UNITED 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): January 18, 2018 | ||
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)) |
1st SOURCE CORPORATION | ||
(Registrant) | ||
Date: January 18, 2018 | /s/ CHRISTOPHER J. MURPHY III | |
Christopher J. Murphy III | ||
Chairman of the Board and CEO | ||
Date: January 18, 2018 | /s/ ANDREA G. SHORT | |
Andrea G. Short | ||
Treasurer and Chief Financial Officer | ||
Principal Accounting Officer |
For: | Immediate Release | Contact: | Andrea Short |
January 18, 2018 | 574-235-2000 |
• | Net income improved to $17.99 million, up 18.19% over the fourth quarter of 2016. Diluted net income per common share increased to $0.69 from the prior year's fourth quarter of $0.58. |
• | One-time tax benefit of $2.61 million from the revaluation of net deferred tax liabilities. |
• | Return on average assets increased to 1.23% and return on average common shareholders' equity improved to 9.93% from 1.11% and 8.96%, respectively, in the fourth quarter of 2016. |
• | Net charge-offs of $2.11 million and nonperforming assets to loans and leases of 0.67% compared to $1.10 million and 0.70%, respectively, in the fourth quarter of 2016. |
• | Average loans and leases grew $296.88 million, up 7.15% from the fourth quarter of 2016. |
• | Average deposits grew $283.92 million, up 6.45% from the fourth quarter of 2016. |
• | Net interest income increased $5.43 million, up 12.52% from the fourth quarter of 2016. |
• | Noninterest income increased $3.32 million, up 14.83% from the fourth quarter of 2016 (13.12% excluding leased equipment depreciation). |
• | Noninterest expenses increased $5.55 million or 13.29% from the fourth quarter of 2016 (12.27% excluding leased equipment depreciation). |
1st SOURCE CORPORATION | ||||||||||||||||
4th QUARTER 2017 FINANCIAL HIGHLIGHTS | ||||||||||||||||
(Unaudited - Dollars in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
AVERAGE BALANCES | ||||||||||||||||
Assets | $ | 5,818,837 | $ | 5,706,072 | $ | 5,461,990 | $ | 5,638,322 | $ | 5,360,685 | ||||||
Earning assets | 5,418,305 | 5,300,838 | 5,097,192 | 5,251,094 | 5,003,922 | |||||||||||
Investments | 884,209 | 858,572 | 828,955 | 854,879 | 812,501 | |||||||||||
Loans and leases | 4,446,794 | 4,387,748 | 4,149,913 | 4,333,375 | 4,113,508 | |||||||||||
Deposits | 4,686,145 | 4,528,267 | 4,402,225 | 4,493,247 | 4,302,701 | |||||||||||
Interest bearing liabilities | 3,985,709 | 3,937,159 | 3,729,397 | 3,889,169 | 3,695,309 | |||||||||||
Common shareholders’ equity | 719,058 | 709,276 | 675,915 | 702,419 | 663,703 | |||||||||||
INCOME STATEMENT DATA | ||||||||||||||||
Net interest income | $ | 48,814 | $ | 47.229 | $ | 43,383 | $ | 185,631 | $ | 169,659 | ||||||
Net interest income - FTE(1) | 49,249 | 47,670 | 43,837 | 187,426 | 171,484 | |||||||||||
Provision for loan and lease losses | 3,622 | 1,620 | 742 | 8,980 | 5,833 | |||||||||||
Noninterest income | 25,671 | 25,592 | 22,356 | 98,706 | 88,945 | |||||||||||
Noninterest expense | 47,313 | 44,460 | 41,761 | 173,997 | 163,645 | |||||||||||
