Exhibit 99.1 | | | | | | | | | | | |
|
| For: | Immediate Release | Contact: | Brett Bauer |
| April 25, 2024 | | 574-235-2000 |
1st Source Corporation Reports First Quarter Results,
Cash Dividend Declared
QUARTERLY HIGHLIGHTS
•Net income was $29.46 million for the quarter, up $1.03 million or 3.61% from the previous quarter and down $1.67 million or 5.36% from the first quarter of 2023. Diluted net income per common share was $1.19, up $0.04 or 3.48% from the previous quarter and down $0.06 or 4.80% from the prior year’s first quarter of $1.25.
•Cash dividend of $0.34 per common share was approved, up 6.25% from the cash dividend declared a year ago.
•Average loans and leases grew $116.21 million in the first quarter, up 1.82% (7.28% annualized growth) from the previous quarter and $467.87 million, up 7.75% from the first quarter of 2023.
•Tax-equivalent net interest income was $72.06 million, up $0.57 million or 0.79% from fourth quarter 2023 and up $2.27 million or 3.26% from the first quarter a year ago. Tax-equivalent net interest margin was 3.54%, up three basis points from the previous quarter and down six basis points from the first quarter a year ago.
•Net charge-offs of $6.12 million or 0.38% of average loans and leases occurred during the quarter.
South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported quarterly net income of $29.46 million for the first quarter of 2024, up $1.03 million or 3.61% from the previous quarter and down 5.36% from the $31.12 million reported in the first quarter a year ago. Diluted net income per common share for the first quarter of 2024 was $1.19, up $0.04 or 3.48% from the previous quarter and down 4.80%, versus $1.25 in the first quarter of 2023.
At its April 2024 meeting, the Board of Directors approved a cash dividend of $0.34 per common share, up 6.25% from the cash dividend declared a year ago. The cash dividend is payable to shareholders of record on May 6, 2024, and will be paid on May 15, 2024.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “We are pleased with our increase in revenue and net interest margin expansion compared to the previous quarter. Average loans grew $116.21 million, up 1.82%, while average deposits decreased slightly from the previous quarter. Although our tax-equivalent net interest margin continued to endure competitive deposit rate pressures, we improved our overall margin by three basis points compared to the prior quarter. Additionally, our liquidity and capital positions remained strong during the quarter.
“Credit was challenged in the quarter, with elevated net charge-offs, the majority of which were from two commercial business accounts unrelated to our commercial real estate portfolio. Nonperforming assets to loans and leases at March 31, 2024, was 0.34%, down from 0.37% at December 31, 2023, and the allowance for loan and lease losses as a percentage of total loans and leases remained strong at 2.26%, which was unchanged from 2023 year end.
“At 1st Source, we value integrity, teamwork, superior quality, outstanding client service, community leadership, delivering true relationship banking and operating with strong capital. We believe these values differentiate us from our competition, and we received confirmation of this belief during the quarter. In March, we were excited to learn that 1st Source was ranked 14th in the country and number 1 in Indiana in Forbes’ 15th annual America’s Best Banks list. The 200 largest publicly traded banks and thrifts were eligible for the list and the top 100 were ranked according to 10 metrics measuring growth, credit quality and profitability for the 2023 calendar year, as well as stock performance in the 12 months through March 18, 2024.
“In March, we were also happy to learn that 1st Source was ranked 22nd in S&P Global Market Intelligence’s Top 50 Community Banks with $3B to $10B in assets. This is especially powerful because S&P Global Market Intelligence places special consideration on the strength and risk profile of balance sheets in addition to their returns, growth, and funding.
“And finally, 1st Source Bank was once again rated 5 stars by BauerFinancial. Ratings are based on performance data from 2023 for U.S. Banks including leverage capital ratios, profitability/loss trends, market versus book value of the investment portfolio, along with many other factors. These rankings are a testament to our team’s enduring commitment to making smart financial decisions and working to ensure that 1st Source remains among the nation’s most stable banks, so we are able to serve our clients well for the long term”, Mr. Murphy concluded.
FIRST QUARTER 2024 FINANCIAL RESULTS
Loans
First quarter average loans and leases increased $116.21 million to $6.50 billion, up 1.82% from the previous quarter and increased $467.87 million, up 7.75% from the first quarter a year ago. Average loan growth during the quarter occurred primarily within the Auto and Light Truck, Renewable Energy and Commercial Real Estate portfolios.
Deposits
Average deposits of $7.01 billion, declined $57.56 million, or 0.81% from the previous quarter, and grew $142.10 million or 2.07% compared to the quarter ended March 31, 2023. Average balances were down slightly from the previous quarter and the overall deposit mix changed as rate competition continued to drive consumers to higher yielding time and money market deposit accounts.
