SRCE 1st Source Corporation

1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported net income of $13.82 million for the first quarter of 2016, an increase of 2.27% compared to $13.51 million reported in the first quarter a year ago. Diluted net income per common share for the first quarter of 2016 was $0.53, up 3.92% over the $0.51 in the first quarter of 2015. (The March 31, 2015 share and per share information has been adjusted for a 10% stock dividend declared on July 22, 2015 and issued on August 14, 2015, unless otherwise noted.)

At its April 2016 meeting, the Board of Directors approved a cash dividend of $0.18 per common share. The cash dividend is payable to shareholders of record on May 3, 2016 and will be paid on May 13, 2016.

According to Christopher J. Murphy III, Chairman, “In spite of the challenging low interest rate environment, we saw an increase in net income over the prior year and turned in a steady performance in the first quarter. Credit quality remains strong and we have seen little increase in delinquencies or problem credits, even as issues with the energy sector affect a small portion of our construction machinery clients. While credit quality remains good we know that we are at the far reaches of a sustained weak economic period and continue to work hard to position ourselves properly for any downturn in the domestic economy.”

“During the quarter, we began renovating our banking centers in Bluffton and Huntington, Indiana. We also upgraded our mobile banking to offer greater convenience and enhance the client experience. It has been our long-term strategy to continue to invest in our branches and in technology. We have seen good client growth in many areas as a result of this focus. As always, we remain committed to our mission of helping our clients achieve security, build wealth and realize their dreams.” Mr. Murphy concluded.

HIGHLIGHTS

• Average loans and leases grew $334.35 million or 9.10% from the first quarter of 2015.
• Average deposits grew $336.32 million or 8.81% from the first quarter of 2015.
• Net interest income on a tax-equivalent basis of $41.75 million increased $1.90 million or 4.76% from the first quarter of 2015.
• Noninterest income of $21.63 million increased $1.88 million or 9.50% from the first quarter of 2015 (6.01% excluding equipment rental income).
• Noninterest expenses of $40.71 million increased $2.64 million or 6.95% from the first quarter of 2015 (4.80% excluding leased equipment depreciation).
• During the first quarter of 2016, the Company repurchased $8.01 million, or approximately 270,000 shares, of common stock at an average cost of $29.69 per share.

FIRST QUARTER 2016 FINANCIAL RESULTS

Loans

Average loans and leases of $4.01 billion increased $334.35 million, or 9.10% from the year ago quarter and have increased $48.97 million, or 1.24% from the fourth quarter.

Deposits

Average deposits of $4.15 billion grew $336.32 million, or 8.81% from the year ago quarter and have increased $52.36 million, or 1.28% compared to the fourth quarter.

Net Interest Income and Net Interest Margin

First quarter tax-equivalent net interest income of $41.75 million increased $1.90 million, or 4.76% from the quarter a year ago and was down $1.92 million, or 4.39% from the fourth quarter. First quarter net interest recoveries were down $0.06 million from the year ago quarter and have decreased $1.66 million relative to the fourth quarter.

First quarter net interest margin was 3.45%, a decrease of 13 basis points from the 3.58% for the same period in 2015 and a decrease of 16 basis points from the 3.61% reported in the fourth quarter.

Noninterest Income and Expense

Noninterest income for the first quarter was $21.63 million, up $1.88 million, or 9.50% from the year ago quarter, and up $0.73 million, or 3.47% from the fourth quarter. Noninterest income increased from the same quarter a year ago mainly as a result of higher equipment rental income, gains on partnership investments and increased insurance commissions offset by lower mortgage banking income. Noninterest income increased from the fourth quarter primarily as a result of gains on partnership investments and higher insurance commissions offset by lower service charges on deposit accounts due to reduced volumes of nonsufficient fund transactions.

Noninterest expense for the quarter ended March 31, 2016 was $40.71 million, up $2.64 million or 6.95% as compared to the first quarter of 2015 and down $1.04 million, or 2.49% from the fourth quarter. Noninterest expense increased from the comparable quarter a year ago mainly due to higher depreciation on leased equipment, furniture and equipment expense, salaries and employee benefits and professional fees. Depreciation on leased equipment was higher as a result of an increase in the average equipment rental portfolio. Salaries increased due to more full-time equivalent employees as a result of opening a new banking center in 2015, filling other open positions and normal performance raises. Employee benefits decreased as a result of lower health insurance claims experience. Professional fees increased due to higher legal fees and increased utilization of consulting services offset by lower audit fees. Noninterest expense decreased from the fourth quarter primarily as a result of reduced salaries and employee benefits due to lower group insurance costs.

