-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QPHIBUNCuAX7JuvoASYOzBEO4wSHqC6dOUZVc4wE8ax5nB6g1vz9zFyyRty3dXiY 9Z2SjTk3o8kfMEA/iXQYzg== 0001157523-03-003471.txt : 20030730 0001157523-03-003471.hdr.sgml : 20030730 20030730140525 ACCESSION NUMBER: 0001157523-03-003471 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030728 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 1ST SOURCE CORP CENTRAL INDEX KEY: 0000034782 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 351068133 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-06233 FILM NUMBER: 03811035 BUSINESS ADDRESS: STREET 1: 100 NORTH MICHIGAN STREET CITY: SOUTH BEND STATE: IN ZIP: 46601 BUSINESS PHONE: 5742352702 MAIL ADDRESS: STREET 1: P O BOX 1602 STREET 2: P O BOX 1602 CITY: SOUTH BEND STATE: IN ZIP: 46634 FORMER COMPANY: FORMER CONFORMED NAME: FBT BANCORP INC DATE OF NAME CHANGE: 19820818 8-K 1 a4442940.txt 1ST SOURCE 8-K 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) July 28, 2003 ---------------------- 1st SOURCE CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) INDIANA - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-6233 35-1068133 - -------------------------------------------------------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 100 North Michigan Street South Bend, Indiana 46601 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (574) 235-2702 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) ITEM 5. Other Events On July 28, 2003, 1st Source Corporation issued a press release that announced its second quarter earnings for 2003. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits 99.1 Press release dated July 28, 2003 ITEM 9. The information included or incorporated by reference under Item 5 of this report is intended to be included under "Item 12. Disclosure of Results of Operations and Financial Condition" and is included under this Item 9 in accordance with SEC Release No. 33-8216. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 1st Source Corporation ---------------------- DATE July 29, 2003 /s/ Christopher J. Murphy III --------------------- ------------------------------------- (Signature) Christopher J. Murphy III Chairman of the Board, President and CEO DATE July 29, 2003 /s/ Larry E. Lentych --------------------- ------------------------------------ (Signature) Larry E. Lentych Treasurer and Chief Financial Officer Principal Accounting Officer EX-99 3 a4442940_ex991.txt 1ST SOURCE EXHIBIT 99.1 Exhibit 99.1 1st Source Corporation Quarterly Earnings Up, Dividend Announced Business Editors SOUTH BEND, Ind.--(BUSINESS WIRE)--July 28, 2003--1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reported net income of $4.69 million for the second quarter of 2003, up 69.50 percent over the $2.77 million reported in the second quarter of 2002. During the first six months of 2003, net income for 1st Source Corporation was $9.15 million, a 31.19 percent increase over the $6.98 million reported for the same period in 2002. Diluted net income per common share for the second quarter of 2003 amounted to $0.22, up 69.23 percent compared with $0.13 reported in the second quarter of 2002. Diluted net income per share for the first two quarters of 2003 was $0.43, an increase of 30.30 percent over the $0.33 reported in the same period a year ago. Earnings for the second quarter of 2003 represent a return on average common shareholders' equity of 5.95 percent, as compared to 3.59 percent for the second quarter of 2002. Return on average total assets for the second quarter of 2003 was 0.57 percent versus 0.32 percent reported in the second quarter of 2002. Christopher J. Murphy III, Chairman and Chief Executive Officer, reported that at the July meeting, the Board of Directors approved a cash dividend for the second quarter of $ 0.09 per share. The cash dividend will be payable on August 15, 2003 to shareholders of record August 5, 2003. The cash dividend is equal to the second quarter cash dividend in 2002. Mr. Murphy commented, "We are pleased with the slight improvement in our earnings and the slowly improving credit picture. Progress has occurred without substantial improvement in the overall economy, which especially affects our transportation financing areas. The Commercial, Consumer, and Trust Banking businesses all did quite well during the quarter and mortgage volumes in both the Bank and Trustcorp (our mortgage banking subsidiary) were at record levels." "We made good progress in disposing of repossessed aircraft from both the Bank's and our securitized portfolio over the last year. The credit problems of early 2002 cascaded throughout the year and we finished 2002 having repossessed 