1st Source Corporation (NASDAQ:SRCE), parent company of 1st Source Bank, today announced net income of $57.49 million for the year of 2015, compared to $58.07 million in 2014. Fourth quarter net income was $14.42 million, compared to $15.00 million in the fourth quarter of 2014. The 2014 results included $3.30 million of one-time tax benefits of which $2.12 million was in the fourth quarter. These benefits were the result of a resolution of uncertain tax positions due to settlements with taxing authorities and the lapse of the applicable statute of limitations.
Diluted net income per common share for the year was $2.17 unchanged from a year earlier. Diluted net income per common share for the fourth quarter was $0.55, compared to $0.57 per common share reported in the fourth quarter of the previous year. (All share and per share information has been adjusted for a 10% stock dividend declared on July 22, 2015 and issued on August 14, 2015, unless otherwise noted.)
At its January 2016 meeting, the 1st Source Board of Directors approved a cash dividend of $0.18 per common share. The cash dividend is payable on February 12, 2016 to shareholders of record on February 1, 2016. Cash dividends for 2015 increased 4.03% over the previous year.
According to Christopher J. Murphy, III, Chairman, "While fourth quarter earnings did not conclude as strongly as I had hoped, I am pleased with the continued steady growth over the prior year with total loans and leases up 8.30%, total deposits up 8.84%, and total assets up 7.41%. The fourth quarter was negatively impacted by costs associated with the issuance of debit cards with the new, more secure embedded EMV chip which our customers are receiving this year. For the year, we saw steady growth across the board offset by an increase in noninterest expense as we continued our long-term focus of investing in our banking centers, information technology and our people. We also experienced an increase in employee health care costs. That said, I am proud that 1st Source Corporation continued adding to our record of consecutive dividend growth now with a 28th year!"
"Also, we ended the year by opening two new banking centers, one in downtown Kalamazoo, Michigan and another in a well-developed area of Valparaiso, Indiana. In Valparaiso we consolidated two outdated and less convenient facilities into one. As a result we look forward to growing in these markets in the coming years. We also received the Small Business Administration's Community Lender Award for producing the highest volume of SBA loans throughout the state, among banks of our size. It is an honor to receive this recognition for the third straight year. As always we remain focused on helping our clients achieve security, build wealth and realize their dreams," Murphy concluded.
Total assets at the end of 2015 were $5.19 billion, up 7.41% from the same period last year. Total loans and leases at December 31, 2015 were $3.99 billion, up 8.30%, and total deposits at December 31, 2015 were $4.14 billion, up 8.84% from the same period last year. As of December 31, 2015, the common equity-to-assets ratio was 12.41%, compared to 12.72% at December 31, 2014 and the tangible common equity-to-tangible assets ratio was 10.96% at December 31, 2015 compared to 11.15% at December 31, 2014.
The net interest margin was 3.61% for the fourth quarter of 2015 unchanged from the same period in 2014. The net interest margin was 3.60% for the year ending December 31, 2015 versus 3.59% for the year ending December 31, 2014. Tax-equivalent net interest income was $43.67 million for the fourth quarter of 2015, up 5.77% compared to $41.29 million for 2014’s fourth quarter. For the twelve months of 2015, tax-equivalent net interest income was $168.22 million, up 3.73% compared to $162.17 million for the twelve months of 2014.
Reserve for loan and lease losses as of December 31, 2015 was 2.21% of total loans and leases, compared to 2.31% as of December 31, 2014. We achieved net recoveries of $0.50 million for the fourth quarter 2015, compared to net charge-offs of $1.51 million in the fourth quarter 2014. Net recoveries for the full year were $0.88 million in 2015 compared to charge-offs of $2.17 million in 2014. There was no provision for loan and lease losses in the fourth quarter of 2015, compared with recovery of provision for loan and leases losses of $0.82 million for the same period in 2014. For the twelve months of 2015, the provision for loan and lease losses was $2.16 million compared with $3.73 million for the twelve months of 2014. The ratio of nonperforming assets to net loans and leases improved to 0.50% on December 31, 2015, compared to 1.13% on December 31, 2014.
Noninterest income for the fourth quarter of 2015 was $20.90 million, up 5.16% compared to $19.88 million for the fourth quarter of 2014. For the year, noninterest income was $83.32 million, up 6.97% from $77.89 million in 2014. Noninterest income increased primarily as a result of higher equipment rental income.
Noninterest expense for the fourth quarter of 2015 was $41.74 million, down slightly compared to $41.99 million for the fourth quarter of 2014. For the year ending December 31, 2015, noninterest expense was $159.11 million, up 6.05% from $150.04 million one year ago. Noninterest expense increased primarily as a result of higher salary and employee benefits and depreciation on leased equipment. Salaries expense increased due to more full-time equivalent employees related to opening three new banking centers in 2014, one new banking center in 2015 and filling other open positions. Employee benefits expense was up as a result of higher group insurance claims experience in 2015. Depreciation on leased equipment was higher as a result of an increase in the average equipment rental portfolio.
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 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.
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, 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.
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