1st Source Corporation Reports Second Quarter Results, a Record Quarter Adjusted for PPP Income Due to Government Response to COVID-19; Cash Dividend Increased

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QUARTERLY HIGHLIGHTS

  • Net income was $29.31 million for the quarter, down $0.91 million or 3.01% from the second quarter of 2021. Excluding tax-effected PPP income, net income was a record $28.47 million for the quarter, up $1.06 million or 3.87% from the second quarter of 2021. Diluted net income per common share was $1.18, down $0.01 from the prior year’s second quarter of $1.19.
  • Cash dividend of $0.32 per common share was approved, up 3.22% from the cash dividend declared a year ago.
  • Small Business Administration (SBA) forgiveness and customer pay downs of Paycheck Protection Program (PPP) loans amounted to $29.84 million during the quarter which contributed to the recognition of $1.03 million in PPP-related loan fees in the quarter down from $158.41 million in forgiveness and $2.59 million in fees in the second quarter of 2021.
  • Average loans and leases net PPP loans grew $168.96 million in the second quarter, up 3.20% (12.8% annualized growth) from the previous quarter and $335.87 million, up 6.58% from the second quarter of 2021.
  • Tax-equivalent net interest margin was 3.32%, up 17 basis points from the second quarter a year ago.
  • Mortgage banking income was $1.06 million, down $1.80 million, or 62.85% from the second quarter a year ago.

SOUTH BEND, Ind.1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported quarterly net income of $29.31 million for the second quarter of 2022, down 3.01% from the $30.22 million reported in the second quarter a year ago, bringing the 2022 year-to-date net income to $56.70 million compared to $58.33 million in 2021. Excluding tax-effected PPP income, net income was a record $28.47 million for the quarter, up $1.06 million or 3.87% from the second quarter of 2021. Diluted net income per common share for the second quarter of 2022 was $1.18 versus $1.19 in the second quarter of 2021. Diluted net income per common share for the first half of 2022 was $2.28 compared to $2.29 a year earlier.

At its July 2022 meeting, the Board of Directors approved a cash dividend of $0.32 per common share, up 3.22% from the $0.31 per common share declared a year ago. The cash dividend is payable to shareholders of record on August 2, 2022 and will be paid on August 12, 2022.

Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “We are pleased to announce another strong quarter. Average loans grew $335.87 million or 6.58% net of Paycheck Protection Program (PPP) loans from the second quarter last year. Average deposits increased $517.14 million, up 8.24% from the prior year second quarter. At the end of the second quarter, we had helped clients submit PPP loan forgiveness to the SBA for over 99% of all PPP loans we originated. Our tax-equivalent net interest margin for the quarter was 3.32% compared to 3.15% in the prior year second quarter. The increase in margin this quarter helped defray the expected reduction in PPP loan fees and mortgage banking income since the same period last year. It remains to be seen whether the numerous Federal Reserve rate hikes during the first half of 2022 and any future adjustments can successfully tame runaway inflation as we move further into 2022 and beyond.

“We were very pleased to learn during the second quarter that 1st Source was the recipient of multiple honors that recognize our commitment to our clients, shareholders and team members. 1st Source was named among the Keefe, Bruyette & Woods, Inc. (KBW) Bank Honor Roll for the fourth consecutive year. We are proud to be one of the 17 honorees, placing us among the top 5% of eligible banks in the country. To be considered, banks must be publicly traded institutions with more than $500 million in total assets and 10 consecutive years of increased earnings per share. It is our focus on quality earnings, investing for the future, building a strong balance sheet, capital, and reserves that earned 1st Source this recognition and allowed us to continue to meet the challenges the pandemic presented. Receiving this recognition for the fourth year in a row is a great honor, and welcome confirmation of the success of our continued focus on the long-term has been successful.

“1st Source was also recognized by Forbes twice in recent months. We were named to the Forbes ‘Best Employers for Diversity’ list. We were also included on the Forbes ‘Best In State Banks’ list, ranking #3 in Indiana. Both lists were compiled in partnership with market research firm Statista, and both were the result of surveys conducted of our employees and clients, respectively. First and foremost, an inclusive culture that welcomes and values all people as part of our workforce is extremely important to us and to our future success as a financial institution and employer. Being named to this list signals to us that our momentum in the vital area of diversity, equity and inclusion is being felt, embraced, and celebrated by our team. Additionally, being named among the ‘Best In State Banks’ in Indiana by our clients is an equally important and gratifying recognition for us. We strive every day to show our clients they have made the right choice for their financial future by entrusting us to be their partner. Being named one of the best banks in Indiana by our clients lets us know that hard work is paying off, and that we are living our mission to help people achieve security, build wealth and realize their dreams in all that we do.

“In addition, 1st Source was recognized by the Business Development Corporation (BDC) as the top lender of SBA 504 loans for the years 2020 and 2021 and one of the top long term small business lenders in the state. In both years, 1st Source had the highest number of SBA 504 loan approvals, as well as the highest dollar amount in approvals with the BDC. This honor as top SBA 504 lender by the BDC is our latest recognition for small business lending. We have also received the Community Lender ‘Gold Level Award’ by the Indiana District of the U.S. Small Business Administration as the top SBA lender of banks our size in the state nine years in a row (which was detailed in a previous earning release). Small businesses have been challenged greatly throughout the pandemic, and we made it our focus to serve small businesses in any way we were able. This recognition shows the positive impact of our laser-like focus on small businesses, and we’re proud of the dedication and superior service our business banking and support teams have provided along the way.

