1st Source Corporation · NASDAQ:SRCE
1st Source — Investor Presentation (July 2017)
37 slides from 1st Source's investor presentation, Jul 26, 2017
Slide 1: Second Quarter 2017 Investor Presentation
Source. | 1Corporation SECOND QUARTER 2017 INVESTOR PRESENTATION Symbol: SRCE www. |stsource.com
Slide 2: Disclosures
DISCLOSURES Forward-Looking Statements Except for fete) ineeii, the matters discussed may include “forward-looking statements.” Those state subject to material risks and uncertainties. Ist Source cautions readers not to ee unde rel eee oh any forward-looking statements, which speak only as of the da
Slide 3: Corporate Overview
CORPORATE OVERVIEW $5.7 billion Community Bank with International Reach headquartered in South Bend, Indiana Community Banking: = Locations throughout Northern Indiana and Southwestern Michigan = Personal and business banking, payment services, lending, mortgage, and leasing a Investment management,
Slide 4: Mission and Vision
MISSION AND VISION Mission To help our clients achieve security, build wealth and realize their dreams by offering straight talk, sound advice and keeping their best interests in mind for the long-term. Vision Offer our clients the highest-quality service Support a proud family of colleagues who per
Slide 5: Market Area
MARKET AREA Specialty Finance yj Community Bank Loans: $2.26 billion Loans: $2.27 billion
Slide 6: Business Mix (Loans and Leases)
BUSINESS MIX (LOANS AND LEASES) Personal Community Banking 29% 50% Business Community Banking 71% Specialty Finance 50% :Corporation
Slide 7: Community Banking
COMMUNITY BANKING mu 79 Banking Centers m 103 Twenty-four hour ATMs mu 10 Ist Source Insurance offices a 8 Trust & Wealth Advisory locations with approximately $4.5 billion of assets under management In person Online Over the phone Mobile
Slide 8: Community Banking Market Area
COMMUNITY BANKING MARKET AREA Households Client Households Penetration Businesses (approx) Business Clients Penetration As of December 31, 2016 Medical Devices Ss 17 - County Market 797,863 102,353 12.8% 74,600 14,963 20.1% Recreational Vehicle Manufacturing
Slide 9: Specialty Finance Group Services
SPECIALTY FINANCE GROUP SERVICES ae Aircraft Division— $788MM Mech division provides financing primarily for new and used general aviation aircraft (including helicopters) for private and eas users, some ii eeiet distributors and dealers, air charter operators, air cargo rs, and other aircraft opera
Slide 10: Experienced and Proven Team
EXPERIENCED AND PROVEN TEAM Executive Team m= 5 executives with an average 35 years each of banking experience and 26 years with Ist Source Business Banking Officers = 35 business banking officers with an average 20 years each of lending experience and with Ist Source from 1 to 34 years Specialty Fi
Slide 11: Performance - Client
PERFORMANCE - CLIENT = #1 deposit share in our 15 = Best Branch Service in the Midwest - MSR contiguous county market Group, 2015 & 2016 = #1 SBA Lender in our Indiana Indiana SBA Community Lender Award — footprint 2013 - 2016 = #2 SBA Lender in State of Michiana's Best Bank for Business — Indiana N
Slide 12: Financial Review
FINANCIAL REVIEW
Slide 13: Growing Loan Portfolio
GROWING LOAN PORTFOLIO Total Average Loans & Leases ($MM) Loans & Leases @=Yield on Loans & Leases - FTE (%)* 5500 10.00% 5000 om Compound Annual 4500 ‘Compoul . . ra 3837 aa 3434 3640 7.00% 3500 _ 3000 i | ; 4.42 4.39 4 : 5.00% 2500 e 3 _ - ~ =v @ 2000 so 1500 ——® co 1000 sos 500 1.00% 2013 2014 20
