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1st Source Corporation Reports First Quarter Results, Cash Dividend Declared
Business
Apr 25 2024
3 min read

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, Indiana--(Newsfile Corp. - April 25, 2024) - 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.

# # #

(charts attached)

Category: Earnings

 

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    
   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    
   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    
            
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  
   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.

 

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  

 

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
   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  

 

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      
                    
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 %
        
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 )
(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 %
     
  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 %
        
        
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) Please contact us at shareholder@1stsource.com.

Contact: Brett Bauer 574-235-2000

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SOURCE 1st Source Corporation