Exhibit 99.1
For: Immediate Release Contact: Larry Lentych
April 27, 2006 574 235 2000
Andrea Short
574 235 2000
1ST SOURCE INCOME RISES IN FIRST QUARTER,
CASH DIVIDEND REPORTED
South Bend, IN -- 1st Source Corporation (Nasdaq: SRCE), parent company of
1st Source Bank, today reported net income of $9.93 million for the first
quarter of 2006, up 43.04 percent over the $6.94 million reported in the first
quarter of 2005.
Christopher J. Murphy III, Chairman and Chief Executive Officer,
commented on the first quarter by saying, "The performance of 1st Source
continues to improve. It's been a busy and rewarding quarter. Assets, loans and
leases, and deposits all grew. New banking centers were opened in Elkhart and
Dowagiac, with the Dowagiac branch employing a new design. We were named as one
of the "Best Places to Work in Indiana" in a survey sponsored by the Indiana
Chamber and readers of our regional newspapers again selected us as the Best
Bank in their readers' poll. Also, 1st Source has recently been selected as a
founding member of the new NASDAQ Dividend Achievers Index, a special group of
companies that have increased their annual regular dividend payments for the
last 10 or more consecutive years."
Mr. Murphy continued, "The quarter was also helped by one time events.
We benefited by changes in compensation expenses of $1.5 million, and gains in
venture capital investments of over $2.0 million. Credit quality was good as
reflected by net recoveries for the period. Due to our concern about the
increasing costs of oil and gas, and the problems being experienced by the U.S.
auto industry and its effect on our regional economy and national niche
businesses, we have continued to maintain strong credit reserves. Overall, it's
a good, strong start to the year."
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Diluted net income per share of common stock for the first quarter of
2006 amounted to $0.48 compared with $0.33 for the first quarter of 2005, an
increase of 45.45 percent. Return on average common shareholders' equity for 1st
Source Corporation was 11.53 percent compared to 8.60 percent for the first
quarter of 2005, and return on average total assets was 1.18 percent compared to
0.84 percent a year ago.
At its April meeting, the Board of Directors approved a first quarter
cash dividend of $0.14 per common share, an increase of 16.67 percent over the
first quarter cash dividend in 2005. The cash dividend will be payable on May
15, 2006, to shareholders of record May 8, 2006.
As of March 31, 2006, the common equity-to-assets ratio for 1st Source
was 10.04 percent, up from 9.78 percent a year ago. Common shareholders' equity
was $347.35 million, up 6.34 percent from March 31, 2005. At the end of the
first quarter of 2006, total assets were $3.46 billion, up 3.55 percent from a
year ago. Loans and leases increased 8.80 percent and deposits increased 3.42
percent from a year ago.
For the first quarter of 2006, 1st Source's recovery of provision for
loan and lease losses was $0.30 million as compared to $0.42 million for the
first quarter of 2005. Net recoveries were $0.70 million for the first quarter
of 2006 compared to net charge-offs of $0.60 million in the first quarter of
2005. The reserve for loan and lease losses as of March 31, 2006, was 2.38
percent of total loans and leases compared to 2.75 percent as of March 31, 2005.
The ratio of nonperforming assets to net loans and leases was 0.83 percent on
March 31, 2006, compared to 1.10 percent for the same period last year.
Tax-equivalent net interest income was $25.72 million for the first
quarter of 2006, up 6.06 percent from 2005's first quarter, and the net interest
margin was 3.29 percent versus 3.15 percent in the first quarter of 2005.
Noninterest income for the three-month periods ended March 31, 2006 and
2005 was $19.01 million and $17.70 million, respectively. The predominant factor
behind the increase in 2006 was gains on venture capital investments, due to
market value adjustments. Insurance commissions, service charges on deposit
accounts, equipment rental income, and trust fees increased during the first
quarter of 2006 as compared to the first quarter 2005. These increases were
partially offset by a decrease in mortgage banking income which was primarily
due to minimal recoveries of mortgage servicing rights in the first quarter of
2006 compared to significant recoveries in the first quarter of 2005.
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Noninterest expense for the three-month periods ended March 31, 2006 and
2005 was $29.41 million and $31.67 million, respectively. The decrease in
noninterest expense for the first quarter of 2006 was primarily due to a one
time reduction in the accrual for stock-based compensation expense related to
the recognition of estimated forfeitures and the adoption of the new accounting
standard on stock-based compensation. Additionally, group insurance costs were
lower for the first quarter 2006 versus the first quarter of 2005.
1st Source is the largest locally controlled financial institution
headquartered and serving 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 65 banking centers in 15
counties, 4 Trustcorp Mortgage offices in Indiana and Ohio, and 24 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 clients 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.; Sandler O'Neill & Partners;
Stifel, Nicolaus & Company; 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
second quarter, 2006 is 6.88 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," "anticipate," "project,"
"will," "should," 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
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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.