Slide 14: Diversified Loan Portfolio
DIVERSIFIED LOAN PORTFOLIO Average Loans by Type e iin Commercial ommercial an Real Estate Agricultural 17% Residential Real Estate 12% Aircraft ‘Consumer 19% 3% Medium and Heavy uty Truck Construction Equipment ‘Auto and Light Truck 12% 10%
Slide 15: Strong Credit Quality
STRONG CREDIT QUALITY % of Net Loans and Leases Stable Reserves Low Nonperforming Assets Limited Losses 235% 2.31% 2.21% 211% 2.10% 0.02% 0.06% (0.027%) 2013, 2014 «2015-2016 .2017 2013, 2014 «2015-2016 ).2017 2013. 2014: «2015-2016. YID YTD PAGE 15
Slide 16: Core Deposit Franchise
CORE DEPOSIT FRANCHISE Total Average Deposits ($MM) mm Non-core Deposits «= Core Deposits = Effective Rate on Deposits (%) 5500 1.50% 1.30% 2013 2014 2015 *Non-core deposits include CDs over $250,000 and brokered CDs. [st pect A PAGE 16 Corporation 2
Slide 17: Attractive Core Deposit Franchise
ATTRACTIVE CORE DEPOSIT FRANCHISE Average Deposits By Type Noninterest , Bearing Demand Savings and Interest 22% Bearing Deman
Slide 18: Deposit Market Share - County Contiguous Market
DEPOSIT MARKET SHARE - 15 COUNTY CONTIGUOUS MARKET* Leading Market Share in Community Banking Markets ($000) _| =®Ist Source Chase -@Wells Fargo Lake City Bank -#-Horizon Bank Fifth Third Data as of June 2016 - FDIC (Via SNL Financial) June10 June11_ June 12. June13. June 14 June 15 June 16 “Include
Slide 19: Net Income & Earnings Per Share
NET INCOME & EARNINGS PER SHARE 2013 2014 2015 2016 2016 YTD “=2Net Income =@EPCS (Diluted) eeCrporation
Slide 20: Net Interest Margin (FTE)
NET INTEREST MARGIN (FTE)* 162.2 2013 2014 2015 2016 2016 2017 YTD YTD “==Net Interest Income ($MM) _=®=Net Interest Margin (%) * See “Reconciliation of non-GAAP Financial Measures” in Appendix. Pigource. = PAGED Corporation sli
Slide 21: Diverse Sources of Noninterest Income
DIVERSE SOURCES OF NONINTEREST INCOME Noninterest Income Composition YTD = $35.5MM* Mortgage Banking &% Insurance ‘Commissions % Service Charges on Deposit Accounts 13% Debit Card 16% 28% of Total Revenue* Equipment Rental T% Twust and Wealth Advisory 30% F Fe ; Ee of non-GAAP Financial Measures" in
Slide 22: Operating Expenses
OPERATING EXPENSES 2013 2014 2015 2016 2016 2017 YTD YTD “==:Noninterest Expense ($MM)* =®=Efficiency - Adjusted (%)* of non-GAAP Financial Measures” in Appendix. eeCrporation
Slide 23: Strong Capital Position
5% Wel Copitalzed 10% well Copitalzed STRONG CAPITAL POSITION 14.54% 14.57% 13 go 12.08% 12.16% 12.21% 12.11% 12.28% 13.80% 13.58% 2013 2014 2015 2016 =. 2017 YTD 2013 2014 2015 2016 = 2017 YTD 18.86% 15.89% — 497m, 15.12% 14.88% 10.76% 11-18% + 10.96% 10.89% 10.98% 2013 2014 2015 2016 = 2017 YID 20
Slide 24: Tangible Book Value per Common Share
TANGIBLE BOOK VALUE PER COMMON SHARE* Consistent Growth 2010 2011 2012. 2013, 2014, 2015, 2016=— 2017 YTD * See “Reconciliation of non-GAAP Financial Measures” in Appendix. eeCrporation
Slide 25: Common Dividends per Share
COMMON DIVIDENDS PER SHARE 29 YEARS OF CONSECUTIVE DIVIDEND GROWTH $0.900 $0.800 $0.700 $0.600 0.509 9.527 $0.500 $0.400 $0.300 $0.200 $0.100 $0.000 2007 = 2008)=— 2009S 2010. 2011._—S 2012) «2013's 2014-2015. 2016 = 2017 YTD
