Exhibit 99.1
For: Immediate Release Contact: Larry Lentych
July 29, 2004 574 235 2702
Andrea Short
574 235 2348
1ST SOURCE CORPORATION UP 85.88 PERCENT IN 2ND QUARTER,
INCREASED DIVIDEND ANNOUNCED
South Bend, IN -- 1st Source Corporation (Nasdaq:SRCE), parent company
of 1st Source Bank, today reported net income of $8.72 million for the second
quarter of 2004, up 85.88 percent over the $4.69 million reported in the second
quarter of 2003. During the first six months of 2004, net income for 1st Source
Corporation was $13.80 million, a 50.79 percent increase over the $9.15 million
reported for the same period in 2003.
Diluted net income per common share for the second quarter of 2004
amounted to $0.42, up 90.91 percent compared with $0.22 reported in the second
quarter of 2003. Diluted net income per share for the first two quarters of 2004
was $0.66, an increase of 53.49 percent over the $0.43 reported in the same
period a year ago.
Earnings for the second quarter of 2004 represent a return on average
common shareholders' equity of 11.03 percent, as compared to 5.95 percent for
the second quarter of 2003. Return on average total assets for the second
quarter of 2004 was 1.08 percent versus 0.57 percent reported in the second
quarter of 2003.
Christopher J. Murphy III, Chairman and Chief Executive Officer,
reported that at the July meeting, the Board of Directors approved an increase
in the cash dividend for the second quarter to $0.11 per share from $0.10 per
share last quarter. This is a 10.00 percent increase from the previous quarter's
dividend and a 22.22 percent increase over the second quarter dividend of 2003.
The increased cash dividend is reflective of the improving performance of the
company and will be payable on August 16, 2004, to shareholders of record August
9, 2004.
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1st Source Corporation
July 29, 2004
Mr. Murphy commented, "1st Source's financial performance continues to
improve. We have worked diligently to strengthen our credit quality which has
shown steady progress over the past year. We are still affected by decreased
interest margins and volatility in the valuation of our mortgage servicing
rights portfolio, but this quarter that volatility had a positive effect."
Murphy concluded, "We have also continued to look for opportunities to
grow our customer base and opened a new banking center on South Bend's south
side in April. We continue to review and upgrade our systems and processes to
help us provide outstanding customer service and better manage our businesses."
1st Source's reserve for loan losses as of June 30, 2004 was 3.14
percent of total loans compared to 3.22 percent at the end of the first quarter
of 2004 and 3.01 percent for the second quarter a year ago. 1st Source's
provision for loan losses was $0.48 million this quarter compared to $4.90
million for the second quarter of 2003. Net charge-offs were $0.48 million for
the second quarter 2004 compared to $6.48 million for the second quarter of
2003. The ratio of nonperforming assets to net loans and leases was 1.22 percent
on June 30, 2004, compared to 2.65 percent on June 30, 2003.
Tax-equivalent net interest income was $26.02 million for the second
quarter of 2004, down 5.41 percent from 2003's second quarter. The net interest
margin was 3.45 percent for the second quarter of 2004 versus 3.66 percent for
the same period in 2003. For the first six months of 2004, tax-equivalent
interest income was $52.49 million compared to $54.82 million for the first six
months of 2003, a decrease of 4.24 percent. The net interest margin was 3.49
percent for the six months ending June 30, 2004, versus 3.69 percent for the
same period in 2003.
Noninterest income for the second quarter of 2004 was $20.22 million,
down 7.74 percent from the second quarter of 2003. In the second quarter,
equipment rental income decreased due to the shrinkage of the operating lease
portfolio, while other income decreased with the elimination of securitization
income, as 1st Source no longer securitizes any of its loan portfolio. Trading
security income also declined in the second quarter. Mortgage banking income
increased in the second quarter of 2004 compared to a year ago as mortgage
servicing
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1st Source Corporation
July 29, 2004
rights impairment recoveries of $3.78 million offset both a reduction in
mortgage origination volume and reduced gains on the sale of mortgage loans into
the secondary market.
For the first six months of 2004, noninterest income was $34.24
million, down 18.39 percent from 2003. Significant items affecting comparability
between six month periods included decreased income from mortgage banking,
equipment rental, securitization and securities trading.
Noninterest expense was $31.95 million for the second quarter of 2004,
compared with $37.28 million for the second quarter of 2003. For the first six
months, noninterest expense was $64.29 million, compared with $72.08 million for
the same period in 2003. In general, noninterest expense improvements in 2004
reflect decreases in salaries and employee benefits expense, depreciation on
leased equipment, and loan collection and repossession expenses partially offset
by an increase in professional fees which are included in other expense.