Net income | 17,994 | 17,182 | 15,225 | 68,051 | 57,786 | |||||||||||
PER SHARE DATA | ||||||||||||||||
Basic net income per common share | $ | 0.69 | $ | 0.66 | $ | 0.58 | $ | 2.60 | $ | 2.22 | ||||||
Diluted net income per common share | 0.69 | 0.66 | 0.58 | 2.60 | 2.22 | |||||||||||
Common cash dividends declared | 0.20 | 0.19 | 0.18 | 0.76 | 0.72 | |||||||||||
Book value per common share | 27.70 | 27.39 | 26.00 | 27.70 | 26.00 | |||||||||||
Tangible book value per common share(1) | 24.47 | 24.16 | 22.75 | 24.47 | 22.75 | |||||||||||
Market value - High | 53.29 | 51.80 | 45.61 | 53.29 | 45.61 | |||||||||||
Market value - Low | 47.16 | 44.59 | 33.27 | 42.15 | 27.01 | |||||||||||
Basic weighted average common shares outstanding | 25,936,508 | 25,935,867 | 25,873,552 | 25,925,820 | 25,879,397 | |||||||||||
Diluted weighted average common shares outstanding | 25,936,508 | 25,935,867 | 25,873,552 | 25,925,820 | 25,879,397 | |||||||||||
KEY RATIOS | ||||||||||||||||
Return on average assets | 1.23 | % | 1.19 | % | 1.11 | % | 1.21 | % | 1.08 | % | ||||||
Return on average common shareholders’ equity | 9.93 | 9.61 | 8.96 | 9.69 | 8.71 | |||||||||||
Average common shareholders’ equity to average assets | 12.36 | 12.43 | 12.37 | 12.46 | 12.38 | |||||||||||
End of period tangible common equity to tangible assets(1) | 10.94 | 10.95 | 10.89 | 10.94 | 10.89 | |||||||||||
Risk-based capital - Common Equity Tier 1(2) | 12.35 | 12.52 | 12.59 | 12.35 | 12.59 | |||||||||||
Risk-based capital - Tier 1(2) | 13.44 | 13.65 | 13.80 | 13.44 | 13.80 | |||||||||||
Risk-based capital - Total(2) | 14.70 | 14.94 | 15.12 | 14.70 | 15.12 | |||||||||||
Net interest margin | 3.57 | 3.53 | 3.39 | 3.54 | 3.39 | |||||||||||
Net interest margin - FTE(1) | 3.61 | 3.57 | 3.42 | 3.57 | 3.43 | |||||||||||
Efficiency ratio: expense to revenue | 63.52 | 61.05 | 63.53 | 61.19 | 63.28 | |||||||||||
Efficiency ratio: expense to revenue - adjusted(1) | 60.09 | 57.98 | 59.87 | 57.66 | 60.24 | |||||||||||
Net charge offs to average loans and leases | 0.19 | 0.01 | 0.11 | 0.06 | 0.13 | |||||||||||
Loan and lease loss reserve to loans and leases | 2.10 | 2.10 | 2.11 | 2.10 | 2.11 | |||||||||||
Nonperforming assets to loans and leases | 0.67 | 0.64 | 0.70 | 0.67 | 0.70 | |||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||
END OF PERIOD BALANCES | ||||||||||||||||
Assets | $ | 5,887,284 | $ | 5,806,735 | $ | 5,687,230 | $ | 5,501,526 | $ | 5,486,268 | ||||||
Loans and leases | 4,527,678 | 4,436,718 | 4,381,314 | 4,234,862 | 4,188,071 | |||||||||||
Deposits | 4,752,730 | 4,573,712 | 4,482,036 | 4,336,976 | 4,333,760 | |||||||||||
Reserve for loan and lease losses | 94,883 | 93,372 | 91,914 | 90,118 | 88,543 | |||||||||||
Goodwill and intangible assets | 83,742 | 83,795 | 83,848 | 83,960 | 84,102 | |||||||||||
Common shareholders’ equity | 718,537 | 710,497 | 699,202 | 685,934 | 672,650 | |||||||||||
ASSET QUALITY | ||||||||||||||||
Loans and leases past due 90 days or more | $ | 459 | $ | 208 | $ | 178 | $ | 344 | $ | 416 | ||||||
Nonaccrual loans and leases | 19,405 | 15,066 | 15,923 | 18,090 | 19,907 | |||||||||||
