1st Source Corporation Earnings Increase in First Quarter, Cash Dividend Declared

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SOUTH BEND, Ind.--(Business Wire)--
1st Source Corporation (Nasdaq: SRCE), parent company of 1st Source Bank, today
reported net income of $9.68 million for the first quarter of 2010, up 54.84%
compared to the $6.25 million reported in the first quarter a year ago. Diluted
net income per common share for the first quarter of 2010 amounted to $0.33, up
65.00% over the $0.20 for the first quarter of 2009.

At the April 2010 meeting, the Board of Directors approved a first quarter cash
dividend of $0.15 per common share, an increase of 7.14% over the dividend
declared in the same period a year earlier. The cash dividend will be payable on
May 17, 2010, to shareholders of record May 5, 2010.

Christopher J. Murphy III, Chairman and Chief Executive Officer, commented on
the first quarter by saying, "Our first quarter performance was one of steady
progress. Our net interest margin rebounded to 3.50% in the first quarter from
3.27% for the fourth quarter of 2009, and 3.03% a year ago. The structures we
put in place from better pricing control to modeling seem to be bearing fruit."

Mr. Murphy continued, "On the credit side, our non-performing loans and leases
may have peaked at year end 2009 at $101.01 million as they declined to $95.97
million as of this quarter end. Our ratio of nonperforming assets to total loans
and leases slowly backed down to 2.98% this quarter end after reaching 3.15% at
year end 2009. Our annualized net charge-offs to average loans and leases were a
manageable 0.63% for the first quarter. Of course, it is too early to conclude
that the economy is in a sustained recovery, so we could experience further
deterioration or continued improvement as time goes on."

"We remained focused on helping our clients make wise choices during what is
still a difficult time for many. Our efforts were concentrated on delivering
outstanding client service, providing straight talk and sound advice,
maintaining excellent cost control, and of course, keeping a close eye on credit
quality. Additionally, we were pleased during the quarter to be identified as
number 8 out of the Top 150 Best Performing Banks in the Country by Bank
Director`s Magazine among banks over $3 billion in size. All in all, it was an
improving quarter and a good one for 1st Source," concluded Mr. Murphy.

Return on average common shareholders` equity for 1st Source Corporation was
6.82% compared to 4.31% for the first quarter of 2009, and return on average
total assets was 0.88% compared to 0.56% a year ago. As of March 31, 2010, the
1st Source common equity-to-assets ratio was 10.66%, up from 10.07% a year ago
and its tangible common equity-to-tangible assets ratio was 8.81% compared to
8.25% a year earlier. Common shareholders` equity was $473.80 million, up 2.29%
from March 31, 2009. At the end of March 2010, total assets were $4.45 billion,
down slightly from the $4.60 billion a year ago. Loans and leases decreased
3.38% and deposits remained stable from a year ago.

For the first quarter of 2010, 1st Source`s provision for loan and lease losses
was $4.39 million compared to $7.79 million for the first quarter of 2009. Net
charge-offs were $4.80 million for the first quarter of 2010 compared to $3.20
million for the first quarter of 2009. The reserve for loan and lease losses as
of March 31, 2010, was 2.83% of total loans and leases compared to 2.62% a year
earlier. The ratio of nonperforming assets to net loans and leases was 2.98% on
March 31, 2010, compared to 2.09% for the same period last year. In the fourth
quarter 2009, the provision for loan and lease losses was $8.36 million, net
charges offs were $5.63 million, and the ratio of nonperforming assets to net
loans and leases was 3.15%, all of which have improved during the first quarter
2010. As of March 31, 2010, nonperforming assets included $2.36 million of
former bank premises held for sale.

Tax-equivalent net interest income was $35.78 million for the first quarter of
2010, up 13.07% from 2009's first quarter, and the net interest margin was 3.50%
compared to 3.03% in the first quarter of 2009.

Noninterest income for the three-month period ended March 31, 2010 was $20.92
million, an increase of 1.82% as compared to the first quarter of 2009.
Noninterest income increased primarily due to improvements in equipment rental
income, investment securities and other investment gains, and other income.
Those increases were largely offset by decreases in mortgage banking income.

