UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission file number 0-6233
1st SOURCE CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-1068133
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 North Michigan Street, South Bend, Indiana 46601
(Address of principal executive offices) (Zip Code)
(574) 235-2702
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No______
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No ______
Number of shares of common stock outstanding as of July 25, 2003 - 21,077,534
shares.
EXPLANATORY NOTE
This amendment to Form 10-Q for the quarterly period ended June 30, 2003, is
being filed to correct two typographical errors included under the table heading
of Supplemental Loan Information as of June 30, 2003, on page 18 of the
originally filed report, which was filed under Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
typographical errors are as follows:
- Correctly state the Aircraft financing non-accrual loans as $18,925
- Correctly state the Total non-accrual loans as $41,930
This 10-Q/A is filed solely to correct these two typographical errors in Part I,
Item 2.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited)
Consolidated statements of financial condition --
June 30, 2003, and December 31, 2002 3
Consolidated statements of income --
three months and six months ended June 30, 2003 and 2002 4
Consolidated statements of cash flows --
six months ended June 30, 2003 and 2002 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
Item 4. Controls and Procedures 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 20
Item 6(a). Exhibits 20
Item 6(b). Reports on Form 8-K 20
SIGNATURES 21
CERTIFICATIONS 22
2
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
1ST SOURCE CORPORATION AND SUBSIDIARIES
(UNAUDITED - DOLLARS IN THOUSANDS)
June 30, December 31,
2003 2002
---------------------------
ASSETS
Cash and due from banks $ 122,422 $ 120,894
Federal funds sold and
interest bearing deposits with other banks 61,351 81,881
Investment securities available-for-sale
(amortized cost of $676,431 and $640,224
at June 30, 2003 and December 31, 2002, respectively) 684,926 647,617
Trading account securities 13,303 13,347
Mortgages held for sale 125,724 146,640
Loans - net of unearned discount
Commercial and agricultural 427,760 428,367
Truck and automobile financing 486,712 445,195
Aircraft financing 288,110 323,802
Construction equipment financing 270,582 303,126
Loans secured by real estate 527,047 567,950
Consumer loans 98,577 111,012
------ -------
Total loans 2,098,788 2,179,452
Reserve for loan losses (63,194) (59,218)
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Net loans 2,035,594 2,120,234
Equipment owned under operating leases,
net of accumulated depreciation 80,135 93,893
Net premises and equipment 39,376 40,899
Other assets 131,642 142,063
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Total assets $ 3,294,473 $ 3,407,468
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing 444,705 419,289
Interest bearing 2,199,039 2,293,616
--------- ---------
Total deposits 2,643,744 2,712,905
Federal funds purchased and securities
sold under agreements to repurchase 172,586 212,040
Other short-term borrowings 35,707 48,638
Long-term debt 17,253 16,878
Guaranteed preferred beneficial interests in
1st Source's subordinated debentures 54,750 54,750
Other liabilities 53,261 52,828
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Total liabilities 2,977,301 3,098,039
Shareholders' equity:
Preferred stock-no par value -- --
Common stock-no par value 7,578 7,579
Capital surplus 214,001 214,001
Retained earnings 95,855 90,897
Cost of common stock in treasury (5,535) (7,637)
Accumulated other comprehensive income 5,273 4,589
----- -----
Total shareholders' equity 317,172 309,429
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Total liabilities and shareholders' equity $ 3,294,473 $ 3,407,468
=========== ===========
The accompanying notes are a part of the consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF INCOME
1ST SOURCE CORPORATION AND SUBSIDIARIES
(UNAUDITED - DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
2003 2002 2003 2002
----------------------------- ----------------------------
Interest and Fee Income:
Loans $ 36,103 $ 43,134 $ 72,713 $ 88,324
Investment securities:
Taxable 4,710 5,586 9,244 11,322
Tax-exempt 1,445 1,550 2,880 3,092
Other 295 127 445 198
------------ ------------ ------------ ------------
TOTAL INTEREST INCOME 42,553 50,397 85,282 102,936
Interest Expense:
Deposits 13,187 18,227 26,958 37,906
Short-term borrowings 1,498 1,211 2,762 2,528
Guaranteed preferred beneficial interests in
1st Source's subordinated debentures 941 794 1,881 1,585
Long-term debt 187 213 385 424
------------ ------------ ------------ ------------
TOTAL INTEREST EXPENSE 15,813 20,445 31,986 42,443
------------ ------------ ------------ ------------
NET INTEREST INCOME 26,740 29,952 53,296 60,493
Provision for loan losses 4,901 10,750 10,451 22,559
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 21,839 19,202 42,845 37,934
Noninterest Income:
Trust fees 2,736 2,661 5,376 5,321
Service charges on deposit accounts 3,922 3,684 7,646 7,155
Loan servicing and sale income 4,445 1,124 7,651 3,579
Equipment rental income 6,455 7,464 13,226 14,744
Other income 4,635 3,009 8,613 6,313
Investment securities and other investment losses (275) 0 (555) (488)
------------ ------------ ------------ ------------
TOTAL NONINTEREST INCOME 21,918 17,942 41,957 36,624
------------ ------------ ------------ ------------
Noninterest Expense:
Salaries and employee benefits 18,290 16,417 35,537 32,995
Net occupancy expense 1,785 1,678 3,649 3,380
Furniture and equipment expense 2,677 2,626 5,318 5,355
Depreciation - leased equipment 5,050 5,966 10,408 12,113
Supplies and communication 1,558 1,594 3,069 3,261
Loan collection and repossession expense 3,972 1,438 5,570 1,875
Other expense 3,943 3,944 8,526 6,929
