Slide 1: Investor Presentation 1st Quarter 2024
INVESTOR PRESENTATION 1st Quarter 2024 NASDAQ: SRCE | www.1stsource.com
Slide 2: Disclosures
DISCLOSURES Forward-Looking Statements Except for historical information, the matters discussed may include “forward-looking statements.” Those statements are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which
Slide 3: Corporate Overview
CORPORATE OVERVIEW Founded in 1863 $8.7 billion Community Bank with International Reach headquartered in South Bend, Indiana Community Banking Locations throughout northern Indiana and southwestern Michigan Business and personal banking, payment services, lending, mortgage, and leasing Investm
Slide 4: Mission & Vision
MISSION & VISION 4page 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 Be the financial institution of choi
Slide 5: Market Area
MARKET AREA 5page Specialty Finance Loans & Leases $3.51 billion Community Bank Loans & Leases $3.07 billion
Slide 6: Business Mix
BUSINESS MIX Loans & Leases 6page COMMUNITY BANKING 47% SPECIALTY FINANCE 53% Business 74% Personal 26%
Slide 7: Community Banking
COMMUNITY BANKING 78 Banking Centers 97 Twenty-four-hour ATMs 9 Trust & Wealth Advisory locations with approximately $5.7 billion of assets under management 10 1st Source Insurance offices 3 Loan Production offices 7page In person OnlineOver the phone Mobile
Slide 8: Renewable Energy Financing
8page RENEWABLE ENERGY FINANCING Our Renewable Energy Financing Division provides sponsors and developers with one-stop-shop financing by providing construction loans, permanent loans, and tax equity investments to community solar, commercial and industrial, small utility scale, university, and muni
Slide 9: Specialty Finance Group
SPECIALTY FINANCE GROUP Auto and Light Truck Division Auto/light truck division provides financing for automobile rental and commercial auto leasing companies, and light truck rental and leasing companies. Medium and Heavy Duty Truck Division The medium and heavy duty truck division finances highway
Slide 10: Highly Rated, Feature-Rich Mobile App
Zelle (P2P) HIGHLY RATED, FEATURE-RICH MOBILE APP Budget & Account Aggregation 60% 61% 63% 66% 15% 15% 13% 12% 25% 24% 24% 22% 0% 25% 50% 75% 100% Q1 21 Q1 22 Q1 23 Q1 24 Digital Adoption¹ Mobile & Online Online Only Non-Digital 25% 25% 31% 32% 23% 23% 23% 23% 29% 28% 25% 25% 23% 24% 21% 20% 0% 25%
Slide 11: Instant Payments
page 11 INSTANT PAYMENTS Successfully launched instant payment systems Real Time Payments (RTP) and FedNow over three phases in 2023: • RTP Receive All deposit accounts eligible to receive funds through RTP • RTP Send Send capability restricted to select client businesses • FedNow Send/Receive
Slide 12: An Experienced and Proven Team
AN EXPERIENCED AND PROVEN TEAM Executive Team 6 executives with an average 35 years each of banking experience and 26 years with 1st Source Business Banking Officers 45 business banking officers with an average 20 years each of lending experience and with 1st Source from 1 to 35 years Specialty Fina
Slide 13: Performance: Client
