1st Source (SRCE) Q4 2008 earnings summary

Executive summary

• 2008 net income rose to $33.39M from $30.54M in 2007, as stronger net interest income and a one-time asset-sale gain offset higher credit provisions, securities impairment and expenses.

• Fourth-quarter 2008 net income was $12.32M, with diluted EPS of $0.50, versus $7.83M and $0.32 in Q4 2007.

Financial highlights

• Net interest income increased to $132.16M from $118.91M; total noninterest income rose to $84.00M from $70.62M in 2007.

• Net income was $33.39M; diluted EPS was $1.37, versus $30.54M and $1.28 in 2007.

• Provision for loan and lease losses climbed to $16.65M from $7.53M; noninterest expense increased to $153.11M from $140.31M.

• The $11.49M gain on Investment Advisors asset sales supported 2008 results; investment securities and other investment losses were $10.00M, including $10.82M of impairment charges.

Outlook and guidance

• Management expected further deterioration in the loan and lease portfolio amid the economic slowdown, while expressing hope that stabilization in financial markets and employment could improve conditions.

• Future results remained exposed to economic conditions, borrower performance, interest-rate changes, market disruption, fuel costs, regulation and rising deposit insurance premiums.