------------ ------------ ------------ ------------
TOTAL NONINTEREST EXPENSE 37,275 33,663 72,077 65,908
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 6,482 3,481 12,725 8,650
Income taxes 1,792 714 3,575 1,675
------------ ------------ ------------ ------------
NET INCOME $ 4,690 $ 2,767 $ 9,150 $ 6,975
============ =========== ============ ============
Other Comprehensive Income, Net of Tax:
Change in unrealized appreciation of
available-for-sale securities 881 2,372 684 19
------------ ------------ ------------ ------------
Total Comprehensive Income $ 5,571 $ 5,139 $ 9,835 $ 6,994
============ =========== ============ ============
Per Common Share:
Basic Net Income Per Common Share $ 0.22 $ 0.13 $ 0.43 $ 0.33
============ =========== ============ ============
Diluted Net Income Per Common Share $ 0.22 $ 0.13 $ 0.43 $ 0.33
============ =========== ============ ============
Dividends $ 0.090 $ 0.090 $ 0.180 $ 0.180
============ =========== ============ ============
Basic Weighted Average Common Shares Outstanding 21,071,946 20,950,747 21,036,329 20,909,450
============ =========== ============ ============
Diluted Weighted Average Common Shares Outstanding 21,407,824 21,368,441 21,368,940 21,297,194
============ =========== ============ ============
The accompanying notes are a part of the consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
1ST SOURCE CORPORATION AND SUBSIDIARIES
(UNAUDITED - DOLLARS IN THOUSANDS)
Six Months Ended June 30,
--------------------------
2003 2002
-------------- ----------
Operating activities:
Net income $ 9,150 $ 6,975
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 10,451 22,559
Depreciation of premises and equipment 13,053 14,685
Amortization of investment security premiums
and accretion of discounts, net 2,696 2,127
Amortization of mortgage servicing rights 3,846 2,903
Mortgage servicing asset impairment charges 5,415 1,177
Deferred income taxes (1,677) 8,937
Realized investment securities losses 555 488
Change in mortgages held for sale 20,916 88,599
Realized losses (gains) on securitized loans 311 (4,499)
Change in trading account securities 43 --
Decrease in interest receivable 1,333 1,482
Decrease in interest payable (376) (3,571)
Increase in other assets (173) (4,088)
Other 4,002 (4,309)
-------- --------
Net cash from operating activities 69,545 133,465
Investing activities:
Proceeds from sales and maturities of investment securities 70,119 128,299
Purchases of investment securities (109,886) (119,725)
Net change in short-term investments 20,530 (6,373)
Loans sold or participated to others 49,403 168,660
Net change in loans 24,785 (205,616)
Net change in equipment owned under operating leases 3,350 (5,826)
Purchases of premises and equipment (994) (3,097)
-------- --------
Net cash from investing activities 57,307 (43,678)
Financing activities:
Net change in demand deposits, NOW
accounts and savings accounts (33,292) 65,067
Net decrease in certificates of deposit (35,869) (156,538)
Net decrease in short-term borrowings (52,385) (30,252)
Proceeds from issuance of long-term debt 694 37
Payments on long-term debt (319) (158)
Acquisition of treasury stock (370) (2,158)
Cash dividends (3,783) (3,763)
-------- --------
Net cash from financing activities (125,324) (127,765)
Net change in cash and cash equivalents 1,528 (37,978)
Cash and cash equivalents, beginning of year 120,894 129,431
-------- --------
Cash and cash equivalents, end of period $ 122,422 $ 91,453
======== ========
The accompanying notes are a part of the consolidated financial statements
5
1ST SOURCE CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements reflect all
adjustments (all of which are normal and recurring in nature) which are, in the
opinion of management, necessary for a fair presentation of the consolidated
financial position, the results of operations, and cash flows for the periods
presented. These unaudited consolidated financial statements have been prepared
according to the rules and regulations of the Securities and Exchange Commission
(SEC)and, therefore, certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been omitted. The Notes
to the Consolidated Financial Statements appearing in 1st Source Corporation's
(1st Source) Annual Report on Form 10-K (2002 Annual Report), which include
descriptions of significant accounting policies, should be read in conjunction
with these interim financial statements. The balance sheet at December 31, 2002
has been derived from the audited financial statements at that date but does not
include all of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements.
Certain amounts in the prior period consolidated financial statements have been
reclassified to conform with the current year presentation. These
reclassifications had no effect on total assets, shareholders' equity or net
income as previously reported.
1st Source accounts for its stock-based compensation plans under the
recognition and measurement principles provided in Accounting Principles Board
Opinion (APB) No. 25, "Accounting for Stock Issued to Employees", and related
Interpretations. Stock-based employee compensation expense for the Executive
Incentive Plan and the Restricted Stock Award Plan is recognized in net income.
For the stock option plans, the stock option agreement, and the Employee Stock
Purchase Plan, no compensation expense is recognized in net income as all
options granted under these plans had an exercise price equal to the market
value of the underlying common stock on the date of grant.
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," as amended by SFAS 148, requires pro forma
disclosures of net income and earnings per share for companies not adopting its
fair value accounting method for stock-based employee compensation. The pro
forma disclosures below use the fair value method of SFAS 123 to measure
compensation expense for stock-based employee compensation plans.