End of period deposits were $7.06 billion at March 31, 2024, compared to $7.04 billion at December 31, 2023. While the increase in end of period deposits was minimal, the deposit mix shift we saw during 2023 continued during the quarter as higher brokered, time, and money market deposit balances were offset by decreased noninterest-bearing deposit balances and seasonal decreases in interest bearing public fund deposit balances. Rate competition for deposits persisted during the quarter.
Net Interest Income and Net Interest Margin
First quarter 2024 tax-equivalent net interest income increased $0.57 million to $72.06 million, up 0.79% from the previous quarter and increased from the first quarter a year ago by $2.27 million, up 3.26%.
First quarter 2024, net interest margin was 3.54%, an increase of three basis points from the 3.51% in the previous quarter and a decrease of five basis points from the same period in 2023. On a fully tax-equivalent basis, first quarter 2024 net interest margin was 3.54%, up by three basis points compared to the 3.51% in the previous quarter and a decline of six basis points from the same period in 2023. The three basis point increase from the prior quarter was primarily due to higher rates on loan and lease balances and lower rates on short-term borrowings.
Noninterest Income
First quarter 2024 noninterest income of $22.16 million increased $2.08 million, up 10.36% from the previous quarter and decreased $1.17 million, down 5.00% compared to the first quarter a year ago.
The increase in noninterest income compared to the previous quarter was mainly due to available for sale securities losses of $2.88 million realized in the prior quarter, an increase in trust and wealth advisory income primarily from positive market performance during the quarter, and increased insurance contingent commissions offset by lower partnership investment gains, decreased interest rate swap fees and lower equipment rental income due to a change in customer preferences and continued competitive pricing pressure for new business.
The decrease in noninterest income for the first quarter of 2024 compared to a year ago was mainly due to a decrease in equipment rental income due to a change in customer preferences and continued competitive pricing pressure for new business, reduced debit card income, and decreased partnership gains. These were offset by an increase in trust and wealth advisory income primarily from positive market performance during the quarter.
Noninterest Expense
First quarter 2024 noninterest expense of $49.59 million decreased $3.39 million, or 6.39%, from the prior quarter and increased slightly from the first quarter a year ago.
The decrease in noninterest expense from the previous quarter was primarily due to a $1.00 million charitable contribution during the previous quarter, lower legal and professional consulting fees, a reduction in salaries and employee benefits from a decrease in group insurance claims, and lower furniture and equipment expense.
The slight increase in noninterest expense compared to the first quarter of 2023 was the result of higher salaries and wages from normal merit increases, the impact of wage inflation and an increase in the number of employees filling prior open positions, and increased incentive compensation offset by lower group insurance claims. Additionally, we saw a rise in legal fees due to a $1.08 million reversal of accrued legal fees during the first quarter of 2023, and higher data processing expenses from technology projects offset by lower leased equipment depreciation and fewer gains on the sale of off-lease equipment.
Credit
The allowance for loan and lease losses as of March 31, 2024, was 2.26% of total loans and leases compared to 2.26% at December 31, 2023, and 2.33% at March 31, 2023. Net charge-offs of $6.12 million were recorded for the first quarter of 2024 compared with $1.57 million of net recoveries in the prior quarter and net recoveries of $0.19 million in the same quarter a year ago. The majority of the first quarter charge-offs related to the two accounts in the commercial and agricultural portfolio.
The provision for credit losses was $6.60 million for the first quarter of 2024, an increase of $4.68 million from the previous quarter and an increase of $3.55 million compared with the same period in 2023. Net charge-offs during the quarter compared to net recoveries in the previous quarter were the primary reason for the increase in the provision for credit losses. The ratio of nonperforming assets to loans and leases was 0.34% as of March 31, 2024, compared to 0.37% on December 31, 2023, and 0.30% on March 31, 2023.
Capital
As of March 31, 2024, the common equity-to-assets ratio was 11.65%, compared to 11.34% at December 31, 2023, and 10.91% a year ago. The tangible common equity-to-tangible assets ratio was 10.79% at March 31, 2024, compared to 10.48% at December 31, 2023, and 10.01% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines was 13.48% at March 31, 2024 compared to 13.22% at December 31, 2023 and 13.51% a year ago.
No shares were repurchased for treasury during the first quarter of 2024.
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 its clients, individuals, businesses and 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 78 banking centers, 18 1st Source Bank Specialty Finance Group locations nationwide, nine Wealth Advisory Services locations, 10 1st Source Insurance offices, and three loan production offices.