Noninterest expense for the three-month period ended March 31, 2010 was $37.11
million, a decrease of 3.96% as compared to the first quarter of 2009.
Noninterest expense decreased primarily due to a reduction in salaries and
benefits.

1st Source serves the northern half of Indiana and southwest Michigan and is the
largest locally controlled financial institution headquartered in the area.
While delivering a comprehensive range of consumer and commercial banking
services through its community bank offices, 1st Source 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 76 community banking centers in 17 counties, 23 specialty finance
locations nationwide, 7 trust and wealth management locations, and 7 1st Source
Insurance offices. 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 it serves.

In addition to the results presented in accordance with generally accepted
accounting principles in the United States of America, this press release
contains certain non-GAAP financial measures. 1st Source Corporation believes
that providing non-GAAP financial measures provides investors with information
useful to understanding our financial performance. Additionally, these non-GAAP
measures are used by management for planning and forecasting purposes, including
measures based on "tangible equity" which is "common shareholders` equity"
excluding intangible assets.

1st Source may be accessed on its home page at "www.1stsource.com." Its common
stock is traded on the Nasdaq Global Select Market under "SRCE" and appears in
the National Market System tables in many daily newspapers under the code name
"1st Src". Except for historical information contained herein, the matters
discussed in this document express "forward-looking statements." Generally, the
words "believe," "contemplate," "seek," "plan," "possible," "assume," "expect,"
"intend," "targeted," "continue," "remain," "estimate," "anticipate," "project,"
"will," "should," "indicate," "would," "may" 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.

1st SOURCE CORPORATION
1st QUARTER 2010 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)
Three Months Ended
March 31,
2010 2009
END OF PERIOD BALANCES
Assets $ 4,445,112 $ 4,601,281
Loans and leases 3,106,115 3,214,725
Deposits 3,539,130 3,547,868
Reserve for loan and lease losses 87,827 84,357
Intangible assets 89,949 91,350
Common shareholders' equity 473,803 463,212
Total shareholders' equity 579,057 567,202

AVERAGE BALANCES
Assets $ 4,485,394 $ 4,536,327
Earning assets 4,145,707 4,229,221
Investments 892,606 778,392
Loans and leases 3,100,144 3,245,046
Deposits 3,574,129 3,587,073
Interest bearing liabilities 3,396,682 3,510,032
Common shareholders' equity 473,562 464,862
Total shareholders' equity 578,612 543,508

INCOME STATEMENT DATA
Net interest income $ 34,902 $ 30,722
Net interest income - FTE 35,777 31,642
Provision for loan and lease losses 4,388 7,785
Noninterest income 20,922 20,549
Noninterest expense 37,110 38,640
Net income 9,679 6,251
Net income available to common shareholders 7,968 4,938

PER SHARE DATA
Basic net income per common share $ 0.33 $ 0.20
Diluted net income per common share 0.33 0.20
Common cash dividends declared 0.15 0.14
Book value per common share 19.51 19.15
Tangible book value per common share 15.81 15.37
Market value - High 18.74 23.92
Market value - Low 14.25 14.16
Basic weighted average common shares outstanding 24,210,242 24,150,200
Diluted weighted average common shares outstanding 24,215,506 24,191,610

KEY RATIOS
Return on average assets 0.88 % 0.56 %
Return on average common shareholders' equity 6.82 4.31
Average common shareholders' equity to average assets 10.56 10.25
End of period tangible common equity to tangible assets 8.81 8.25
Risk-based capital - Tier 1 16.73 15.19
Risk-based capital - Total 18.01 16.48
Net interest margin 3.50 3.03
Efficiency: expense to revenue 63.78 71.10
Net charge-offs to average loans and leases 0.63 0.40
Loan and lease loss reserve to loans and leases 2.83 2.62
Nonperforming assets to loans and leases 2.98 2.09

ASSET QUALITY
Loans and leases past due 90 days or more $ 272 $ 678
Nonaccrual and restructured loans and leases 78,094 60,297
Other real estate 5,205 1,495
Former bank premises held for sale 2,363 3,356
Repossessions 9,886 2,919
Equipment owned under operating leases 150 373
Total nonperforming assets 95,970 69,118

