South Bend Tribune

Chris Murphy, 1st Source, 2013 (August 18, 2013)

SOUTH BEND - Just 11 days after Abraham Lincoln delivered the Gettysburg Address, a small bank opened in South Bend.

Then, it was known as First National Bank of South Bend. Today, it is known as 1st Source Bank.

Though it has grown to about 76 locations over the past 150 years, the bank's main focus is still on the local community. And, that is where its directors and leaders wish it to remain.

"The bank's objective is to serve the northern Indiana-southwestern Michigan area and the businesses here," says Christopher Murphy III, chairman and CEO of the bank. "We are trying to help people who are living here, working here and growing business from here."

1st Source, which has been run by the same family since the 1930s, has grown primarily one customer at a time, Murphy says. It has branches as far north as Kalamazoo and as far south as Lafayette, Ind. It offers a full range of deposit savings and investment loans for individuals and businesses.

While it is not the largest bank in Indiana, 1st Source has been honored by Forbes as one of America's best banks and was named one of the top 1,000 banks in the world for 2013 by The Banker, an industry magazine.

"We are involved across the fabric of this community," Murphy says. "Our interests are here. We employ people here. We care about what happens to the businesses here and how they grow and succeed."

Historic roots

The University of Notre Dame was just 21 years old and the Civil War was in its final months when several local men organized First National Bank of South Bend.

It was the city's second bank.

"Judge (Thomas) Stanfield, a very prominent judge in the area at the time, was one of the original founders," Murphy says. "Schuyler Colfax was one of the early investors. He went on to Êbecome vice president (of the United States under Ulysses S. Grant) a few years later."

The bank moved several times and, in 1928, it became the 15th bank in the nation to replace teller cages with an open counter system, which allowed bankers to provide more personal service.

Then came "Black Tuesday." Between 1930 and 1932, 11 of South Bend's 18 banks closed. But First National survived and, in 1931, it merged with another bank to form First Bank & Trust Co.

The move was engineered by Ernest M. Morris, founder and president of Associates Investment Co., and Vincent Bendix, founder and president of Bendix Aviation Corp.

"E.M. Morris and Vincent Bendix each put a half a million dollars into it to make sure that in the depths of the Depression there was a strong bank serving businesses and individuals across the community," Murphy says.

After President Franklin D. Roosevelt declared a bank holiday in 1933, the first South Bend bank to reopen without restrictions of any kind was First Bank. In fact, that first day its deposits exceeded withdrawals according to a history of the bank written by First Source.

"That is emblematic of what has happened to us over time," Murphy says, explaining that in the recent recession 1st Source did not participate in the losses that came in the mortgage markets because it didn't do ALT-A or subprime lending.

"We believed that we were responsible to and for our clients, and we didn't want to put them into houses they couldn't afford," he says, explaining that the bank's mission is to help clients "achieve security, build wealth and realize their dreams" and "sometimes that means teaching them delayed gratification."

A bank is a reflection of the communities it serves, Murphy says, and the stronger those communities are, the stronger the bank is going to be. So, 1st Source invests in its communities through both its financial services and its volunteer efforts.

"I think that's been a basic tenet of the family since the beginning, and it has carried over to all of us who have joined the institution over the generations," Murphy says.