1st Source Corporation · NASDAQ:SRCE
1st Source — Investor Presentation (February 2015)
26 slides from 1st Source's investor presentation, Feb 12, 2015
Slide 1: Investor Presentation
Investor Presentation Symbol: SRCE www.1stsource.com
Slide 2: Forward-looking Statement Disclosure
Except for historical information, the matters discussed may include “forward-looking statements.” Generally, words such as “believe,” “possible,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “contemplate,” “seek,” “plan,” “assume,” “targeted,” “continue,” “remain,” “should,” “in
Slide 3: Company Overview: Community Banking Franchise
$4.83 billion bank holding company Headquartered in South Bend, IN, serving Northern Indiana and Southwest Michigan Our history dates back to 1863 when we were chartered as the First National Bank of South Bend Diversified business model, offering personal and business banking, specialty fin
Slide 4: History, Values, Mission, and Vision
History, Values, Mission, and Vision 4
Slide 5: Community Banking Market Area
Community Banking Market Area 5 Higher education Regional medical hub Medical devices Recreational vehicle manufacturing Agriculture Steel production Distribution hub 17 – County Market Market Households 780,424 Client Households 99,205 Penetration 12.7% Businesses 74,634 Business Clients 14,356 Pen
Slide 6: Specialty Finance Divisions
Aircraft Financing − Aircraft financing consists of financings for new and used general aviation aircraft (including helicopters) for private and corporate aircraft users, aircraft distributors and dealers, air charter operators, air cargo carriers, and other aircraft operators Auto and Light Tr
Slide 7: Financial Results
Financial Results 7
Slide 8: Average Deposit Composition Over Time
1.54 1.71 1.72 1.80 1.93 2.01 1.60 1.42 1.30 1.15 1.08 1.01 0.43 0.48 0.54 0.62 0.69 0.76 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 2009 2010 2011 2012 2013 2014 % Noninterest- bearing checking Total Deposits $3.57 $3.61 $3.56 $3.57 $3.70 $3.78 12% 13% 15% 17% 19% 20% Deposit Franchise N
Slide 9: Deposit Franchise
Deposit Franchise 9 1.78% 1.24% 0.87% 0.61% 0.45% 0.30% 0.00% 0.50% 1.00% 1.50% 2.00% 2009 2010 2011 2012 2013 2014 Cost of Total Average Deposits (%)
Slide 10: Loan Mix
Aircraft financing $728M 41% Auto and light truck $398M 22% Construction equipment financing $400M 23% Medium and heavy duty truck $247M 14% Specialty Finance $1.8B 49%Personal Community Banking $0.6B 16% Business Community Banking $1.3B 35% Loan Portfolio (12/31/14) Specialty Finance Loans (12/31/1
Slide 11: Loan Distribution and Performance
Medium and heavy duty truck $247M 6% Construction equipment financing $400M 11% Aircraft financing $728M 20% Auto and light truck $398M 11% Commercial and agricultural loans $711M 19% Commercial real estate $616M 17% Residential real estate $446M 12% Consumer $143M 4% Medium and heavy duty truck $0.