Other real estate | 1,312 | 1,341 | 710 | 916 | 704 | |||||||||||
Repossessions | 10,114 | 12,913 | 13,052 | 8,121 | 9,373 | |||||||||||
Equipment owned under operating leases | 9 | 14 | 21 | 27 | 34 | |||||||||||
Total nonperforming assets | $ | 31,299 | $ | 29,542 | $ | 29,884 | $ | 27,498 | $ | 30,434 |
1st SOURCE CORPORATION | |||||||||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||||||||
(Unaudited - Dollars in thousands) | |||||||||||||||
December 31, | September 30, | June 30, | December 31, | ||||||||||||
2017 | 2017 | 2017 | 2016 | ||||||||||||
ASSETS | |||||||||||||||
Cash and due from banks | $ | 73,635 | $ | 64,636 | $ | 63,473 | $ | 58,578 | |||||||
Federal funds sold and interest bearing deposits with other banks | 4,398 | 34,788 | 12,561 | 49,726 | |||||||||||
Investment securities available-for-sale | 904,033 | 893,973 | 850,314 | 850,467 | |||||||||||
Other investments | 25,953 | 25,953 | 24,238 | 22,458 | |||||||||||
Mortgages held for sale | 13,123 | 11,000 | 16,204 | 15,849 | |||||||||||
Loans and leases, net of unearned discount: | |||||||||||||||
Commercial and agricultural | 929,997 | 893,174 | 876,404 | 812,264 | |||||||||||
Auto and light truck | 496,816 | 505,126 | 512,021 | 411,764 | |||||||||||
Medium and heavy duty truck | 296,935 | 287,975 | 290,687 | 294,790 | |||||||||||
Aircraft | 844,657 | 816,120 | 787,516 | 802,414 | |||||||||||
Construction equipment | 563,437 | 541,838 | 539,097 | 495,925 | |||||||||||
Commercial real estate | 741,568 | 740,345 | 720,078 | 719,170 | |||||||||||
Residential real estate and home equity | 526,122 | 524,071 | 526,592 | 521,931 | |||||||||||
Consumer | 128,146 | 128,069 | 128,919 | 129,813 | |||||||||||
Total loans and leases | 4,527,678 | 4,436,718 | 4,381,314 | 4,188,071 | |||||||||||
Reserve for loan and lease losses | (94,883 | ) | (93,372 | ) | (91,914 | ) | (88,543 | ) | |||||||
Net loans and leases | 4,432,795 | 4,343,346 | 4,289,400 | 4,099,528 | |||||||||||
Equipment owned under operating leases, net | 139,581 | 145,975 | 144,509 | 118,793 | |||||||||||
Net premises and equipment | 54,612 | 53,324 | 54,783 | 56,708 | |||||||||||
Goodwill and intangible assets | 83,742 | 83,795 | 83,848 | 84,102 | |||||||||||
Accrued income and other assets | 155,412 | 149,945 | 147,900 | 130,059 | |||||||||||
Total assets | $ | 5,887,284 | $ | 5,806,735 | $ | 5,687,230 | $ | 5,486,268 | |||||||
LIABILITIES | |||||||||||||||
Deposits: | |||||||||||||||
Noninterest bearing demand | $ | 1,064,271 | $ | 1,019,106 | $ | 979,801 | $ | 991,256 | |||||||
Interest-bearing deposits: | |||||||||||||||
Interest-bearing demand | 1,554,898 | 1,493,187 | 1,519,419 | 1,471,526 | |||||||||||
Savings | 863,588 | 825,147 | 832,341 | 814,326 | |||||||||||
Time | 1,269,973 | 1,236,272 | 1,150,475 | 1,056,652 | |||||||||||
Total interest-bearing deposits | 3,688,459 | 3,554,606 | 3,502,235 | 3,342,504 | |||||||||||
Total deposits | 4,752,730 | 4,573,712 | 4,482,036 | 4,333,760 | |||||||||||
Short-term borrowings: | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 205,834 | 148,001 | 148,109 | 162,913 | |||||||||||
