixed rate securities is 9.0 percent and the rate for the third quarter 2004 on the floating rate securities is 3.63 percent. Marketmakers in those securities are Howe, Barnes Barnes, former municipal borough, SE England. See Richmond upon Thames. Investments, Inc.; Schwab Capital Markets; and Stifel, Nicolaus & Company, Incorporated. Except for historical information contained herein, the matters discussed in this document express "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ." 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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 U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ; 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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
2nd QUARTER 2004 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except for per share data)
Three Months Ended Six Months Ended
June 30 June 30
2004 2003 2004 2003
----------- ----------- ----------- -----------
END OF PERIOD
BALANCES
Assets $ 3,315,249 $ 3,294,473
Loans 2,230,429 2,098,788
Deposits 2,384,863 2,643,744
Reserve for loan
losses 70,045 63,194
Intangible assets 24,904 27,034
Common
shareholders'
equity 314,936 317,172
AVERAGE BALANCES
Assets $ 3,257,795 $ 3,299,570 $ 3,254,177 $ 3,286,796
Earning assets 3,030,244 3,013,449 3,023,187 2,995,225
Investments 737,900 670,172 739,352 663,215
Loans 2,191,348 2,112,247 2,195,194 2,131,930
Deposits 2,432,125 2,625,320 2,422,959 2,604,273
Interest bearing
liabilities 2,489,900 2,500,962 2,501,970 2,508,611
Common
shareholders'
equity 317,805 315,933 317,688 313,887
INCOME STATEMENT
DATA
Net interest
income $ 25,334 $ 26,740 $ 51,096 $ 53,296
Net interest
income - FTE 26,015 27,504 52,490 54,816
Provision for
loan losses 482 4,901 583 10,451
Noninterest
income 20,221 21,918 34,240 41,957
Noninterest
expense 31,945 37,275 64,287 72,077
Net income 8,718 4,690 13,797 9,150
PER SHARE DATA
Basic net income
per common share $ 0.42 $ 0.22 $ 0.67 $ 0.43
Diluted net
income per
common share 0.42 0.22 0.66 0.43
Cash dividends
per common share 0.100 0.090 0.200 0.180
Book value per
common share 15.26 15.05 15.26 15.05
Market value -
High 25.500 19.500 25.500 19.500
Market value -
Low 20.350 12.570 20.350 12.570
Basic weighted
average common
shares
outstanding 20,700,516 21,071,946 20,713,775 21,036,329
Diluted weighted
average common
shares
outstanding 20,969,669 21,407,824 20,993,471 21,368,940
KEY RATIOS
Return on average
assets 1.08 % 0.57 % 0.85 % 0.56 %
Return on average
common
shareholders'
equity 11.03 5.95 8.73 5.88
Average common
shareholders'
equity to
average assets 9.76 9.57 9.76 9.55
End of period
tangible common
equity to
tangible assets 8.81 8.88 8.81 8.88
Net interest
margin 3.45 3.66 3.49 3.69
Efficiency:
expense to
revenue 66.20 72.18 71.08 70.95
Net charge-offs
to average loans 0.09 0.67 0.05 0.61
Loan loss reserve
to loans 3.14 3.01 3.14 3.01
Nonperforming
assets to loans
and leases 1.22 2.65 1.22 2.65
ASSET QUALITY
Loans past due 90
days or more $ 164 $ 289
Nonaccrual loans 22,210 41,930
Other real estate 2,184 3,213
Repossessions 3,222 12,583
Equipment owned
under operating
leases 118 168
Total
nonperforming
assets 27,898 58,183
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
June 30, 2004 June 30, 2003
--------------- ---------------
ASSETS
--------------------------------------
Cash and due from banks $82,131 $122,422
Federal funds sold and interest
bearing deposits with other banks 1,169 61,351
Investment securities, available-for-
sale (amortized cost of $791,019 and
$676,431 June 30, 2004 and 2003,
respectively) 782,525 684,926
Trading account securities 4,516 13,303
Mortgages held for sale 66,296 125,724
Loans, net of unearned discount:
Commercial and agricultural loans 426,933 427,760
Auto, light truck and environmental
equipment 269,583 277,477
Medium and heavy duty truck 229,867 209,235
Aircraft financing 445,340 288,110
