Exhibit 99.1
For: Immediate Release Contact: Larry Lentych
April 28, 2005 574 235 2000
Andrea Short
574 235 2000
1ST SOURCE INCOME UP 36.72 PERCENT IN FIRST QUARTER,
DIVIDEND REPORTED
South Bend, IN -- 1st Source Corporation (Nasdaq: SRCE), parent company of
1st Source Bank today reported net income of $6.94 million for the first quarter
of 2005, up 36.72 percent over the $5.08 million in the first quarter of 2004.
Diluted net income per share of common stock for the first quarter of 2005
amounted to $0.33 compared with $0.24 for the first quarter of 2004, an increase
of 37.50 percent. Return on average common shareholders' equity for 1st Source
Corporation was 8.60 percent compared to 6.43 percent for the first quarter of
2004, and return on average total assets was 0.84 percent compared to 0.63
percent a year ago.
At its April meeting, the Board of Directors approved a first quarter cash
dividend of $0.12 per common share, an increase of 20.00 percent over the first
quarter cash dividend in 2004. The cash dividend will be payable on May 16,
2005, to shareholders of record May 9, 2005.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented
on the first quarter by saying, "Our credit quality continues to show
improvement and this quarter is no exception. Over the last three years, we have
taken 71 aircraft back in repossession, and are pleased that 70 of them have
been sold in an orderly manner, leaving us with only one left for disposition.
Interest rate margin compression continues but recent changes in short term
rates could lead to some improvement in subsequent quarters."
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1st Source Corporation
Mr. Murphy continued, "This is also a time of growth in our community
banking markets. We have opened three new banking centers in Northern Indiana so
far this year including replacement facilities in Chesterton and on the Saint
Mary's College campus, as well as a new in-store banking center in the Martin's
Super Market in Granger. All in all, it has been a productive first quarter."
As of March 31, 2005, the common equity-to-assets ratio for 1st Source was
9.78 percent, down from 9.93 percent a year ago. Common shareholders' equity was
$326.63 million, up 2.12 percent from March 31, 2004. At the end of the first
quarter of 2005, total assets were $3.34 billion, up 3.68 percent from a year
ago. Loans and leases increased 4.73 percent and deposits increased 7.74 percent
from a year ago.
For the first quarter of 2005, 1st Source's provision for loan and lease
losses was $(0.42) million as compared to $0.10 million for the first quarter of
2004. Net charge-offs were $0.60 million for the first quarter of 2005 compared
to $0.10 million in the first quarter of 2004. The resulting reserve for loan
and lease losses as of March 31, 2005, was 2.75 percent of total loans and
leases, compared to 3.22 percent as of March 31, 2004. The ratio of
nonperforming assets to net loans and leases was 1.10 percent on March 31, 2005,
compared to 1.45 percent for the same period last year.
Tax-equivalent net interest income was $24.25 million for the first
quarter, down 8.39 percent from 2004's first quarter, and the net interest
margin was 3.15 percent versus 3.53 percent in the first quarter of 2004.
Noninterest income for the first quarter 2005 was $17.70 million, up 26.22
percent from the first quarter of 2004. The predominant factor behind the
increase in 2005 was an increase in mortgage banking income, primarily due to
mortgage servicing rights recovery of $1.09 million in the first quarter of 2005
versus mortgage servicing rights impairment of $3.23 million for the same period
in 2004. Other factors affecting noninterest income include decreased equipment
rental income and increased investment security and other investment gains.
Noninterest expense was $31.67 million for the first quarter 2005, down
2.07 percent from the first quarter of 2004, primarily due to decreased loan
collection and repossession expense, offset by increased salaries and employee
benefits and net occupancy expense.
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1st Source Corporation
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 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 63 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, Incorporated; Crowell, Weedon & Company; FTN Midwest Securities;
Goldman, Sachs & Company; Keefe, Bruyette & Woods, Inc.; Lehman Brothers,
Incorporated; Morgan Stanley & Company, Inc.; Prudential Equity Group,
Incorporated; RBC Capital Markets; Sandler O'Neill & Partners; Stifel, Nicolaus
& Company, Incorporated; William Blair & Company and UBS Capital Markets.
1st Source's floating rate cumulative trust preferred security is traded on
the Nasdaq stock market under the symbol "SRCEO." The rate for the second
quarter, 2005 is 5.09 percent. Marketmakers in those securities are Stifel,
Nicolaus & Company, Incorporated and UBS Capital Markets.
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,"
"should," and similar expressions indicate forward-looking statements. Those
statements, including statements, projections, estimates or
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1st Source Corporation
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.