PERFORMANCE CLIENT Indiana SBA Community Lender Award 2013-2023 #1 SBA Lender in our Indiana footprint #1 SBA Lender Headquartered in State of Indiana #1 Deposit share in our 16 contiguous county market #5 Lender of Community Development Loans (Total Dollars) in State of Indiana by Banks Headquarter
Slide 14: Performance: Leadership
PERFORMANCE LEADERSHIP 2023 Forbes’ 15th annual America’s Best Banks list #14 in the U.S. and #1 in Indiana Forbes’ Best in State Banks 2023 Indiana Rank #1 Forbes’ 500 Best Midsize Employers 2021-2023 Newsweek 2023 America’s Greatest Workplaces for Parents and Families Notre Dame Lucy Family Instit
Slide 15: Financial Review
FINANCIAL REVIEW
Slide 16: Core Deposit Franchise
16page 5128 5987 6426 6121 6069 609 356 285 836 942 0.53% 0.19% 0.38% 1.77% 2.28% -0.38% 0.50% 1.38% 2.25% 3.13% 4.00% 0 3,000 6,000 9,000 2020 2021 2022 2023 2024 YTD Core Deposits ($MM) Non-core Deposits ($MM) Effective Rate on Deposits (%) CORE DEPOSIT FRANCHISE TOTAL AVERAGE DEPOSITS *Non-core d
Slide 17: Diversified Deposit Mix
17page Time 26% Noninterest- bearing demand 23% Interest- bearing demand 33% Savings 18% Public Fund 17% Brokered 9% Business 26% Consumer (1) 48% (1) Includes business customer certificates of deposit which were immaterial Approximately 228,700 deposit accounts with an average balance of $30,800. A
Slide 18: Deposit Market Share
18page $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 June 17 June 18 June 19 June 20 June 21 June 22 June 23 1st Source Chase Lake City Bank Horizon Bank Fifth Third DEPOSIT MARKET SHARE 16 COUNTY CONTIGUOUS MARKET* Leading Market Share in Community Banking Markets
Slide 19: Growing Loan Portfolio
19page 5463 5438 5567 6204 6504 4.44% 4.32% 4.74% 6.25% 6.76% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 2500 4000 5500 7000 2020 2021 2022 2023 2024 YTD Loans & Leases ($MM) Yield on Loans & Leases - FTE (%)* GROWING LOAN PORTFOLIO Total Average Loans & Leases * See “Reconciliation of non-GAAP Financial M
Slide 20: Diversified Loan Portfolio
20page Commercial Real Estate 17% Residential Real Estate 10% Consumer 2% Medium and Heavy Duty Truck 5% Auto and Light Truck 15% Construction Equipment 17% Aircraft 17% Commercial 17% DIVERSIFIED LOAN PORTFOLIO 2024 Average Loans by Type
Slide 21: Strong Credit Quality
21page 2.56% 2.38% 2.32% 2.26% 2.26% 2020 2021 2022 2023 2024 YTD STRONG CREDIT QUALITY % of Net Loans and Leases Loan & Lease Loss Allowance 1.16% 0.77% 0.45% 0.37% 0.34% 2020 2021 2022 2023 2024 YTD Low Nonperforming Assets 0.17% 0.16% 0.03% -0.04% 0.38% 2020 2021 2022 2023 2024 YTD Limited Losses
Slide 22: Net Income & Earnings Per Share
22page 81.4 118.5 120.5 124.9 31.1 29.5 3.17 4.70 4.84 5.03 1.25 1.19 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $0 $15 $30 $45 $60 $75 $90 $105 $120 $135 2020 2021 2022 2023 2023 YTD 2024 YTD Net Income ($MM) EPCS (Diluted) NET INCOME & EARNINGS PER SHARE
Slide 23: Pre-Tax, Pre-Provision Income
23page 142.3 150.6 170.0 167.6 43.5 44.5 $0 $50 $100 $150 $200 2020 2021 2022 2023 2023 YTD 2024 YTD PRE-TAX, PRE-PROVISION INCOME ($MM) *See “Reconciliation of non-GAAP Financial Measures” in Appendix.
