Slide 1: Investor Presentation
INVESTOR PRESENTATION Symbol: SRCE www.1stsource.com
Slide 2: Disclaimer: Forward Looking Statements
DISCLAIMER Forward Looking Statements 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
Slide 3: Franchise Overview
FRANCHISE OVERVIEW 3
Slide 4: 1st Source Corporation (SRCE)
1st SOURCE CORPORATION (SRCE) $5.1 billion Community Bank with International Reach Headquartered in South Bend, IN, offering community banking services throughout Northern Indiana and Southwest Michigan, as well as operating a national and international specialty finance platform Diversified b
Slide 5: Differentiated Operating Strategy
DIFFERENTIATED OPERATING STRATEGY Specialty Finance Loans: $1.9 billion Community Bank Loans: $2.0 billion September 30, 2015 YTD Averages Deeply Ingrained Community Banking Footprint with an International Specialty Finance Platform 5
Slide 6: Business Mix (Loans and Leases)
BUSINESS MIX (LOANS AND LEASES) Loan Portfolio (9/30/15) Specialty Finance Loans (9/30/15) 51% Community Banking 6 Specialty Finance $1.9B 49% Personal Community Banking $0.6B 15% Business Community Banking $1.4B 36% Aircraft financing $794M 41% Auto and light truck $423M 22% Construction eq ipment
Slide 7: Community Banking Footprint
COMMUNITY BANKING FOOTPRINT Market Households 788,652 Client Households 99,897 Penetration 12.7% Businesses (approx) 74,600 Business Clients 14,545 Penetration 19.5% As of December 31, 2014 ■ 81 Banking Centers ■ 100 Twenty-four hour ATMs ■ 10 1st Source Insurance offices ■ 8 Trust & Wealth Manageme
Slide 8: Community Banking Recognition
COMMUNITY BANKING RECOGNITION #1 deposit share in our 15 contiguous county market Best Branch Service in the Midwest – MSR Group Best Bank for Business – Northwest Indiana Business Quarterly Best Bank for Obtaining a Business Loan – Northwest Indiana Business Quarterly A Top Bank – Post-Tr
Slide 9: Specialty Finance Group Services
SPECIALTY FINANCE GROUP SERVICES Aircraft Financing — $794MM Aircraft financing primarily for new and used general aviation aircraft (including helicopters) for private and corporate users, some for aircraft distributors and dealers, air charter operators, air cargo carriers, and other aircraft oper
Slide 10: Experienced and Proven Team
EXPERIENCED AND PROVEN TEAM Executive Team ■ 7 executives with an average 37 years each of banking experience and 24 years with 1st Source Business Banking Officers ■ 39 business banking officers with an average 23 years each of lending experience and 12 years with 1st Source Specialty Finance Group
Slide 11: Financial Review
FINANCIAL REVIEW 11
Slide 12: 3rd Quarter Results Summary
3rd QUARTER RESULTS SUMMARY ■ Net income of $13.9 million, or $0.53 per diluted common share, and a return on average assets of 1.09% ■ Loans and leases grew by approximately $102.9 million, or 11% annualized ■ Net interest margin remained stable at 3.57% ■ Noninterest income of $21.1 million, or ap
Slide 13: Diversified & Growing Loan Portfolio
$3,110 $3,079 $3,209 $3,434 $3,640 $3,796 5.53% 5.33% 5.02% 4.69% 4.42% 4.39% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 2010 2011 2012 2013 2014 2015 YTD Loans & Leases Yield on Loans & Leases (%) Total Average
Slide 14: Strong Credit Quality