“Lastly, we announced in April the election of Isaac P. Torres to our Board of Directors. Mr. Torres is President and Chief Executive Officer of InterCambio Express, Inc., an internet-based money transfer service with a U.S.A. headquarters in Elkhart, Ind. and a Mexican subsidiary located in Puebla, Mexico. Mr. Torres has expertise in internet-based industries and international payment systems as well as extensive skills in finance, accounting, compliance and international business. We are pleased our shareholders voted to add such a strong leader to our Board of Directors and we are certain Mr. Torres will help the Company deliver on its mission to help our clients achieve security, build wealth and realize their dreams by living our values and keeping our clients’ best interest in mind for the long-term. His background and experience blend well with our already strong Board, and his strategic guidance and unique perspective will add value to the future of our organization. At the time of this election, three current board members - John F. Affleck-Graves, Chaired Professor of Finance, and former Executive Vice President and Chief Financial Officer of the University of Notre Dame, Daniel B. Fitzpatrick, founder, Chairman and Chief Executive Officer of Quality Dining, Inc., and Christopher J. Murphy IV, co-founder, owner and Chief Executive Officer of Catharsis Productions, LLC - were also re-elected to continue their service on the 1st Source Corporation Board of Directors. All four above mentioned directors have been elected to terms that end April 2025 and will be subject to re-election at that time,” Mr. Murphy concluded.

SECOND QUARTER 2022 FINANCIAL RESULTS

Loans

Second quarter average loans and leases of $5.47 billion increased $335.87 million, up 6.58% net of PPP loans from the year ago quarter and increased $168.96 million, up 3.20% net of PPP loans from the previous quarter. Year-to-date average loans and leases of $5.40 billion increased $261.18 million, up 5.12% net of PPP loans from the first six months of 2021. PPP forgiveness and customer payments totaled $29.84 million in the second quarter of 2022 and $66.44 million in the first half of 2022. PPP loans of $9.13 million remained outstanding which is net of $0.21 million in unearned fees as of June 30, 2022. The solar, auto and light truck, aircraft and construction equipment portfolios all grew in the second quarter of 2022 compared to the second quarter of 2021 and the previous quarter.

Deposits

Average deposits of $6.80 billion grew $517.14 million for the quarter ended June 30, 2022, up 8.24% from the year ago quarter and increased $178.92 million, up 2.70% from the previous quarter. Average deposits for the first six months of 2022 were $6.71 billion, an increase of $576.44 million, up 9.40% from the same period a year ago. Deposit growth over the last year came from business and consumer clients while brokered deposits have declined. The second quarter increase over the linked quarter was primarily attributable to seasonal public fund deposit inflows.

Net Interest Income and Net Interest Margin

Second quarter 2022 tax-equivalent net interest income of $63.59 million increased $6.53 million, up 11.45% from the second quarter a year ago and grew $3.86 million, up 6.46% from the previous quarter. For the first six months of 2022, tax-equivalent net interest income was $123.31 million, an increase of $8.73 million, up 7.61% from the first half of 2021. We recognized $1.03 million in PPP loan fees during the quarter and $2.50 million during the first half of 2022 compared to $2.59 million in the previous year quarter and $6.57 million during the first half of 2021.

Second quarter 2022 net interest margin was 3.31%, an increase of 17 basis points from the 3.14% for the same period in 2021 and an increase of 14 basis points from the previous quarter. On a fully tax-equivalent basis, second quarter 2022 net interest margin was 3.32%, an increase of 17 basis points from the 3.15% for the same period in 2021 and was higher by 14 basis points compared to the previous quarter. Non-recurring items during the quarter contributed 11 basis points of the 17-basis point increase. Those items include PPP loans of two basis points, lower interest expense on mandatorily redeemable securities due to book value adjustments of four basis points and net interest recoveries of five basis points.

Net interest margin for the first six months of 2022 was 3.24% which was equal to the first six months of 2021. Similarly, net interest margin on a fully-tax-equivalent basis for the first half of 2022 was 3.25% which was equal to the prior year. PPP loans had a positive impact on the net margin of six basis points for the first half of 2022 and the first half of 2021.

Multiple Federal Reserve rate increases during 2022 contributed to net interest margin expansion as loans repriced faster than deposits during the second quarter of 2022 following significant compression after rate decreases during the first quarter of 2020 in response to the COVID-19 pandemic.

Noninterest Income

Second quarter 2022 noninterest income of $22.83 million decreased $2.07 million, or 8.31% from the second quarter a year ago and decreased $0.32 million, or 1.36% from the first quarter of 2022. For the first six months of 2022, noninterest income was $45.98 million, a decrease of $4.79 million, or 9.44% from the same period a year ago.

The reduction for both periods is mainly from reduced mortgage banking volumes resulting in lower income from loans retained and those originated and sold in the secondary market. Demand for mortgages has continued to decline as refinancing slowed and the number of homes for sale remains low. Equipment rental income continued to shrink as demand for leases declined. This was offset by a rise in service charges on deposit accounts and the absence of losses on the sale of investment securities. In addition to these, the decrease in noninterest income from the prior quarter was mainly due to decreased insurance commissions due to seasonal contingent commissions and this was offset by increased debit card income from a higher volume of debit card transactions.

Noninterest Expense

Second quarter 2022 noninterest expense of $45.66 million increased $0.46 million, or 1.01% from the second quarter a year ago and increased $0.32 million, or 0.70% from the prior quarter. For the first six months of 2022, noninterest expense was $90.99 million, an increase of $1.65 million, or 1.85% compared to the same period in 2021.

The increase in noninterest expense from the second quarter a year ago was mainly the result of a higher loan loss provision for unfunded loan commitments, increased data processing charges for technology projects, and higher business development costs tied to fewer COVID-19 restrictions and offset by decreased leased equipment depreciation as the average equipment rental portfolio continues to decline and lower collection and repossession expense.

The increase in noninterest expense from the prior quarter was primarily the result of increased legal and professional consulting fees, a rise in business development and marketing expense tied to marketing campaigns and higher data processing charges offset by a decrease in collection and repossession expense, lower net occupancy expense from snow removal costs during the previous quarter and decreased leased equipment depreciation.

Credit

The allowance for loan and lease losses as of June 30, 2022 was 2.39% of total loans and leases compared to 2.41% at March 31, 2022 and 2.49% at June 30, 2021. The allowance calculation includes PPP loans which are guaranteed by the SBA. Excluding these loans from the calculation results in an allowance of 2.40% at June 30, 2022, compared to 2.43% at March 31, 2022 and 2.63% at June 30, 2021. Net recoveries of $0.40 million were recorded for the second quarter of 2022 compared with net charge-offs of $0.16 million in the same quarter a year ago and $0.23 million of net recoveries in the prior quarter. The majority of recoveries during the quarter were related to the aircraft and consumer portfolios.