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,” “hope,” “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
The accounting and reporting policies of 1st Source conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures are used by management to evaluate and measure the Company’s performance. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity-to-tangible assets ratio and tangible book value per common share. Management believes that these measures provide users of the Company’s financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses and lease depreciation), measures how much it costs to produce one dollar of revenue. Securities gains or losses and lease depreciation are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity-to-tangible assets ratio and tangible book value per common share as useful measurements of the Company’s equity.
See the table marked “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of certain non-GAAP financial measures used by the Company with their most closely related GAAP measures.
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(charts attached)
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| 1st SOURCE CORPORATION | | | | | | |
| 1st QUARTER 2024 FINANCIAL HIGHLIGHTS | | | | | | |
| (Unaudited - Dollars in thousands, except per share data) | | | | | | |
| Three Months Ended | | |
| March 31, | December 31, | March 31, | | | |
| 2024 | 2023 | 2023 | | | |
| AVERAGE BALANCES | | | | | | |
| Assets | $ | 8,652,144 | | $ | 8,553,500 | | $ | 8,323,431 | | | | |
| Earning assets | 8,182,165 | | 8,071,861 | | 7,864,595 | | | | |
| Investments | 1,608,094 | | 1,596,602 | | 1,768,621 | | | | |
| Loans and leases | 6,504,069 | | 6,387,858 | | 6,036,203 | | | | |
| Deposits | 7,011,105 | | 7,068,668 | | 6,869,006 | | | | |
| Interest bearing liabilities | 5,783,480 | | 5,678,546 | | 5,345,498 | | | | |
| Common shareholders’ equity | 1,006,286 | | 949,939 | | 890,294 | | | | |
| Total equity | 1,084,654 | | 1,013,114 | | 949,879 | | | | |
| INCOME STATEMENT DATA | | | | | | |
| Net interest income | $ | 71,915 | | $ | 71,330 | | $ | 69,565 | | | | |
Net interest income - FTE(1) | 72,063 | | 71,496 | | 69,791 | | | | |
| Provision for credit losses | 6,595 | | 1,911 | | 3,049 | | | | |
| Noninterest income | 22,156 | | 20,076 | | 23,323 | | | | |
| Noninterest expense | 49,586 | | 52,972 | | 49,421 | | | | |
| Net income | 29,462 | | 28,417 | | 31,131 | | | | |
| Net income available to common shareholders | 29,455 | | 28,429 | | 31,124 | | | | |
| PER SHARE DATA | | | | | | |
| Basic net income per common share | $ | 1.19 | | $ | 1.15 | | $ | 1.25 | | | | |
| Diluted net income per common share | 1.19 | | 1.15 | | 1.25 | | | | |
| Common cash dividends declared | 0.34 | | 0.34 | | 0.32 | | | | |
Book value per common share(2) | 41.26 | | 40.50 | | 36.81 | | | | |
Tangible book value per common share(1) | 37.83 | | 37.06 | | 33.42 | | | | |
| Market value - High | 55.25 | | 56.59 | | 53.85 | | | | |
| Market value - Low | 48.32 | | 41.30 | | 42.50 | | | | |
| Basic weighted average common shares outstanding | 24,459,088 | | 24,430,477 | | 24,687,087 | | | | |
| Diluted weighted average common shares outstanding | 24,459,088 | | 24,430,477 | | 24,687,087 | | | | |
| KEY RATIOS | | | | | | |
| Return on average assets | 1.37 | % | 1.32 | % | 1.52 | % | | | |
| Return on average common shareholders’ equity | 11.77 | | 11.87 | | 14.18 | | | | |
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| Average common shareholders’ equity to average assets | 11.63 | | 11.11 | | 10.70 | | | | |
End of period tangible common equity to tangible assets(1) | 10.79 | | 10.48 | | 10.01 | | | | |