Construction equipment financing 213,609 270,582
Loans secured by real estate 551,058 527,047
Consumer loans 94,039 98,577
--------------- ---------------
Total loans 2,230,429 2,098,788
Reserve for loan losses (70,045) (63,194)
--------------- ---------------
Net loans 2,160,384 2,035,594
Equipment owned under operating leases
(net of accumulated depreciation) 56,186 80,135
Net premises and equipment 37,490 39,376
Accrued income and other assets 124,552 131,642
--------------- ---------------
Total assets $3,315,249 $3,294,473
=============== ===============
LIABILITIES
--------------------------------------
Deposits:
Noninterest bearing $384,302 $444,705
Interest bearing 2,000,561 2,199,039
--------------- ---------------
Total deposits 2,384,863 2,643,744
Federal funds purchased and securities
sold under agreements to repurchase 411,812 172,586
Other short-term borrowings 71,760 35,707
Long-term debt and mandatorily
redeemable securities 22,901 17,253
Subordinated notes 56,444 54,750
Accrued expenses and other liabilities 52,533 53,261
--------------- ---------------
Total liabilities 3,000,313 2,977,301
SHAREHOLDERS' EQUITY
--------------------------------------
Preferred stock; no par value - -
Common stock; no par value 7,578 7,578
Capital surplus 214,001 214,001
Retained earnings 110,199 95,855
Cost of common stock in treasury (11,603) (5,535)
Accumulated other comprehensive
(loss)/income (5,239) 5,273
--------------- ---------------
Total shareholders' equity 314,936 317,172
--------------- ---------------
Total liabilities and shareholders'
equity $3,315,249 $3,294,473
=============== ===============
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
---------- --------- --------- ---------
Interest income:
Loans $31,904 $36,103 $64,358 $72,713
Investment securities,
taxable 4,106 4,710 8,395 9,244
Investment securities, tax-
exempt 1,258 1,445 2,575 2,880
Other 46 295 111 445
---------- --------- --------- ---------
Total interest income 37,314 42,553 75,439 85,282
Interest expense:
Deposits 9,597 13,187 19,420 26,958
Short-term borrowings 1,283 1,498 2,540 2,762
Subordinated notes 962 941 1,923 1,881
Long-term debt and
mandatorily redeemable
securities 138 187 460 385
---------- --------- --------- ---------
Total interest expense 11,980 15,813 24,343 31,986
---------- --------- --------- ---------
Net interest income 25,334 26,740 51,096 53,296
Provision for loan losses 482 4,901 583 10,451
---------- --------- --------- ---------
Net interest income after
provision for loan losses 24,852 21,839 50,513 42,845
Noninterest income:
Trust fees 3,140 2,736 6,230 5,376
Service charges on deposit
accounts 4,115 3,922 7,821 7,646
Mortgage banking income 6,187 5,176 5,345 9,342
Equipment rental income 4,927 6,455 10,751 13,226
Other income 1,890 3,904 4,383 6,922
Investment securities and
other investment losses (38) (275) (290) (555)
---------- --------- --------- ---------
Total noninterest income 20,221 21,918 34,240 41,957
---------- --------- --------- ---------
Noninterest expense:
Salaries and employee
benefits 15,866 18,290 31,620 35,537
Net occupancy expense 1,725 1,785 3,558 3,649
Furniture and equipment
expense 2,697 2,677 5,281 5,318
Depreciation - leased
equipment 3,883 5,050 8,419 10,408
Supplies and communication 1,451 1,558 2,883 3,069
Loan collection and
repossession expense 821 3,695 1,876 5,566
Other expense 5,502 4,220 10,650 8,530
---------- --------- --------- ---------
Total noninterest expense 31,945 37,275 64,287 72,077
---------- --------- --------- ---------
Income before income taxes 13,128 6,482 20,466 12,725
Income taxes 4,410 1,792 6,669 3,575
---------- --------- --------- ---------
Net Income $8,718 $4,690 $13,797 $9,150
========== ========= ========= =========
The NASDAQ Stock Market National Market Symbol: "SRCE"
(CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com
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