1st Source Corporation Reports Record Earnings for the Full Year and Fourth Quarter 2018, History of Increased Dividends Continues: up 23% from Fourth Quarter 2017

By: 1st Source Bank Last Updated: January 24, 2019

rot31st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported a record high net income of $82.41 million for the year of 2018, an improvement of 21.11% compared to $68.05 million earned in 2017. Fourth quarter net income was $21.45 million, an increase of 19.18% compared to $17.99 million earned in the fourth quarter of 2017. Income before taxes for the year of 2018 was $105.03 million, growing 3.62% compared to $101.36 million earned in 2017 and $27.61 million for the fourth quarter of 2018, an improvement of 17.24% compared to $23.55 million for the same period in 2017.

The annual pretax income comparison was positively impacted by increased net interest income of $28.28 million primarily due to rising lending rates and higher average loan and lease balances. These positives were offset by a $10.48 million increase in the provision for loan and lease losses to support loan and lease growth along with higher charge-offs and a $12.47 million rise in noninterest expense. Non-recurring 2018 costs were approximately $3.68 million.

Diluted net income per common share for the year was a record high at $3.16, up from the $2.60 earned a year earlier. Diluted net income per common share for the fourth quarter was $0.82, up from the $0.69 earned in the fourth quarter of the previous year.

At its January 2019 meeting, the Board of Directors approved a cash dividend of $0.27 per common share, up 22.73% from the $0.22 per common share declared a year ago. The cash dividend is payable to shareholders of record on February 4, 2019 and will be paid on February 14, 2019.

According to Christopher J. Murphy III, Chairman, “1st Source Corporation had back-to-back record years in 2018 and 2017! Also, 2018 was our 31st consecutive year of dividend growth. Reflecting the strong economy on both a national and local level, average loans and leases were up a solid 8.75% for the quarter compared to the same period a year ago. Average deposits had strong growth of 8.57% from this time last year. The net interest margin continued to improve with the rising interest rate environment.

“Credit quality was moderate with net charge-offs of $2.53 million in the fourth quarter of 2018. The majority of the charge-offs occurred in the Auto and Light Truck and Aircraft portfolios and were somewhat offset by a recovery in the Aircraft portfolio.

“In the final quarter of 2018, 1st Source’s commitment to helping our clients achieve security, build wealth, and realize their dreams using straight talk and sound advice, along with our acclaimed personal service, convenient branches and highly rated on-line and mobile services, attracted many new clients who were frustrated by the disruption and lack of transparency in their previous banking situation. We welcomed our new clients to the Bank and appreciate the opportunity to prove to them that we are the bank on which they can rely.

“Additionally, we are pleased with the success of our sustainability efforts in the financing of solar installations across the country and in testing them at our own locations. We are also pleased to be able to help the many organizations across our region serving our clients and neighbors. We provide financial and volunteer support helping assure a strong social safety net, good health care, and promising education in the markets we serve.” Mr. Murphy concluded.

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