FOR: Immediate Release CONTACT: Larry Lentych
January 27, 2005 574 235 2000
Andrea Short
574 235 2000
1ST SOURCE CORPORATION ANNOUNCES YEAR END RESULTS,
INCREASED DIVIDEND
South Bend, IN--1st Source Corporation (Nasdaq:SRCE), parent company of
1st Source Bank, today reported net income of $24.97 million for the year 2004,
an increase of 30.34 percent over the $19.15 million reported for the year
2003. Diluted net income per common share for 2004 amounted to $1.19, up 30.77
percent compared to $0.91 diluted net income per common share for 2003.
Net income was $7.86 million for the fourth quarter of 2004, up 46.61
percent compared to the $5.36 million of net income reported for the fourth
quarter of 2003. Diluted net income per common share for the fourth quarter of
2004 amounted to $0.37, compared to $0.26 per common share reported in the
fourth quarter of 2003.
The Board of Directors approved an increase in the fourth quarter cash
dividend to $0.12 per share. The cash dividend is payable on February 14, 2005
to shareholders of record on February 7, 2005, and is an increase of 20.00
percent over the fourth quarter cash dividend in 2003.
Christopher J. Murphy III, Chairman of 1st Source Corporation,
commented, "I am very pleased with the continued improvement in 1st Source's
performance - especially credit quality. In the fourth quarter, there was a
recovery of the provision for loan losses of $0.59 million compared to a charge
of $2.83 million to the provision for loan losses in the fourth quarter of 2003.
The volatility experienced all year in the value of mortgage servicing rights
continued in the fourth quarter, fortunately, the quarter included a recovery of
prior impairments of $2.23 million. This was offset slightly by an additional
impairment charge of $0.91 million on FHLMC (Freddie Mac) and FNMA (Fannie Mae)
preferred stocks, which we first reported on last quarter."
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1st Source Corporation
January 27, 2005
"As compared to prior quarters, the size of the bank increased by over
$170 million in the fourth quarter due to significant growth in public tax funds
collected and deposited with us for late November and all of December. This
year's collection and disbursement activities were different from prior years
with the full year's property tax receipts for several Indiana counties being
deposited with us at the close of the year. Due to the short term nature of
these funds and our long term arrangements with local governments, there was a
negative spread on these funds for November and December. These funds were
disbursed by early January."
Mr. Murphy concluded, "The consumer banking, personal asset management,
insurance and the specialty finance areas all had a productive quarter. We are
pleased with the overall results of the fourth quarter and look forward to
2005."
1st Source's reserve for loan losses as of December 31, 2004, was 2.79
percent of total loans and leases, compared to 3.14 percent as of December 31,
2003. Net charge-offs were $3.93 million for the fourth quarter 2004, compared
to $2.83 million a year ago. Net charge-offs for the year were $6.60 million
compared to $13.36 million in 2003. The ratio of nonperforming assets to net
loans and leases was 1.42 percent on December 31, 2004, compared to 1.59
percent on December 31, 2003.
Noninterest income for the fourth quarter of 2004 was $18.09 million,
down 6.70 percent from the fourth quarter of 2003. This decrease was due to a
reduction in equipment rental income offset by an increase in mortgage banking
income. For the year, noninterest income was $62.73 million, down 21.78 percent
from 2003. The predominant factor behind the decline in 2004 was mortgage
banking income and equipment rental income.
Noninterest expense was $30.43 million for the fourth quarter of 2004,
down 10.82 percent from the fourth quarter of 2003. For the year, noninterest
expense was $127.09 million, down 8.50 percent from 2003. The reduction in
noninterest expense was primarily due to decreased salaries and employee
benefits, leased equipment depreciation and loan collection and repossession
expense, which were partially offset by an increase in professional fees.
As of December 31, 2004, the 1st Source common equity-to-assets ratio
was 9.16 percent, compared to 9.45 percent a year ago. Shareholders' equity was
$326.60 million, up from $314.69
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1st Source Corporation
January 27, 2005
million a year ago. Total assets at the end of 2004 were $3.56 billion, up 7.01
percent compared to $3.33 billion at the end of 2003.
1st Source Corporation 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 new and used private and cargo aircraft,
automobiles for leasing and rental agencies, medium and heavy duty trucks,
construction and environmental equipment.