As of June 30, 2004, the 1st Source common equity-to-assets ratio was
9.50 percent compared to 9.63 percent a year ago. Common shareholders' equity
was $314.94 million, down 0.70 percent from the $317.17 million a year ago, due
to the repurchase of 103,733 shares of common stock and a decrease of $10.51
million in accumulated other comprehensive income. The decrease in accumulated
other comprehensive income was a result of changes in unrealized gain or loss on
securities in the available-for-sale portfolio. Total assets at the end of the
second quarter of 2004 were $3.32 billion, up 0.63 percent from the same time
last year. Total deposits were down 9.79 percent and total loans were up 6.27
percent over the comparable figures at the end of the second quarter of 2003.
1st Source is the largest locally controlled 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 private and cargo aircraft, automobiles for leasing and
rental agencies, medium and heavy duty trucks, construction and environmental
equipment. The
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1st Source Corporation
July 29, 2004
Corporation includes 61 banking centers in 15 counties, 6 Trustcorp Mortgage
offices in Indiana, Ohio and Michigan, and 22 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 Citigroup Global
Markets, Inc.; FTN Midwest Research Securities; Goldman, Sachs & Company; Keefe,
Bruyette & Woods, Inc.; NatCity Investments, Inc.; Prudential Equity Group,
Inc.; RBC Capital Markets; 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 2004 on the floating rate securities
is 3.63 percent. Marketmakers in those securities are 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 U. S. generally accepted accounting principles; 1st Source's
competitive position
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1st Source Corporation
July 29, 2004
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 2004 FINANCIAL HIGHLIGHTS
(Unaudited-Dollars in thousands, except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE JUNE
2004 2003 2004 2003
-------------------------------- -----------------------------
END OF PERIOD BALANCES
Assets $ 3,315,249 $ 3,294,473
Loans 2,230,429 2,098,788
Deposits 2,384,863 2,643,744
Reserve for loan losses 70,045 63,194
Intangible assets 24,904 27,034
Common shareholders' equity 314,936 317,172
AVERAGE BALANCES
Assets $ 3,257,795 $ 3,299,570 $ 3,254,177 $ 3,286,796
Earning assets 3,030,244 3,013,449 3,023,187 2,995,225
Investments 737,900 670,172 739,352 663,215
Loans 2,191,348 2,112,247 2,195,194 2,131,930
Deposits 2,432,125 2,625,320 2,422,959 2,604,273
Interest bearing liabilities 2,489,900 2,500,962 2,501,970 2,508,611
Common shareholders' equity 317,805 315,933 317,688 313,887
INCOME STATEMENT DATA
Net interest income $ 25,334 $ 26,740 $ 51,096 $ 53,296
Net interest income - FTE 26,015 27,504 52,490 54,816
Provision for loan losses 482 4,901 583 10,451
Noninterest income 20,221 21,918 34,240 41,957
Noninterest expense 31,945 37,275 64,287 72,077
Net income 8,718 4,690 13,797 9,150
PER SHARE DATA
Basic net income per common share $ 0.42 $ 0.22 $ 0.67 $ 0.43
Diluted net income per common share 0.42 0.22 0.66 0.43
Cash dividends per common share 0.100 0.090 0.200 0.180
Book value per common share 15.26 15.05 15.26 15.05
Market value - High 25.500 19.500 25.500 19.500
Market value - Low 20.350 12.570 20.350 12.570
Basic weighted average common shares outstanding 20,700,516 21,071,946 20,713,775 21,036,329
Diluted weighted average common shares outstanding 20,969,669 21,407,824 20,993,471 21,368,940
KEY RATIOS
Return on average assets 1.08 % 0.57 % 0.85 % 0.56 %
Return on average common shareholders' equity 11.03 5.95 8.73 5.88
Average common shareholders' equity to average assets 9.76 9.57 9.76 9.55
End of period tangible common equity to tangible assets 8.81 8.88 8.81 8.88
Net interest margin 3.45 3.66 3.49 3.69
Efficiency: expense to revenue 66.20 72.18 71.08 70.95
Net charge-offs to average loans 0.09 0.67 0.05 0.61
Loan loss reserve to loans 3.14 3.01 3.14 3.01
Nonperforming assets to loans and leases 1.22 2.65 1.22 2.65
ASSET QUALITY
Loans past due 90 days or more $ 164 $ 289
Nonaccrual loans 22,210 41,930
Other real estate 2,184 3,213
Repossessions 3,222 12,583
Equipment owned under operating leases 118 168
Total nonperforming assets 27,898 58,183
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1ST SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited-Dollars in thousands)
June 30, 2004 June 30, 2003