6
(Dollars in thousands, except per share data) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------------------------------------
2003 2002 2003 2002
------------------------------------------------
Net income, as reported $ 4,690 $ 2,767 $ 9,150 $ 6,975
Add: Stock-based employee compensation expense included in
reported net income, net of related tax effects 310 -- 310 --
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards, net
of related tax effects (442) (21) (479) (483)
--------- --------- --------- ---------
Pro forma net income $ 4,558 $ 2,746 $ 8,981 $ 6,492
========= ========= ========= =========
Earnings per share:
Basic--as reported $ 0.22 $ 0.13 $ 0.43 $ 0.33
========= ========= ========= =========
Basic--pro forma $ 0.22 $ 0.13 $ 0.43 $ 0.32
========= ========= ========= =========
Diluted--as reported $ 0.22 $ 0.13 $ 0.43 $ 0.31
========= ========= ========= =========
Diluted--pro forma $ 0.21 $ 0.13 $ 0.42 $ 0.30
========= ========= ========= =========
Note 2. Recent Accounting Pronouncements
CONSOLIDATION OF VARIABLE INTEREST ENTITIES: In January 2003, the Financial
Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 46,
"Consolidation of Variable Interest Entities." The objective of this
interpretation is to provide guidance on how to identify a variable interest
entity (VIE) and determine when the assets, liabilities, noncontrolling
interests, and results of operations of a VIE need to be included in a company's
consolidated financial statements. A company that holds variable interests in an
entity will need to consolidate the entity if the company's interest in the VIE
is such that the company will absorb a majority of the VIE's expected losses
and/or receive a majority of the entity's expected residual returns, if they
occur. FIN 46 also requires additional disclosures by primary beneficiaries and
other significant variable interest holders. The provisions of this
interpretation became effective upon issuance. As of June 30, 2003 and December
31, 2002, 1st Source had a variable interest in a securitization trust. This
securitization trust is a qualifying special purpose entity, which is exempt
from the consolidation requirements of FIN 46.
1st Source adopted FIN 46 on July 1, 2003. In its current form, FIN 46 may
require 1st Source to de-consolidate its investment in 1st Source Capital Trust
I, II, and III (the Trusts) in future financial statements. The potential
de-consolidation of subsidiary trusts of bank holding companies formed in
connection with the issuance of trust preferred securities, like the Trusts,
appears to be an unintended consequence of FIN 46. It is currently unknown if,
or when, the FASB will address this issue. In July 2003, the Board of Governors
of the Federal Reserve System issued a supervisory letter instructing bank
holding companies to continue to include the trust preferred securities in their
Tier I capital for regulatory capital purposes until notice is given to the
contrary. The Federal Reserve intends to review the regulatory implications of
any accounting treatment changes and, if necessary or warranted, provide further
appropriate guidance. There can be no assurance that the Federal Reserve will
continue to allow institutions to include trust preferred securities in Tier I
capital for regulatory capital purposes. As of June 30, 2003, assuming 1st
Source was not allowed to include the $54.75 million in trust preferred
securities issued by the Trusts in Tier 1 capital, 1st Source would still be
well capitalized per regulatory guidelines.
7
GUARANTEES: In November 2002, the FASB issued FIN 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." This interpretation expands the
disclosures to be made by a guarantor in its financial statements about its
obligations under certain guarantees and requires the guarantor to recognize a
liability for the fair value of an obligation assumed under a guarantee. The
initial recognition and measurement provisions of FIN 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002. The
disclosure requirements of FIN 45 are effective for financial statements of
interim or annual periods ending after December 15, 2002, and were adopted in
1st Source's 2002 Annual Report. Implementation of the remaining provisions of
FIN 45 during the first quarter of 2003 did not have a significant impact on the
financial statements.
AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES: In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts. The
provisions in this Statement require that contracts with comparable
characteristics be accounted for similarly. The provisions of SFAS No. 149 are
effective for contracts entered into or modified after June 30, 2003, and for
hedging relationships designated after June 30, 2003. 1st Source does not expect
the requirements of SFAS No. 149 to have a material impact on the results of
operations or financial position.
ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY: In May 2003, the FASB issued SFAS No. 150, "Accounting
for Certain Financial Instruments with Characteristics of both Liabilities and
Equity." This Statement establishes standards on the classification and
measurement of certain financial instruments with characteristics of both
liability and equity. SFAS No. 150 is effective for all financial instruments
entered into or modified after May 31, 2003, and to all other instruments that
exist as of the beginning of the first interim period beginning after
June 15, 2003. 1st Source does not expect the requirements of SFAS No. 150 to
have an impact on the results of operations or financial position.
8
Note 3. Reserve for Loan Losses
The reserve for loan losses is maintained at a level believed to be
adequate by management to absorb probable losses inherent in the loan portfolio.
The determination of the reserve requires significant judgment reflecting
management's best estimate of probable loan losses related to specifically
identified loans as well as probable losses in the remainder of the various loan
portfolios. The methodology for assessing the appropriateness of the reserve
consists of several key elements, which include: specific reserves for
identified special attention loans (classified loans and leases and internal
watch list credits), percentage allocations for special attention loans without
specific reserves, formula reserves for each business lending division portfolio
including a higher percentage reserve allocation for special attention loans
without a specific reserve and reserves for pooled homogeneous loans.
Management's evaluation is based upon a continuing review of these portfolios,
estimates of future customer performance, collateral values and disposition and
forecasts of future economic and geopolitical events, all of which are subject
to judgment and will change.
Note 4. Financial Instruments with Off-Balance-Sheet Risk
To meet the financing needs of its customers, 1st Source and its
subsidiaries are parties to financial instruments with off-balance-sheet risk in
the normal course of business. These off-balance-sheet financial instruments
include commitments to originate, purchase and sell loans and standby letters of
credit. The instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the consolidated
statements of financial condition. 1st Source's exposure to credit loss in the
event of nonperformance by the other party to the financial instruments for loan
commitments and standby letters of credit is represented by the dollar amount of
those instruments. 1st Source uses the same credit policies and collateral
requirements in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
Trustcorp Mortgage Company and 1st Source Bank (Bank), subsidiaries of 1st
Source, grant mortgage loan commitments to borrowers, subject to normal loan
underwriting standards. The interest rate risk associated with these loan
commitments is managed by entering into contracts for future deliveries of
loans. Loan commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
Letters of credit are conditional commitments issued by 1st Source to
guarantee the performance of a customer to a third party. The credit risk
involved and collateral obtained in issuing letters of credit is essentially the
same as that involved in extending loan commitments to customers.