Other short-term borrowings | 8,761 | 168,764 | 158,474 | 129,030 | |||||||||||
Total short-term borrowings | 214,595 | 316,765 | 306,583 | 291,943 | |||||||||||
Long-term debt and mandatorily redeemable securities | 70,060 | 70,482 | 70,438 | 74,308 | |||||||||||
Subordinated notes | 58,764 | 58,764 | 58,764 | 58,764 | |||||||||||
Accrued expenses and other liabilities | 72,598 | 76,515 | 70,207 | 54,843 | |||||||||||
Total liabilities | 5,168,747 | 5,096,238 | 4,988,028 | 4,813,618 | |||||||||||
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 December 31, 2017, September 30, 2017, June 30, 2017, and December 31, 2016, respectively | 436,538 | 436,538 | 436,538 | 436,538 | |||||||||||
Retained earnings | 339,959 | 327,149 | 314,889 | 290,824 | |||||||||||
Cost of common stock in treasury (2,268,910, 2,269,544, 2,270,350, and 2,329,909 shares at December 31, 2017, September 30, 2017, June 30, 2017, and December 31, 2016, respectively) | (54,628 | ) | (54,643 | ) | (54,662 | ) | (56,056 | ) | |||||||
Accumulated other comprehensive (loss) income | (3,332 | ) | 1,453 | 2,437 | 1,344 | ||||||||||
Total shareholders’ equity | 718,537 | 710,497 | 699,202 | 672,650 | |||||||||||
Total liabilities and shareholders’ equity | $ | 5,887,284 | $ | 5,806,735 | $ | 5,687,230 | $ | 5,486,268 |
1st SOURCE CORPORATION | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
(Unaudited - Dollars in thousands, except per share amounts) | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Interest income: | |||||||||||||||||||
Loans and leases | $ | 51,381 | $ | 50,429 | $ | 44,407 | $ | 194,726 | $ | 175,999 | |||||||||
Investment securities, taxable | 3,761 | 3,048 | 3,273 | 13,693 | 11,777 | ||||||||||||||
Investment securities, tax-exempt | 585 | 628 | 679 | 2,573 | 2,740 | ||||||||||||||
Other | 458 | 325 | 365 | 1,393 | 1,244 | ||||||||||||||
Total interest income | 56,185 | 54,430 | 48,724 | 212,385 | 191,760 | ||||||||||||||
Interest expense: | |||||||||||||||||||
Deposits | 5,771 | 5,186 | 3,827 | 19,202 | 15,267 | ||||||||||||||
Short-term borrowings | 220 | 396 | 95 | 1,115 | 525 | ||||||||||||||
Subordinated notes | 870 | 1,022 | 1,055 | 4,002 | 4,220 | ||||||||||||||
Long-term debt and mandatorily redeemable securities | 510 | 597 | 364 | 2,435 | 2,089 | ||||||||||||||
Total interest expense | 7,371 | 7,201 | 5,341 | 26,754 | 22,101 | ||||||||||||||
Net interest income | 48,814 | 47,229 | 43,383 | 185,631 | 169,659 | ||||||||||||||
Provision for loan and lease losses | 3,622 | 1,620 | 742 | 8,980 | 5,833 | ||||||||||||||
Net interest income after provision for loan and lease losses | 45,192 | 45,609 | 42,641 | 176,651 | 163,826 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Trust and wealth advisory | 5,315 | 5,037 | 4,834 | 20,980 | 19,256 | ||||||||||||||
Service charges on deposit accounts | 2,393 | 2,468 | 2,304 | 9,564 | 9,053 | ||||||||||||||
Debit card | 3,090 | 2,983 | 2,727 | 11,809 | 10,887 | ||||||||||||||
Mortgage banking | 1,059 | 1,486 | 1,001 | 4,796 | 4,496 | ||||||||||||||