52 aircraft. Through June 30, 2003, we have repossessed or taken control of another 6 aircraft. We arranged for disposal of 39 planes leaving us with 19 repossessed aircraft at the end of June. Additionally, we have seen some stabilizing of the market values for aircraft and are hopeful that we can continue to work down these problems. Having said this, we know that there will continue to be some strong volatility in repossessions and nonperforming assets among aircraft operators. We have also seen an increase in the delinquency of our construction machinery customers as they deal with bad weather and slow payment from state and municipal governments." Mr. Murphy concluded, "We are especially pleased that we were able to end the quarter with an increase in the reserve for loan losses which now totals $63.19 million, up from $61.84 million at the close of the last quarter. Our reserve is 3.01 percent of outstanding loans, and covers our non-performing loans 1.50 times. Overall, our core businesses performed well during the quarter, and our credit situation has improved over last year." 1st Source's reserve for loan losses as of June 30, 2003 increased to 3.01 percent of total loans compared to 2.92 percent in first quarter 2003. For the second quarter of 2003, 1st Source's provision for loan losses was $4.90 million compared to $5.55 million in the first quarter of 2003. Net charge-offs were $3.55 million for the second quarter 2003 compared to $2.92 million last quarter. The ratio of nonperforming assets to net loans and leases was 2.67 percent on June 30, 2003, compared to 3.17 percent on March 31, 2003. Tax-equivalent net interest income was $27.50 million for the second quarter of 2003, down 10.56 percent from 2002's second quarter. The net interest margin was 3.66 percent for the second quarter of 2003 versus 3.90 percent for the same period in 2002. For the first six months of 2003, tax-equivalent interest income was $54.82 million compared to $62.09 million for the first six months of 2002, a decrease of 11.72 percent. The net interest margin was 3.69 percent for the six months ending June 30, 2003, versus 3.95 percent for the same period in 2002. Both the lower tax-equivalent net interest income and the lower margin were due to reduced earning assets and reduced asset yields, reflecting the effect of fewer loans and lower market interest rates. Noninterest income for the second quarter of 2003 was $21.92 million, up 22.16 percent from the second quarter of 2002. In the second quarter, loan servicing and sale income was up as increased mortgage revenue more than offset mortgage servicing rights valuation adjustments and decreased securitization income. Insurance commissions and trading security income also increased in 2003, while equipment rental income decreased due to a decrease in equipment owned under operating leases. For the first six months of 2003, noninterest income was $41.96 million, up 14.56 percent from 2002. Significant items affecting comparability between six month periods included: increased mortgage revenue, insurance commissions, and trading security income; and decreased securitization income and equipment rental income. Noninterest expense was $37.28 million for the second quarter of 2003, compared with $33.66 million for the second quarter of 2002. For the first six months, noninterest expense was $72.08 million, compared with $65.91 million for the same period in 2002. In general, noninterest expense in 2003 reflects higher personnel expense and an increase in expenses related to loan collection. As 1st Source continues to work through problem loans and dispose of collateral primarily in its aircraft and auto financing businesses, expenses in this area remain higher than one year ago. During the second quarter, 1st Source began to voluntarily liquidate its aircraft and auto rental loan securitization due to reduced loan demand and strong deposit base. The 1st Source Master Trust Securitization was issued in July 1998 with a seven year revolving period followed by scheduled amortization beginning July 2005. As of June 30, 2003, there were $309.06 million outstanding auto and aircraft loans as compared to $387.79 million at December 31, 2002. As of June 30, 2003, the 1st Source common equity-to-assets ratio was 9.63 percent compared to 9.05 percent a year ago. Common shareholders' equity was $317.17 million, up 1.83 percent from the $311.48 million a year ago. Total assets at the end of the second quarter of 2003 were $3.29 billion, down 4.30 percent from the same time last year. Total deposits were down 5.29 percent and total loans were down 11.67 percent over the comparable figures at the end of the second quarter of 2002. 