# # #
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1st SOURCE CORPORATION Page 5
1st QUARTER 2006 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except for per share data)
Three Months Ended
March 31
2006 2005
--------------- ----------------
END OF PERIOD BALANCES
Assets $ 3,459,910 $ 3,341,453
Loans and leases 2,479,504 2,278,995
Deposits 2,678,421 2,589,939
Reserve for loan and lease losses 59,097 62,647
Intangible assets 20,715 22,931
Common shareholders' equity 347,350 326,629
AVERAGE BALANCES
Assets $ 3,405,052 $ 3,338,667
Earning assets 3,171,897 3,124,749
Investments 633,839 777,542
Loans and leases 2,457,080 2,278,249
Deposits 2,614,284 2,589,092
Interest bearing liabilities 2,633,088 2,580,918
Common shareholders' equity 349,303 327,535
INCOME STATEMENT DATA
Net interest income $ 25,099 $ 23,604
Net interest income - FTE 25,723 24,253
Recovery of provision for loan and lease losses (300) (421)
Noninterest income 19,005 17,695
Noninterest expense 29,406 31,674
Net income 9,933 6,944
PER SHARE DATA
Basic net income per common share $ 0.48 $ 0.34
Diluted net income per common share 0.48 0.33
Cash dividends paid per common share 0.140 0.120
Book value per common share 16.96 15.77
Market value - High 29.990 25.840
Market value - Low 24.900 20.390
Basic weighted average common shares outstanding 20,588,714 20,718,976
Diluted weighted average common shares outstanding 20,872,676 21,001,772
KEY RATIOS
Return on average assets 1.18 % 0.84 %
Return on average common shareholders' equity 11.53 8.60
Average common shareholders' equity to average assets 10.26 9.81
End of period tangible common equity to tangible assets 9.50 9.15
Net interest margin 3.29 3.15
Efficiency: expense to revenue 66.28 75.16
Net (recoveries) charge-offs to average loans and leases (0.12) 0.11
Loan and lease loss reserve to loans and leases 2.38 2.75
Nonperforming assets to loans and leases 0.83 1.10
ASSET QUALITY
Loans and leases past due 90 days or more $ 121 $ 206
Nonaccrual and restructured loans and leases 15,071 21,281
Other real estate 1,192 1,438
Repossessions 4,640 1,459
Equipment owned under operating leases 48 1,282
Total nonperforming assets 21,072 25,666
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1st SOURCE CORPORATION Page 6
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
March 31, 2006 March 31, 2005
--------------- ---------------
ASSETS
Cash and due from banks $ 86,212 $ 86,955
Federal funds sold and interest bearing deposits with other banks 27,001 26,252
Investment securities available-for-sale, at fair value 647,256 733,786
(amortized cost of $652,202 and $740,662 at
March 31, 2006 and 2005, respectively)
Mortgages held for sale 66,361 79,591
Loans and leases, net of unearned discount:
Commercial and agricultural loans 464,350 431,750
Auto, light truck and environmental equipment 311,560 269,361
Medium and heavy duty truck 299,421 274,097
Aircraft financing 445,664 423,017
Construction equipment financing 237,156 200,601
Loans secured by real estate 607,140 579,388
Consumer loans 114,213 100,781
--------------- ---------------
Total loans and leases 2,479,504 2,278,995
Reserve for loan and lease losses (59,097) (62,647)
--------------- ---------------
Net loans and leases 2,420,407 2,216,348
Equipment owned under operating leases 59,408 44,552
(net of accumulated depreciation)
Premises and equipment 37,482 37,581
Accrued income and other assets 115,783 116,388
--------------- ---------------
Total assets $ 3,459,910 $ 3,341,453
=============== ===============
LIABILITIES
Deposits:
Noninterest bearing $ 391,002 $ 402,004
Interest bearing 2,287,419 2,187,935
--------------- ---------------
Total deposits 2,678,421 2,589,939
Federal funds purchased and securities sold 193,347 194,247
under agreements to purchase
Other short-term borrowings 87,502 97,401
Long-term debt and mandatorily redeemable securities 33,501 18,027
Subordinated notes 59,022 59,022
Accrued expenses and other liabilities 60,767 56,188
--------------- ---------------
Total liabilities 3,112,560 3,014,824
SHAREHOLDERS' EQUITY
Preferred stock; no par value - -
Common stock; no par value 7,578 7,578
Capital surplus 214,001 214,001
Retained earnings 146,803 120,387
Cost of common stock in treasury (17,982) (11,096)
Accumulated other comprehensive loss (3,050) (4,241)
--------------- ---------------
Total shareholders' equity 347,350 326,629
--------------- ---------------
Total liabilities and shareholders' equity $ 3,459,910 $ 3,341,453
=============== ===============
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1st SOURCE CORPORATION Page 7
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands)
Three Months Ended
March 31
2006 2005
---------- ----------
Interest income:
Loans and leases $ 40,888 $ 33,637
Investment securities, taxable 3,925 3,818
Investment securities, tax-exempt 1,267 1,264
Other 316 77
---------- ----------
Total interest income 46,396 38,796
Interest expense:
Deposits 17,033 12,316
Short-term borrowings 2,760 1,702
Subordinated notes 1,050 964
Long-term debt and mandatorily redeemable securities 454 210
---------- ----------
Total interest expense 21,297 15,192
---------- ----------
Net interest income 25,099 23,604
Recovery of provision for loan and lease losses (300) (421)
---------- ----------
Net interest income after recovery of provision for
loan and lease losses 25,399 24,025
Noninterest income:
Trust fees 3,391 3,246
Service charges on deposit accounts 4,386 3,963
Mortgage banking income 1,757 2,767
Insurance commissions 1,682 1,164
Equipment rental income 4,220 4,015
Other income 1,486 1,636
Investment securities and other investment gains 2,083 904
---------- ----------
Total noninterest income 19,005 17,695
---------- ----------
Noninterest expense:
Salaries and employee benefits 15,514 18,544
Net occupancy expense 1,867 2,102
Furniture and equipment expense 3,134 2,642
Depreciation - leased equipment 3,382 3,323
Supplies and communication 1,363 1,343
Other expense 4,146 3,720
---------- ----------
Total noninterest expense 29,406 31,674
---------- ----------
Income before income taxes 14,998 10,046
Income tax expense 5,065 3,102
---------- ----------
Net income $ 9,933 $ 6,944
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The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com
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