Insurance commissions | 1,383 | 1,429 | 1,367 | 5,889 | 5,513 | ||||||||||||||
Equipment rental | 8,046 | 7,917 | 6,616 | 30,381 | 25,863 | ||||||||||||||
Gains on investment securities available-for-sale | 1,583 | 1,007 | 1,006 | 4,340 | 1,796 | ||||||||||||||
Other | 2,802 | 3,265 | 2,501 | 10,947 | 12,081 | ||||||||||||||
Total noninterest income | 25,671 | 25,592 | 22,356 | 98,706 | 88,945 | ||||||||||||||
Noninterest expense: | |||||||||||||||||||
Salaries and employee benefits | 22,839 | 22,016 | 22,156 | 86,912 | 86,837 | ||||||||||||||
Net occupancy | 2,856 | 2,806 | 2,443 | 10,624 | 9,686 | ||||||||||||||
Furniture and equipment | 5,505 | 5,363 | 5,001 | 20,769 | 19,500 | ||||||||||||||
Depreciation — leased equipment | 6,674 | 6,565 | 5,563 | 25,215 | 21,678 | ||||||||||||||
Professional fees | 2,296 | 1,765 | 1,508 | 6,810 | 5,161 | ||||||||||||||
Supplies and communication | 1,444 | 1,316 | 1,106 | 5,355 | 5,244 | ||||||||||||||
FDIC and other insurance | 648 | 693 | 710 | 2,537 | 3,147 | ||||||||||||||
Business development and marketing | 3,125 | 1,199 | 1,668 | 7,477 | 4,936 | ||||||||||||||
Loan and lease collection and repossession | 666 | 1,093 | 464 | 2,724 | 1,600 | ||||||||||||||
Other | 1,260 | 1,644 | 1,142 | 5,574 | 5,856 | ||||||||||||||
Total noninterest expense | 47,313 | 44,460 | 41,761 | 173,997 | 163,645 | ||||||||||||||
Income before income taxes | 23,550 | 26,741 | 23,236 | 101,360 | 89,126 | ||||||||||||||
Income tax expense | 5,556 | 9,559 | 8,011 | 33,309 | 31,340 | ||||||||||||||
Net income | $ | 17,994 | $ | 17,182 | $ | 15,225 | $ | 68,051 | $ | 57,786 | |||||||||
Per common share: | |||||||||||||||||||
Basic net income per common share | $ | 0.69 | $ | 0.66 | $ | 0.58 | $ | 2.60 | $ | 2.22 | |||||||||
Diluted net income per common share | $ | 0.69 | $ | 0.66 | $ | 0.58 | $ | 2.60 | $ | 2.22 | |||||||||
Cash dividends | $ | 0.20 | $ | 0.19 | $ | 0.18 | $ | 0.76 | $ | 0.72 | |||||||||
Basic weighted average common shares outstanding | 25,936,508 | 25,935,867 | 25,873,552 | 25,925,820 | 25,879,397 | ||||||||||||||
Diluted weighted average common shares outstanding | 25,936,508 | 25,935,867 | 25,873,552 | 25,925,820 | 25,879,397 |
1st SOURCE CORPORATION | ||||||||||||||||||||||||||||||||
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||
INTEREST RATES AND INTEREST DIFFERENTIAL | ||||||||||||||||||||||||||||||||
(Unaudited - Dollars in thousands) | ||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
Average Balance | Interest Income/Expense | Yield/ Rate | Average Balance | Interest Income/Expense | Yield/ Rate | Average Balance | Interest Income/Expense | Yield/ Rate | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Investment securities available-for-sale: | ||||||||||||||||||||||||||||||||
Taxable | $ | 764,239 | $ | 3,761 | 1.95 | % | $ | 733,471 | $ | 3,048 | 1.65 | % | $ | 696,110 | $ | 3,273 | 1.87 | % | ||||||||||||||
Tax-exempt(1) | 119,970 | 853 | 2.82 | % | 125,101 | 917 | 2.91 | % | 132,845 | 983 | 2.94 | % | ||||||||||||||||||||