As of June 30, 2003 and December 31, 2002, 1st Source had commitments
outstanding to originate and purchase mortgage loans aggregating $533.00 million
and $364.00 million, respectively. Outstanding commitments to sell loans
aggregated $286.00 million at June 30, 2003 and $240.00 million at
December 31, 2002. Standby letters of credit totaled $112.85 million and $117.21
million at June 30, 2003 and December 31, 2002, respectively. Standby letters of
credit have terms ranging from six months to one year.
9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 include, but are not limited to,
changes in law; 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 changes in loan prepayment assumptions; unforeseen
downturns in or major events affecting the local, regional or national economies
or the industries in which 1st Source has credit concentrations; and other
matters discussed in 1st Source's filings with the SEC, including its Annual
Report on Form 10-K for 2002, which filings are available from the SEC. 1st
Source undertakes no obligation to publicly update or revise any forward-looking
statements.
The following management's discussion and analysis is presented to provide
information concerning the financial condition of 1st Source as of
June 30, 2003, as compared to December 31, 2002, and the results of operations
for the six months ended June 30, 2003 and 2002. This discussion and analysis
should be read in conjunction with 1st Source's consolidated financial
statements and the financial and statistical data appearing elsewhere in this
report and 1st Source's 2002 Annual Report.
FINANCIAL CONDITION
1st Source's assets at June 30, 2003 were $3.29 billion, down 3.32% from
December 31, 2002. Total loans were down 3.70% and total deposits decreased
2.55% over the comparable figures at the end of 2002.
Nonperforming assets at June 30, 2003, were $58.18 million compared to
$64.12 million at December 31, 2002 and $69.83 million at March 31, 2003, a
decrease of 9.26% and 16.68%, respectively. Nonperforming assets decreased due
to the liquidation of repossessions and a decrease in truck non-accrual loans.
This decrease was offset by an increase in aircraft non-accrual loans. At
June 30, 2003, nonperforming assets were 2.67% of net loans and leases compared
to 2.65% at December 31, 2002.
At June 30, 2003, other assets consisted of $27.03 million in intangible
assets, $26.79 million in cash surrender value of corporate owned life
insurance, $19.14 million in originated and purchased mortgage servicing rights,
$13.45 million in accrued interest receivable, $12.58 million in repossessions,
$4.80 million in other real estate and $27.84 million in all other assets.
10
CAPITAL
As of June 30, 2003, total shareholders' equity was $317.17 million, up
2.50% from the $309.43 million at December 31, 2002. The 1st Source
equity-to-assets ratio was 9.63% as of June 30, 2003, compared to 9.08% at
December 31, 2002. Book value per common share rose to $15.05 at June 30, 2003,
up from $14.77 at December 31, 2002.
1st Source declared and paid dividends per common share of $0.09 during
the second quarter of 2003. The dividend payout ratio, representing dividends
per share divided by earnings per share, was 40.91% for the second quarter of
2003. The dividend payout is continually reviewed by management and the Board of
Directors.
The banking regulators have established guidelines for leverage capital
requirements, expressed in terms of Tier 1 or core capital as a percentage of
average assets, to measure the soundness of a financial institution. These
guidelines require all banks to maintain a minimum leverage capital ratio of
4.00% for adequately capitalized banks and 5.00% for well-capitalized banks. 1st
Source's leverage capital ratio was 10.38% at June 30, 2003.
The Federal Reserve Board has established risk-based capital guidelines
for U.S. banking organizations. The guidelines establish a conceptual framework
calling for risk weights to be assigned to on and off-balance sheet items in
arriving at risk-adjusted total assets, with the resulting ratio compared to a
minimum standard to determine whether a bank has adequate capital. The minimum
standard risk-based capital ratios effective in 2003 are 4.00% for adequately
capitalized banks and 6.00% for well-capitalized banks for Tier 1 risk-based
capital and 8.00% and 10.00%, respectively, for total risk-based capital. 1st
Source's Tier 1 risk-based capital ratio on June 30, 2003 was 12.46% and the
total risk-based capital ratio was 13.80%.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Bank's liquidity is monitored and closely managed by the
Asset/Liability Committee (ALCO), whose members are comprised of the Bank's
senior management. Asset and liability management includes the management of
interest rate sensitivity and the maintenance of an adequate liquidity position.
The purpose of interest rate sensitivity management is to stabilize net interest
income during periods of changing interest rates.
Liquidity management is the process by which the Bank ensures that adequate
liquid funds are available to meet financial commitments on a timely basis.
Financial institutions must maintain liquidity to meet day-to-day requirements
of depositors and borrowers, take advantage of market opportunities and provide
a cushion against unforeseen needs.
11
Liquidity of the Bank is derived primarily from core deposit growth,
principal payments received on loans, the sale and maturity of investment
securities, net cash provided by operating activities, and access to other
funding sources. The most stable source of liability funded liquidity is deposit
growth and retention of the core deposit base. The principal source of asset
funded liquidity is available for sale investment securities, cash and due from
banks, federal funds sold, securities purchased under agreements to resell and
loans and interest bearing deposits with other banks maturing within one year.
Additionally, liquidity is provided by bank lines of credit, repurchase
agreements and the ability to borrow from the Federal Reserve Bank and Federal
Home Loan Bank.