The provision for credit losses was $2.50 million for the second quarter of 2022, an increase of $5.53 million compared with the same period in 2021 and an increase of $0.27 million from the previous quarter. The ratio of nonperforming assets to loans and leases was 0.60% as of June 30, 2022, compared to 0.66% on March 31, 2022 and 1.06% on June 30, 2021. Excluding PPP loans, the ratio of non-performing assets to loans and leases was unchanged at June 30, 2022, 0.67% at March 31, 2021 and 1.13% at June 30, 2021. While nonperforming assets showed improvement during the quarter, the allowance for loan and lease losses increased at June 30, 2022 due to loan growth, economic uncertainty stemming from the war in Ukraine, inflationary pressures and prolonged supply chain disruptions.

Capital

As of June 30, 2022, the common equity-to-assets ratio was 10.66%, compared to 10.79% at March 31, 2022 and 11.68% a year ago. The tangible common equity-to-tangible assets ratio was 9.72% at June 30, 2022 compared to 9.85% at March 31, 2022 and 10.70% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 13.79% at June 30, 2022 compared to 13.88% at March 31, 2022 and 13.62% a year ago. During the second quarter of 2022, 104,400 shares were repurchased for treasury reducing common shareholders’ equity by $4.66 million.

Book value per share declined to $34.74 primarily due to non-credit-related, negative market value adjustments to our investment securities available-for-sale portfolio during the quarter. Market value adjustments were the result of changes in interest rates, market spreads and market conditions subsequent to purchase.

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 79 banking centers, 18 1st Source Bank Specialty Finance Group locations nationwide, nine Wealth Advisory Services locations and 10 1st Source Insurance 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.

Category: Earnings

 

1st SOURCE CORPORATION

 

 

 

 

 

 

2nd QUARTER 2022 FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

(Unaudited - Dollars in thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

 

2022

2022

2021

 

2022

2021

AVERAGE BALANCES

 

 

 

 

 

 

Assets

$

8,092,316

 

$

8,008,738

 

$

7,657,276

 

 

$

8,050,758

 

$

7,504,692

 

Earning assets

 

7,685,631

 

 

7,620,248

 

 

7,264,886

 

 

 

7,653,120

 

 

7,113,559

 

Investments

 

1,835,974

 

 

1,887,055

 

 

1,339,551

 

 

 

1,861,374

 

 

1,285,564

 

Loans and leases

 

5,467,808

 

 

5,324,344

 

 

5,515,387

 

 

 

5,396,472

 

 

5,507,243

 

Deposits

 

6,795,793

 

 

6,616,869

 

 

6,278,654

 

 

 

6,706,826

 

 

6,130,386

 

Interest bearing liabilities

 

5,049,145

 

 

4,913,453

 

 

4,785,800

 

 

 

4,981,675

 

 

4,682,307

 

Common shareholders’ equity

 

861,134

 

 

910,793

 

 

898,388

 

 

 

885,826

 

 

896,481

 

Total equity

 

915,714

 

 

964,156

 

 

942,821

 

 

 

939,801

 

 

940,648

 

INCOME STATEMENT DATA

 

 

 

 

 

 

Net interest income

$

63,462

 

$

59,618

 

$

56,935

 

 

$

123,080

 

$

114,347

 

Net interest income - FTE(1)

 

63,585

 

 

59,726

 

 

57,053

 

 

 

123,311

 

 

114,586

 

Provision (recovery of provision) for credit losses

 

2,503

 

 

2,233

 

 

(3,025

)

 

 

4,736

 

 

(627

)

Noninterest income

 

22,830

 

 

23,145

 

 

24,898

 

 

 

45,975

 

 

50,767

 

Noninterest expense

 

45,655

 

 

45,336

 

 

45,198

 

 

 

90,991

 

 

89,338

 

Net income

 

29,330

 

 

27,401

 

 

30,235

 

 

 

56,731

 

 

58,341

 

Net income available to common shareholders

 

29,314

 

 

27,390

 

 

30,223

 

 

 

56,704

 

 

58,328

 

PER SHARE DATA

 

 

 

 

 

 

Basic net income per common share

$

1.18

 

$

1.10

 

$

1.19

 

 

$

2.28

 

$

2.29

 

Diluted net income per common share

 

1.18

 

 

1.10

 

 

1.19

 

 

 

2.28

 

 

2.29

 

Common cash dividends declared

 

0.31

 

 

0.31

 

 

0.30

 

 

 

0.62

 

 

0.59

 

Book value per common share(2)

 

34.74

 

 

34.97

 

 

36.05

 

 

 

34.74

 

 

36.05

 

Tangible book value per common share(1)

 

31.33

 

 

31.57

 

 

32.69

 

 

 

31.33

 

 

32.69

 

Market value - High

 

48.42

 

 

52.70

 

 

51.02

 

 

 

52.70

 

 

51.02

 

Market value - Low

 

42.29

 

 

45.78

 

 

45.22

 

 

 

42.29

 

 

38.73

 

Basic weighted average common shares outstanding

 

24,691,747

 

 

24,743,790

 

 

25,143,712

 

 

 

24,717,625

 

 

25,231,789

 

Diluted weighted average common shares outstanding

 

24,691,747

 

 

24,743,790

 

 

25,143,712

 

 

 

24,717,625

 

 

25,231,789

 

KEY RATIOS

 

 

 

 

 

 

Return on average assets

 

1.45

%

 

1.39

%

 

1.58

%

 

 

1.42

%

 

1.57

%

Return on average common shareholders’ equity

 

13.65

 

 

12.20

 

 

13.49

 

 

 

12.91

 

 

13.12

 

Average common shareholders’ equity to average assets

 

10.64

 

 

11.37

 

 

11.73

 

 

 

11.00

 

 

11.95

 

End of period tangible common equity to tangible assets(1)

 

9.72

 

 

9.85

 

 

10.70

 

 

 

9.72

 

 

10.70

 