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Risk-based capital - Common Equity Tier 1(3) | 13.48 | | 13.22 | | 13.51 | | | | |
Risk-based capital - Tier 1(3) | 15.15 | | 14.99 | | 15.15 | | | | |
Risk-based capital - Total(3) | 16.41 | | 16.25 | | 16.41 | | | | |
| Net interest margin | 3.54 | | 3.51 | | 3.59 | | | | |
Net interest margin - FTE(1) | 3.54 | | 3.51 | | 3.60 | | | | |
| Efficiency ratio: expense to revenue | 52.71 | | 57.95 | | 53.20 | | | | |
Efficiency ratio: expense to revenue - adjusted(1) | 52.56 | | 56.40 | | 52.92 | | | | |
| Net charge-offs (recoveries) to average loans and leases | 0.38 | | (0.10) | | (0.01) | | | | |
| Loan and lease loss allowance to loans and leases | 2.26 | | 2.26 | | 2.33 | | | | |
| Nonperforming assets to loans and leases | 0.34 | | 0.37 | | 0.30 | | | | |
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| | | | | | |
| March 31, | December 31, | September 30, | | June 30, | March 31, |
| 2024 | 2023 | 2023 | | 2023 | 2023 |
| END OF PERIOD BALANCES | | | | | | |
| Assets | $ | 8,667,837 | | $ | 8,727,958 | | $ | 8,525,058 | | | $ | 8,414,818 | | $ | 8,329,803 | |
| Loans and leases | 6,562,772 | | 6,518,505 | | 6,353,648 | | | 6,215,343 | | 6,116,716 | |
| Deposits | 7,055,311 | | 7,038,581 | | 6,967,492 | | | 6,976,518 | | 6,801,464 | |
| Allowance for loan and lease losses | 148,024 | | 147,552 | | 144,074 | | | 143,542 | | 142,511 | |
| Goodwill and intangible assets | 83,912 | | 83,916 | | 83,921 | | | 83,897 | | 83,901 | |
| Common shareholders’ equity | 1,009,886 | | 989,568 | | 924,250 | | | 921,020 | | 909,159 | |
| Total equity | 1,081,549 | | 1,068,263 | | 982,997 | | | 980,087 | | 968,444 | |
| ASSET QUALITY | | | | | | |
| Loans and leases past due 90 days or more | $ | 26 | | $ | 149 | | $ | 154 | | | $ | 56 | | $ | 24 | |
| Nonaccrual loans and leases | 22,097 | | 23,381 | | 16,617 | | | 20,481 | | 18,062 | |
| Other real estate | — | | — | | 117 | | | 193 | | 117 | |
| Repossessions | 308 | | 705 | | 233 | | | 47 | | 445 | |
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| Total nonperforming assets | $ | 22,431 | | $ | 24,235 | | $ | 17,121 | | | $ | 20,777 | | $ | 18,648 | |
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
(2) Calculated as common shareholders’ equity divided by common shares outstanding at the end of the period.
(3) Calculated under banking regulatory guidelines.
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| 1st SOURCE CORPORATION | | | | | | | |
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | | | | | | | |
| (Unaudited - Dollars in thousands) | | | | | | | |
| March 31, | | December 31, | | September 30, | | March 31, |
| 2024 | | 2023 | | 2023 | | 2023 |
| ASSETS | | | | | | | |
| Cash and due from banks | $ | 41,533 | | | $ | 77,474 | | | $ | 75,729 | | | $ | 66,866 | |
| Federal funds sold and interest bearing deposits with other banks | 39,381 | | | 52,194 | | | 35,406 | | | 27,171 | |
| Investment securities available-for-sale | 1,583,244 | | | 1,622,600 | | | 1,605,242 | | | 1,713,480 | |
| Other investments | 25,075 | | | 25,075 | | | 25,075 | | | 25,293 | |
| Mortgages held for sale | 2,881 | | | 1,442 | | | 3,118 | | | 2,068 | |
| Loans and leases, net of unearned discount: | | | | | | | |
| Commercial and agricultural | 731,527 | | | 766,223 | | | 763,051 | | | 795,429 | |
| Renewable energy | 413,662 | | | 399,708 | | | 364,949 | | | 375,330 | |
| Auto and light truck | 997,465 | | | 966,912 | | | 901,484 | | | 875,564 | |
| Medium and heavy duty truck | 303,799 | | | 311,947 | | | 323,202 | | | 326,588 | |
| Aircraft | 1,104,058 | | | 1,078,172 | | | 1,079,581 | | | 1,056,829 | |
| Construction equipment | 1,092,585 | | | 1,084,752 | | | 1,062,097 | | | 991,412 | |
| Commercial real estate | 1,135,595 | | | 1,129,861 | | | 1,088,199 | | | 954,221 | |