Close attention is given to various interest rate sensitivity gaps and
interest rate spreads. Maturities of rate sensitive assets are relative to the
maturities of rate sensitive liabilities and interest rate forecasts. At
June 30, 2003, the consolidated statement of financial condition was rate
sensitive by $139.55 million more assets than liabilities scheduled to reprice
within one year or approximately 1.08%.
RESULTS OF OPERATIONS
Net income for the three and six month periods ended June 30, 2003, was
$4.69 million and $9.15 million respectively, compared to $2.77 million and
$6.98 million for the same periods in 2002. Diluted net income per common share
was $0.22 and $0.43, respectively, for the three and six month periods ended
June 30, 2003, compared to $0.13 and $0.33 for the same periods in 2002. Return
on average common shareholders' equity was 5.88% for the six months ended
June 30, 2003, compared to 4.53% in 2002. The return on total average assets was
0.56% for the six months ended June 30, 2003 compared to 0.40% in 2002.
The increase in net income for the six months ended June 30, 2003 over the
first six months of 2002, was primarily the result of a $12.11 million decrease
in the provision for loan losses and a $5.65 million increase in mortgage
banking income, offset by a $7.20 million decrease in net interest income, a
$2.54 million increase in salaries and employee benefit expense and a $3.70
million increase in loan collection and repossession expense. Details of the
changes in the various components of net income are further discussed below.
12
NET INTEREST INCOME
The taxable equivalent net interest income for the three months ended
June 30, 2003, was $27.50 million, a decrease of 10.56% over the same period in
2002. The net interest margin on a fully taxable equivalent basis' was 3.66%
for the three months ended June 30, 2003 compared to 3.90% for the three months
ended June 30, 2002. The taxable equivalent net interest income for the
six-month period ended June 30, 2003, was $54.82 million, a decrease of 11.72%
over 2002, resulting in a net yield of 3.69%, compared to 3.95% for the same
period in 2002.
Total average earning assets decreased 4.73% and 5.48%, respectively, for
the three and six-month periods ended June 30, 2003, over the comparative
periods in 2002. Average loan outstandings decreased by 11.70% and 10.95% for
the three and six-month periods, compared to the same periods in 2002, due
primarily to decreased loan volume in commercial loans secured by transportation
and construction equipment. Total average investment securities increased 4.20%
and 2.65% for the three and six-month periods over one year ago due to an
increase in municipal and other securities which more than offset a decrease in
United States treasury securities. Average mortgages held for sale increased
41.38%, as demand for mortgage loans was greater in the second quarter of 2003
due to the interest rate environment. The taxable equivalent yields on total
average earning assets were 5.77% and 6.49% for the three-month periods ended
June 30, 2003 and 2002, respectively, and 5.84% and 6.65% for the six-month
periods ended June 30, 2003 and 2002, respectively.
Average interest bearing deposits decreased 10.28% and 10.08% for the three
and six month periods, respectively, over the same periods in 2002. The rate on
average interest-bearing deposits was 2.41% and 2.99% for the three-month
periods ended June 30, 2003 and 2002 and 2.48% and 3.13% for the six-month
periods ended June 30, 2003 and 2002 due to a decrease in public funds and
brokered deposits. These higher cost deposits were not pursued due to lower
funding needs. The rate on average interest-bearing funds was 2.54% and 2.95%
for the three months ended June 30, 2003 and 2002, respectively. For the six
months ended June 30, 2003 and 2002, the rate on average interest bearing funds
was 2.57% and 3.08%, respectively.
13
The following table sets forth consolidated information regarding average
balances and rates.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Dollars in thousands)
Three months ended June 30,
2003 2002
------------------------------- --------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------------------------- --------------------------------
ASSETS:
Investment securities:
Taxable $ 504,210 $ 4,710 3.75% $ 492,830 $ 5,586 4.55%
Tax exempt (1) 165,963 2,136 5.16% 150,317 2,277 6.08%
Mtg - Held for Sale 137,651 2,141 6.24% 97,361 1,506 6.20%
Net loans (2 & 3) 2,112,248 34,034 6.46% 2,392,107 41,702 6.99%
Other investments 93,378 296 1.27% 30,467 126 1.66%
------------------------------- --------------------------------
Total Earning Assets 3,013,449 43,317 5.77% 3,163,082 51,197 6.49%
Cash and due from banks 91,161 90,384
Reserve for loan losses (62,976) (58,828)
Other assets 257,936 282,607
------------- -----------
Total $ 3,299,570 $3,477,245
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest bearing deposits $ 2,196,935 $ 13,187 2.41% $2,448,524 $ 18,227 2.99%
Short-term borrowings 231,971 1,498 2.59% 272,938 1,211 1.78%
Guaranteed preferred beneficial interest
in 1st Source's subordinated debentures 54,750 942 6.90% 44,750 794 7.11%
Long-term debt 17,305 187 4.33% 11,850 213 7.20%
------------------------------- --------------------------------
Total Interest Bearing Liabilities 2,500,961 15,813 2.54% 2,778,062 20,445 2.95%
Noninterest bearing deposits 428,384 337,547
Other liabilities 54,290 91,310
Shareholders' equity 315,934 309,104
------------- -----------
Total $ 3,299,570 $3,477,245
============= ===========
---------- ---------
Net Interest Income $ 27,504 $ 30,752
========== =========
Net Yield on Earning Assets on a Taxable
----- -----
Equivalent Basis 3.66% 3.90%
===== =====
14
Six months ended June 30,
2003 2002
------------------------------- --------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------------------------- --------------------------------
ASSETS:
Investment securities:
Taxable $ 498,345 $ 9,244 3.74% $ 497,853 $ 11,322 4.59%
Tax exempt (1) 164,870 4,251 5.20% 148,263 4,539 6.17%
Mtg - Held for Sale 131,480 3,844 5.90% 110,955 3,490 6.34%
Net loans (2 & 3) 2,131,930 69,019 6.53% 2,393,975 84,987 7.16%
Other investments 68,599 445 1.31% 17,897 198 2.23%
------------------------------- ------------------------------
Total Earning Assets 2,995,225 86,802 5.84% 3,168,943 104,536 6.65%
Cash and due from banks 88,583 88,860
Reserve for loan losses (62,038) (58,798)
Other assets 265,026 284,244
------------- -----------
Total $ 3,286,796 $3,483,249
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest bearing deposits $ 2,194,050 $ 26,958 2.48% $2,440,126 37,906 3.13%
Short-term borrowings 242,411 2,763 2.30% 282,902 2,528 1.80%
Guaranteed preferred beneficial interest
in 1st Source's subordinated debentures 54,750 1,881 6.93% 44,750 1,584 7.14%
Long-term debt 17,400 385 4.46% 11,877 424 7.20%
------------------------------- ----------------------------
Total Interest Bearing Liabilities 2,508,611 31,986 2.57% 2,779,655 42,442 3.08%
Noninterest bearing deposits 410,223 337,168
Other liabilities 54,075 96,397
Shareholders' equity 313,887 310,399
------------- -----------
Total $ 3,286,796 $3,483,249
============= ===========
---------- --------
Net Interest Income $ 54,816 $ 62,094
========== ========
Net Yield on Earning Assets on a Taxable
----- -----
Equivalent Basis 3.69% 3.95%
===== =====
(1) Interest income includes the effects of taxable equivalent
adjustments, using a 35% rate. Tax equivalent adjustments were $1,370
in 2003 and $1,447 in 2002.
(2) Loan income includes fees on loans of $2,574 in 2003 and $2,557 in
2002. Loan income also includes the effects of taxable equivalent
adjustments, using a 35% rate for 2003 and 2002. The tax equivalent
adjustments were $150 in 2003 and $153 in 2002.
(3) For purposes of this computation, nonaccruing loans are included in
the daily average loan amounts outstanding.
15
PROVISION AND RESERVE FOR LOAN LOSSES
The provision for loan losses for the three-month periods ended
June 30, 2003, and 2002 was $4.90 million and $10.75 million, respectively, and
$10.45 million and $22.56 million for the six-month periods ended June 30, 2003
and 2002, respectively. Net Charge-offs of $3.55 million were recorded for the
second quarter 2003, compared to $11.22 million for the same quarter a year ago.
Year-to-date net charge-offs of $6.48 million have been recorded in 2003,
compared to net charge-offs of $22.76 million through June 2002.
In the second quarter 2003, 1st Source experienced moderate improvement in
credit quality. Overall delinquencies have decreased, even though there has been
a slight increase in construction equipment delinquencies due to bad weather and
to 1st Source slow payments from state and municipal governments. Loan
delinquencies were down to 1.51% on June 30, 2003, as compared to 2.51% on
June 30, 2002, and 1.80% at the end of 2002. Second quarter 2003 net charge-offs
increased slightly as compared to first quarter 2003. The reserve for loan
losses as a percentage of loans outstanding at the end of the period continued
to increase. A summary of loan loss experience during the three-month and
six-month periods ended June 30, 2003 and 2002 is provided below.
Summary of Reserve for Loan Losses
------------------------------------------------------------------
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------------------------------------
2003 2002 2003 2002
--------------- --------------- -------------- ---------------
Reserve for loan losses - beginning balance $ 61,843 $ 57,892 $ 59,218 $ 57,624
Charge-offs (4,453) (11,696) (8,123) (24,435)
Recoveries 903 474 1,648 1,672
----------- ----------- ----------- -----------
Net charge-offs (3,550) (11,222) (6,475) (22,763)
Provision for loan losses 4,901 10,750 10,451 22,559
----------- ----------- ----------- -----------
Reserve for loan losses - ending balance $ 63,194 $ 57,420 $ 63,194 $ 57,420
=========== =========== =========== ===========
Loans outstanding at end of period $ 2,098,788 $ 2,373,043 $ 2,098,788 $ 2,373,043
Average loans outstanding during period 2,112,248 2,393,107 2,131,930 2,393,975
Reserve for loan losses as a percentage of
loans outstanding at end of period 3.01% 2.42% 3.01% 2.42%
Ratio of net charge-offs during period to
average loans outstanding 0.67% 1.88% 0.61% 1.92%
16
NONPERFORMING ASSETS
Nonperforming assets were as follows:
(Dollars in thousands)
June 30, Dec 31, June 30,
2003 2002 2002
------- -------- -------
Loans past due 90 days or more $ 289 $ 154 $ 411
Non-accrual loans 41,930 35,664 51,483
Other real estate 3,213 4,362 3,362
Repossessions 12,583 21,343 4,591
Equipment owned under operating leases 168 2,594 1,149
------- ------- -------
Total nonperforming assets $58,183 $64,117 $60,996
======= ======= =======
Nonperforming assets totaled $58.18 million at June 30, 2003, decreasing
9.26% from $64.12 million at December 31, 2002 and decreasing 4.62% from $61.00
million at June 30, 2002. The decrease during the second quarter was primarily
related to the liquidation of repossessions and a decrease in truck non-accrual
loans offset by an increase in aircraft non-accrual loans. Nonperforming assets
as a percentage of total loans and leases increased to 2.67% at June 30, 2003
from 2.65% at December 31, 2002 and 2.45% at June 30, 2002.
