1st Source Corporation · NASDAQ:SRCE
1st Source — Shareholder Meeting (April 2006)
37 slides from 1st Source's shareholder meeting presentation, Apr 27, 2006
Slide 1: 1st Source Corporation
Source. | 1Corporation
Slide 2: Balance Sheet Highlights
Balance Sheet Highlights 12131104. 12131105 Change 03/3105 03/3106 Change (S Millions) Total Assets $35637 $35113 (1.5%) $3,341.56 $3,4599 3.5% Total Loans &Leases $2,280.2 $2,4634 8.0% 2,279.0 $2,4795 88% Total Deposits $207.0 $2,7456 (2.2%) $2,5899 $26784 3.4% Total Common $3266 $ 3456 58% $3266 $
Slide 3: Earnings Highlights
Earnings Highlights Net Income (000's) 2004 2005 Change 1st Quarter 2005 2006 Change $24,965 $33,751 35.2% EPS (Diluted) ¢ 4.19 ROA ROCE 0.75% 7.81% $ 1.61 1.00% 10.12% 35.3% $6,944 $9,933 43.0% $0.33 § 0.48 45.5% 0.84% 1.18% - 8.60% 11.53% -
Slide 4: Shareholders’ Equity
Shareholders’ Equity Avg. Common E quity (SMM) | — Avg. Common Equity/Assets (%) 360 2 3422 9493) 11.0 10.5 10.0 320
Slide 5: Earning Assets
Earning Assets (vm) 3016 3030 3110 3283 3125 3142 3180 3161 3172 [ota\Eamna 3500 2800 2100 1400 700 2199 2191 2245 2278 2278 2325 2382 Assets Investments * Bp Mortgage Loans 7 Held for Sale Loans & Leases *cF0,Lanye Lenton stated 2407 2457 native st uate 206 Investments balance was "es lowaswo are c
Slide 6: Deposits
Deposits 14.9 16.2 161 14.7 14.6 15.2 15.5 14.9 13.9 %DDA Total 2414 2432 2417 2692 2589 2604 2609 2639 2614 Deposits ($MM) 3000 2400 DDA 4800 100 CDs 1200 Other Deposits 600 C) source.
Slide 7: Loan & Lease Quality
Loan & Lease Quality Rolling Four Quarter Annual ——Net Charge-Offs —Non-Performing Assets 9—Loan & Lease Loss Reserve (% of Loans and Leases) 35 3.22 3.14 30 279° 2.75 250 2.46 2.38 as 2.38 20 Tas 1H vie 15 1.22 - 4.10 : 91 89 ar 10) ay 83 0s “ ss wa 2 sm i 04) _(.09) Pal 1 2 3 4 1 2 3 4 1 2004 2005
Slide 8: Net Interest Income
Net Interest Income ~» Netinterest Income (FTE) | —Net interest Margin (FTE) (MM) (%) 45 26.48 26.02 ied 2490 9404 24.25 24.08 2598 25.99 25.72 35 3.0 25
Slide 9: Noninterest Income
Noninterest Income 14.02 2022 10.41 ($MM) 30 18.09 17.70 15.40 1787 1757 49.01 _ Total Noninterest Income 2.08 Gains & Losses Equipment Leasing Mortgage Income
Slide 10: Expense To Total Revenue (Excl. Gains)
Expense To Total Revenue (Excl. Gains) (%) 812 768 782 740 662 687 65 66.3 ($MM) 60
Slide 11: Diluted Net Income per Share
Diluted Net Income per Share $2.00 $1.75 1.69 33 $1.50 pad $1.25 Fagg 125 1.49 $1.00 0.91 $0.75 $0.50 0.47 0.48 $0.25 I $0.00 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1Q 06 1.79 1.82 = Compound Growth Rate: 4.91%
Slide 12: Dividends per Share
Dividends per Share $0.50 0.49 0.42 $0.40 035 0.36 0.37 0.33 $0.30 0.28 0.23 0.25 0.20 $0.20 0.14 $0.10 $0.00 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1006 Compound Growth Rate: 9.81%
Slide 13: 1st Source Corporation
Source. _ Corporation
Slide 14: Forward-looking Statement Disclosure
Forward-looking Statement Disclosure 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 forwa
Slide 15: Current Situation
Current Situation Before discussing the plans and actions necessary to achieve our 2010 goals, it is important for us to critically examine our current situation: Business is profitable + Positive EPS in each of last 5 years + Increase in shareholder equity in each of last 5 years + Steady increase
Slide 16: Current Situation
Current Situation It is also important for us to discuss the question of urgency: We are located in very slow-growing markets + With more entrants to the markets Competitive tempo is increasing + Bigger banks are refocused and more aggressive + Smaller banks and credit unions are successfully positi
Slide 17: Current Situation
Current Situation Top Line is not growing much + Net Interest margin pressure + Intentional contraction in several SFG business units + Community banking is flat Profitability is average + Efficiency ratio > 70% + ROE = 10% + Behind in process automation + Expense reduction needed In the past five y