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
March 31, 2010 March 31, 2009
ASSETS
Cash and due from banks $ 53,518 $ 60,444
Federal funds sold and interest bearing deposits with other banks 71,139 8,490
Investment securities available-for-sale
(amortized cost of $878,403 and $921,980 at
March 31, 2010 and 2009, respectively) 888,862 929,982
Other investments 21,012 18,612
Trading account securities 130 99
Mortgages held for sale 23,067 126,486

Loans and leases, net of unearned discount:
Commercial and agricultural loans 546,826 622,533
Auto, light truck and environmental equipment 364,445 335,267
Medium and heavy duty truck 200,228 228,092
Aircraft financing 608,643 633,372
Construction equipment financing 303,866 354,667
Loans secured by real estate 977,667 917,960
Consumer loans 104,440 122,834
Total loans and leases 3,106,115 3,214,725
Reserve for loan and lease losses (87,827 ) (84,357 )
Net loans and leases 3,018,288 3,130,368

Equipment owned under operating leases, net 92,226 80,224
Net premises and equipment 37,556 39,755
Goodwill and intangible assets 89,949 91,350
Accrued income and other assets 149,365 115,471

Total assets $ 4,445,112 $ 4,601,281

LIABILITIES
Deposits:
Noninterest bearing $ 457,645 $ 435,482
Interest bearing 3,081,485 3,112,386
Total deposits 3,539,130 3,547,868

Federal funds purchased and securities sold
under agreements to purchase 111,788 275,407
Other short-term borrowings 29,358 25,734
Long-term debt and mandatorily redeemable securities 24,847 20,132
Subordinated notes 89,692 89,692
Accrued expenses and other liabilities 71,240 75,246
Total liabilities 3,866,055 4,034,079

SHAREHOLDERS' EQUITY
Preferred stock; no par value 105,254 103,990
Common stock; no par value 350,272 350,260
Retained earnings 147,381 139,121
Cost of common stock in treasury (30,348 ) (31,140 )
Accumulated other comprehensive income 6,498 4,971
Total shareholders' equity 579,057 567,202

Total liabilities and shareholders' equity $ 4,445,112 $ 4,601,281

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
2010 2009
Interest income:
Loans and leases $ 42,270 $ 44,597
Investment securities, taxable 5,401 4,036
Investment securities, tax-exempt 1,467 1,710
Other 274 333
Total interest income 49,412 50,676

Interest expense:
Deposits 12,405 17,606
Short-term borrowings 188 349
Subordinated notes 1,647 1,647
Long-term debt and mandatorily redeemable securities 270 352
Total interest expense 14,510 19,954

Net interest income 34,902 30,722
Provision for loan and lease losses 4,388 7,785
Net interest income after provision for
loan and lease losses 30,514 22,937

Noninterest income:
Trust fees 3,745 3,804
Service charges on deposit accounts 4,620 4,746
Mortgage banking income 777 2,570
Insurance commissions 1,465 1,516
Equipment rental income 6,745 6,147
Other income 2,689 2,235
Investment securities and other investment gains (losses) 881 (469 )
Total noninterest income 20,922 20,549

Noninterest expense:
Salaries and employee benefits 18,810 20,086
Net occupancy expense 2,487 2,601
Furniture and equipment expense 2,800 3,481
Depreciation - leased equipment 5,364 4,956
Professional fees 1,514 1,062
Supplies and communication 1,369 1,567
FDIC and other insurance 1,674 1,550
Business development and marketing expense 567 485
Loan and lease collection and repossession expense 1,106 559
Other expense 1,419 2,293
Total noninterest expense 37,110 38,640

Income before income taxes 14,326 4,846
Income tax expense (benefit) 4,647 (1,405 )

Net income 9,679 6,251
Preferred stock dividends and discount accretion (1,711 ) (1,313 )
Net income available to common shareholders $ 7,968 $ 4,938

The Nasdaq Global Select Market Symbol: "SRCE" (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com

1st Source Corporation
Larry Lentych, 574-235-2000
or
Andrea Short, 574-235-2000

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