Repossessions consist primarily of aircraft, $10.39 million of the $12.58
million as of June 30, 2003. These aircraft primarily have come from defaulted
loans to air cargo operators and aircraft dealers. There are also automobiles,
light trucks, construction equipment and environmental equipment in repossessed
assets at June 30, 2003. At the time of repossession, the recorded amount of the
loan is written down, if necessary, to the estimated value of the equipment or
vehicle by a charge to the reserve for loan losses, unless the equipment is in
the process of immediate sale. Subsequent write-downs are included in
non-interest expense.
Repossessed assets have a valuation determined by the sales and credit
officers or a third party. The estimated value is determined on an orderly
liquidation basis. Sources typically include vehicle and equipment dealers,
valuation guides and other third parties, including appraisers. A number of
variables can lead to a decrease in value after the asset is repossessed. These
include deterioration in the market, discovery of new or additional information
about the asset, and validity or invalidity of prior liens. Valuation
adjustments and net losses upon disposition of repossessions for the three-month
periods ended June 30, 2003 and 2002 totaled $2.48 million and $0.78 million,
respectively, and $2.72 million and $0.69 million for the six month periods
ended June 30, 2003 and 2002, respectively.
The number of repossessed aircraft continues to decrease. Since the credit
problems of early 2002 continued throughout the year, 1st Source finished 2002
having repossessed 35 aircraft. In addition, 1st Source has repossessed another
4 aircraft in 2003. 1st Source has arranged for disposal of 23 planes leaving 16
repossessed aircraft included in repossessed assets as of June 30, 2003.
17
SUPPLEMENTAL LOAN INFORMATION AS OF JUNE 30, 2003
(Dollars in thousands) Other real estate
Loan Non-accrual and Year-to-date
outstandings loans repossessions net credit losses
------------ ------------ ---------------- -----------------
Commercial and agricultural loans $ 427,760 $ 3,797 $ 1,877 $ 291
Truck and automobile financings 486,712 6,764 272 1,725
Aircraft financing 288,110 18,925 10,392 3,704
Construction equipment financing 270,582 8,499 1,871 3,060
Loans secured by real estate 527,047 3,192 344 51
Consumer loans 98,577 753 1,040 363
------------ ------------ ------------- ------------
Total $ 2,098,788 $ 41,930 $ 15,796 $ 9,194
============ ============ ============= ============
For financial statements purposes, non-accrual loans are included in loan
outstandings, whereas repossessions and other real estate are included in other
assets. Net credit losses include net charge-offs on loans and valuation
adjustments and gains and losses on disposition of repossessions and defaulted
operating leases.
NON-INTEREST INCOME
Non-interest income for the three-month periods ended June 30, 2003 and
2002 was $21.92 million and $17.94 million, respectively, and $41.96 million and
$36.62 million for the six-month periods ended June 30, 2003 and 2002,
respectively. The predominant factor behind the growth in 2003 was mortgage loan
servicing and sale income, which reached record levels in both the second
quarter and first half of the year.
(Dollars in thousands) Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
2003 2002 2003 2002
Non-interest Income:
Trust fees $ 2,736 $ 2,661 $ 5,376 $ 5,321
Service charges on deposit accounts 3,922 3,684 7,646 7,155
Mortgage banking 4,094 (46) 7,187 1,538
Securitization income 922 1,418 1,599 2,539
Insurance commissions 616 531 1,428 1,057
Equipment rental income 6,455 7,464 13,226 14,744
Other income 3,448 2,230 6,050 4,758
Investment securities and other investment losses (275) -- (555) (488)
------- -------- -------- -------
Total Non-interest Income $21,918 $ 17,942 $ 41,957 $36,624
======= ======== ======== =======
18
The increase in mortgage banking revenue on both a year-over-year and a
quarter-over-quarter basis was driven primarily by heavy origination volumes and
higher gains on sales of loans into the secondary market which more than offset
mortgage servicing rights impairment. Origination volumes were high as interest
rates for new loans were at historically low levels. Mortgage servicing rights
impairment was $3.64 million and $1.18 million, respectively, for the three
months ended June 30, 2003 and 2002. For the six months ended June 30, 2003 and
2002, mortgage servicing rights impairment was $5.42 million and $1.18 million,
respectively. The carrying value of mortgage servicing rights was impacted by
high prepayment speeds on mortgage loans. The high prepayment speeds were the
result of mortgage loan refinancings due to historically low interest rates.
The second quarter and first half of 2003 saw increases in trust fees,
service charges on deposit accounts and insurance commission income. Equipment
rental income decreased due to the decrease in the operating lease portfolio.
Other income increased due to increased trading security account income. Trading
account security income may be adversely affected by an increase in interest
rates.
Securitization income decreased in the second quarter and first half of
2003 as sales into the securitization decreased, thereby reducing the gain on
sale. During the second quarter, 1st Source began liquidating its aircraft and
auto rental loan securitization due to a reduced demand for loans and a
continued strong deposit base. The 1998 1st Source Master Trust Securitization
(Master Trust) was issued in July 1998 with a seven year revolving period
followed by scheduled amortization beginning July 2005. It is anticipated the
liquidation process will take several years. As a result of an increase in the
Master Trust's commercial paper costs and liquidity fees, together with the
decision to voluntarily liquidate the Master Trust, 1st Source's second quarter
earnings were adversely impacted by a pre-tax impairment charge of $275,000.
This charge was recorded as an other investment loss. As of June 30, 2003, there
were $309.06 million outstanding auto and aircraft loans in the Master Trust as
compared to $387.79 million at December 31, 2002.