Slide 24: Income Performance Metrics
24page 1.34% 1.41% 1.14% 1.53% 1.49% 1.48% 1.37% 11.09% 11.50% 9.41% 13.07% 13.81% 13.48% 11.77% 12.50% 12.85% 10.42% 14.40% 15.28% 14.82% 12.84% 4.00% 8.00% 12.00% 16.00% 0.60% 1.20% 1.80% 2.40% 3.00% 2018 2019 2020 2021 2022 2023 2024 YTD R O AE a nd R O AT E R O AA Return on Average Assets Return
Slide 25: Net Interest Margin (FTE)
25page 226.4 237.1 264.1 279.4 69.8 72.1 3.39% 3.23% 3.45% 3.51% 3.60% 3.54% 2.00% 3.00% 4.00% 5.00% $0 $60 $120 $180 $240 $300 2020 2021 2022 2023 2023 YTD 2024 YTD Net Interest Income ($MM) Net Interest Margin (%) NET INTEREST MARGIN (FTE)* * See “Reconciliation of non-GAAP Financial Measures” in
Slide 26: Diverse Sources of Noninterest Income
26page Trust, Wealth Advisory, and Retirement Plan Services 30% Other 20% Debit Card 20% Service Charges on Deposit Accounts 15% Insurance Commissions 8% Mortgage Banking 5% Equipment Rental 2% DIVERSE SOURCES OF NONINTEREST INCOME Fair Value of Assets Under Management of $5.7B * Note: Equipment ren
Slide 27: Operating Expenses
27page 167.2 172.5 174.7 194.6 47.4 48.3 54.2% 53.5% 51.1% 54.2% 52.9% 52.6% 40.0% 50.0% 60.0% 70.0% 80.0% $0.0 $70.0 $140.0 $210.0 2020 2021 2022 2023 2023 YTD 2024 YTD Noninterest Expense ($MM)* Efficiency - Adjusted (%)* OPERATING EXPENSES * Note: Noninterest expense is shown net of leased equipm
Slide 28: Strong Capital Position
15.99% 16.76% 16.10% 16.25% 16.41% 2020 2021 2022 2023 2024 YTD 28page 12.15% 11.89% 12.63% 13.26% 13.37% 2020 2021 2022 2023 2024 YTD STRONG CAPITAL POSITION Tier 1 Leverage Ratio 14.73% 15.50% 14.84% 14.99% 15.15% 2020 2021 2022 2023 2024 YTD Tier 1 Risk Based Ratio Total Risk Based Capital Ratio
Slide 29: Long History of Conservative Capital
29page 16.41% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 1st Source Corp Well-Capitalized LONG HISTORY OF CONSERVATIVE CAPITAL Total Capital (To Risk-Weighted Assets) 10% Well Capitalized
Slide 30: Tangible Book Value per Common Share
30page $24.47 $26.30 $29.18 $31.62 $33.64 $31.63 $37.06 $37.83 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 2017 2018 2019 2020 2021 2022 2023 2024 YTD TANGIBLE BOOK VALUE PER COMMON SHARE* * See “Reconciliation of non-GAAP Financial Measures” in Appendix.
Slide 31: Common Dividends Per Share
31page 0.645 0.671 0.720 0.760 0.960 1.100 1.130 1.210 1.260 1.300 0.680 $0.000 $0.200 $0.400 $0.600 $0.800 $1.000 $1.200 $1.400 $1.600 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD COMMON DIVIDENDS PER SHARE 36 YEARS OF CONSECUTIVE DIVIDEND GROWTH
Slide 32: Delivering Returns to Shareholders
32page DELIVERING RETURNS TO SHAREHOLDERS Value of $100 Invested in 1st Source since 1971 Inception with Dividends Reinvested vs. Total Return of Stock Indices
Slide 33: Delivering Returns to Shareholders
33page DELIVERING RETURNS TO SHAREHOLDERS December 31, 2007 – April 26, 2024
Slide 34: Performance: Financial
PERFORMANCE FINANCIAL 2019-2024 KBW Bank Honor Roll Sixth consecutive year named among top 5% of banks with more than $500 million in total assets and ten consecutive years of increased earnings per share 2023 Forbes’ 15th annual America’s Best Banks list #14 in the U.S. and #1 in Indiana 2023 S&P G
Slide 35: Investment Considerations
INVESTMENT CONSIDERATIONS Consistent and superior financial performance with a focus on long-term earnings per share and tangible book value growth Experienced and proven team with significant investment in bank Diversification of product mix and geography with asset generation capability Leading ma