STRONG CREDIT QUALITY % of Net Loans and Leases Loan & Lease Loss Reserve Nonperforming Assets Net Charge-Offs / (Recoveries) 2.83% 2.64% 2.50% 2.35% 2.31% 2.22% 2010 2011 2012 2013 2014 2015 YTD 2.81% 2.28% 1.25% 1.29% 1.13% 0.66% 2010 2011 2012 2013 2014 2015 YTD 0.66% 0.27% 0.13% 0.02% 0.06% (0.0
Slide 15: Attractive Core Deposit Franchise
ATTRACTIVE CORE DEPOSIT FRANCHISE $3,605 $3,555 $3,574 $3,701 $3,778 $3,914 1.24% 0.87% 0.61% 0.45% 0.30% 0.28% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 2010 2011 2012 2013 2014 2015 YTD Deposits Effective Rate on Dep
Slide 16: Net Income & Earnings Per Share
$41.2 $48.2 $49.6 $55.0 $58.1 $43.1 $43.1 $1.10 $1.78 $1.83 $2.03 $2.17 $1.61 $1.63 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 2010 2011 2012 2013 2014 2014 YTD 2015 YTD Net Income EPCS (Diluted) ($MM) NET INCOME & EARNINGS PER SHARE* * Note:
Slide 17: Stable Net Interest Margin (FTE)
$150.9 $150.9 $153.8 $158.6 $162.2 $120.9 $124.6 3.59% 3.69% 3.69% 3.67% 3.59% 3.59% 3.60% 0.00% 1.40% 2.80% 4.20% 5.60% 7.00% $0.0 $30.0 $60.0 $90.0 $120.0 $150.0 $180.0 2010 2011 2012 2013 2014 2014 YTD 2015 YTD Net Interest Income ($MM) Net Interest Margin (%) ($MM) STABLE NET INTEREST MARGIN (FT
Slide 18: Diverse Sources of Noninterest Income
DIVERSE SOURCES OF NONINTEREST INCOME Noninterest Income Composition YTD 12/31/14 = $77.9M YTD 9/30/15 = $62.4M Fair Value of Assets Under Management of $4.0B Fair Value of Assets Under Management of $3.8B 33% of Total Revenue 18 34% of Total Revenue
Slide 19: Stable Operating Expenses
STABLE OPERATING EXPENSES $154.5 $152.4 $151.5 $149.3 $150.0 $108.0 $117.4 63.3% 64.4% 63.3% 62.4% 60.6% 58.3% 60.6% 0.0% 25.0% 50.0% 75.0% 100.0% $0.0 $30.0 $60.0 $90.0 $120.0 $150.0 $180.0 2010 2011 2012 2013 2014 2014 YTD 2015 YTD Noninterest Expense ($MM) Efficiency (%) ($MM) 19
Slide 20: Strong Capital Position
Total Risk Based Capital Ratio Tier 1 Leverage Ratio Tier 1 Risk Based Ratio STRONG CAPITAL POSITION 15.34% 16.51% 15.57% 15.86% 15.89% 15.08% 2010 2011 2012 2013 2014 2015 YTD 10.39% 11.72% 11.47% 12.08% 12.16% 12.23% 2010 2011 2012 2013 2014 2015 YTD 20 Tangible Common Equity / Tangible Assets 9.1
Slide 21: Tangible Book Value Per Common Share
$13.65 $14.15 $14.95 $16.38 $17.67 $18.65 $20.16 $21.26 $10.00 $15.00 $20.00 $25.00 2008 2009 2010 2011 2012 2013 2014 2015 YTD TANGIBLE BOOK VALUE PER COMMON SHARE* Consistent Growth * Note: Adjusted for 10% stock dividend declared July 22, 2015 and issued on August 14, 2015. 21
Slide 22: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS * As of 12/2/15 (100%) (50%) 0% 50% 100% 150% 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 SRCE (113%) S&P 500 Bank (-13%) KBW Nasdaq Bank (-15%) SNL U.S. Bank (-9%) KBW Nasdaq Regional Bank (15%) NASDAQ Bank (13%) 22
Slide 23: 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 L
Slide 24: Appendix
APPENDIX 24
Slide 25: Deposit Market Share – County Contiguous Market
DEPOSIT MARKET SHARE – 15 COUNTY CONTIGUOUS MARKET* $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 June 09 June 10 June 11 June 12 June 13 June 14 June 15 1st Source Chase Lake City Bank Wells Fargo Fifth Third PNC *Includes Allen, Elkhart, Fulton, Huntington
Slide 26: Common Dividends Per Share
$0.409 $0.482 $0.509 $0.527 $0.536 $0.555 $0.582 $0.600 $0.618 $0.645 $0.671 $0.000 $0.100 $0.200 $0.300 $0.400 $0.500 $0.600 $0.700 $0.800 $0.900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD COMMON DIVIDENDS PER SHARE* 27 YEARS OF CONSECUTIVE DIVIDEND GROWTH * Note: Adjusted for 10% s