Mortgages held for sale | 10,654 | 107 | 3.98 | % | 12,832 | 126 | 3.90 | % | 14,615 | 128 | 3.48 | % | ||||||||||||||||||||
Loans and leases, net of unearned discount(1) | 4,446,794 | 51,441 | 4.59 | % | 4,387,748 | 50,455 | 4.56 | % | 4,149,913 | 44,429 | 4.26 | % | ||||||||||||||||||||
Other investments | 76,648 | 458 | 2.37 | % | 41,686 | 325 | 3.09 | % | 103,709 | 365 | 1.40 | % | ||||||||||||||||||||
Total earning assets(1) | 5,418,305 | 56,620 | 4.15 | % | 5,300,838 | 54,871 | 4.11 | % | 5,097,192 | 49,178 | 3.84 | % | ||||||||||||||||||||
Cash and due from banks | 64,356 | 62,373 | 62,689 | |||||||||||||||||||||||||||||
Reserve for loan and lease losses | (94,265 | ) | (93,162 | ) | (89,618 | ) | ||||||||||||||||||||||||||
Other assets | 430,441 | 436,023 | 391,727 | |||||||||||||||||||||||||||||
Total assets | $ | 5,818,837 | $ | 5,706,072 | $ | 5,461,990 | ||||||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 3,644,989 | $ | 5,771 | 0.63 | % | $ | 3,543,037 | $ | 5,186 | 0.58 | % | $ | 3,406,478 | $ | 3,827 | 0.45 | % | ||||||||||||||
Short-term borrowings | 211,786 | 220 | 0.41 | % | 265,014 | 396 | 0.59 | % | 189,895 | 95 | 0.20 | % | ||||||||||||||||||||
Subordinated notes | 58,764 | 870 | 5.87 | % | 58,764 | 1,022 | 6.90 | % | 58,764 | 1,055 | 7.14 | % | ||||||||||||||||||||
Long-term debt and mandatorily redeemable securities | 70,170 | 510 | 2.88 | % | 70,344 | 597 | 3.37 | % | 74,260 | 364 | 1.95 | % | ||||||||||||||||||||
Total interest-bearing liabilities | 3,985,709 | 7,371 | 0.73 | % | 3,937,159 | 7,201 | 0.73 | % | 3,729,397 | 5,341 | 0.57 | % | ||||||||||||||||||||
Noninterest-bearing deposits | 1,041,156 | 985,230 | 995,747 | |||||||||||||||||||||||||||||
Other liabilities | 72,914 | 74,407 | 60,931 | |||||||||||||||||||||||||||||
Shareholders’ equity | 719,058 | 709,276 | 675,915 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,818,837 | $ | 5,706,072 | $ | 5,461,990 | ||||||||||||||||||||||||||
Less: Fully tax-equivalent adjustments | (435 | ) | (441 | ) | (454 | ) | ||||||||||||||||||||||||||
Net interest income/margin (GAAP-derived)(1) | $ | 48,814 | 3.57 | % | $ | 47,229 | 3.53 | % | $ | 43,383 | 3.39 | % | ||||||||||||||||||||
Fully tax-equivalent adjustments | 435 | 441 | 454 | |||||||||||||||||||||||||||||
Net interest income/margin - FTE(1) | $ | 49,249 | 3.61 | % | $ | 47,670 | 3.57 | % | $ | 43,837 | 3.42 | % |
1st SOURCE CORPORATION | |||||||||||||||||||||
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST RATES AND INTEREST DIFFERENTIAL | |||||||||||||||||||||
(Unaudited - Dollars in thousands) | |||||||||||||||||||||
Twelve Months Ended | |||||||||||||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||||||||
Average Balance | Interest Income/Expense | Yield/ Rate | Average Balance | Interest Income/Expense | Yield/ Rate | ||||||||||||||||
ASSETS | |||||||||||||||||||||
Investment securities available-for-sale: | |||||||||||||||||||||
Taxable | $ | 728,501 | $ | 13,693 | 1.88 | % | $ | 684,503 | $ | 11,777 | 1.72 | % | |||||||||
Tax-exempt(1) | 126,378 | 3,747 | 2.96 | % | 127,998 | 3,981 | 3.11 | % | |||||||||||||