| Residential real estate and home equity | 643,856 | | | 637,973 | | | 627,515 | | | 594,618 | |
| Consumer | 140,225 | | | 142,957 | | | 143,570 | | | 146,725 | |
| Total loans and leases | 6,562,772 | | | 6,518,505 | | | 6,353,648 | | | 6,116,716 | |
| Allowance for loan and lease losses | (148,024) | | | (147,552) | | | (144,074) | | | (142,511) | |
| Net loans and leases | 6,414,748 | | | 6,370,953 | | | 6,209,574 | | | 5,974,205 | |
| Equipment owned under operating leases, net | 16,691 | | | 20,366 | | | 24,096 | | | 30,083 | |
| Net premises and equipment | 45,689 | | | 46,159 | | | 43,951 | | | 44,034 | |
| Goodwill and intangible assets | 83,912 | | | 83,916 | | | 83,921 | | | 83,901 | |
| Accrued income and other assets | 414,683 | | | 427,779 | | | 418,946 | | | 362,702 | |
| Total assets | $ | 8,667,837 | | | $ | 8,727,958 | | | $ | 8,525,058 | | | $ | 8,329,803 | |
| LIABILITIES | | | | | | | |
| Deposits: | | | | | | | |
| Noninterest-bearing demand | $ | 1,618,498 | | | $ | 1,655,728 | | | $ | 1,680,725 | | | $ | 1,815,123 | |
| Interest-bearing deposits: | | | | | | | |
| Interest-bearing demand | 2,364,751 | | | 2,430,833 | | | 2,416,864 | | | 2,403,818 | |
| Savings | 1,270,401 | | | 1,213,334 | | | 1,180,837 | | | 1,171,418 | |
| Time | 1,801,661 | | | 1,738,686 | | | 1,689,066 | | | 1,411,105 | |
| Total interest-bearing deposits | 5,436,813 | | | 5,382,853 | | | 5,286,767 | | | 4,986,341 | |
| Total deposits | 7,055,311 | | | 7,038,581 | | | 6,967,492 | | | 6,801,464 | |
| Short-term borrowings: | | | | | | | |
| Federal funds purchased and securities sold under agreements to repurchase | 82,591 | | | 55,809 | | | 48,335 | | | 73,396 | |
| Other short-term borrowings | 166,989 | | | 256,550 | | | 223,757 | | | 229,640 | |
| Total short-term borrowings | 249,580 | | | 312,359 | | | 272,092 | | | 303,036 | |
| Long-term debt and mandatorily redeemable securities | 39,406 | | | 47,911 | | | 46,533 | | | 46,714 | |
| Subordinated notes | 58,764 | | | 58,764 | | | 58,764 | | | 58,764 | |
| Accrued expenses and other liabilities | 183,227 | | | 202,080 | | | 197,180 | | | 151,381 | |
| Total liabilities | 7,586,288 | | | 7,659,695 | | | 7,542,061 | | | 7,361,359 | |
| 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, 2024, December 31, 2023, September 30, 2023, and March 31, 2023, respectively | 436,538 | | | 436,538 | | | 436,538 | | | 436,538 | |
| Retained earnings | 812,413 | | | 789,842 | | | 769,603 | | | 719,495 | |
Cost of common stock in treasury (3,728,016, 3,771,070, 3,776,591, and 3,510,122 shares at March 31, 2024, December 31, 2023, September 30, 2023, and March 31, 2023, respectively) | (129,790) | | | (130,489) | | | (130,579) | | | (119,409) | |
| Accumulated other comprehensive loss | (109,275) | | | (106,323) | | | (151,312) | | | (127,465) | |
| Total shareholders’ equity | 1,009,886 | | | 989,568 | | | 924,250 | | | 909,159 | |
| Noncontrolling interests | 71,663 | | | 78,695 | | | 58,747 | | | 59,285 | |
| Total equity | 1,081,549 | | | 1,068,263 | | | 982,997 | | | 968,444 | |
| Total liabilities and equity | $ | 8,667,837 | | | $ | 8,727,958 | | | $ | 8,525,058 | | | $ | 8,329,803 | |
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| 1st SOURCE CORPORATION | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | | | | | |
| (Unaudited - Dollars in thousands, except per share amounts) | | | | | | | | |
| Three Months Ended | | |
| March 31, | | December 31, | | March 31, | | | | |
| 2024 | | 2023 | | 2023 | | | | |
| Interest income: | | | | | | | | | |
| Loans and leases | $ | 109,202 | | | $ | 107,103 | | | $ | 86,689 | | | | | |
| Investment securities, taxable | 6,079 | | | 5,989 | | | 6,648 | | | | | |
