Slide 1: Investor Presentation
INVESTOR PRESENTATION Symbol: SRCE www.1stsource.com
Slide 2: Forward-Looking Statement Disclosure
FORWARD-LOOKING STATEMENT DISCLOSURE PAGE 2 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,” “ta
Slide 3: Corporate Overview
CORPORATE OVERVIEW $5.4 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 ■ Investment management,
Slide 4: Market Area
MARKET AREA Specialty Finance Loans: $2.2 billion Community Bank Loans: $2.1 billion As of June 30, 2016 PAGE 4
Slide 5: Business Mix (Loans and Leases)
BUSINESS MIX (LOANS AND LEASES) Personal Community Banking 30% Business Community Banking 70% Specialty Finance 50% 50% As of June 30, 2016 PAGE 5
Slide 6: Community Banking
COMMUNITY BANKING ■ 80 Banking Centers ■ 102 Twenty-four hour ATMs ■ 10 1st Source Insurance offices ■ 8 Trust & