SRCE 1st Source Corporation

1st Source Corporation (NASDAQ:SRCE), parent company of 1st Source Bank, today announced net income of $13.51 million for the first quarter of 2015 compared to $13.63 million reported in the first quarter a year ago. Diluted net income per common share for the first quarter of 2015 was $0.56, up 1.82% over the $0.55 in the first quarter of 2014.

At its April 2015 meeting, the Board of Directors approved a cash dividend of $0.18 per common share. The cash dividend is payable on May 15, 2015 to shareholders of record on May 5, 2015.

Christopher J. Murphy, III, Chairman and Chief Executive Officer, commented, "We saw solid growth in our deposits this quarter as we continue to add new client relationships throughout the bank. Credit quality remains strong as does our loan pipeline and we look forward to a steadily improving economy in the coming months. Capital ratios are also strong and exceed the new minimum Well Capitalized requirements on a fully phased-in basis."

"During the quarter we held a ground breaking in Portage, Michigan, to celebrate our second banking center in the greater Kalamazoo area. We look forward to growing in this market and providing greater convenience for our clients there. As always, we remain committed to our mission of helping our clients achieve security, build wealth and realize their dreams."

The net interest margin held close to last year’s level at 3.58% for the first quarter of 2015 versus 3.59% for the same period in 2014. Tax-equivalent net interest income was $39.85 million for the first quarter of 2015, compared to the $39.09 million from 2014’s first quarter.

The reserve for loan and lease losses as of March 31, 2015 was 2.30% of total loans and leases compared to 2.38% at March 31, 2014. Net charge-offs of $0.33 million were recorded for the first quarter of 2015 compared with net recoveries of $0.70 million in the same quarter a year ago. The ratio of nonperforming assets to net loans and leases improved to 0.73% as of March 31, 2015, compared to 0.98% on March 31, 2014.

Total assets at the end of the first quarter of 2015 were $4.86 billion, up 1.87% from the $4.77 billion a year ago. Total loans and leases were $3.70 billion, up 3.45% from March 31, 2014. Total deposits were $3.87 billion, up 4.37% from the comparable figure at March 31, 2014. As of March 31, 2015, the common equity-to-assets ratio was 12.84%, compared to 12.50% a year ago and the tangible common equity-to-tangible assets ratio was 11.29% compared to 10.89% a year earlier.

Noninterest income for the three-month period ended March 31, 2015 was $19.75 million, an increase of 1.81% as compared to the first quarter of 2014. The increase for the quarter was mainly attributed to increased equipment rental income and gains on partnership investments.

Noninterest expense for the three-month period ended March 31, 2015 was $38.06 million, an increase of 5.80% as compared to the first quarter of 2014. The increase for the quarter was mainly attributed to increased salaries expense and group insurance costs, higher loan and lease collection and repossession expenses and increased depreciation on leased equipment.

1st Source 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.” Since 1863, 1st Source has been committed to the success of the communities it serves. For more information, visit www.1stsource.com.

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, and construction equipment. The Corporation includes 80 community banking centers in 17 counties, 8 trust and wealth management locations, 8 1st Source Insurance offices, as well as 22 specialty finance locations nationwide.

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.

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 2015 FINANCIAL HIGHLIGHTS (Unaudited - Dollars in thousands, except per share data)   Three Months Ended March 31, 2015       2014 END OF PERIOD BALANCES Assets $ 4,862,384 $ 4,773,193 Loans and leases 3,701,132 3,577,568 Deposits 3,870,460 3,708,423 Reserve for loan and lease losses 85,098 85,010 Intangible assets 85,158 86,057 Common shareholders’ equity 624,505 596,586   AVERAGE BALANCES Assets $ 4,820,453 $ 4,698,167 Earning assets 4,511,467 4,414,390 Investments 788,561 831,598 Loans and leases 3,674,082 3,543,219 Deposits 3,816,955 3,669,955 Interest bearing liabilities 3,364,623 3,340,957 Common shareholders’ equity 623,397 594,687   INCOME STATEMENT DATA Net interest income $ 39,436 $ 38,618 Net interest income - FTE 39,854 39,087 Provision for loan and lease losses 357 804 Noninterest income 19,751 19,398 Noninterest expense 38,061 35,973 Net income 13,511 13,632   PER SHARE DATA Basic net income per common share $ 0.56 $ 0.55 Diluted net income per common share 0.56 0.55 Common cash dividends declared 0.18 0.17 Book value per common share 26.18 24.51 Tangible book value per common share 22.61 20.98 Market value - High 34.49 32.60 Market value - Low 29.65 27.56 Basic weighted average common shares outstanding 23,871,157 24,317,446 Diluted weighted average common shares outstanding 23,871,157 24,317,446   KEY RATIOS Return on average assets 1.14 % 1.18 % Return on average common shareholders’ equity 8.79 9.30 Average common shareholders’ equity to average assets 12.93 12.66 End of period tangible common equity to tangible assets 11.29 10.89 Risk-based capital - Common Equity Tier 1 13.09 N/A Risk-based capital - Tier 1 14.48 14.60 Risk-based capital - Total 15.80 15.94 Net interest margin 3.58 3.59 Efficiency: expense to revenue 62.10 58.46 Net charge offs to average loans and leases 0.04 (0.08 ) Loan and lease loss reserve to loans and leases 2.30 2.38 Nonperforming assets to loans and leases 0.73 0.98   ASSET QUALITY Loans and leases past due 90 days or more $ 190 $ 307 Nonaccrual loans and leases 21,359 24,680 Other real estate 892 2,091 Former bank premises held for sale 626 801 Repossessions 4,607 7,998 Equipment owned under operating leases 36 —     Total nonperforming assets $ 27,710 $ 35,877               1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited - Dollars in thousands)   March 31, 2015 March 31, 2014

ASSETS

Cash and due from banks $ 58,196 $ 92,465 Federal funds sold and interest bearing deposits with other banks 11,068 1,362 Investment securities available-for-sale (amortized cost of $778,597 and $826,007 at

March 31, 2015 and 2014, respectively)

796,604 839,597 Other investments 20,561 22,400 Trading account securities 208 192 Mortgages held for sale 22,820 10,961   Loans and leases, net of unearned discount: Commercial and agricultural 712,293 698,246 Auto and light truck 402,389 388,665 Medium and heavy duty truck 240,187 237,906 Aircraft financing 696,943 730,803 Construction equipment financing 439,530 352,796 Commercial real estate 615,555 588,629 Residential real estate 443,375 455,678 Consumer 150,860   124,845   Total loans and leases 3,701,132 3,577,568 Reserve for loan and lease losses (85,098 ) (85,010 ) Net loans and leases 3,616,034 3,492,558   Equipment owned under operating leases, net 82,640 58,468 Net premises and equipment 49,701 45,856 Goodwill and intangible assets 85,158 86,057 Accrued income and other assets 119,394   123,277     Total assets $ 4,862,384   $ 4,773,193    

LIABILITIES

Deposits: Noninterest bearing $ 835,403 $ 750,662 Interest bearing 3,035,057   2,957,761   Total deposits 3,870,460 3,708,423   Short-term borrowings: Federal funds purchased and securities sold under agreements to repurchase 123,075 168,339 Other short-term borrowings 77,071   129,308   Total short-term borrowings 200,146 297,647 Long-term debt and mandatorily redeemable securities 57,515 59,555 Subordinated notes 58,764 58,764 Accrued expenses and other liabilities 50,994   52,218   Total liabilities 4,237,879   4,176,607    

SHAREHOLDERS’ EQUITY

Preferred stock; no par value — — Common stock; no par value 346,535 346,535 Retained earnings 311,207 270,848 Cost of common stock in treasury (44,484 ) (29,285 ) Accumulated other comprehensive income 11,247   8,488   Total shareholders’ equity 624,505   596,586     Total liabilities and shareholders’ equity $ 4,862,384   $ 4,773,193                 1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited - Dollars in thousands)   Three Months Ended March 31, 2015       2014 Interest income: Loans and leases $ 39,604 $ 38,914 Investment securities, taxable 3,004 3,345 Investment securities, tax-exempt 769 819 Other 255   277   Total interest income 43,632 43,355   Interest expense: Deposits 2,559 2,971 Short-term borrowings 103 136 Subordinated notes 1,055 1,055 Long-term debt and mandatorily redeemable securities 479   575   Total interest expense 4,196   4,737     Net interest income 39,436 38,618 Provision for loan and lease losses 357   804   Net interest income after provision for loan and lease losses 39,079 37,814   Noninterest income: Trust fees 4,557 4,476 Service charges on deposit accounts 2,197 2,066 Debit card income 2,399 2,232 Mortgage banking income 1,251 1,334 Insurance commissions 1,305 1,563 Equipment rental income 5,079 4,082 Gains on investment securities available-for-sale — 963 Other income 2,963   2,682   Total noninterest income 19,751   19,398     Noninterest expense: Salaries and employee benefits 20,925 19,482 Net occupancy expense 2,461 2,437 Furniture and equipment expense 4,336 4,237 Depreciation - leased equipment 4,088 3,249 Professional fees 870 1,128 Supplies and communication 1,406 1,392 FDIC and other insurance 849 864 Business development and marketing expense 1,049 1,684 Loan and lease collection and repossession expense 363 (494 ) Other expense 1,714   1,994   Total noninterest expense 38,061   35,973     Income before income taxes 20,769 21,239 Income tax expense 7,258   7,607     Net income $ 13,511   $ 13,632    

The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3)

Please contact us at shareholder@1stsource.com

1st Source CorporationAndrea Short, 574-235-2000