| Investment securities, tax-exempt | 260 | | | 314 | | | 482 | | | | | |
| Other | 927 | | | 1,165 | | | 637 | | | | | |
| Total interest income | 116,468 | | | 114,571 | | | 94,456 | | | | | |
| Interest expense: | | | | | | | | | |
| Deposits | 39,744 | | | 38,624 | | | 21,263 | | | | | |
| Short-term borrowings | 3,102 | | | 1,878 | | | 1,393 | | | | | |
| Subordinated notes | 1,061 | | | 1,066 | | | 1,020 | | | | | |
| Long-term debt and mandatorily redeemable securities | 646 | | | 1,673 | | | 1,215 | | | | | |
| Total interest expense | 44,553 | | | 43,241 | | | 24,891 | | | | | |
| Net interest income | 71,915 | | | 71,330 | | | 69,565 | | | | | |
| Provision for credit losses | 6,595 | | | 1,911 | | | 3,049 | | | | | |
| Net interest income after provision for credit losses | 65,320 | | | 69,419 | | | 66,516 | | | | | |
| Noninterest income: | | | | | | | | | |
| Trust and wealth advisory | 6,287 | | | 5,912 | | | 5,679 | | | | | |
| Service charges on deposit accounts | 3,070 | | | 3,331 | | | 3,003 | | | | | |
| Debit card | 4,201 | | | 4,395 | | | 4,507 | | | | | |
| Mortgage banking | 950 | | | 772 | | | 802 | | | | | |
| Insurance commissions | 1,776 | | | 1,527 | | | 2,029 | | | | | |
| Equipment rental | 1,671 | | | 1,907 | | | 2,503 | | | | | |
| Losses on investment securities available-for-sale | — | | | (2,882) | | | (44) | | | | | |
| Other | 4,201 | | | 5,114 | | | 4,844 | | | | | |
| Total noninterest income | 22,156 | | | 20,076 | | | 23,323 | | | | | |
| Noninterest expense: | | | | | | | | | |
| Salaries and employee benefits | 29,572 | | | 29,913 | | | 28,597 | | | | | |
| Net occupancy | 2,996 | | | 2,925 | | | 2,622 | | | | | |
| Furniture and equipment | 1,149 | | | 1,715 | | | 1,307 | | | | | |
| Data processing | 6,500 | | | 6,341 | | | 6,157 | | | | | |
| Depreciation – leased equipment | 1,288 | | | 1,523 | | | 2,022 | | | | | |
| Professional fees | 1,345 | | | 2,556 | | | 682 | | | | | |
| FDIC and other insurance | 1,657 | | | 1,624 | | | 1,360 | | | | | |
| Business development and marketing | 1,744 | | | 2,335 | | | 1,972 | | | | | |
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| Other | 3,335 | | | 4,040 | | | 4,702 | | | | | |
| Total noninterest expense | 49,586 | | | 52,972 | | | 49,421 | | | | | |
| Income before income taxes | 37,890 | | | 36,523 | | | 40,418 | | | | | |
| Income tax expense | 8,428 | | | 8,106 | | | 9,287 | | | | | |
| Net income | 29,462 | | | 28,417 | | | 31,131 | | | | | |
| Net (income) loss attributable to noncontrolling interests | (7) | | | 12 | | | (7) | | | | | |
| Net income available to common shareholders | $ | 29,455 | | | $ | 28,429 | | | $ | 31,124 | | | | | |
| Per common share: | | | | | | | | | |
| Basic net income per common share | $ | 1.19 | | | $ | 1.15 | | | $ | 1.25 | | | | | |
| Diluted net income per common share | $ | 1.19 | | | $ | 1.15 | | | $ | 1.25 | | | | | |
| Cash dividends | $ | 0.34 | | | $ | 0.34 | | | $ | 0.32 | | | | | |
| Basic weighted average common shares outstanding | 24,459,088 | | | 24,430,477 | | | 24,687,087 | | | | | |
| Diluted weighted average common shares outstanding | 24,459,088 | | | 24,430,477 | | | 24,687,087 | | | | | |
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| 1st SOURCE CORPORATION | | | | | | | | | | | | | | | | | |
| DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | |
| INTEREST RATES AND INTEREST DIFFERENTIAL | | | | | | | | | | |
| (Unaudited - Dollars in thousands) | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |
| March 31, 2024 | | December 31, 2023 | | March 31, 2023 |
| Average
Balance | | Interest Income/Expense | | Yield/
Rate | | Average
Balance | | Interest Income/Expense | | Yield/
Rate | | Average
Balance | | Interest Income/Expense | | Yield/
Rate |