Mortgages held for sale | 10,754 | 429 | 3.99 | % | 12,396 | 467 | 3.77 | % | |||||||||||||
Loans and leases, net of unearned discount(1) | 4,333,375 | 194,918 | 4.50 | % | 4,113,508 | 176,116 | 4.28 | % | |||||||||||||
Other investments | 52,086 | 1,393 | 2.67 | % | 65,517 | 1,244 | 1.90 | % | |||||||||||||
Total earning assets(1) | 5,251,094 | 214,180 | 4.08 | % | 5,003,922 | 193,585 | 3.87 | % | |||||||||||||
Cash and due from banks | 62,137 | 60,753 | |||||||||||||||||||
Reserve for loan and lease losses | (92,187 | ) | (90,206 | ) | |||||||||||||||||
Other assets | 417,278 | 386,216 | |||||||||||||||||||
Total assets | $ | 5,638,322 | $ | 5,360,685 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
Interest-bearing deposits | $ | 3,510,197 | $ | 19,202 | 0.55 | % | $ | 3,358,827 | $ | 15,267 | 0.45 | % | |||||||||
Short-term borrowings | 245,235 | 1,115 | 0.45 | % | 210,876 | 525 | 0.25 | % | |||||||||||||
Subordinated notes | 58,764 | 4,002 | 6.81 | % | 58,764 | 4,220 | 7.18 | % | |||||||||||||
Long-term debt and mandatorily redeemable securities | 74,973 | 2,435 | 3.25 | % | 66,842 | 2,089 | 3.13 | % | |||||||||||||
Total interest-bearing liabilities | 3,889,169 | 26,754 | 0.69 | % | 3,695,309 | 22,101 | 0.60 | % | |||||||||||||
Noninterest-bearing deposits | 983,050 | 943,874 | |||||||||||||||||||
Other liabilities | 63,684 | 57,799 | |||||||||||||||||||
Shareholders’ equity | 702,419 | 663,703 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,638,322 | $ | 5,360,685 | |||||||||||||||||
Less: Fully tax-equivalent adjustments | (1,795 | ) | (1,825 | ) | |||||||||||||||||
Net interest income/margin (GAAP-derived)(1) | $ | 185,631 | 3.54 | % | $ | 169,659 | 3.39 | % | |||||||||||||
Fully tax-equivalent adjustments | 1,795 | 1,825 | |||||||||||||||||||
Net interest income/margin - FTE(1) | $ | 187,426 | 3.57 | % | $ | 171,484 | 3.43 | % |
1st SOURCE CORPORATION | |||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||
(Unaudited - Dollars in thousands, except per share data) | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||
Calculation of Net Interest Margin | |||||||||||||||||
(A) | Interest income (GAAP) | $ | 56,185 | $ | 54,430 | $ | 48,724 | $ | 212,385 | $ | 191,760 | ||||||
Fully tax-equivalent adjustments: | |||||||||||||||||
(B) | - Loans and leases | 167 | 152 | 150 | 621 | 584 | |||||||||||
(C) | - Tax-exempt investment securities | 268 | 289 | 304 | 1,174 | 1,241 | |||||||||||
(D) | Interest income - FTE (A+B+C) | 56,620 | 54,871 | 49,178 | 214,180 | 193,585 | |||||||||||
(E) | Interest expense (GAAP) | 7,371 | 7,201 | 5,341 | 26,754 | 22,101 | |||||||||||
(F) | Net interest income (GAAP) (A–E) | 48,814 | 47,229 | 43,383 | 185,631 | 169,659 | |||||||||||
(G) | Net interest income - FTE (D–E) | 49,249 | 47,670 | 43,837 | 187,426 | 171,484 | |||||||||||
(H) | Annualization factor | 3.967 | 3.967 | 3.978 | 1.000 | 1.000 | |||||||||||
(I) | Total earning assets | $ | 5,418,305 | $ | 5,300,838 | $ | 5,097,192 | $ | 5,251,094 | $ | 5,003,922 | ||||||
Net interest margin (GAAP-derived) (F*H)/I | 3.57 | % | 3.53 | % | 3.39 | % | 3.54 | % | 3.39 | % | |||||||