Credit

The reserve for loan and lease losses as of March 31, 2016 and December 31, 2015 was 2.21% of total loans and leases compared to 2.30% at March 31, 2015. Net recoveries of $0.21 million were recorded for the first quarter of 2016 compared with net charge-offs of $0.33 million in the same quarter a year ago and down from $0.50 million of net recoveries in the fourth quarter. The provision for loan and lease losses was $0.98 million for the first quarter of 2016, up $0.62 million compared with the same period in 2015 and up $0.98 million from the fourth quarter. The ratio of nonperforming assets to net loans and leases was 0.51% as of March 31, 2016, down from 0.73% on March 31, 2015 and comparable to the 0.50% on December 31, 2015.

Capital

During the first quarter, the Company repurchased $8.01 million of common stock in several open market transactions. As of March 31, 2016, the common equity-to-assets ratio was 12.39%, compared to 12.41% at December 31, 2015 and 12.84% a year ago. The tangible common equity-to-tangible assets ratio was 10.96% at March 31, 2016 and December 31, 2015 compared to 11.29% a year earlier. The Common Equity Tier 1 ratio was 12.37% at March 31, 2016 compared to 12.39% at December 31, 2015 and 13.09% a year ago.

ABOUT 1ST SOURCE CORPORATION

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, 10 1st Source Insurance offices, as well as 22 specialty finance locations nationwide.

FORWARD LOOKING STATEMENTS

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.

NON-GAAP FINANCIAL MEASURES

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.

(charts attached)

      1st SOURCE CORPORATION 1st QUARTER 2016 FINANCIAL HIGHLIGHTS (Unaudited - Dollars in thousands, except per share data) Three Months Ended March 31, December 31, March 31, 2016     2015     2015   AVERAGE BALANCES Assets $ 5,209,765 $ 5,134,594 $ 4,820,453 Earning assets 4,863,774 4,792,553 4,511,467 Investments 794,849 785,903 788,561 Loans and leases 4,008,435 3,959,468 3,674,082 Deposits 4,153,273 4,100,913 3,816,955 Interest bearing liabilities 3,607,008 3,532,627 3,364,623 Common shareholders’ equity 649,597 647,027 623,397   INCOME STATEMENT DATA Net interest income $ 41,289 $ 43,211 $ 39,436 Net interest income - FTE 41,750 43,668 39,854 Provision for loan and lease losses 975 — 357 Noninterest income 21,627 20,902 19,751 Noninterest expense 40,705 41,744 38,061 Net income 13,818 14,417 13,511   PER SHARE DATA* Basic net income per common share $ 0.53 $ 0.55 $ 0.51 Diluted net income per common share 0.53 0.55 0.51 Common cash dividends declared 0.180 0.180 0.164 Book value per common share 25.14 24.75 23.80 Tangible book value per common share 21.87 21.49 20.56 Market value - High 33.50 34.35 31.35 Market value - Low 27.01 29.35 26.95 Basic weighted average common shares outstanding 25,923,530 26,059,762 26,258,273 Diluted weighted average common shares outstanding 25,923,530 26,059,762 26,258,273   KEY RATIOS Return on average assets 1.07 % 1.11 % 1.14 % Return on average common shareholders’ equity 8.56 8.84 8.79 Average common shareholders’ equity to average assets 12.47 12.60 12.93 End of period tangible common equity to tangible assets 10.96 10.96 11.29 Risk-based capital - Common Equity Tier 1 12.37 12.39 13.09 Risk-based capital - Tier 1 13.63 13.65 14.49 Risk-based capital - Total 14.94 14.97 15.80 Net interest margin 3.45 3.61 3.58 Efficiency: expense to revenue 62.28 61.98 62.10 Net charge offs to average loans and leases (0.02 ) (0.05 ) 0.04 Loan and lease loss reserve to loans and leases 2.21 2.21 2.30 Nonperforming assets to loans and leases 0.51 0.50 0.73   March 31, December 31, March 31, 2016     2015     2015   END OF PERIOD BALANCES Assets $ 5,245,610 $ 5,187,916 $ 4,862,384 Loans and leases 4,031,975 3,994,692 3,701,132 Deposits 4,225,148 4,139,186 3,870,460 Reserve for loan and lease losses 89,296 88,112 85,098 Intangible assets 84,530 84,676 85,158 Common shareholders’ equity 649,973 644,053 624,505   ASSET QUALITY Loans and leases past due 90 days or more $ 728 $ 122 $ 190 Nonaccrual loans and leases 12,982 12,718 21,359 Other real estate 330 736 892 Former bank premises held for sale — — 626 Repossessions 7,201 6,927 4,607 Equipment owned under operating leases 113   121   36   Total nonperforming assets $ 21,354   $ 20,624   $ 27,710  

*Three months ended March 31, 2015 share and per share figures have been adjusted for a 10% stock dividend declared July 22, 2015 and issued on August 14, 2015.