The corporation includes 62 banking centers in 15 counties, 5 Trustcorp
Mortgage offices in Indiana and Ohio, and 23 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.; Crowell, Weedon & Co.; FTN Midwest Research Securities; Goldman,
Sachs & Company; Keefe, Bruyette & Woods, Inc.; Morgan Stanley & Company, Inc.;
NatCity Investments, Inc.; Prudential Equity Group, Inc.; RBC Dain Rauscher,
Inc.; Sandler O'Neill & Partners; Stifel, Nicolaus & Company; Susquehana
Capital Group; and William Blair & Company.
1st Source's floating rate cumulative trust preferred security is
traded on the Nasdaq Stock Market under the symbol "SRCEO". The rate for the
first quarter, 2005 is 4.47 percent. Marketmakers in those securities are Howe,
Barnes Investments, Inc. and Stifel, Nicolaus & Company.
Except for historical information contained herein, the matters
discussed in this document express "forward-looking statements." Generally, the
words "believe," "expect," "intend," "estimate,"
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1st Source Corporation
January 27, 2005
"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 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)
1st SOURCE CORPORATION Page 5
4th QUARTER 2004 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except for per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
2004 2003 2004 2003
------------- --------------- -------------- -----------
END OF PERIOD BALANCES
Assets $ 3,563,715 $ 3,330,153
Loans and leases 2,280,168 2,231,000
Deposits 2,807,003 2,487,215
Reserve for loan and lease losses 63,672 70,045
Intangible assets 23,588 25,740
Common shareholders' equity 326,600 314,691
AVERAGE BALANCES
Assets $ 3,507,471 $ 3,177,552 $ 3,349,364 $ 3,258,174
Earning assets 3,283,278 2,922,488 3,121,990 2,981,622
Investments 784,417 787,701 762,386 702,973
Loans and leases 2,277,611 2,032,231 2,240,055 2,091,004
Deposits 2,691,849 2,438,887 2,489,170 2,559,261
Interest bearing liabilities 2,735,176 2,423,947 2,590,324 2,477,831
Common shareholders' equity 325,288 313,245 319,737 312,793
INCOME STATEMENT DATA
Net interest income $ 23,369 $ 25,412 $ 98,688 $ 103,252
Net interest income - FTE 24,014 26,143 101,403 106,244
(Recovery of)/provision for
loan and lease losses (591) 2,832 229 17,361
Noninterest income 18,087 19,385 62,733 80,196
Noninterest expense 30,430 34,123 127,091 138,904
Net income 7,860 5,361 24,965 19,154
PER SHARE DATA
Basic net income per common share $ 0.38 $ 0.26 $ 1.21 $ 0.92
Diluted net income per common share 0.37 0.26 1.19 0.91
Cash dividends per common share 0.110 0.100 0.420 0.370
Book value per common share 15.76 15.19 15.76 15.19
Market value - High 28.090 22.640 28.090 22.640
Market value - Low 25.150 18.850 20.350 12.570
Basic weighted average common
shares outstanding 20,727,663 20,690,334 20,709,457 20,858,720
Diluted weighted average common
shares outstanding 21,015,302 20,987,840 20,984,822 21,150,009
KEY RATIOS
Return on average assets 0.89% 0.67% 0.75% 0.59%
Return on average common
shareholders' equity 9.61 6.79 7.81 6.12
Average common shareholders'
equity to average assets 9.27 9.86 9.55 9.60
End of period tangible common
equity to tangible assets 8.56 8.74 8.56 8.74
Net interest margin 2.91 3.55 3.25 3.56
Efficiency: expense to revenue 68.66 71.72 72.80 69.83
Net charge-offs to average loans and leases 0.69 0.55 0.29 0.64
Loan loss reserve to loans and leases 2.79 3.14 2.79 3.14
Nonperforming assets to loans and leases 1.42 1.59 1.42 1.59
ASSET QUALITY
Loans and leases past due 90 days or more $ 481 $ 212
Nonaccrual loans and leases 25,253 27,085
Other real estate 1,307 3,010
Repossessions 4,382 6,263
Equipment owned under operating leases 1,785 257
Total nonperforming assets 33,208 36,827
1st SOURCE CORPORATION Page 6
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
1st Source Corporation and Subsidiaries
(Unaudited - Dollars in thousands)
December 31, 2004 December 31, 2003
----------------- -----------------
ASSETS
Cash and due from banks $ 78,255 $ 109,787
Federal funds sold and interest bearing deposits with other banks 220,131 1,355
Investment securities available-for-sale, at fair value 789,923 763,763
(amortized cost of $790,404 and $759,945 at
December 31, 2004 and 2003, respectively)
Mortgages held for sale 55,711 60,215