| ASSETS | | | | | | | | | | | | | | | | | |
| Investment securities available-for-sale: | | | | | | | | | | | | | | | | | |
| Taxable | $ | 1,576,579 | | | $ | 6,079 | | | 1.55 | % | | $ | 1,559,351 | | | $ | 5,989 | | | 1.52 | % | | $ | 1,711,177 | | | $ | 6,648 | | | 1.58 | % |
Tax exempt(1) | 31,515 | | | 327 | | | 4.17 | % | | 37,251 | | | 392 | | | 4.17 | % | | 57,444 | | | 605 | | | 4.27 | % |
| Mortgages held for sale | 1,830 | | | 34 | | | 7.47 | % | | 2,010 | | | 41 | | | 8.09 | % | | 2,410 | | | 32 | | | 5.38 | % |
Loans and leases, net of unearned discount(1) | 6,504,069 | | | 109,249 | | | 6.76 | % | | 6,387,858 | | | 107,150 | | | 6.65 | % | | 6,036,203 | | | 86,760 | | | 5.83 | % |
| Other investments | 68,172 | | | 927 | | | 5.47 | % | | 85,391 | | | 1,165 | | | 5.41 | % | | 57,361 | | | 637 | | | 4.50 | % |
Total earning assets(1) | 8,182,165 | | | 116,616 | | | 5.73 | % | | 8,071,861 | | | 114,737 | | | 5.64 | % | | 7,864,595 | | | 94,682 | | | 4.88 | % |
| Cash and due from banks | 61,889 | | | | | | | 70,352 | | | | | | | 71,921 | | | | | |
| Allowance for loan and lease losses | (148,982) | | | | | | | (146,076) | | | | | | | (141,054) | | | | | |
| Other assets | 557,072 | | | | | | | 557,363 | | | | | | | 527,969 | | | | | |
| Total assets | $ | 8,652,144 | | | | | | | $ | 8,553,500 | | | | | | | $ | 8,323,431 | | | | | |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | $ | 5,394,854 | | | $ | 39,744 | | | 2.96 | % | | $ | 5,383,925 | | | $ | 38,624 | | | 2.85 | % | | $ | 4,988,093 | | | $ | 21,263 | | | 1.73 | % |
| Short-term borrowings: | | | | | | | | | | | | | | | | | |
| Securities sold under agreements to repurchase | 47,973 | | | 47 | | | 0.39 | % | | 52,278 | | | 29 | | | 0.22 | % | | 134,501 | | | 40 | | | 0.12 | % |
| Other short-term borrowings | 234,672 | | | 3,055 | | | 5.24 | % | | 136,814 | | | 1,849 | | | 5.36 | % | | 118,760 | | | 1,353 | | | 4.62 | % |
| Subordinated notes | 58,764 | | | 1,061 | | | 7.26 | % | | 58,764 | | | 1,066 | | | 7.20 | % | | 58,764 | | | 1,020 | | | 7.04 | % |
| Long-term debt and mandatorily redeemable securities | 47,217 | | | 646 | | | 5.50 | % | | 46,765 | | | 1,673 | | | 14.19 | % | | 45,380 | | | 1,215 | | | 10.86 | % |
| Total interest-bearing liabilities | 5,783,480 | | | 44,553 | | | 3.10 | % | | 5,678,546 | | | 43,241 | | | 3.02 | % | | 5,345,498 | | | 24,891 | | | 1.89 | % |
| Noninterest-bearing deposits | 1,616,251 | | | | | | | 1,684,743 | | | | | | | 1,880,913 | | | | | |
| Other liabilities | 167,759 | | | | | | | 177,097 | | | | | | | 147,141 | | | | | |
| Shareholders’ equity | 1,006,286 | | | | | | | 949,939 | | | | | | | 890,294 | | | | | |
| Noncontrolling interests | 78,368 | | | | | | | 63,175 | | | | | | | 59,585 | | | | | |
| Total liabilities and equity | $ | 8,652,144 | | | | | | | $ | 8,553,500 | | | | | | | $ | 8,323,431 | | | | | |
| Less: Fully tax-equivalent adjustments | | | (148) | | | | | | | (166) | | | | | | | (226) | | | |
Net interest income/margin (GAAP-derived)(1) | | | $ | 71,915 | | | 3.54 | % | | | | $ | 71,330 | | | 3.51 | % | | | | $ | 69,565 | | | 3.59 | % |
| Fully tax-equivalent adjustments | | | 148 | | | | | | | 166 | | | | | | | 226 | | | |
Net interest income/margin - FTE(1) | | | $ | 72,063 | | | 3.54 | % | | | | $ | 71,496 | | | 3.51 | % | | | | $ | 69,791 | | | 3.60 | % |
| (1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio. |
| | | | | | | | | | | | | | | | | |
| 1st SOURCE CORPORATION | | | | | |
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | | | | |
| (Unaudited - Dollars in thousands, except per share data) | | | | |
| | | | | | | |
| | Three Months Ended | | |
| | March 31, | December 31, | March 31, | | | |
| | 2024 | 2023 | 2023 | | | |
| Calculation of Net Interest Margin | | | | | | |