Slide 18: Context
Context Late 90s: Early 2000s: Now: Growth & Profitability Achieved Growth & Infrastructure Credit Problems Growth, Profitability, Infrastructure, and Credit Quality
Slide 19: Issues
Issues Growth People Infrastructure Succession
Slide 20: Corporate Overview
Corporate Overview st To offer our clients the highest quailty service! ‘To support a proud family of colleagues Who personify the Ist Source spirit of partnership. ‘To be the first choice of financial institutions in each market ‘To remain independent and to nurture Bride of ownership armong all Is
Slide 21: Develop our People
Develop our People DEVELOP ‘OUR PEOPLE
Slide 22: Develop our People
Develop our People Organize for growth, future leadership Attract, develop and retain the best people Update succession plans, prepare for retirements, growth Hire new market leaders Reinforce vision, mission and values in colleagues Move to market-based management (community bank model)
Slide 23: Vitalize Sales
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Slide 24: Vitalize Sales
Vitalize Sales Top line revenue growth Leverage the bank's customer base Develop customer-centric behaviors (market of one) Deepen relationships, selling more to current customers Give relationship managers more time to sell Develop retention process Build on our strengths in niche markets Diminish
Slide 25: Roll Out Full Services In Present Markets
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Slide 26: Roll Out Full Services in Present Markets
Roll Out Full Services in Present Markets Roll out full services in present markets + Focus value proposition + Establish Fort Wayne goals for Insurance, PAMG, Business Banking, Small Business, Agriculture + Review/investigate products specific to each new market
Slide 27: Open New Markets
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Slide 28: Open New Markets
Open New Markets Focus on growth — add new clients and grow distribution outlets + Define and deliver customer value proposition Add sales officers in selected specialty markets Pinpoint present market growth opportunities/locations Establish in outlying counties in 2006 Explore growth market acquis
Slide 29: Implement Cornerstone
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Slide 30: Implement Cornerstone
Implement Cornerstone Develop infrastructure for the long term + Will spend between $10 million and $11 million Allow for growth and scalability * Improve effectiveness and efficiency of core processes + Look at all systems, processes, reports with fresh eyes + Integrate processes bank-wide * Provid
Slide 31: Produce Superior Financials
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Slide 32: Produce Superior Financials
Produce Superior Financials Manage balance among businesses Price for high-risk adjusted returns Develop Fortress balance sheet Improve risk management of credit and interest rates Drive for lower cost per unit delivery
Slide 33: Corporate Overview: 1st Source Strategy
Corporate Overview 1st Source Strategy Execution * Deliver personalized, community banking to individuals, businesses and institutions within No. Indiana and SW Michigan through knowledgeable, local members of the community + Provide core basic banking services that all consumers and business need,
Slide 34: 2010 Strategic Plan
2010 Strategic Plan 2010 Strategic Plan + Strategy set * Plans developed Execute
Slide 35: 2010 Strategic Plan
2010 Strategic Plan Success means we deliver on our mission: help our clients achieve security, build wealth, and realize their dreams We are in partnership with our clients. As they succeed, so do we.
Slide 36: Questions
Questions Shareholder Questions t
Slide 37: 1st Source Corporation
Source. _ Corporation