Risk-based capital - Common Equity Tier 1(3)

 

13.79

 

 

13.88

 

 

13.62

 

 

 

13.79

 

 

13.62

 

Risk-based capital - Tier 1(3)

 

15.53

 

 

15.67

 

 

15.32

 

 

 

15.53

 

 

15.32

 

Risk-based capital - Total(3)

 

16.79

 

 

16.93

 

 

16.58

 

 

 

16.79

 

 

16.58

 

Net interest margin

 

3.31

 

 

3.17

 

 

3.14

 

 

 

3.24

 

 

3.24

 

Net interest margin - FTE(1)

 

3.32

 

 

3.18

 

 

3.15

 

 

 

3.25

 

 

3.25

 

Efficiency ratio: expense to revenue

 

52.91

 

 

54.78

 

 

55.23

 

 

 

53.82

 

 

54.11

 

Efficiency ratio: expense to revenue - adjusted(1)

 

51.72

 

 

53.29

 

 

52.89

 

 

 

52.49

 

 

51.94

 

Net (recoveries) charge offs to average loans and leases

 

(0.03

)

 

(0.02

)

 

0.01

 

 

 

(0.02

)

 

0.13

 

Loan and lease loss allowance to loans and leases

 

2.39

 

 

2.41

 

 

2.49

 

 

 

2.39

 

 

2.49

 

Nonperforming assets to loans and leases

 

0.60

 

 

0.66

 

 

1.06

 

 

 

0.60

 

 

1.06

 

 

 

 

 

 

 

 

 

June 30,

March 31,

December 31,

 

September 30,

June 30,

 

2022

2022

2021

 

2021

2021

END OF PERIOD BALANCES

 

 

 

 

 

 

Assets

$

8,029,359

 

$

8,012,463

 

$

8,096,289

 

 

$

7,964,092

 

$

7,718,694

 

Loans and leases

 

5,551,216

 

 

5,394,003

 

 

5,346,214

 

 

 

5,358,797

 

 

5,483,045

 

Deposits

 

6,744,896

 

 

6,673,092

 

 

6,679,065

 

 

 

6,522,505

 

 

6,345,410

 

Allowance for loan and lease losses

 

132,865

 

 

129,959

 

 

127,492

 

 

 

133,755

 

 

136,361

 

Goodwill and intangible assets

 

83,916

 

 

83,921

 

 

83,926

 

 

 

83,931

 

 

83,937

 

Common shareholders’ equity

 

856,251

 

 

864,850

 

 

916,255

 

 

 

911,333

 

 

901,226

 

Total equity

 

910,667

 

 

919,470

 

 

969,464

 

 

 

956,397

 

 

945,457

 

ASSET QUALITY

 

 

 

 

 

 

Loans and leases past due 90 days or more

$

50

 

$

274

 

$

249

 

 

$

96

 

$

44

 

Nonaccrual loans and leases

 

33,490

 

 

35,435

 

 

38,706

 

 

 

43,166

 

 

55,864

 

Repossessions

 

102

 

 

73

 

 

861

 

 

 

690

 

 

1,213

 

Equipment owned under operating leases

 

43

 

 

343

 

 

1,518

 

 

 

1,598

 

 

1,728

 

Total nonperforming assets

$

33,685

 

$

36,125

 

$

41,334

 

 

$

45,550

 

$

58,849

 

(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.

 

1st SOURCE CORPORATION

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

 

 

 

 

 

(Unaudited - Dollars in thousands)

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

June 30,

 

2022

 

2022

 

2021

 

2021

ASSETS

 

 

 

 

 

 

 

Cash and due from banks

$

116,915

 

 

$

69,195

 

 

$

54,420

 

 

$

69,101

 

Federal funds sold and interest bearing deposits with other banks

 

164,848

 

 

 

347,697

 

 

 

470,767

 

 

 

400,346

 

Investment securities available-for-sale

 

1,836,389

 

 

 

1,857,431

 

 

 

1,863,041

 

 

 

1,413,022

 

Other investments

 

25,538

 

 

 

25,538

 

 

 

27,189

 

 

 

27,429

 

Mortgages held for sale

 

5,525

 

 

 

4,757

 

 

 

13,284

 

 

 

6,453

 

Loans and leases, net of unearned discount:

 

 

 

 

 

 

 

Commercial and agricultural

 

842,618

 

 

 

869,093

 

 

 

918,712

 

 

 

1,125,965

 

Solar

 

350,472

 

 

 

337,485

 

 

 

348,302

 

 

 

305,250

 

Auto and light truck

 

708,720

 

 

 

629,780

 

 

 

603,775

 

 

 

595,326

 

Medium and heavy duty truck

 

278,334

 

 

 

255,277

 

 

 

259,740

 

 

 

256,169

 

Aircraft

 

959,876

 

 

 

957,040

 

 

 

898,401

 

 

 

883,559

 

Construction equipment

 

803,734

 

 

 

775,972

 

 

 

754,273

 

 

 

729,055

 

Commercial real estate

 

931,058

 

 

 

920,807

 

 

 

929,341

 

 

 

966,171

 

Residential real estate and home equity

 

535,589

 

 

 

510,537

 

 

 

500,590

 

 

 

492,552

 

Consumer

 

140,815

 

 

 

138,012

 

 

 

133,080

 

 

 

128,998

 

Total loans and leases

 

5,551,216

 

 

 

5,394,003

 

 

 

5,346,214

 

 

 

5,483,045

 

Allowance for loan and lease losses

 

(132,865

)

 

 

(129,959

)

 

 

(127,492

)

 

 

(136,361

)

Net loans and leases

 

5,418,351

 

 

 

5,264,044

 

 

 

5,218,722

 

 

 

5,346,684

 

Equipment owned under operating leases, net

 

36,579

 

 

 

41,792

 

 

 

48,433

 

 

 

56,011

 

Net premises and equipment

 

45,250

 

 

 

45,960

 

 

 

47,038

 

 

 

47,617

 

Goodwill and intangible assets

 

83,916

 

 

 

83,921

 

 

 

83,926

 

 

 

83,937

 