Slide 26: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS Value of $100 Invested in 1st Source since 1971 Inception with Dividends Reinvested vs. Total Return of Stock Indices — Ist Source (SRCE) —S&P 500 —-Wilshire 5000 —Russell 2000 —-NASDAQ $25,000 $20,000 $15,000 $10,000 $5,000 $0 eeerporation
Slide 27: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS December 31, 2007 - July 20, 2017 ——Ist Source Corp (SRCE) —KBW NASDAQ Bank ——NASDAG Bank S&P 500 Bank —SNL U.S. Bank —KBW NASDAQ Regional Bank 250.00 200.00 zor) 150.00 100.00 3 38 & o D c o nat oO o eo om 2 8 poe itlgas 2011 2012 2013 2014 2015 2016 2017 eeerpora
Slide 28: Performance - Financial
PERFORMANCE - FINANCIAL = #10 of 102 banks between $5 billion and $50 billion in assets — Bank Performance Scorecard by Bank Director Magazine = Top 15th Percentile of Community Banks — Seifried & Brew a 5 Star “Superior” Rating — Baver Financial = 29 years of consecutive dividend growth PAGE 28
Slide 29: Investment Considerations
INVESTMENT CONSIDERATIONS Consistent and superior financial performance with a focus on long-term earnings per share and tangible book value growth Experienced and proven team with significant investment in bank Diversification of product mix and geography with asset generation capability Leading ma
Slide 30: Contact Information
CONTACT INFORMATION Christopher J. Murphy III Chairman of the Board and CEO. (574) 235-2711 murphy-c@1stsource.com Andrea G. Short CFO and Treasurer (574) 235-2348 shorta@1stsource.com PAGE 30
Slide 31: Appendix
APPENDIX
Slide 32: Present Initiatives
PRESENT INITIATIVES Banking Centers a Rebuilt Calumet North = Opened in Sarasota, Florida = Consolidation of banking centers Expanding Product Lines a Solar = Bus/Motor Coach Other a= Implementation of Bankwide Customer Relationship Management System
Slide 33: Aircraft Portfolio - Industries by NAICS
Aircraft Portfolio — Industries by NAICS Construction 1% Retail Trade 13% Manufacturing % estry, rishi a Hunting Services 14% Wholesale Trade 4% Other* 6% Final Transportation & Insurance and Real Estate rehousing 1% *Other includes: Mining & Utilities, Information, & Public Administration
Slide 34: Ownership Summary
Ownership Summary Shareholder Type Shares % of Total Ist Source ESOP Institutional 11,177,161 43.1% Ietal/ Otros BEY Institutional Insiders 9,348,796 36.0% i 43.1% Retail/Other 4,238,243 16.4% Ist Source ESOP 1,171,124 4.5% Total Shares Outstanding”) 25,935,324 100.0% Rank Institution (Top 10 Instit
Slide 35: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Calculation ch ies on Loans and Leases (Dollars in thousor 2013 2014 2015 2016 2017 YID ‘oans 160,837 $ 160,753 $ 168327 $ 175532 $ 92,720 355 274 28 584 = a 3 ag oF g 2 g g 3 8 Ft a abe (Cc) learesansiise= fares income - FTE (A+B) 161,192 161,027 168,61
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Noninterest Expense {Dolor in thousands) 2013, 2014 2015 2016 2016YID_2017 ID (A) Noninterest expense [GAAF] $ 149314 $ 150,040 $ 159,114 $ 163645 $ 80739 $ 82224 (8) Less: depreciation - leased equipment (13,055) (13,893) (18,280) (21,678) (10,545) (11,
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (Dolo in thousands (A) Total comme ‘equity (GAAP) Total tangible common shareholders’ equity (A-B) (of Total assets (GAAP) Total tangible assets (D- Common equity-to-assets ae (GAAP-derived) (AD i 11.15% 10.96% Calculation of Tangible Book Value per eric