--------------- ---------------
ASSETS
Cash and due from banks $ 82,131 $ 122,422
Federal funds sold and
interest bearing deposits with other banks 1,169 61,351
Investment securities, available-for-sale
(amortized cost of $791,019 and $676,431
at June 30, 2004 and 2003, respectively) 782,525 684,926
Trading account securities 4,516 13,303
Mortgages held for sale 66,296 125,724
Loans, net of unearned discount:
Commercial and agricultural loans 426,933 427,760
Auto, light truck and environmental equipment 269,583 277,477
Medium and heavy duty truck 229,867 209,235
Aircraft financing 445,340 288,110
Construction equipment financing 213,609 270,582
Loans secured by real estate 551,058 527,047
Consumer loans 94,039 98,577
--------------- ---------------
Total loans 2,230,429 2,098,788
Reserve for loan losses (70,045) (63,194)
--------------- ---------------
Net loans 2,160,384 2,035,594
Equipment owned under operating leases
(net of accumulated depreciation) 56,186 80,135
Net premises and equipment 37,490 39,376
Accrued income and other assets 124,552 131,642
--------------- ---------------
Total assets $ 3,315,249 $ 3,294,473
=============== ===============
LIABILITIES
Deposits:
Noninterest bearing $ 384,302 $ 444,705
Interest bearing 2,000,561 2,199,039
--------------- ---------------
Total deposits 2,384,863 2,643,744
Federal funds purchased and securities
sold under agreements to repurchase 411,812 172,586
Other short-term borrowings 71,760 35,707
Long-term debt and
mandatorily redeemable securities 22,901 17,253
Subordinated notes 56,444 54,750
Accrued expenses and other liabilities 52,533 53,261
--------------- ---------------
Total liabilities 3,000,313 2,977,301
SHAREHOLDERS' EQUITY
Preferred stock; no par value - -
Common stock; no par value 7,578 7,578
Capital surplus 214,001 214,001
Retained earnings 110,199 95,855
Cost of common stock in treasury (11,603) (5,535)
Accumulated other comprehensive (loss)/income (5,239) 5,273
--------------- ---------------
Total shareholders' equity 314,936 317,172
--------------- ---------------
Total liabilities and shareholders' equity $ 3,315,249 $ 3,294,473
=============== ===============
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1ST SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
--------- ----------- --------- ---------
Interest income:
Loans $ 31,904 $ 36,103 $ 64,358 $ 72,713
Investment securities, taxable 4,106 4,710 8,395 9,244
Investment securities, tax-exempt 1,258 1,445 2,575 2,880
Other 46 295 111 445
--------- ------------ ---------- ----------
Total interest income 37,314 42,553 75,439 85,282
Interest expense:
Deposits 9,597 13,187 19,420 26,958
Short-term borrowings 1,283 1,498 2,540 2,762
Subordinated notes 962 941 1,923 1,881
Long-term debt and
mandatorily redeemable securities 138 187 460 385
--------- ------------ ---------- ----------
Total interest expense 11,980 15,813 24,343 31,986
--------- ------------ ---------- ----------
Net interest income 25,334 26,740 51,096 53,296
Provision for loan losses 482 4,901 583 10,451
--------- ------------ ---------- ----------
Net interest income after
provision for loan losses 24,852 21,839 50,513 42,845
Noninterest income:
Trust fees 3,140 2,736 6,230 5,376
Service charges on deposit accounts 4,115 3,922 7,821 7,646
Mortgage banking income 6,187 5,176 5,345 9,342
Equipment rental income 4,927 6,455 10,751 13,226
Other income 1,890 3,904 4,383 6,922
Investment securities
and other investment losses (38) (275) (290) (555)
--------- ------------ ---------- ----------
Total noninterest income 20,221 21,918 34,240 41,957
--------- ------------ ---------- ----------
Noninterest expense:
Salaries and employee benefits 15,866 18,290 31,620 35,537
Net occupancy expense 1,725 1,785 3,558 3,649
Furniture and equipment expense 2,697 2,677 5,281 5,318
Depreciation - leased equipment 3,883 5,050 8,419 10,408
Supplies and communication 1,451 1,558 2,883 3,069
Loan collection and repossession expense 821 3,695 1,876 5,566
Other expense 5,502 4,220 10,650 8,530
--------- ------------ ---------- ----------
Total noninterest expense 31,945 37,275 64,287 72,077
--------- ------------ ---------- ----------
Income before income taxes 13,128 6,482 20,466 12,725
Income taxes 4,410 1,792 6,669 3,575
--------- ------------ ---------- ----------
Net Income $ 8,718 $ 4,690 $ 13,797 $ 9,150
========= ============ ========== ==========
The Nasdaq Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com
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