Accrued income and other assets

 

296,048

 

 

 

272,128

 

 

 

269,469

 

 

 

268,094

 

Total assets

$

8,029,359

 

 

$

8,012,463

 

 

$

8,096,289

 

 

$

7,718,694

 

LIABILITIES

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Noninterest-bearing demand

$

2,032,566

 

 

$

2,061,111

 

 

$

2,052,981

 

 

$

1,851,932

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest-bearing demand

 

2,644,590

 

 

 

2,430,979

 

 

 

2,455,580

 

 

 

2,318,210

 

Savings

 

1,282,791

 

 

 

1,328,981

 

 

 

1,286,367

 

 

 

1,182,643

 

Time

 

784,949

 

 

 

852,021

 

 

 

884,137

 

 

 

992,625

 

Total interest-bearing deposits

 

4,712,330

 

 

 

4,611,981

 

 

 

4,626,084

 

 

 

4,493,478

 

Total deposits

 

6,744,896

 

 

 

6,673,092

 

 

 

6,679,065

 

 

 

6,345,410

 

Short-term borrowings:

 

 

 

 

 

 

 

Federal funds purchased and securities sold under agreements to repurchase

 

162,649

 

 

 

193,798

 

 

 

194,727

 

 

 

167,097

 

Other short-term borrowings

 

5,190

 

 

 

5,360

 

 

 

5,300

 

 

 

5,247

 

Total short-term borrowings

 

167,839

 

 

 

199,158

 

 

 

200,027

 

 

 

172,344

 

Long-term debt and mandatorily redeemable securities

 

48,459

 

 

 

69,563

 

 

 

71,251

 

 

 

81,330

 

Subordinated notes

 

58,764

 

 

 

58,764

 

 

 

58,764

 

 

 

58,764

 

Accrued expenses and other liabilities

 

98,734

 

 

 

92,416

 

 

 

117,718

 

 

 

115,389

 

Total liabilities

 

7,118,692

 

 

 

7,092,993

 

 

 

7,126,825

 

 

 

6,773,237

 

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 June 30, 2022, March 31, 2022, December 31, 2021, and June 30, 2021, respectively

 

436,538

 

 

 

436,538

 

 

 

436,538

 

 

 

436,538

 

Retained earnings

 

646,600

 

 

 

624,503

 

 

 

603,787

 

 

 

558,795

 

Cost of common stock in treasury (3,555,267, 3,473,139, 3,466,162, and 3,204,947 shares at June 30, 2022, March 31, 2022, December 31, 2021, and June 30, 2021, respectively)

 

(119,876

)

 

 

(115,654

)

 

 

(114,209

)

 

 

(101,711

)

Accumulated other comprehensive (loss) income

 

(107,011

)

 

 

(80,537

)

 

 

(9,861

)

 

 

7,604

 

Total shareholders’ equity

 

856,251

 

 

 

864,850

 

 

 

916,255

 

 

 

901,226

 

Noncontrolling interests

 

54,416

 

 

 

54,620

 

 

 

53,209

 

 

 

44,231

 

Total equity

 

910,667

 

 

 

919,470

 

 

 

969,464

 

 

 

945,457

 

Total liabilities and equity

$

8,029,359

 

 

$

8,012,463

 

 

$

8,096,289

 

 

$

7,718,694

 

 

1st SOURCE CORPORATION

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

 

 

 

(Unaudited - Dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

 

2022

 

2022

 

2021

 

2022

 

2021

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

$

60,415

 

 

$

55,208

 

 

$

57,144

 

 

$

115,623

 

 

$

115,008

 

Investment securities, taxable

 

6,289

 

 

 

6,344

 

 

 

4,155

 

 

 

12,633

 

 

 

8,143

 

Investment securities, tax-exempt

 

157

 

 

 

134

 

 

 

154

 

 

 

291

 

 

 

328

 

Other

 

1,168

 

 

 

363

 

 

 

317

 

 

 

1,531

 

 

 

583

 

Total interest income

 

68,029

 

 

 

62,049

 

 

 

61,770

 

 

 

130,078

 

 

 

124,062

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

3,553

 

 

 

2,376

 

 

 

3,202

 

 

 

5,929

 

 

 

6,728

 

Short-term borrowings

 

23

 

 

 

24

 

 

 

29

 

 

 

47

 

 

 

65

 

Subordinated notes

 

851

 

 

 

823

 

 

 

814

 

 

 

1,674

 

 

 

1,632

 

Long-term debt and mandatorily redeemable securities

 

140

 

 

 

(792

)

 

 

790

 

 

 

(652

)

 

 

1,290

 

Total interest expense

 

4,567

 

 

 

2,431

 

 

 

4,835

 

 

 

6,998

 

 

 

9,715

 

Net interest income

 

63,462

 

 

 

59,618

 

 

 

56,935

 

 

 

123,080

 

 

 

114,347

 

Provision (recovery of provision) for credit losses

 

2,503

 

 

 

2,233

 

 

 

(3,025

)

 

 

4,736

 

 

 

(627

)

Net interest income after provision for credit losses

 

60,959

 

 

 

57,385

 

 

 

59,960

 

 

 

118,344

 

 

 

114,974

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Trust and wealth advisory

 

6,087

 

 

 

5,914

 

 

 

6,466

 

 

 

12,001

 

 

 

11,947

 

Service charges on deposit accounts

 

2,942

 

 

 

2,792

 

 

 

2,508

 

 

 

5,734

 

 

 

4,955

 

Debit card

 

4,561

 

 

 

4,194

 

 

 

4,754

 

 

 

8,755

 

 

 

8,936

 

Mortgage banking

 

1,062

 

 

 

1,377

 

 

 

2,859

 

 

 

2,439

 

 

 

6,760

 

Insurance commissions

 

1,568

 

 

 

1,905

 

 

 

1,684

 

 

 

3,473

 

 

 

3,836

 

Equipment rental

 

3,295

 

 

 

3,662

 

 

 

4,255

 

 

 

6,957

 

 

 

8,884

 

Losses on investment securities available-for-sale

 

 

 

 

 

 

 

(680

)

