Exhibit 99.1
FOR: Immediate Release CONTACT: Larry Lentych
January 29, 2004 574 235 2702
Andrea Short
574-235 2348
1ST SOURCE CORPORATION ANNOUNCES YEAR END RESULTS
South Bend, IN--1st Source Corporation (Nasdaq:SRCE), parent company of
1st Source Bank, today reported net income of $19.15 million for the year 2003,
an increase of 90.80 percent over the $10.04 million reported for the year
2002. Diluted net income per common share for 2003 amounted to $0.91, up 93.62
percent compared to $0.47 diluted net income per common share for 2002.
Net income was $5.36 million for the fourth quarter of 2003 compared to
the $0.96 million of net income reported for the fourth quarter of 2002.
Diluted net income per common share for the fourth quarter of 2003 amounted to
$0.26, compared to $0.05 per common share reported in the fourth quarter of
2002.
The Board of Directors approved a fourth quarter cash dividend of $0.10
per share. The cash dividend is payable on February 17, 2004 to shareholders of
record on February 9, 2004, and is an increase of 11.11 percent over the fourth
quarter cash dividend in 2002.
Christopher J. Murphy III, Chairman of 1st Source Corporation,
commented, "While the fourth quarter presented challenges to our margins, we
were pleased with the improvements in the quality of our loan portfolios as
evidenced by lower non-performing asset ratios and lower net charge offs than a
year ago."
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1st Source Corporation
Mr. Murphy continued, "At the end of the quarter, we closed down the
asset securitization and purchased the loans in the 1st Source Master Trust.
For many years, 1st Source was the originator and servicer of loans sold to and
owned by the Trust, which were mainly loans secured by business use and
personal aircraft, or by car rental company vehicles. However, the Trust had
outlived its usefulness as a source of funding, and its accounting and
reporting requirements had become way too time consuming. Closing the Trust
freed up intellectual capital which can be redirected to achieve better benefit
for 1st Source."
"We are also very pleased with the success of our new personal on-line
banking product, InfoSource Online, which provides free basic home banking
services to our customers. Introduced late in the third quarter, over 11,000
customers had decided to become active users by year end, which is a pretty
sound endorsement of the product, " Mr. Murphy concluded.
The provision for loan losses was $2.83 million in the fourth quarter
compared to $8.33 million in the fourth quarter of 2002. 1st Source's reserve
for loan losses as of December 31, 2003, was 3.14 percent of total loans,
compared to 2.72 percent as of December 31, 2002. Net charge-offs were $2.83
million for the fourth quarter 2003, compared to $8.06 million a year ago. Net
charge-offs for the year were $13.36 million compared to $38.06 million in
2002. The ratio of nonperforming assets to net loans and leases was 1.59
percent on December 31, 2003, compared to 2.79 percent on December 31, 2002.
Noninterest income for the fourth quarter of 2003 was $19.39 million,
down 7.18 percent from the fourth quarter of 2002. This decrease was due to the
slowdown of mortgage loan refinancings, lower trading account securities gains,
and lower securitization impairment in the fourth quarter of 2003 compared to
the same period in 2002. For the year, noninterest income was $80.20 million,
up 9.68 percent from 2002. The predominant factor behind the growth in 2003 was
mortgage loan servicing and sale income. This increase was partially offset by
a decrease in equipment rental income and increased securitization impairment
charges.
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1st Source Corporation
Noninterest expense was $34.12 million for the fourth quarter of 2003, down
17.42 percent from the fourth quarter of 2002. This quarter to quarter decrease
was primarily due to decreased loan collection and repossession expense,
including lower valuation adjustments on repossessed aircraft. Also,
depreciation on leased equipment decreased due to reduced demand for equipment
leases, and salaries and employee benefits decreased due to lower mortgage
commissions as mortgage loan refinancings slowed. For the year, noninterest
expense was $138.90 million, down 1.31 percent from 2002. In general, 2003
noninterest expense reflects decreased depreciation on equipment owned under
operating leases and decreased loan collection and repossession expense offset
by increased salary and employee benefit expense.
The 2003 earnings represent a return on average shareholders' equity of
6.12 percent, compared to 3.23 percent for 2002. Return on total assets was
0.59 percent compared to 0.29 percent for 2002.
As of December 31, 2003, the 1st Source common equity-to-assets ratio
was 9.45 percent, compared to 9.08 percent a year ago. Shareholders' equity was
$314.70 million, up 1.70 percent from $309.43 million a year ago. Total assets
at the end of 2003 were $3.33 billion compared to $3.41 billion at the end of
2002. Total deposits were $2.49 billion, down 8.32 percent from the end of
2002, and total loans were $2.23 billion, up 2.37 percent from 2002.
