EX-99 3 a4386162ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 1st Source Corp. Announces Increased 1st Quarter Earnings, Dividend Reported SOUTH BEND, Ind.--(BUSINESS WIRE)--April 30, 2003--1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank, today reported net income of $4.46 million for the first quarter of 2003, up 5.99 percent compared to the $4.21 million in the first quarter of 2002. Diluted net income per share of common stock for the first quarter of 2003 amounted to $0.21 compared with $0.20 for the first quarter of 2002, an increase of 5.0 percent. Return on average common shareholders' equity for 1st Source Corporation was 5.80 percent compared to 5.47 percent for the first quarter of 2002, and return on average total assets was 0.55 percent compared to 0.49 percent a year ago. At their April meeting, the Board of Directors approved a first quarter cash dividend of $0.09 per common share. The cash dividend will be payable on May 15, 2003, to shareholders of record May 5, 2003, and is equal to the first quarter cash dividend in 2002. Christopher J. Murphy III, Chairman and Chief Executive Officer, commented on the first quarter by saying, "Our performance in the first quarter of 2003 is a slight improvement over last year, and was managed with no help from the stalled economy. We are pleased that our credit situation has currently stabilized as our sale of repossessions increased and our charge-offs decreased. We're hopeful that the successful conclusion to the war will help stabilize fuel rates and encourage business to begin investing in new plant and equipment. Furthermore, fuel price stability should improve the business climate for our niche areas which supply specialized financing services for used private and cargo aircraft, automobiles for leasing and rental agencies, heavy duty trucks, construction and environmental equipment ... all of which are heavily dependent on gas prices." "I am most pleased with the strong showing of other areas of the bank. Our retail branch network continues to increase the number of customers we serve, as well as gain market share, and remains the dominant retail financial institution in our area. We've attained excellent growth in our investments under management, increased the number of clients we serve in our trust department, and our insurance and 401(k) management areas are turning in strong performances. All of this is achieved by meeting the needs of our customers, one customer at a time," Murphy concluded. As of March 31, 2003, the common equity-to-assets ratio for 1st Source was 9.57 percent, up from 8.85 percent a year ago. Common shareholders' equity was $313.54 million, up 1.78 percent from March 31, 2002. At the end of the first quarter of 2003, total assets were $3.28 billion, down 5.92 percent from a year ago. Loans and deposits were down 10.48 percent and 4.48 percent, respectively, from a year ago. For the first quarter of 2003, 1st Source's provision for loan losses was $5.55 million as compared to $11.81 million for the first quarter of 2002. Net charge-offs were $2.92 million for the first quarter of 2003 compared to $11.54 million in the first quarter of 2002. The resulting reserve for loan losses as of March 31, 2003 was 2.73 percent of total loans, compared to 2.29 percent as of March 31, 2002. The ratio of nonperforming assets to net loans and leases was 2.97 percent on March 31, 2003 compared to 2.01 percent for the same period last year. Tax-equivalent net interest income was $27.31 million for the first quarter, down 12.85 percent from 2002's first quarter, and the net interest margin was 3.72 percent versus 4.00 percent in 2002. The lower margin was due to reduced earning assets and reduced asset yields, reflecting the effect of fewer loans in our specialty finance group and lower market interest rates. Noninterest income for the first quarter 2003 was $20.04 million, up 7.26 percent from the first quarter of 2002. Loan servicing and sale income was up as increased mortgage revenue more than offset decreased securitization income. Insurance commissions and trading security income also increased in 2003. Noninterest expense was $34.8 million for the first quarter 2003, up 7.93 percent from the first quarter of 2002, and down 10.67 percent from the fourth quarter. These fluctuations are primarily due to the timing of loan collection and repossession expense. As 1st Source continues to work through problem loans and liquidate repossessions primarily in its aircraft and auto financing businesses, expenses in this area remain higher than one year ago. 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 used private and cargo aircraft, automobiles for leasing and rental agencies, heavy duty trucks, construction and environmental equipment. The corporation includes 60 banking centers in 15 counties, 7 Trustcorp Mortgage offices in Indiana, Ohio and Michigan, and 26 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 Dain Rauscher, Inc.; Corwell, Weeden & Co.; FTN Financial Securities Corporation; Goldman, Sachs & Company; Jefferies & Company, Inc.; Keefe, Bruyette & Woods, Inc.; Merrill Lynch, Pierce, Fenner; Morgan Stanley & Company, Inc.; NatCity Investments; 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 first quarter, 2003 on the floating rate securities is 3.41 percent. Marketmakers in those securities are Goldman, Sachs & Company; 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 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 QUARTER 2003 FINANCIAL HIGHLIGHTS 1st Source Corporation and Subsidiaries (Unaudited - Dollars in thousands except Per Share Data) Three Months Ended March 31 2003 2002 ------------ ------------ END OF PERIOD BALANCES Assets $ 3,275,846 $ 3,482,010 Loans 2,263,845 2,529,006 Deposits 2,597,056 2,718,989 Reserve for Loan Losses 61,843 57,892 Intangible Assets 27,691 29,839 Common Shareholders' Equity 313,542 308,066 AVERAGE BALANCES Assets $ 3,273,880 $ 3,489,319 Earning Assets 2,976,799 3,174,867 Investments 656,181 649,116 Loans 2,277,072 2,520,565 Deposits 2,582,992 2,768,418 Interest Bearing Liabilities 2,516,345 2,781,265 Common Shareholders' Equity 311,818 311,709 INCOME STATEMENT DATA Net Interest Income $ 26,556 $ 30,541 Net Interest Income - FTE 27,312 31,340 Provision for Loan Losses 5,550 11,809 Noninterest Income 20,039 18,682 Noninterest Expense 34,802 32,245 Net Income 4,460 4,208 PER SHARE DATA Basic Net Income Per Common Share $ 0.21 $ 0.20 Diluted Net Income Per Common Share 0.21 0.20 Cash Dividends Per Common Share 0.090 0.090 Book Value Per Common Share 14.88 14.71 Market Value -- High 17.520 25.450 Market Value -- Low 12.800 19.750 Basic Weighted Avg. Common Shares Outstanding 21,000,317 20,867,694 Diluted Weighted Avg. Common Shares Outstanding 21,331,419 21,242,149 KEY RATIOS Return on Average Assets 0.55% 0.49% Return on Average Common Shareholders' Equity 5.80 5.47 Average Common Shareholders' Equity to Average Assets 9.52 8.93 End of Period Tangible Common Equity to Tangible Assets 8.80 8.06 Net Interest Margin 3.72 4.00 Efficiency: Expense to Revenue 69.65 58.83 Net Charge Offs to Average Loans 0.52 1.86 Loan Loss Reserve to Loans 2.73 2.29 Nonperforming Assets to Loans and Leases 2.97 2.01 ASSET QUALITY Loans Past Due 90 Days or More $ 569 $ 515 Non-accrual Loans 39,297 40,686 Other Real Estate Owned 5,667 4,196 Other Nonperforming Assets 24,297 7,822 Total Nonperforming Assets 69,830 53,219 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 1st Source Corporation and Subsidiaries (Unaudited - Dollars in thousands) March 31, March 31, 2003 2002 ------------ ------------ ASSETS Cash and due from banks $ 125,880 $ 64,999 Federal funds sold and interest bearing deposits with other banks 1,693 621 Investment securities available-for-sale, at fair value (amortized cost of $651,935 and $653,750 at March 31, 2003 and 2002, respectively) 659,010 659,011 Trading securities 13,539 0 Loans - net of unearned discount Commercial and agricultural loans 430,379 466,648 Truck and automobile financing 450,574 392,008 Aircraft financing 295,428 502,577 Construction equipment financing 290,341 343,069 Loans secured by real estate 548,487 582,968 Mortgage held for sale 146,932 120,061 Consumer loans 101,704 121,675 ------------ ------------ Total Loans 2,263,845 2,529,006 Reserve for loan losses (61,843) (57,892) ------------ ------------ Net Loans 2,202,002 2,471,114 Equipment owned under operating leases, net of accumulated depreciation 87,157 113,904 Premises and equipment 40,120 41,481 Other assets 146,445 130,880 ------------ ------------ Total Assets $ 3,275,846 $ 3,482,010 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Noninterest bearing $ 425,924 $ 332,166 Interest bearing 2,171,132 2,386,823 ------------ ------------ Total Deposits 2,597,056 2,718,989 Federal funds purchased and securities sold under agreements to repurchase 199,538 258,391 Other short-term borrowings 40,327 91,075 Other liabilities 53,243 48,855 Guaranteed junior subordinated debentures 54,750 44,750 Long-term debt 17,390 11,884 ------------ ------------ Total Liabilities 2,962,304 3,173,944 Shareholders' equity: Common stock-no par value 7,578 7,579 Capital surplus 214,001 214,001 Retained earnings 93,123 91,032 Cost of common stock in treasury (5,552) (7,803) Accumulated other comprehensive income 4,392 3,257 ------------ ------------ Total Shareholders' Equity 313,542 308,066 ------------ ------------ Total Liabilities and Shareholders' Equity $ 3,275,846 $ 3,482,010 ============ ============ CONSOLIDATED STATEMENTS OF INCOME 1st Source Corporation and Subsidiaries (Unaudited - Dollars in thousands) Three Months Ended March 31 2003 2002 ------------ ------------ INTEREST INCOME Loans, including fees $ 36,610 $ 45,190 Investment securities and other 6,119 7,349 ------------ ------------ Total Interest Income 42,729 52,539 INTEREST EXPENSE Deposits 13,771 19,679 Short-term borrowings 1,264 1,317 Guaranteed preferred beneficial interests in the Company's subordinated debentures 940 791 Long-term debt 198 211 ------------ ------------ Total Interest Expense 16,173 21,998 ------------ ------------ Net Interest Income 26,556 30,541 Provision for loan losses 5,550 11,809 ------------ ------------ Net Interest Income After Provision for Loan Losses 21,006 18,732 NONINTEREST INCOME Trust fees 2,640 2,660 Service charges on deposit accounts 3,724 3,471 Loan servicing and sale income 3,206 2,455 Equipment rental income 6,771 7,280 Other income 3,978 3,304 Investment securities and other investment losses (280) (488) ------------ ------------ Total Noninterest Income 20,039 18,682 ------------ ------------ NONINTEREST EXPENSE Salaries and employee benefits 17,247 16,578 Net occupancy expense 1,864 1,702 Furniture and equipment expense 2,641 2,729 Depreciation -- leased equipment 5,358 6,147 Supplies and communication 1,511 1,667 Business development and marketing expense 709 600 Other 5,472 2,822 ------------ ------------ Total Noninterest Expense 34,802 32,245 ------------ ------------ Income Before Income Taxes 6,243 5,169 Income Taxes 1,783 961 ------------ ------------ Net Income $ 4,460 $ 4,208 ============ ============ The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP 336901 10 3) Please contact us at shareholder@1stsource.com. CONTACT: 1st Source Corporation Larry Lentych, 574/235-2702 Andrea Short, 574/235-2348