 

 

 

 

 

(680

)

Other

 

3,315

 

 

 

3,301

 

 

 

3,052

 

 

 

6,616

 

 

 

6,129

 

Total noninterest income

 

22,830

 

 

 

23,145

 

 

 

24,898

 

 

 

45,975

 

 

 

50,767

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

25,562

 

 

 

25,467

 

 

 

25,510

 

 

 

51,029

 

 

 

50,706

 

Net occupancy

 

2,524

 

 

 

2,811

 

 

 

2,527

 

 

 

5,335

 

 

 

5,246

 

Furniture and equipment

 

1,384

 

 

 

1,295

 

 

 

1,420

 

 

 

2,679

 

 

 

2,894

 

Data processing

 

5,402

 

 

 

5,208

 

 

 

4,917

 

 

 

10,610

 

 

 

9,901

 

Depreciation – leased equipment

 

2,664

 

 

 

3,015

 

 

 

3,550

 

 

 

5,679

 

 

 

7,323

 

Professional fees

 

2,094

 

 

 

1,608

 

 

 

2,146

 

 

 

3,702

 

 

 

3,759

 

FDIC and other insurance

 

893

 

 

 

850

 

 

 

772

 

 

 

1,743

 

 

 

1,437

 

Business development and marketing

 

1,669

 

 

 

1,268

 

 

 

1,351

 

 

 

2,937

 

 

 

2,348

 

Loan and lease collection and repossession

 

(265

)

 

 

134

 

 

 

486

 

 

 

(131

)

 

 

615

 

Other

 

3,728

 

 

 

3,680

 

 

 

2,519

 

 

 

7,408

 

 

 

5,109

 

Total noninterest expense

 

45,655

 

 

 

45,336

 

 

 

45,198

 

 

 

90,991

 

 

 

89,338

 

Income before income taxes

 

38,134

 

 

 

35,194

 

 

 

39,660

 

 

 

73,328

 

 

 

76,403

 

Income tax expense

 

8,804

 

 

 

7,793

 

 

 

9,425

 

 

 

16,597

 

 

 

18,062

 

Net income

 

29,330

 

 

 

27,401

 

 

 

30,235

 

 

 

56,731

 

 

 

58,341

 

Net (income) loss attributable to noncontrolling interests

 

(16

)

 

 

(11

)

 

 

(12

)

 

 

(27

)

 

 

(13

)

Net income available to common shareholders

$

29,314

 

 

$

27,390

 

 

$

30,223

 

 

$

56,704

 

 

$

58,328

 

Per common share:

 

 

 

 

 

 

 

 

 

Basic net income per common share

$

1.18

 

 

$

1.10

 

 

$

1.19

 

 

$

2.28

 

 

$

2.29

 

Diluted net income per common share

$

1.18

 

 

$

1.10

 

 

$

1.19

 

 

$

2.28

 

 

$

2.29

 

Cash dividends

$

0.31

 

 

$

0.31

 

 

$

0.30

 

 

$

0.62

 

 

$

0.59

 

Basic weighted average common shares outstanding

 

24,691,747

 

 

 

24,743,790

 

 

 

25,143,712

 

 

 

24,717,625

 

 

 

25,231,789

 

Diluted weighted average common shares outstanding

 

24,691,747

 

 

 

24,743,790

 

 

 

25,143,712

 

 

 

24,717,625

 

 

25,231,789

 

1st SOURCE CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

INTEREST RATES AND INTEREST DIFFERENTIAL

 

 

 

 

 

 

 

 

 

 

(Unaudited - Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

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

$

1,805,044

 

 

$

6,289

 

 

1.40

%

 

$

1,857,557

 

 

$

6,344

 

 

1.39

%

 

$

1,305,988

 

 

$

4,156

 

 

1.28

%

Tax exempt(1)

 

30,930

 

 

 

195

 

 

2.53

%

 

 

29,498

 

 

 

165

 

 

2.27

%

 

 

33,563

 

 

 

192

 

 

2.29

%

Mortgages held for sale

 

4,889

 

 

 

52

 

 

4.27

%

 

 

8,791

 

 

 

67

 

 

3.09

%

 

 

7,208

 

 

 

54

 

 

3.00

%

Loans and leases, net of unearned discount(1)

 

5,467,808

 

 

 

60,448

 

 

4.43

%

 

 

5,324,344

 

 

 

55,218

 

 

4.21

%

 

 

5,515,387

 

 

 

57,169

 

 

4.16

%

Other investments

 

376,960

 

 

 

1,168

 

 

1.24

%

 

 

400,058

 

 

 

363

 

 

0.37

%

 

 

402,740

 

 

 

317

 

 

0.32

%

Total earning assets(1)

 

7,685,631

 

 

 

68,152

 

 

3.56

%

 

 

7,620,248

 

 

 

62,157

 

 

3.31

%

 

 

7,264,886

 

 

 

61,888

 

 

3.42

%

Cash and due from banks

 

90,101

 

 

 

 

 

 

 

77,063

 

 

 

 

 

 

 

76,198

 

 

 

 

 

Allowance for loan and lease losses

 

(132,020

)

 

 

 

 

 

 

(128,647

)

 

 

 

 

 

 

(142,056

)

 

 

 

 

Other assets

 

448,604

 

 

 

 

 

 

 

440,074

 

 

 

 

 

 

 

458,248

 

 

 

 

 

Total assets

$

8,092,316

 

 

 

 

 

 

$

8,008,738

 

 

 

 

 

 

$

7,657,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

$

4,753,331

 

 

$

3,553

 

 

0.30

%

 

$

4,587,242

 

 

$

2,376

 

 

0.21

%

 

$

4,458,915

 

 

$

3,202

 

 

0.29

%

Short-term borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

176,994

 

 

 

23

 

 

0.05

%

 

 

192,108

 

 

 

23

 

 

0.05

%

 

 

180,613

 

 

 

28

 

 

0.06

%

Other short-term borrowings

 

5,394

 

 

 

 

 

%

 

 

5,372

 

 

 

1

 

 

0.08

%

 

 

5,992

 

 

 