Slide 36: Contact Information
CONTACT INFORMATION Christopher J. Murphy III Chairman of the Board and CEO 1st Source Corporation (574) 235-2711 Murphy-c@1stsource.com Andrea G. Short President, 1st Source Corporation President and CEO, 1st Source Bank (574) 235-2348 shorta@1stsource.com Brett A. Bauer CFO and Treasurer (574) 235
Slide 37: Appendix
APPENDIX
Slide 38: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET 38page (Dollars in millions) 2020 2021 2022 2023 2024 YTD Cash and cash equivalents 243$ 525$ 123$ 130$ 81$ Investment securities and other investments* 1,225 1,890 1,800 1,648 1,608 Loans and leases, net of unearned discount 5,502 5,360 6,015 6,520 6,566 Allowance for loa
Slide 39: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT 39page (Dollars in millions) 2020 2021 2022 2023 2023 YTD 2024 YTD Net interest income 226$ 237$ 263$ 279$ 70$ 72$ Provision (recovery of provision) for credit losses 36 (4) 13 6 3 7 Noninterest income* 83 86 81 84 21 21 Noninterest expense* 167 172 174 195 48 48 Income
Slide 40: Aircraft Portfolio Industries by NAICS
40page Transportation & Warehousing 16% Finance & Insurance and Real Estate 17% Services 21% Retail Trade 8% Construction 14% Manufacturing 8% Ag, Forestry, Fishing & Hunting 8% Wholesale Trade 4% Other* 4% * Other includes: Mining, Utilities, and Information AIRCRAFT PORTFOLIO INDUSTRIES BY NAICS
Slide 41: Asset Liability Management
62% 35% 3% 41page Interest Rate Risk Characteristics • Variable rate loans reprice quickly — 91% of Variable reprice within 3 months • Fixed rate loans have short terms — 2.78 year weighted average remaining life • Stable, low-cost deposit funding base — 2.28% total deposit cost at March 31, 2024 —
Slide 42: Ownership Summary
42page OWNERSHIP SUMMARY Institutional 11,405,130 46.6% Insiders 7,752,338 31.7% Retail/Other 4,583,010 18.7% 1st Source ESOP 731,180 3.0% Total Shares Outstanding(1) 24,477,658 100.0% Institution (Top 10 Institutions) Shares % of Total Dimensional Fund Advisors LP 1,579,147 6.5% BlackRock Inc. 1,49
Slide 43: Reconciliation of Non-GAAP Financial Measures
43page RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Yield on Loans and Leases (Dollars in thousands) 2020 2021 2022 2023 2024 YTD (A) Loans and leases interest income (GAAP) 242,172$ 234,583$ 263,677$ 387,143$ 109,168$ (B) Plus: loans and leases fully tax-equivalent adjustments 333 3
Slide 44: Reconciliation of Non-GAAP Financial Measures
44page RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Net Interest Margin (Dollars in thousands) 2020 2021 2022 2023 2023 YTD 2024 YTD (A) Interest income (GAAP) 263,031$ 254,772$ 293,816$ 416,907$ 94,456$ 116,468$ (B) Plus: fully tax-equivalent adjustments 543 459 628 741 226 148 (C)
Slide 45: Reconciliation of Non-GAAP Financial Measures
45page RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Efficiency Ratio (Dollars in thousands) 2020 2021 2022 2023 2023 YTD 2024 YTD (A) Net interest income (GAAP) 225,820$ 236,638$ 263,469$ 278,647$ 69,565$ 71,915$ (B) Net interest income - FTE 226,363 237,097 264,097 279,388 69,791 72
Slide 46: Reconciliation of Non-GAAP Financial Measures
46page RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Calculation of Tangible Book Value per Common Share (Dollars in thousands, except for per share data) 2017 2018 2019 2020 2021 2022 2023 2024 YTD (A) Total common shareholders' equity (GAAP) 718,537$ 762,082$ 828,277$ 886,845$ 916,255$ 864,068$ 98