1st Source takes pride in its identification as 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
highly personalized services. 1st Source Bank also competes for business
nationally by offering specialized financing services for used private and
cargo aircraft, automobiles for leasing and rental agencies, medium and heavy
duty trucks, construction and environmental equipment.
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1st Source Corporation
The corporation includes 60 banking centers in 15 counties, 7 Trustcorp
Mortgage offices in Indiana, Ohio and Michigan, and 21 locations nationwide for
the 1st Source Bank Specialty Finance Group. With a history dating back to
1863, 1st Source Bank 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 FTN Midwest Research
Securities; Goldman, Sachs & Company; Keefe, Bruyette & Woods, Inc.; Merrill
Lynch, Pierce, Fenner; Morgan Stanley & Company, Inc.; NatCity Investments,
Inc.; Prudential Equity Group, Inc,; RBC Dain Rauscher, Inc.; Sandler O'Neill &
Partners; Schwab Capital Markets; Stifel, Nicolaus & Company, Inc.; 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 fourth quarter, 2003 on the floating rate
securities is 3.15 percent. Marketmakers in those securities are Goldman, Sachs
& Company; Howe, Barnes Investments, Inc.; Schwab Capital Markets; and Stifel,
Nicolaus & Company, Inc. 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
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1st Source Corporation
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.
# # #
(Charts attached)
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1ST SOURCE CORPORATION
4TH QUARTER 2003 FINANCIAL HIGHLIGHTS
(UNAUDITED-DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
3 MONTHS ENDED 12 MONTHS ENDED
DECEMBER 31 DECEMBER 31
END OF PERIOD BALANCES 2003 2002 2003 2002
Assets $ 3,330,153 $ 3,407,468
Loans 2,231,000 2,179,452
Deposits 2,487,215 2,712,905
Reserve for Loan Losses 70,045 59,218
Intangible Assets 25,740 27,895
Common Shareholders' Equity 314,691 309,429
AVERAGE BALANCES
Assets $ 3,177,552 $ 3,503,022 $ 3,258,174 $ 3,466,382
Earning Assets 2,922,488 3,181,936 2,981,622 3,149,632
Investments 787,701 634,611 702,973 639,178
Loans 2,032,231 2,225,297 2,091,004 2,332,992
Deposits 2,438,887 2,831,058 2,559,261 2,771,310
Interest Bearing Liabilities 2,423,947 2,723,923 2,477,831 2,738,624
Common Shareholders' Equity 313,245 309,397 312,793 310,412
INCOME STATEMENT DATA
Net Interest Income $ 25,412 $ 29,051 $ 103,252 $ 118,686
Net Interest Income - FTE 26,143 29,825 106,244 121,822
Provision for Loan Losses 2,832 8,333 17,361 39,657
Noninterest Income 19,385 20,884 80,196 73,117
Noninterest Expense 34,123 41,321 138,904 140,741
Net Income 5,361 963 19,154 10,039
PER SHARE DATA
Basic Net Income Per Common Share $ 0.26 $ 0.05 $ 0.92 $ 0.48
Diluted Net Income per Common Share 0.26 0.05 0.91 0.47
Cash Dividends 0.100 0.090 0.370 0.360
Book Value Per Common Share 15.19 14.77 15.19 14.77
Market Value - High 22.640 17.810 22.640 26.890
Market Value - Low 18.850 10.900 12.570 10.900
Basic Weighted Average Common Shares Outstanding 20,690,334 20,957,401 20,858,720 20,935,212
Diluted Weighted Average Common Shares Outstanding 20,987,840 21,281,079 21,150,009 21,309,580
KEY RATIOS
Return on Average Assets 0.67% 0.11% 0.59% 0.29%
Return on Average Common Shareholders' Equity 6.79 1.23 6.12 3.23
Average Common Shareholders'Equity to Average Assets 9.86 8.83 9.60 8.95
End of Period Tangible Common Equity to Tangible Assets 8.74 8.33 8.74 8.33
Net Interest Margin 3.55 3.72 3.56 3.87
Efficiency: Expense to Revenue 71.72 76.22 69.83 67.27
Net Charge Offs to Average Loans 0.55 1.44 0.64 1.63
Loan Loss Reserve to Loans 3.14 2.72 3.14 2.72
Nonperforming Assets to Loans and Leases 1.59 2.79 1.59 2.79
ASSET QUALITY
Loans Past Due 90 Days or More $ 212 $ 154
Non-accrual Loans 27,085 35,664
Other Real Estate Owned 3,010 4,362
Repossessions 6,263 21,343
Equipment Owned Under Operating Leases 257 2,594
Total Nonperforming Assets 36,827 64,117
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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
1ST SOURCE CORPORATION AND SUBSIDIARIES
(UNAUDITED - DOLLARS IN THOUSANDS)
December 31, December 31,
2003 2002
-------------------------------
ASSETS
Cash and due from banks $ 109,787 $ 120,894
Federal funds sold and
interest bearing deposits with other banks 1,355 81,881
Investment securities available-for-sale
(amortized cost of $759,945 and $640,224
at December 31, 2003 and December 31, 2002, respectively) 763,763 647,617
Trading account securities - 13,347