Net interest margin - FTE (G*H)/I | 3.61 | % | 3.57 | % | 3.42 | % | 3.57 | % | 3.43 | % | |||||||
Calculation of Efficiency Ratio | |||||||||||||||||
(F) | Net interest income (GAAP) | $ | 48,814 | $ | 47,229 | $ | 43,383 | $ | 185,631 | $ | 169,659 | ||||||
(G) | Net interest income - FTE | 49,249 | 47,670 | 43,837 | 187,426 | 171,484 | |||||||||||
(J) | Plus: noninterest income (GAAP) | 25,671 | 25,592 | 22,356 | 98,706 | 88,945 | |||||||||||
(K) | Less: gains/losses on investment securities and partnership investments | (1,441 | ) | (1,336 | ) | (974 | ) | (4,569 | ) | (3,873 | ) | ||||||
(L) | Less: depreciation - leased equipment | (6,674 | ) | (6,565 | ) | (5,563 | ) | (25,215 | ) | (21,678 | ) | ||||||
(M) | Total net revenue (GAAP) (F+J) | 74,485 | 72,821 | 65,739 | 284,337 | 258,604 | |||||||||||
(N) | Total net revenue - adjusted (G+J–K–L) | 66,805 | 65,361 | 59,656 | 256,348 | 234,878 | |||||||||||
(O) | Noninterest expense (GAAP) | 47,313 | 44,460 | 41,761 | 173,997 | 163,645 | |||||||||||
(L) | Less: depreciation - leased equipment | (6,674 | ) | (6,565 | ) | (5,563 | ) | (25,215 | ) | (21,678 | ) | ||||||
(P) | Less: contribution expense limited to gains on investment securities in (K) | (498 | ) | — | (484 | ) | (959 | ) | (484 | ) | |||||||
(Q) | Noninterest expense - adjusted (O–L–P) | 40,141 | 37,895 | 35,714 | 147,823 | 141,483 | |||||||||||
Efficiency ratio (GAAP-derived) (O/M) | 63.52 | % | 61.05 | % | 63.53 | % | 61.19 | % | 63.28 | % | |||||||
Efficiency ratio - adjusted (Q/N) | 60.09 | % | 57.98 | % | 59.87 | % | 57.66 | % | 60.24 | % | |||||||
End of Period | |||||||||||||||||
December 31, | September 30, | December 31, | |||||||||||||||
2017 | 2017 | 2016 | |||||||||||||||
Calculation of Tangible Common Equity-to-Tangible Assets Ratio | |||||||||||||||||
(R) | Total common shareholders’ equity (GAAP) | $ | 718,537 | $ | 710,497 | $ | 672,650 | ||||||||||
(S) | Less: goodwill and intangible assets | (83,742 | ) | (83,795 | ) | (84,102 | ) | ||||||||||
(T) | Total tangible common shareholders’ equity (R–S) | $ | 634,795 | $ | 626,702 | $ | 588,548 | ||||||||||
(U) | Total assets (GAAP) | 5,887,284 | 5,806,735 | 5,486,268 | |||||||||||||
(S) | Less: goodwill and intangible assets | (83,742 | ) | (83,795 | ) | (84,102 | ) | ||||||||||
(V) | Total tangible assets (U–S) | $ | 5,803,542 | $ | 5,722,940 | $ | 5,402,166 | ||||||||||
Common equity-to-assets ratio (GAAP-derived) (R/U) | 12.20 | % | 12.24 | % | 12.26 | % | |||||||||||
Tangible common equity-to-tangible assets ratio (T/V) | 10.94 | % | 10.95 | % | 10.89 | % | |||||||||||
Calculation of Tangible Book Value per Common Share | |||||||||||||||||
(R) | Total common shareholders’ equity (GAAP) | $ | 718,537 | $ | 710,497 | $ | 672,650 | ||||||||||
(W) | Actual common shares outstanding | 25,936,764 | 25,936,130 | 25,875,765 | |||||||||||||
Book value per common share (GAAP-derived) (R/W)*1000 | $ | 27.70 | $ | 27.39 | $ | 26.00 | |||||||||||
Tangible common book value per share (T/W)*1000 | $ | 24.47 | $ | 24.16 | $ | 22.75 |