Slide 12: Loan Portfolio
Loan Portfolio 12 627 614 606 652 701 724 234 309 373 414 423 419 342 304 268 271 302 364 321 266 220 217 218 242 593 539 551 568 651 704 579 584 569 546 571 603 340 392 396 437 450 453 119 102 96 104 118 131 $0 $625 $1250 $1875 $2500 $3125 $3750 2009 2010 2011 2012 2013 2014 Commercial & Agricultur
Slide 13: Loan Yields
Loan Yields 13 5.44% 5.53% 5.33% 5.02% 4.69% 4.42% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 2009 2010 2011 2012 2013 2014 Return on Net Loans and Leases (%)
Slide 14: Credit Quality
Credit Quality 14 2.85 2.83 2.64 2.50 2.35 2.31 3.15 2.81 2.28 1.25 1.29 1.13 0.72 0.66 0.27 0.13 0.02 0.06 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2009 2010 2011 2012 2013 2014 Loan & Lease Loss Reserve Nonperforming Assets Net Charge-Offs % of Net Loans and Leases
Slide 15: Net Interest Margin (FTE)
Net Interest Margin (FTE) 15 132.0 150.9 150.9 153.8 158.6 162.2 3.14 3.59 3.69 3.69 3.67 3.59 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% $0 $30 $60 $90 $120 $150 $180 2009 2010 2011 2012 2013 2014 Net Interest Income ($MM) Net Interest Margin (%)
Slide 16: Diverse Sources of Noninterest Income
Trust fees 24% Equipment rental income 22% Other income 17% Debit card income 12% Service charges on deposit accounts 11% Mortgage banking income 7% Insurance commissions 7% Noninterest Income Composition 12/31/14 = $77.9M Diverse Sources of Noninterest Income 16 Assets Under Management of $4.0B Ins
Slide 17: Noninterest Income to Total Revenue
Noninterest Income to Total Revenue 17 33.7% 30.9% 29.5% 30.3% 29.0% 28.5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2009 2010 2011 2012 2013 2014 Note: Noninterest income to total revenue has been adjusted for equipment lease depreciation. Stable Source of Revenue
Slide 18: Noninterest Expense Composition
Personnel expense 54% Other expense 46% 12/31/14 = $150.0M Noninterest Expense 18 12/31/13 = $149.3M Personnel expense 53% Other expense 47% Efficiency ratio: 62.44% Efficiency ratio: 60.62% Noninterest Expense Composition
Slide 19: Net Income and Earnings Per Share
Net Income and Earnings Per Share 19 25.49 41.24 48.20 49.63 54.96 58.07 0.79 1.21 1.96 2.02 2.23 2.39 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% $0 $10 $20 $30 $40 $50 $60 2009 2010 2011 2012 2013 2014 Net Income EPCS (Diluted) ($MM) Record Net Income
Slide 20: PTPP Return on Average Assets vs Peers
1.39% 1.75% 1.75% 1.82% 1.84% 1.83% 1.30% 1.60% 1.63% 1.72% 1.46% 1.48% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 2009 2010 2011 2012 2013 2014 1st Source US Banks with $3B - $10B in Assets Pre-tax, Pre-provision (PTPP) Return on Average Assets (ROAA) Note: PTPP ROAA is a non-GAAP financ
Slide 21: Strong Capital Position
Strong Capital Position 21 17.72% 15.34% 16.51% 15.57% 15.86% 15.89% 12.74% 10.39% 11.72% 11.47% 12.08% 12.16% 8.43% 9.12% 10.18% 10.56% 10.76% 11.15% 4.0% 8.0% 12.0% 16.0% 20.0% 2009 2010 2011 2012 2013 2014 Total Risk-Based Capital/ Risk-Weighted Assets Tier 1 Leverage Ratio Tangible Common Equity
Slide 22: Common Dividends per Share
$0.38 $0.45 $0.53 $0.56 $0.58 $0.59 $0.61 $0.64 $0.66 $0.68 $0.71 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Common Dividends per Share 22
Slide 23: Tangible Book Value Per Common Share
Tangible Book Value Per Common Share 23 $13.99 $15.01 $15.56 $16.44 $18.02 $19.43 $20.52 $22.17 $10.00 $15.00 $20.00 $25.00 2007 2008 2009 2010 2011 2012 2013 2014 Consistent Growth
Slide 24: Performance Recognition
Performance Recognition BauerFinancial iS BankDirector 5 Star “Superior” Rating ‘Small Bosiness Administration Nifty Fifty Highest rating possible. Based on La 14 list of capital ratio, profitabilty/loss trend, Lender of the Year best users of capital based on credit quality and CRA ratings for 2014
Slide 25: Investment Considerations
Consistent and superior financial performance Seasoned executive management team Diversification of product mix and geography with asset generation capability Leading market share in community banking markets Stable credit quality, strongly reserved Strong capital position provides oppor
Slide 26: Contact Information
Contact Information 26 Christopher J. Murphy III Chairman of the Board and CEO (574) 235-2711 Murphy-C@1stsource.com James R. Seitz President (574) 235-2402 Seitz@1stsource.com Andrea G. Short CFO and Treasurer (574) 235-2348 ShortA@1stsource.com