19
NON-INTEREST EXPENSE
Non-interest expense for the three-month periods ended June 30, 2003 and
2002 was $37.28 million and $33.66 million, respectively, and $72.08 million and
$65.91 million for the six-month periods ended June 30, 2003 and 2002,
respectively. The increase in non-interest expense in 2003 was primarily due to
increased salaries and employee benefits and increased loan collection and
repossession expense.
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2003 2002 2003 2002
Non-interest Expense:
Salaries and employee benefits $18,290 $16,417 $35,537 $32,995
Net occupancy expense 1,785 1,678 3,649 3,380
Furniture and equipment expense 2,677 2,626 5,318 5,355
Depreciation - leased equipment 5,050 5,966 10,408 12,113
Supplies and communications 1,558 1,594 3,069 3,261
Business development and marketing expense 854 1,010 1,563 1,610
Intangible asset amortization 647 625 1,441 838
Repossessed valuation adjustment,
loan collection and repossession expenses 3,972 1,438 5,570 1,875
Other expense 2,442 2,310 5,522 4,481
------- ------- ------- -------
Total Non-interest Expense $37,275 $33,663 $72,077 $65,908
======= ======= ======= =======
The increase in salaries and employee benefits on a year-over-year basis
reflect increased mortgage commissions of $1.12 million, incentives of $0.60
million and group insurance expenses of $0.31 million. Loan collection and
repossession expense is up substantially as 1st Source continues to work through
problem loans and liquidate repossessions. Net occupancy expense, furniture and
equipment expense, supplies and communication, business development and
marketing expense all remained comparable to 2002 levels. Leased equipment
depreciation decreased due to the decrease in the operating lease portfolio.
Intangible asset amortization increased for the six months ended June 30, 2003,
due to the June 2002 reclassification of certain goodwill to unidentifiable
intangible assets in accordance with SFAS No. 147, Acquisitions of Certain
Financial Institutions. Other expenses increased primarily due to higher
insurance costs and losses on the disposition of leasehold improvements at three
branches that were closed as of March 31, 2003.
INCOME TAXES
The provision for income taxes for the six months ended June 30, 2003, was
$3.58 million, compared to $1.68 million for the comparable period in 2002. The
provision for income taxes for the six months ended June 30, 2003, and 2002, is
at a rate which management believes approximates the effective rate for the
year.
20
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risks faced by 1st Source
since December 31, 2002. For information regarding 1st Source's market risk,
refer to 1st Source's Annual Report on Form 10-K for the year ended
December 31, 2002.
ITEM 4.
CONTROLS AND PROCEDURES
1st Source carried out an evaluation, under the supervision and with the
participation of 1st Source's management, including 1st Source's Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of 1st Source's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, at June 30, 2003, 1st
Source's disclosure controls and procedures are effective in accumulating and
communicating to management (including such officers) the information relating
to 1st Source (including its consolidated subsidiaries) required to be included
in 1st Source's periodic SEC filings.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
1st Source and its subsidiaries are defendants in various legal
proceedings arising in the normal course of business. In the
opinion of management, based upon present information including
the advice of legal counsel, the ultimate resolution of these
proceedings will not have a material effect on 1st Source's
financial condition or results of operations.
ITEM 2. Changes in Securities and Use of Proceeds.
None
ITEM 3. Defaults Upon Senior Securities.
None
21
ITEM 4. Submission of Matters to a Vote of Security Holders.
The following actions were taken by the shareholders of 1st Source at the annual
shareholders' meeting held April 22, 2003:
1. Election of Directors
The directors named below were re-elected to the board of directors for terms
expiring in April 2006, as follows:
Nominee Votes For Votes Withheld
------- --------- --------------
William P. Johnson 19,471,748 39,626
Claire P. Skinner 19,471,680 34,833
In addition, the following directors continued in office after the 2003 annual
meeting:
TERMS EXPIRING IN APRIL 2004: TERMS EXPIRING IN APRIL 2005:
Daniel B. Fitzpatrick Lawrence E. Hiler
Wellington D. Jones III Rex Martin
Dane A. Miller, Ph.D. Christopher J. Murphy III
Toby S. Wilt Timothy K. Ozark
Finally, in July 2003, the Board elected David Bowers as a director to fill
a vacancy. Mr. Bowers will stand for re-election at the next annual shareholders
meeting in April 2004.
2. Amendment to 1982 Executive Incentive Plan
An amendment to the 1982 Executive Incentive Plan and the 1982 Restricted Stock
Award Plan which would allow the Executive Compensation Committee of the Board
of Directors to extend the forfeiture period on issued shares on a discretionary
basis was approved, as follows:
Votes in Favor Votes Against Abstentions
18,513,836 722,764 280,135
ITEM 5. Other Information.
None
22
ITEM 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed with this report:
1. Exhibit 99.1 Certification of Chief Executive Officer required by Rule
13a-14(a).
2. Exhibit 99.2 Certification of Chief Financial Officer required by Rule
13a-14(a).
3. Exhibit 99.3 Certification pursuant to 18 U.S.C. Section 1350 of Chief
Executive Officer.
4. Exhibit 99.4 Certification pursuant to 18 U.S.C. Section 1350 of Chief
Financial Officer.
(b) Reports on Form 8-K.
A report on Form 8-K, dated April 30, 2003, was filed under report item
numbers 5 and 7, concerning 1st Source's results of operations for the
quarter ended March 31, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
1st Source Corporation
----------------------
DATE: 08/01/03 /s/Christopher J. Murphy III
----------------------------
Christopher J. Murphy III
Chairman of the Board, President and CEO
DATE: 08/01/03 /s/Larry E. Lentych
----------------------------
Larry E. Lentych
Treasurer and Chief Financial Officer
Principal Accounting Officer
23