# # #
1ST SOURCE CORPORATION Page 5
1ST QUARTER 2005 FINANCIAL HIGHLIGHTS
(Unaudited-Dollars in thousands except Per Share Data)
THREE MONTHS ENDED
MARCH
2005 2004
----------- ---------
END OF PERIOD BALANCES
Assets $ 3,341,453 $ 3,222,713
Loans and leases 2,278,995 2,176,113
Deposits 2,589,939 2,403,990
Reserve for loan and lease losses 62,647 70,045
Intangible assets 22,931 25,561
Common shareholders' equity 326,629 319,860
AVERAGE BALANCES
Assets $ 3,338,667 $ 3,250,559
Earning assets 3,124,749 3,016,130
Investments 777,542 740,804
Loans and leases 2,278,249 2,199,040
Deposits 2,589,092 2,413,793
Interest bearing liabilities 2,580,918 2,514,040
Common shareholders' equity 327,535 317,571
INCOME STATEMENT DATA
Net interest income $ 23,604 $ 25,762
Net interest income - FTE 24,253 26,475
(Recovery of)/provision for loan and lease losses (421) 101
Noninterest income 17,695 14,019
Noninterest expense 31,674 32,342
Net income 6,944 5,079
PER SHARE DATA
Basic net income per common share $ 0.34 $ 0.25
Diluted net income per common share 0.33 0.24
Cash dividends per common share 0.120 0.100
Book value per common share 15.77 15.42
Market value - High 25.840 24.900
Market value - Low 20.390 20.960
Basic weighted average common shares outstanding 20,719,596 20,727,035
Diluted weighted average common shares outstanding 21,041,812 21,035,918
KEY RATIOS
Return on average assets 0.84 % 0.63 %
Return on average common shareholders' equity 8.60 6.43
Average common shareholders' equity to average assets 9.81 9.77
End of period tangible common equity to tangible assets 9.15 9.21
Net interest margin 3.15 3.53
Efficiency: expense to revenue 74.51 76.79
Net charge-offs to average loans and leases 0.11 0.02
Loan and lease loss reserve to loans and leases 2.75 3.22
Nonperforming assets to loans and leases 1.10 1.45
ASSET QUALITY
Loans and leases past due 90 days or more $ 206 $ 230
Nonaccrual and restructured loans and leases 21,281 23,356
Other real estate 1,438 2,541
Repossessions 1,459 6,234
Equipment owned under operating leases 1,282 280
Total nonperforming assets 25,666 32,641
1ST SOURCE CORPORATION Page 6
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
March 31, 2005 March 31,2004
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ASSETS
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Cash and due from banks $ 86,955 $ 78,134
Federal funds sold and
interest bearing deposits with other banks 26,252 1,055
Investment securities available-for-sale, at fair value
(amortized cost of $740,662 and $723,011
at March 31, 2005 and 2004, respectively) 733,786 729,924
Mortgages held for sale 79,591 81,650
Loans and leases - net of unearned discount:
Commercial and agricultural loans 431,750 407,166
Auto, light truck and environmental equipment 269,361 244,444
Medium and heavy duty truck 274,097 224,912
Aircraft financing 423,017 458,788
Construction equipment financing 200,601 211,388
Loans secured by real estate 579,388 538,066
Consumer loans 100,781 91,349
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Total loans and leases 2,278,995 2,176,113
Reserve for loan and lease losses (62,647) (70,045)
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Net loans and leases 2,216,348 2,106,068
Equipment owned under operating leases
(net of accumulated depreciation) 44,552 62,994
Premises and equipment 37,581 38,093
Accrued income and other assets 116,388 124,795
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Total assets $ 3,341,453 $ 3,222,713
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LIABILITIES
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Deposits:
Noninterest bearing $ 402,004 $ 378,209
Interest bearing 2,187,935 2,025,781
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Total deposits 2,589,939 2,403,990
Federal funds purchased and securities
sold under agreements to purchase 194,247 248,779
Other short-term borrowings 97,401 109,842
Long-term debt and mandatorily redeemable securities 18,027 23,181
Subordinated notes 59,022 56,444
Accrued expenses and other liabilities 56,188 60,617
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Total liabilities 3,014,824 2,902,853
SHAREHOLDERS' EQUITY
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Preferred stock; no par value - -
Common stock; no par value 7,578 7,578
Capital surplus 214,001 214,001
Retained earnings 120,387 103,529
Cost of common stock in treasury (11,096) (9,512)
Accumulated other comprehensive (loss)/income (4,241) 4,264
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Total shareholders' equity 326,629 319,860
------------ ------------
Total liabilities and shareholders' equity $ 3,341,453 $ 3,222,713
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1ST SOURCE CORPORATION Page 7
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
Three Months Ended
March 31,
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2005 2004
----------- ---------
Interest income:
Loans and leases $ 33,637 $ 32,454
Investment securities, taxable 3,818 4,289
Investment securities, tax-exempt 1,264 1,317
Other 77 65
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Total interest income 38,796 38,125
Interest expense:
Deposits 12,316 9,823
Short-term borrowings 1,702 1,257
Subordinated notes 964 961
Long-term debt and mandatorily redeemable securities 210 322
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Total interest expense 15,192 12,363
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Net interest income 23,604 25,762
(Recovery of)/provision for loan and lease losses (421) 101
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Net interest income after
provision for loan and lease losses 24,025 25,661
Noninterest income:
Trust fees 3,246 3,090
Service charges on deposit accounts 3,963 3,706
Mortgage banking income 2,767 (891)
Equipment rental income 4,015 5,824
Other income 2,800 2,542
Investment securities and other investment gains (losses) 904 (252)
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Total noninterest income 17,695 14,019
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Noninterest expense:
Salaries and employee benefits 18,544 15,754
Net occupancy expense 2,102 1,833
Furniture and equipment expense 2,642 2,584
Depreciation - leased equipment 3,323 4,536
Supplies and communication 1,343 1,432
Loan and lease collection and repossession expense (134) 1,055
Other expense 3,854 5,148
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Total noninterest expense 31,674 32,342
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Income before income taxes 10,046 7,338
Income tax expense 3,102 2,259
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Net income $ 6,944 $ 5,079
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The NASDAQ Stock Market Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com