1st Source Corporation, parent company of 1st Source Bank, reported net income of $12.57 million for the second quarter of 2012 and $24.28 million for the first six months of 2012. This compares to $14.87 million reported in the second quarter of 2011 and $25.47 million for the first six months of 2011. Last year's second quarter benefited from higher investment security gains and lower loan and lease loss provisions.
 
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, "This was a good quarter for 1st Source. Loans were up a strong 4.89% from a year ago; we grew our deposits and total assets; our net interest margin is holding steady; our total nonperforming assets have declined 27.1% from a year ago; and credit quality continues to improve. In comparing the quarters, last year benefited from one-time gains of $2.22 million from the sale of investment securities and the sale of a former corporate aircraft, as well as a $1.99 million lower provision to our loan and lease loss reserve. The present quarter is more normalized with an increase to the reserve driven by loan growth. Overall, our net income for the second quarter is up about 7% from the first quarter of this year."

Mr. Murphy continued, "We continue to be cautious about the economy. It seems as soon as one sector improves, another faces challenges. Locally, the RV industry is improving, while agriculture is hit with a drought. Our national and international businesses are doing well - financing and leasing for aircraft, car rentals, medium and heavy duty trucks, and construction equipment are all performing as expected or better."
 
"With the uncertainties in Washington, a stalled Congress, and a presidential election coming up, we look for little steam in the economy. During these unsettled times, we will continue to offer sound advice and counsel to our clients, provide excellent customer service, and keep our client's bests interests in mind," Mr. Murphy concluded.
 
The 1st Source reserve for loan and lease losses as of June 30, 2012 was 2.55% of total loans and leases compared to 2.73% at June 30, 2011. Net charge-offs were $1.15 million in the second quarter 2012, compared with net charge-offs of $1.22 million in the same quarter a year ago. Year-to-date, net charge-offs of $2.65 million have been recorded in 2012, compared to net charge-offs of $4.13 million for the first half of 2011. The ratio of nonperforming assets to net loans and leases was 1.67% as of June 30, 2012, down from 2.39% on June 30, 2011.

Read the full 1st Source press release.