| (A) | Interest income (GAAP) | $ | 116,468 | | $ | 114,571 | | $ | 94,456 | | | | |
| Fully tax-equivalent adjustments: | | | | | | |
| (B) | – Loans and leases | 81 | | 88 | | 103 | | | | |
| (C) | – Tax exempt investment securities | 67 | | 78 | | 123 | | | | |
| (D) | Interest income – FTE (A+B+C) | 116,616 | | 114,737 | | 94,682 | | | | |
| (E) | Interest expense (GAAP) | 44,553 | | 43,241 | | 24,891 | | | | |
| (F) | Net interest income (GAAP) (A-E) | 71,915 | | 71,330 | | 69,565 | | | | |
| (G) | Net interest income - FTE (D-E) | 72,063 | | 71,496 | | 69,791 | | | | |
| (H) | Annualization factor | 4.022 | | 3.967 | | 4.056 | | | | |
| (I) | Total earning assets | $ | 8,182,165 | | $ | 8,071,861 | | $ | 7,864,595 | | | | |
| Net interest margin (GAAP-derived) (F*H)/I | 3.54 | % | 3.51 | % | 3.59 | % | | | |
| Net interest margin – FTE (G*H)/I | 3.54 | % | 3.51 | % | 3.60 | % | | | |
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| Calculation of Efficiency Ratio | | | | | | |
| (F) | Net interest income (GAAP) | $ | 71,915 | | $ | 71,330 | | $ | 69,565 | | | | |
| (G) | Net interest income – FTE | 72,063 | | 71,496 | | 69,791 | | | | |
| (J) | Plus: noninterest income (GAAP) | 22,156 | | 20,076 | | 23,323 | | | | |
| (K) | Less: gains/losses on investment securities and partnership investments | (1,037) | | 1,173 | | (1,522) | | | | |
| (L) | Less: depreciation – leased equipment | (1,288) | | (1,523) | | (2,022) | | | | |
| (M) | Total net revenue (GAAP) (F+J) | 94,071 | | 91,406 | | 92,888 | | | | |
| (N) | Total net revenue – adjusted (G+J–K–L) | 91,894 | | 91,222 | | 89,570 | | | | |
| (O) | Noninterest expense (GAAP) | 49,586 | | 52,972 | | 49,421 | | | | |
| (L) | Less:depreciation – leased equipment | (1,288) | | (1,523) | | (2,022) | | | | |
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| (P) | Noninterest expense – adjusted (O–L) | 48,298 | | 51,449 | | 47,399 | | | | |
| Efficiency ratio (GAAP-derived) (O/M) | 52.71 | % | 57.95 | % | 53.20 | % | | | |
| Efficiency ratio – adjusted (P/N) | 52.56 | % | 56.40 | % | 52.92 | % | | | |
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| | End of Period | | | |
| | March 31, | December 31, | March 31, | | | |
| | 2024 | 2023 | 2023 | | | |
| Calculation of Tangible Common Equity-to-Tangible Assets Ratio | | | | | |
| (Q) | Total common shareholders’ equity (GAAP) | $ | 1,009,886 | | $ | 989,568 | | $ | 909,159 | | | | |
| (R) | Less: goodwill and intangible assets | (83,912) | | (83,916) | | (83,901) | | | | |
| (S) | Total tangible common shareholders’ equity (Q–R) | $ | 925,974 | | $ | 905,652 | | $ | 825,258 | | | | |
| (T) | Total assets (GAAP) | 8,667,837 | | 8,727,958 | | 8,329,803 | | | | |
| (R) | Less: goodwill and intangible assets | (83,912) | | (83,916) | | (83,901) | | | | |
| (U) | Total tangible assets (T–R) | $ | 8,583,925 | | $ | 8,644,042 | | $ | 8,245,902 | | | | |
| Common equity-to-assets ratio (GAAP-derived) (Q/T) | 11.65 | % | 11.34 | % | 10.91 | % | | | |
| Tangible common equity-to-tangible assets ratio (S/U) | 10.79 | % | 10.48 | % | 10.01 | % | | | |
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| Calculation of Tangible Book Value per Common Share | | | | | | |
| (Q) | Total common shareholders’ equity (GAAP) | $ | 1,009,886 | | $ | 989,568 | | $ | 909,159 | | | | |
| (V) | Actual common shares outstanding | 24,477,658 | | 24,434,604 | | 24,695,552 | | | | |
| Book value per common share (GAAP-derived) (Q/V)*1000 | $ | 41.26 | | $ | 40.50 | | $ | 36.81 | | | | |
| Tangible common book value per share (S/V)*1000 | $ | 37.83 | | $ | 37.06 | | $ | 33.42 | | | | |
The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3)
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