Mortgages held for sale 60,215 146,640
Loans - net of unearned discount
Commercial and agricultural 402,905 428,367
Truck and automobile financing 491,052 445,195
Aircraft financing 489,155 323,802
Construction equipment financing 219,562 303,126
Loans secured by real estate 533,749 567,950
Consumer loans 94,577 111,012
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Total loans 2,231,000 2,179,452
Reserve for loan losses (70,045) (59,218)
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Net loans 2,160,955 2,120,234
Equipment owned under operating leases,
net of accumulated depreciation 70,305 93,893
Net premises and equipment 38,431 40,899
Accrued income and other assets 125,342 142,063
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Total assets $3,330,153 $3,407,468
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LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 396,026 $ 419,289
Interest bearing 2,091,189 2,293,616
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Total deposits 2,487,215 2,712,905
Federal funds purchased and securities
sold under agreements to repurchase 276,040 212,040
Other short-term borrowings 114,814 48,638
Long-term debt and mandatorily redeemable securities 22,802 16,878
Subordinated notes 56,444 54,750
Accrued expenses and other liabilities 58,147 52,828
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Total liabilities 3,015,462 3,098,039
Shareholders' equity:
Preferred stock-no par value - -
Common stock-no par value 7,578 7,579
Capital surplus 214,001 214,001
Retained earnings 100,534 90,897
Cost of common stock in treasury (9,777) (7,637)
Accumulated other comprehensive income 2,355 4,589
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Total shareholders' equity 314,691 309,429
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Total liabilities and shareholders' equity $3,330,153 $3,407,468
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CONSOLIDATED STATEMENTS OF INCOME
1ST SOURCE CORPORATION AND SUBSIDIARIES
(UNAUDITED - DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Twelve Months Ended
December 31 December 31
----------------------------- -----------------------------------
2003 2002 2003 2002
----------------------------- -----------------------------------
Interest and Fee Income:
Loans $ 31,606 $ 40,472 $ 137,382 $ 171,029
Investment securities:
Taxable 4,961 4,915 18,410 21,359
Tax-exempt 1,348 1,482 5,614 6,037
Other 134 839 916 1,078
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TOTAL INTEREST INCOME 38,049 47,708 162,322 199,503
Interest Expense:
Deposits 10,276 16,049 49,153 71,084
Short-term borrowings 973 1,545 5,121 5,659
Subordinated notes 962 875 3,804 3,249
Long-term debt and
mandatorily redeemable securities 426 188 992 825
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TOTAL INTEREST EXPENSE 12,637 18,657 59,070 80,817
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NET INTEREST INCOME 25,412 29,051 103,252 118,686
Provision for loan losses 2,832 8,333 17,361 39,657
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 22,580 20,718 85,891 79,029
Noninterest Income:
Trust fees 2,645 2,325 10,664 10,252
Service charges on deposit accounts 3,876 3,959 15,532 14,947
Loan servicing and sale income 4,037 4,852 17,474 7,406
Equipment rental income 6,005 6,872 25,448 28,773
Other income 3,069 4,624 15,014 14,575
Investment securities and other investment losses (247) (1,748) (3,936) (2,836)
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TOTAL NONINTEREST INCOME 19,385 20,884 80,196 73,117
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Noninterest Expense:
Salaries and employee benefits 16,725 17,611 69,457 67,398
Net occupancy expense 1,506 1,736 6,881 6,861
Furniture and equipment expense 2,444 2,827 10,363 10,719
Depreciation - leased equipment 4,576 5,637 19,773 23,494
Supplies and communication 1,562 1,707 6,163 6,582
Loan collection and repossession expense 2,251 6,752 8,112 9,851
Other expense 5,059 5,051 18,155 15,836
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TOTAL NONINTEREST EXPENSE 34,123 41,321 138,904 140,741
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INCOME BEFORE TAXES 7,842 281 27,183 11,405
Income tax expense (benefit) 2,481 (682) 8,029 1,366
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Net Income $ 5,361 $ 963 $ 19,154 $ 10,039
============================= ===================================
The NASDAQ Stock Market National Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com.
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