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
$4.86 billion bank holding company Headquartered in South Bend, Indiana since 1863 Diversified banking model, offering personal and business banking, specialty finance, investment management, trust & estate planning, insurance sales and mortgage banking operations National specialty finance
Slide 4: History, Values, Mission, and Vision
History, Values, Mission, and Vision 4
Slide 5: Experienced and Proven Team
Experienced and Proven Team 5 Executive Team 7 executives with an average 37 years of banking experience and 24 years with 1st Source Business Banking Officers 39 business banking officers with an average 23 years of lending experience and 12 years with 1st Source Specialty Finance Group Officer
Slide 6: Community Banking Market Area
Community Banking Market Area Higher education Regional medical hub Medical devices Recreational vehicle manufacturing Agriculture Steel production Distribution hub 17 – County Market Market Households 788,652 Client Households 99,897 Penetration 12.7% Businesses (approx) 74,600 Business Clients 14,
Slide 7: Leading Market Share in Community Banking Markets
$500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 June 08 June 09 June 10 June 11 June 12 June 13 June 14 1st Source Wells Fargo Chase Lake City Bank TCU Fifth Third PNC Deposit Market Share – 15 County Market* Data as of June 2014 – FDIC (via Bancography) 2014 12
Slide 8: Growth Opportunities in Fort Wayne Market
Three new banking centers in Fort Wayne and Columbia City Six banking centers remodeled Feature side-by-side banking with banker at your side, sharing their screen and work space Future banking center improvements in outlying markets Growth Opportunities in Fort Wayne Market 8 $8 Million Inv
Slide 9: 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 10: Financial Results
Financial Results 10
Slide 11: Deposit Composition
Noninterest bearing Checking 21% CD & IRA 26% Savings & Interest bearing checking 53% 1808 1926 2007 2041 1150 1084 999 988 616 691 762 788 0 500 1000 1500 2000 2500 3000 3500 4000 2012 2013 2014 2015 Q1 Noninterest bearing checking CD & IRA Savings & Interest bearing checking Total Deposits 3574 37
Slide 12: Deposit Rates
Deposit Rates 1.24% 0.87% 0.61% 0.45% 0.30% 0.33% 0.27% 0.00% 0.50% 1.00% 1.50% 2010 2011 2012 2013 2014 2014 YTD 2015 YTD Cost of Total Average Deposits (%) 12
Slide 13: Loan Distribution and Performance
Medium and heavy duty truck $243M 7% Construction equipment financing $406M 11% Aircraft financing $712M 19% Auto and light truck $401M 11% Commercial and agricultural loans $714M 19% Commercial real estate $609M 17% Residential real estate $444M 12% Consumer $145M 4% Loans By Type (3/31/15) Total A
Slide 14: Loan Yields
Loan Yields 5.53% 5.33% 5.02% 4.69% 4.42% 4.45% 4.36% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 2010 2011 2012 2013 2014 2014 YTD 2015 YTD Return on Net Loans and Leases (%) 14
Slide 15: Strong Credit Quality
Strong Credit Quality 2.83 2.64 2.50 2.35 2.31 2.30 2.81 2.28 1.25 1.29 1.13 0.73 0.66 0.27 0.13 0.02 0.06 0.04 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2010 2011 2012 2013 2014 2015 YTD Loan & Lease Loss Reserve Nonperforming Assets Net Charge-Offs % of Net Loans and Leases 15 * Note: 2015 YTD net charge-of
Slide 16: Net Interest Margin (FTE)
Net Interest Margin (FTE) 150.9 150.9 153.8 158.6 162.2 39.1 39.9 3.59 3.69 3.69 3.67 3.59 3.59 3.58 0.0% 1.4% 2.8% 4.1% 5.5% $0 $30 $60 $90 $120 $150 $180 2010 2011 2012 2013 2014 2014 YTD 2015 YTD Net Interest Income ($MM) Net Interest Margin (%) 16 Maintained Net Interest Margin
Slide 17: Noninterest Income Composition
Trust and wealth management fees 23% Equipment rental income 26% Other income 15% Debit card income 12% Service charges on deposit accounts 11% Mortgage banking income 6% Insurance commissions 7% Noninterest Income Composition YTD 3/31/15 = $19.8M Diverse Sources of Noninterest Income Assets Under M
Slide 18: Noninterest Expense Composition
Personnel expense 55% Other expense 45% YTD 3/31/15 = $38.1M Noninterest Expense YTD 12/31/14 = $150.0M Personnel expense 54% Other expense 46% Efficiency ratio: 60.62% Efficiency ratio: 62.10% Noninterest Expense Composition 18
Slide 19: Net Income and Earnings Per Share
Net Income and Earnings Per Share 41.24 48.20 49.63 54.96 58.07 13.63 13.51 1.21 1.96 2.02 2.23 2.39 0.55 0.56 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 $70 2010 2011 2012 2013 2014 2014 YTD 2015 YTD Net Income EPCS (Diluted) ($MM) Record Net Income 19
Slide 20: Strong Capital Position
Strong Capital Position 15.34% 16.51% 15.57% 15.86% 15.89% 15.80% 10.39% 11.72% 11.47% 12.08% 12.16% 12.50% 9.12% 10.18% 10.56% 10.76% 11.15% 11.29% 4.0% 8.0% 12.0% 16.0% 20.0% 2010 2011 2012 2013 2014 2015 Q1 Total Risk-Based Capital/ Risk-Weighted Assets Tier 1 Leverage Ratio Tangible Common Equit
Slide 21: Common Dividends per Share
$0.45 $0.53 $0.56 $0.58 $0.59 $0.61 $0.64 $0.66 $0.68 $0.71 $0.36 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD Common Dividends per Share 21 27 Years of Consecutive Dividend Growth
Slide 22: Tangible Book Value Per Common Share
Tangible Book Value Per Common Share $15.01 $15.56 $16.44 $18.02 $19.43 $20.52 $22.17 $22.61 $10.00 $15.00 $20.00 $25.00 2008 2009 2010 2011 2012 2013 2014 2015 Q1 Consistent Growth 22
Slide 23: Comparison of Five Year Cumulative Total Return
* Assumes $100 invested on December 31, 2009, in 1st Source common stock, NASDAQ market index and peer group index. Total return assumes reinvestment of dividends. Comparison of Five Year Cumulative Total Return* 23 1st Source Growth of 146% vs. Peer Group Growth of 95%
Slide 24: Performance Recognition
Performance Recognition CLIENT FINANCI Northwest Indiana Business Quarterly Magazine leReReRel *~ 1 Recognized as . ‘Best Bank for Business’ and SSE SU LEE ‘Best Bank for Obtaining a Business possible. Based on capital ratio, in Michiana ee trend, credit quality and CRA ratings BankDirector XD at Ba
Slide 25: Investment Considerations
Consistent and superior financial performance Experienced and proven 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 opportunity
Slide 26: 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 26