      1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited - Dollars in thousands) March 31, December 31, March 31, 2016 2015 2015

ASSETS

Cash and due from banks $ 52,373 $ 65,171 $ 58,196 Federal funds sold and interest bearing deposits with other banks 32,854 14,550 11,068

Investment securities available-for-sale (amortized cost of $787,062, 781,232, and $778,597 at March 31, 2016, December 31, 2015 and March 31, 2015, respectively)

801,950 791,727 796,604 Other investments 21,973 21,973 20,561 Trading account securities — — 208 Mortgages held for sale 11,999 9,825 22,820 Loans and leases, net of unearned discount: Commercial and agricultural 749,024 744,749 712,293 Auto and light truck 428,455 425,236 402,389 Medium and heavy duty truck 272,917 278,254 240,187 Aircraft financing 783,844 778,012 696,943 Construction equipment financing 467,782 455,565 439,530 Commercial real estate 716,610 700,268 615,555 Residential real estate and home equity 466,450 464,129 443,375 Consumer 146,893   148,479   150,860   Total loans and leases 4,031,975 3,994,692 3,701,132 Reserve for loan and lease losses (89,296 ) (88,112 ) (85,098 ) Net loans and leases 3,942,679 3,906,580 3,616,034 Equipment owned under operating leases, net 110,412 110,371 82,640 Net premises and equipment 54,139 53,191 49,701 Goodwill and intangible assets 84,530 84,676 85,158 Accrued income and other assets 132,701   129,852   119,394   Total assets $ 5,245,610   $ 5,187,916   $ 4,862,384    

LIABILITIES

Deposits: Noninterest bearing $ 926,379 $ 902,364 $ 835,403 Interest bearing 3,298,769   3,236,822   3,035,057   Total deposits 4,225,148   4,139,186   3,870,460   Short-term borrowings: Federal funds purchased and securities sold under agreements to repurchase 169,820 130,662 123,075 Other short-term borrowings 12,094   102,567   77,071   Total short-term borrowings 181,914   233,229   200,146   Long-term debt and mandatorily redeemable securities 68,837 57,379 57,515 Subordinated notes 58,764 58,764 58,764 Accrued expenses and other liabilities 60,974   55,305   50,994   Total liabilities 4,595,637   4,543,863   4,237,879    

SHAREHOLDERS’ EQUITY

Preferred stock; no par value Authorized 10,000,000 shares; none issued or outstanding

— — —

Common stock; no par value Authorized 40,000,000 shares; issued 28,205,674 shares at March 31, 2016 and December 31, 2015, respectively and 28,206,076 shares at March 31, 2015*

436,538 436,538 346,535 Retained earnings 260,813 251,812 311,207

Cost of common stock in treasury (2,356,417, 2,178,090, and 1,967,686 shares at March 31, 2016, December 31, 2015, and March 31, 2015, respectively)*

(56,677 ) (50,852 ) (44,484 ) Accumulated other comprehensive income 9,299   6,555   11,247   Total shareholders’ equity 649,973   644,053   624,505   Total liabilities and shareholders’ equity $ 5,245,610   $ 5,187,916   $ 4,862,384  

*March 31, 2015 share data gives retrospective recognition to a 10% stock dividend declared on July 22, 2015 and issued on August 14, 2015.