1st Source Corporation is the largest locally owned financial institution headquartered in the Northern Indiana-Southwestern Michigan area. While delivering a comprehensive range of consumer and commercial banking services, 1st Source Bank has distinguished itself with innovative products and highly personalized services. 1st Source also competes for business nationally by offering specialized financing services for used private and cargo aircraft, automobiles for leasing and rental agencies, heavy duty trucks, construction and environmental equipment. 1st Source Bank has 60 banking centers located in 15 counties; Trustcorp Mortgage has 7 offices located in Indiana, Ohio and Michigan; and the 1st Source Bank Specialty Finance Group has 23 outlets located nationwide. With a history dating back to 1863, 1st Source 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 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 Boenning & Scattergood, Inc.; Crowell, Weedon & Company, Dain Rauscher, Inc.; Goldman, Sachs & Company; Keefe, Bruyette & Woods, Inc.; Morgan Stanley & Company; NatCity Investments; Sandler O'Neill & Partners; Schwab Capital Markets; Stifel, Nicolaus & Company, Incorporated; and William Blair & Company. 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, 2003 on the floating rate securities is 3.16 percent. Marketmakers in those securities are Goldman, Sachs & Company; Howe, Barnes 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." Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions indicate forward-looking statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. 1st Source may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause 1st Source's actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors, among others, include changes in laws, regulations or accounting principles generally accepted in the United States; 1st Source's competitive position within its markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen downturns in the local, regional or national economies or in the industries in which 1st Source has credit concentrations; and other risks discussed in 1st Source's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which filings are available from the SEC. 1st Source undertakes no obligation to publicly update or revise any forward-looking statements. 1st SOURCE CORPORATION 2nd QUARTER 2003 FINANCIAL HIGHLIGHTS (Unaudited - Dollars in thousands except Per Share Data) 3 Months Ended 6 Months Ended June 30 June 30 2003 2002 2003 2002 END OF PERIOD BALANCES Assets $3,294,473 $3,442,347 Loans 2,098,788 2,376,043 Deposits 2,643,744 2,791,336 Reserve for Loan Losses 63,194 57,420 Intangible Assets 27,034 29,215 Common Shareholders' Equity 317,172 311,478 AVERAGE BALANCES Assets $3,299,570 $3,477,245 $3,286,796 $3,483,249 Earning Assets 3,013,449 3,163,082 2,995,225 3,168,943 Investments 670,173 643,147 663,215 646,116 Loans 2,112,248 2,392,107 2,131,930 2,393,975 Deposits 2,625,319 2,786,071 2,604,273 2,777,294 Interest Bearing Liabilities 2,500,961 2,778,062 2,508,611 2,779,655 Common Shareholders' Equity 315,934 309,104 313,887 310,399 INCOME STATEMENT DATA Net Interest Income $ 26,740 $ 29,952 $ 53,296 $ 60,493 Net Interest Income - FTE 27,504 30,752 54,816 62,094 Provision for Loan Losses 4,901 10,750 10,451 22,559 Noninterest Income 21,918 17,942 41,957 36,624 Noninterest Expense 37,275 33,663 72,077 65,908 Net Income 4,690 2,767 9,150 6,975 PER SHARE DATA Basic Net Income Per Common Share $ 0.22 $ 0.13 $ 0.43 $ 0.33 Diluted Net Income Per Common Share 0.22 0.13 0.43 0.33 Cash Dividends Per Common Share 0.090 0.090 0.180 0.180 Book Value Per Common Share 15.05 14.86 15.05 14.86 Market Value -- High 19.500 26.890 19.500 26.890 Market Value -- Low 12.570 21.000 12.570 19.750 Basic Weighted Avg Common Shares Outstanding 21,071,946 20,950,747 21,036,329 20,909,450 Diluted Weighted Avg Common Shares Outstanding 21,407,824 21,368,441 21,368,940 21,297,194 KEY RATIOS Return on Average Assets 0.57% 0.32% 0.56% 0.40% Return on Average Common Shareholders' Equity 5.95 3.59 5.88 4.53 Average Common Shareholders' Equity to Average Assets 9.58 8.89 9.55 8.91 End of Period Tangible Common Equity to Tangible Assets 8.88 8.27 8.88 8.27 Net Interest Margin 3.66 3.90 3.69 3.95 Efficiency: Expense to Revenue 72.18 64.82 70.95 61.77 Net Charge Offs to Average Loans 0.67 1.88 0.61 1.92 Loan Loss Reserve to Loans 3.01 2.42 3.01 2.42 Nonperforming Assets to Loans and Leases 2.67 2.45 2.67 2.45 ASSET QUALITY Loans Past Due 90 Days or More $ 289 $ 411 Non-accrual Loans 41,930 51,483 Other Real Estate Owned 3,213 3,362 Repossessions 12,583 4,591 