Loans and leases, net of unearned discount:
Commercial and agricultural loans 425,018 402,905
Auto, light truck and environmental equipment 263,637 269,490
Medium and heavy duty truck 267,834 221,562
Aircraft financing 444,481 489,155
Construction equipment financing 196,516 219,562
Loans secured by real estate 583,437 533,749
Consumer loans 99,245 94,577
-------------- ---------------
Total loans and leases 2,280,168 2,231,000
Reserved for loan and lease losses (63,672) (70,045)
-------------- ---------------
Net loans and leases 2,216,496 2,160,955
Equipment owned under operating leases 47,257 70,305
(net of accumulated depreciation)
Premises and equipment 37,314 38,431
Accrued income and other assets 118,628 125,342
-------------- ---------------
Total assets $ 3,563,715 $ 3,330,153
============== ===============
LIABILITIES
Deposits:
Noninterest bearing $ 378,867 $ 396,026
Interest bearing 2,428,136 2,091,189
-------------- ---------------
Total deposits 2,807,003 2,487,215
Federal funds purchased and securities sold 216,751 276,040
under agreements to purchase
Other short-term borrowings 82,911 114,814
Long-term debt and mandatorily redeemable securities 17,964 22,802
Subordinated notes 59,022 56,444
Accrued expenses and other liabilities 53,464 58,147
-------------- ---------------
Total liabilities 3,237,115 3,015,462
SHAREHOLDERS' EQUITY
Preferred stock; no par value - -
Common stock; no par value 7,578 7,578
Capital surplus 214,001 214,001
Retained earnings 115,830 100,534
Cost of common stock in treasury (10,512) (9,777)
Accumulated other comprehensive (loss)/income (297) 2,355
-------------- ---------------
Total shareholders' equity 326,600 314,691
-------------- ---------------
Total liabilities and shareholders' equity $ 3,563,715 $ 3,330,153
============== ===============
1st SOURCE CORPORATION Page 7
CONSOLIDATED STATEMENTS OF INCOME
1st Source Corporation and Subsidiaries
(Unaudited - Dollars in thousands
Three Months Ended Twelve Months Ended
December 31 December 31
2004 2003 2004 2003
---------- ---------- ---------- ---------
Interest income:
Loans $ 32,557 $ 31,606 $ 129,059 $137,382
Investment securities, taxable 4,173 4,961 16,361 18,410
Investment securities, tax-exempt 1,230 1,348 5,065 5,614
Other 818 134 952 916
---------- ---------- ---------- ---------
Total interest income 38,778 38,049 151,437 162,322
Interest expense:
Deposits 12,445 10,276 41,698 49,153
Short-term borrowings 1,713 973 6,079 5,121
Subordinated notes 965 962 3,863 3,804
Long-term debt and
mandatorily redeemable securities 286 426 1,109 992
---------- ---------- ---------- ---------
Total interest expense 15,409 12,637 52,749 59,070
---------- ---------- ---------- ---------
Net interest income 23,369 25,412 98,688 103,252
(Recovery of)/provision for
loan and lease losses (591) 2,832 229 17,361
---------- ---------- ---------- ---------
Net interest income after provision for
loan and lease losses 23,960 22,580 98,459 85,891
Noninterest income:
Trust fees 3,059 2,645 12,361 10,664
Service charges on deposit accounts 4,135 3,876 16,228 15,532
Mortgage banking (loss)/income 5,036 3,841 9,553 19,635
Equipment rental income 3,835 6,005 18,856 25,448
Other income 2,707 3,265 10,454 12,853
Investment securities and other investment losses (685) (247) (4,719) (3,936)
---------- ---------- ---------- ---------
Total noninterest income 18,087 19,385 62,733 80,196
---------- ---------- ---------- ---------
Noninterest expense:
Salaries and employee benefits 14,841 16,725 63,083 69,457
Net occupancy expense 1,874 1,506 7,196 6,881
Furniture and equipment expense 2,593 2,444 10,290 10,363
Depreciation - leased equipment 3,363 4,576 15,315 19,773
Supplies and communication 1,429 1,562 5,708 6,163
Loan collection and repossession expense 1,757 2,251 4,946 8,112
Other expense 4,573 5,059 20,553 18,155
---------- ---------- ---------- ---------
Total noninterest expense 30,430 34,123 127,091 138,904
---------- ---------- ---------- ---------
Income before income taxes 11,617 7,842 34,101 27,183
Income tax expense 3,757 2,481 9,136 8,029
---------- ---------- ---------- ---------
Net income $ 7,860 $ 5,361 $ 24,965 $ 19,154
========== ========== ========== =========
The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com