1

 

 

0.07

%

Subordinated notes

 

58,764

 

 

 

851

 

 

5.81

%

 

 

58,764

 

 

 

823

 

 

5.68

%

 

 

58,764

 

 

 

814

 

 

5.56

%

Long-term debt and mandatorily redeemable securities

 

54,662

 

 

 

140

 

 

1.03

%

 

 

69,967

 

 

 

(792

)

 

(4.59

) %

 

 

81,516

 

 

 

790

 

 

3.89

%

Total interest-bearing liabilities

 

5,049,145

 

 

 

4,567

 

 

0.36

%

 

 

4,913,453

 

 

 

2,431

 

 

0.20

%

 

 

4,785,800

 

 

 

4,835

 

 

0.41

%

Noninterest-bearing deposits

 

2,042,462

 

 

 

 

 

 

 

2,029,627

 

 

 

 

 

 

 

1,819,739

 

 

 

 

 

Other liabilities

 

84,995

 

 

 

 

 

 

 

101,502

 

 

 

 

 

 

 

108,916

 

 

 

 

 

Shareholders’ equity

 

861,134

 

 

 

 

 

 

 

910,793

 

 

 

 

 

 

 

898,388

 

 

 

 

 

Noncontrolling interests

 

54,580

 

 

 

 

 

 

 

53,363

 

 

 

 

 

 

 

44,433

 

 

 

 

 

Total liabilities and equity

$

8,092,316

 

 

 

 

 

 

$

8,008,738

 

 

 

 

 

 

$

7,657,276

 

 

 

 

 

Less: Fully tax-equivalent adjustments

 

 

 

(123

)

 

 

 

 

 

 

(108

)

 

 

 

 

 

 

(118

)

 

 

Net interest income/margin (GAAP-derived)(1)

 

 

$

63,462

 

 

3.31

%

 

 

 

$

59,618

 

 

3.17

%

 

 

 

$

56,935

 

 

3.14

%

Fully tax-equivalent adjustments

 

 

 

123

 

 

 

 

 

 

 

108

 

 

 

 

 

 

 

118

 

 

 

Net interest income/margin - FTE(1)

 

 

$

63,585

 

 

3.32

%

 

 

 

$

59,726

 

 

3.18

%

 

 

 

$

57,053

 

 

3.15

%

(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.

 

 

 

 

 

 

 

 

 

 

 

 

 

1st SOURCE CORPORATION

 

 

 

 

 

 

 

 

 

 

 

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

INTEREST RATES AND INTEREST DIFFERENTIAL

 

 

 

 

 

(Unaudited - Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

Average

Balance

 

Interest
Income/
Expense

 

Yield/

Rate

 

Average

Balance

 

Interest
Income/
Expense

 

Yield/

Rate

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investment securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

Taxable

$

1,831,156

 

 

$

12,633

 

 

1.39

%

 

$

1,250,096

 

 

$

8,143

 

 

1.31

%

Tax exempt(1)

 

30,218

 

 

 

360

 

 

2.40

%

 

 

35,468

 

 

 

406

 

 

2.31

%

Mortgages held for sale

 

6,829

 

 

 

119

 

 

3.51

%

 

 

10,727

 

 

 

140

 

 

2.63

%

Loans and leases, net of unearned discount(1)

 

5,396,472

 

 

 

115,666

 

 

4.32

%

 

 

5,507,243

 

 

 

115,029

 

 

4.21

%

Other investments

 

388,445

 

 

 

1,531

 

 

0.79

%

 

 

310,025

 

 

 

583

 

 

0.38

%

Total earning assets(1)

 

7,653,120

 

 

 

130,309

 

 

3.43

%

 

 

7,113,559

 

 

 

124,301

 

 

3.52

%

Cash and due from banks

 

83,618

 

 

 

 

 

 

 

75,691

 

 

 

 

 

Allowance for loan and lease losses

 

(130,343

)

 

 

 

 

 

 

(142,628

)

 

 

 

 

Other assets

 

444,363

 

 

 

 

 

 

 

458,070

 

 

 

 

 

Total assets

$

8,050,758

 

 

 

 

 

 

$

7,504,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

4,670,746

 

 

 

5,929

 

 

0.26

%

 

 

4,360,607

 

 

 

6,728

 

 

0.31

%

Short-term borrowings:

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

184,509

 

 

 

46

 

 

0.05

%

 

 

174,928

 

 

 

63

 

 

0.07

%

Other short-term borrowings

 

5,383

 

 

 

1

 

 

0.04

%

 

 

6,765

 

 

 

2

 

 

0.06

%

Subordinated notes

 

58,764

 

 

 

1,674

 

 

5.74

%

 

 

58,764

 

 

 

1,632

 

 

5.60

%

Long-term debt and mandatorily redeemable securities

 

62,273

 

 

 

(652

)

 

(2.11

) %

 

 

81,243

 

 

 

1,290

 

 

3.20

%

Total interest-bearing liabilities

 

4,981,675

 

 

 

6,998

 

 

0.28

%

 

 

4,682,307

 

 

 

9,715

 

 

0.42

%

Noninterest-bearing deposits

 

2,036,080

 

 

 

 

 

 

 

1,769,779

 

 

 

 

 

Other liabilities

 

93,202

 

 

 

 

 

 

 

111,958

 

 

 

 

 

Shareholders’ equity

 

885,826

 

 

 

 

 

 

 

896,481

 

 

 

 

 

Noncontrolling interests

 

53,975

 

 

 

 

 

 

 

44,167

 

 

 

 

 

Total liabilities and equity

$

8,050,758

 

 

 

 

 

 

$

7,504,692

 

 

 

 

 

Less: Fully tax-equivalent adjustments

 

 

 

(231

)

 

 

 

 

 

 

(239

)

 

 

Net interest income/margin (GAAP-derived)(1)

 

 

$

123,080

 

 

3.24

%

 

 

 

$

114,347

 

 

3.24

%

Fully tax-equivalent adjustments

 

 

 

231

 

 

 

 

 

 

 

239

 

 

 

Net interest income/margin - FTE(1)

 

 