Equipment Owned Under Operating Leases 168 1,149 Total Nonperforming Assets 58,183 60,996 1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 1st Source Corporation and Subsidiaries (Unaudited - Dollars in thousands) June 30, June 30, 2003 2002 ASSETS Cash and due from banks $ 122,422 $ 91,453 Federal funds sold and interest bearing deposits with other banks 61,351 23,411 Investment securities available-for-sale (amortized cost of $676,431 and $636,598 at June 30, 2003 and 2002, respectively) 684,926 645,681 Trading account securities 13,303 -- Mortgages held for sale 125,724 84,916 Loans - net of unearned discount Commercial and agricultural loans 427,760 465,114 Truck and automobile financing 486,712 438,262 Aircraft financing 288,110 409,012 Construction equipment financing 270,582 353,089 Loans secured by real estate 527,047 593,672 Consumer loans 98,577 116,894 ------------ ------------ Total Loans 2,098,788 2,376,043 Reserve for loan losses (63,194) (57,420) ------------ ------------ Net Loans 2,035,594 2,318,623 Equipment owned under operating leases, net of accumulated depreciation 80,135 109,467 Premises and equipment 39,376 42,008 Other assets 131,642 126,788 ------------ ------------ Total Assets $ 3,294,473 $ 3,442,347 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Noninterest bearing $ 444,705 $ 352,454 Interest bearing 2,199,039 2,438,882 ------------ ------------ Total Deposits 2,643,744 2,791,336 Federal funds purchased and securities sold under agreements to repurchase 172,586 194,601 Other short-term borrowings 35,707 39,619 Long-term debt 17,253 11,818 Guaranteed junior subordinated debentures 54,750 44,750 Other liabilities 53,261 48,745 ------------ ------------ Total Liabilities 2,977,301 3,130,869 Shareholders' equity: Preferred stock-no par value -- -- Common stock-no par value 7,578 7,579 Capital surplus 214,001 214,001 Retained earnings 95,855 91,651 Cost of common stock in treasury (5,535) (7,382) Accumulated other comprehensive income 5,273 5,629 ------------ ------------ Total Shareholders' Equity 317,172 311,478 ------------ ------------ Total Liabilities and Shareholders' Equity $ 3,294,473 $ 3,442,347 ============ ============ 1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF INCOME 1st Source Corporation and Subsidiaries (Unaudited - Dollars in thousands) Three Months Ended Six Months Ended June 30 June 30 2003 2002 2003 2002 INTEREST AND FEE INCOME Loans $ 36,103 $ 43,134 $ 72,713 $ 88,324 Investment securities: Taxable 4,710 5,586 9,244 11,322 Tax-exempt 1,445 1,550 2,880 3,092 Other 295 127 445 198 -------- -------- -------- -------- Total Interest Income 42,553 50,397 85,282 102,936 INTEREST EXPENSE Deposits 13,187 18,227 26,958 37,906 Short-term borrowings 1,498 1,211 2,762 2,528 Guaranteed preferred beneficial interests in the Company's subordinated debentures 941 794 1,881 1,585 Long-term debt 187 213 385 424 -------- -------- -------- -------- Total Interest Expense 15,813 20,445 31,986 42,443 -------- -------- -------- -------- Net Interest Income 26,740 29,952 53,296 60,493 Provision for loan losses 4,901 10,750 10,451 22,559 -------- -------- -------- -------- Net Interest Income After Provision for Loan Losses 21,839 19,202 42,845 37,934 NONINTEREST INCOME Trust fees 2,736 2,661 5,376 5,321 Service charges on deposit accounts 3,922 3,684 7,646 7,155 Loan servicing and sale income 4,445 1,124 7,651 3,579 Equipment rental income 6,455 7,464 13,226 14,744 Other income 4,635 3,009 8,613 6,313 Investment securities and other investment losses (275) 0 (555) (488) -------- -------- -------- -------- Total Noninterest Income 21,918 17,942 41,957 36,624 -------- -------- -------- -------- NONINTEREST EXPENSE Salaries and employee benefits 18,290 16,417 35,537 32,995 Net occupancy expense 1,785 1,678 3,649 3,380 Furniture and equipment expense 2,677 2,626 5,318 5,355 Depreciation -- leased equipment 5,050 5,966 10,408 12,113 Supplies and communications 1,558 1,594 3,069 3,261 Repossession valuation adjustments, loan collection and repossession expenses 3,972 1,438 5,570 1,875 Other 3,943 3,944 8,526 6,929 -------- -------- -------- -------- Total Noninterest Expense 37,275 33,663 72,077 65,908 -------- -------- -------- -------- Income Before Income Taxes 6,482 3,481 12,725 8,650 Income Taxes 1,792 714 3,575 1,675 -------- -------- -------- -------- Net Income $ 4,690 $ 2,767 $ 9,150 $ 6,975 ======== ======== ======== ======== The NASDAQ Stock Market National Market Symbol: SRCE (CUSIP #336901 10 3) Contact us at shareholder@1stsource.com. CONTACT: 1st Source Corporation Larry Lentych, 574-235-2702 or Andrea Short, 574-235-2348 -----END PRIVACY-ENHANCED MESSAGE-----