      1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited - Dollars in thousands, except per share amounts) Three Months Ended March 31, December 31, March 31, 2016 2015 2015 Interest income: Loans and leases $ 42,736 $ 44,019 $ 39,604 Investment securities, taxable 3,080 3,000 3,004 Investment securities, tax-exempt 692 731 769 Other 291   267   255 Total interest income 46,799 48,017 43,632   Interest expense: Deposits 3,771 3,218 2,559 Short-term borrowings 161 103 103 Subordinated notes 1,055 1,055 1,055 Long-term debt and mandatorily redeemable securities 523   430   479 Total interest expense 5,510   4,806   4,196   Net interest income 41,289 43,211 39,436 Provision for loan and lease losses 975   —   357 Net interest income after provision for loan and lease losses 40,314 43,211 39,079   Noninterest income: Trust fees 4,623 4,688 4,557 Service charges on deposit accounts 2,107 2,336 2,197 Debit card income 2,599 2,607 2,399 Mortgage banking income 1,046 1,111 1,251 Insurance commissions 1,563 1,318 1,305 Equipment rental income 6,073 6,000 5,079 Gains on investment securities available-for-sale 10 — — Other income 3,606   2,842   2,963 Total noninterest income 21,627   20,902   19,751   Noninterest expense: Salaries and employee benefits 21,351 22,579 20,925 Net occupancy expense 2,501 2,466 2,461 Furniture and equipment expense 4,790 4,877 4,336 Depreciation - leased equipment 5,101 4,938 4,088 Professional fees 1,219 1,467 870 Supplies and communication 1,508 1,889 1,406 FDIC and other insurance 879 868 849 Business development and marketing expense 980 1,330 1,049 Loan and lease collection and repossession expense 427 182 363 Other expense 1,949   1,148   1,714 Total noninterest expense 40,705   41,744   38,061   Income before income taxes 21,236 22,369 20,769 Income tax expense 7,418   7,952   7,258   Net income $ 13,818   $ 14,417   $ 13,511   Per common share*: Basic net income per common share $ 0.53   $ 0.55   $ 0.51 Diluted net income per common share $ 0.53   $ 0.55   $ 0.51 Dividends $ 0.180   $ 0.180   $ 0.164 Basic weighted average common shares outstanding* 25,923,530   26,059,762   26,258,273 Diluted weighted average common shares outstanding* 25,923,530   26,059,762   26,258,273

*The computation of three months ended March 31, 2015 per common share data and shares outstanding gives retrospective recognition to a 10% stock dividend declared on July 22, 2015 and issued on August 14, 2015.

                  1st SOURCE CORPORATION DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY INTEREST RATES AND INTEREST DIFFERENTIAL (Unaudited - Dollars in thousands) Three Months Ended Three Months Ended Three Months Ended March 31, 2016 December 31, 2015 March 31, 2015 Interest Interest Interest Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate

ASSETS

Investment securities available-for-sale: Taxable $ 671,989 $ 3,080 1.84 % $ 663,569 $ 3,000 1.79 % $ 665,577 $ 3,004 1.83 % Tax exempt 122,860 1,013 3.32 % 122,334 1,074 3.48 % 122,984 1,134 3.74 % Mortgages held for sale 9,137 95 4.18 % 8,392 88 4.16 % 13,007 126 3.93 % Net loans and leases 4,008,435 42,781 4.29 % 3,959,468 44,045 4.41 % 3,674,082 39,531 4.36 % Other investments 51,353   291 2.28 % 38,790   267 2.73 % 35,817   255 2.89 %   Total earning assets 4,863,774 47,260 3.91 % 4,792,553 48,474 4.01 % 4,511,467 44,050 3.96 %   Cash and due from banks 58,851 62,446 61,544 Reserve for loan and lease losses (88,845 ) (89,841 ) (85,791 ) Other assets 375,985   369,436   333,233     Total assets $ 5,209,765   $ 5,134,594   $ 4,820,453    

LIABILITIES AND SHAREHOLDERS’ EQUITY

Interest-bearing deposits $ 3,254,262 $ 3,771 0.47 % $ 3,193,247 $ 3,218 0.40 % $ 3,029,179 $ 2,559 0.34 % Short-term borrowings 231,477 161 0.28 % 223,202 103 0.18 % 219,950 103 0.19 % Subordinated notes 58,764 1,055 7.22 % 58,764 1,055 7.12 % 58,764 1,055 7.28 % Long-term debt and mandatorily redeemable securities 62,505   523 3.37 % 57,414   430 2.97 % 56,730   479 3.42 %   Total interest bearing liabilities 3,607,008 5,510 0.61 % 3,532,627 4,806 0.54 % 3,364,623 4,196 0.51 %   Noninterest-bearing deposits 899,011 907,666 787,776 Other liabilities 54,149 47,274 44,657 Shareholders’ equity 649,597   647,027   623,397     Total liabilities and shareholders’ equity $ 5,209,765   $ 5,134,594   $ 4,820,453     Net interest income $ 41,750 $ 43,668 $ 39,854   Net interest margin on a tax equivalent basis 3.45 % 3.61 % 3.58 %

The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3)Please contact us at shareholder@1stsource.com

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1st Source CorporationAndrea Short, 574-235-2000