$

123,311

 

 

3.25

%

 

 

 

$

114,586

 

 

3.25

%

(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

 

Six Months Ended

 

 

June 30,

March 31,

June 30,

 

June 30,

June 30,

 

 

2022

2022

2021

 

2022

2021

Calculation of Net Interest Margin

 

 

 

 

 

 

(A)

Interest income (GAAP)

$

68,029

 

$

62,049

 

$

61,770

 

 

$

130,078

 

$

124,062

 

 

Fully tax-equivalent adjustments:

 

 

 

 

 

 

(B)

– Loans and leases

 

85

 

 

77

 

 

80

 

 

 

162

 

 

161

 

(C)

– Tax exempt investment securities

 

38

 

 

31

 

 

38

 

 

 

69

 

 

78

 

(D)

Interest income – FTE (A+B+C)

 

68,152

 

 

62,157

 

 

61,888

 

 

 

130,309

 

 

124,301

 

(E)

Interest expense (GAAP)

 

4,567

 

 

2,431

 

 

4,835

 

 

 

6,998

 

 

9,715

 

(F)

Net interest income (GAAP) (A-E)

 

63,462

 

 

59,618

 

 

56,935

 

 

 

123,080

 

 

114,347

 

(G)

Net interest income - FTE (D-E)

 

63,585

 

 

59,726

 

 

57,053

 

 

 

123,311

 

 

114,586

 

(H)

Annualization factor

 

4.011

 

 

4.056

 

 

4.011

 

 

 

2.017

 

 

2.017

 

(I)

Total earning assets

$

7,685,631

 

$

7,620,248

 

$

7,264,886

 

 

$

7,653,120

 

$

7,113,559

 

 

Net interest margin (GAAP-derived) (F*H)/I

 

3.31

%

 

3.17

%

 

3.14

%

 

 

3.24

%

 

3.24

%

 

Net interest margin – FTE (G*H)/I

 

3.32

%

 

3.18

%

 

3.15

%

 

 

3.25

%

 

3.25

%

 

 

 

 

 

 

 

 

Calculation of Efficiency Ratio

 

 

 

 

 

 

(F)

Net interest income (GAAP)

$

63,462

 

$

59,618

 

$

56,935

 

 

$

123,080

 

$

114,347

 

(G)

Net interest income – FTE

 

63,585

 

 

59,726

 

 

57,053

 

 

 

123,311

 

 

114,586

 

(J)

Plus: noninterest income (GAAP)

 

22,830

 

 

23,145

 

 

24,898

 

 

 

45,975

 

 

50,767

 

(K)

Less: gains/losses on investment securities and partnership investments

 

(636

)

 

(444

)

 

348

 

 

 

(1,080

)

 

(112

)

(L)

Less: depreciation – leased equipment

 

(2,664

)

 

(3,015

)

 

(3,550

)

 

 

(5,679

)

 

(7,323

)

(M)

Total net revenue (GAAP) (F+J)

 

86,292

 

 

82,763

 

 

81,833

 

 

 

169,055

 

 

165,114

 

(N)

Total net revenue – adjusted (G+J–K–L)

 

83,115

 

 

79,412

 

 

78,749

 

 

 

162,527

 

 

157,918

 

(O)

Noninterest expense (GAAP)

 

45,655

 

 

45,336

 

 

45,198

 

 

 

90,991

 

 

89,338

 

(L)

Less: depreciation – leased equipment

 

(2,664

)

 

(3,015

)

 

(3,550

)

 

 

(5,679

)

 

(7,323

)

(P)

Noninterest expense – adjusted (O–L)

 

42,991

 

 

42,321

 

 

41,648

 

 

 

85,312

 

 

82,015

 

 

Efficiency ratio (GAAP-derived) (O/M)

 

52.91

%

 

54.78

%

 

55.23

%

 

 

53.82

%

 

54.11

%

 

Efficiency ratio – adjusted (P/N)

 

51.72

%

 

53.29

%

 

52.89

%

 

 

52.49

%

 

51.94

%

 

 

 

 

 

 

 

 

 

 

End of Period

 

 

 

 

 

June 30,

March 31,

June 30,

 

 

 

 

 

2022

2022

2021

 

 

 

Calculation of Tangible Common Equity-to-Tangible Assets Ratio

 

 

 

 

 

(Q)

Total common shareholders’ equity (GAAP)

$

856,251

 

$

864,850

 

$

901,226

 

 

 

 

(R)

Less: goodwill and intangible assets

 

(83,916

)

 

(83,921

)

 

(83,937

)

 

 

 

(S)

Total tangible common shareholders’ equity (Q–R)

$

772,335

 

$

780,929

 

$

817,289

 

 

 

 

(T)

Total assets (GAAP)

 

8,029,359

 

 

8,012,463

 

 

7,718,694

 

 

 

 

(R)

Less: goodwill and intangible assets

 

(83,916

)

 

(83,921

)

 

(83,937

)

 

 

 

(U)

Total tangible assets (T–R)

$

7,945,443

 

$

7,928,542

 

$

7,634,757

 

 

 

 

 

Common equity-to-assets ratio (GAAP-derived) (Q/T)

 

10.66

%

 

10.79

%

 

11.68

%

 

 

 

 

Tangible common equity-to-tangible assets ratio (S/U)

 

9.72

%

 

9.85

%

 

10.70

%

 

 

 

 

 

 

 

 

 

 

 

Calculation of Tangible Book Value per Common Share

 

 

 

 

 

 

(Q)

Total common shareholders’ equity (GAAP)

$

856,251

 

$

864,850

 

$

901,226

 

 

 

 

(V)

Actual common shares outstanding

 

24,650,407

 

 

24,732,535

 

 

25,000,727

 

 

 

 

 

Book value per common share (GAAP-derived) (Q/V)*1000

$

34.74

 

$

34.97

 

$

36.05

 

 

 

 

 

Tangible common book value per share (S/V)*1000

$

31.33

 

$

31.57

 

$

32.69

 

 

 

 

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

Please contact us at [email protected]

Brett Bauer
574-235-2000

Source: 1st Source Corporation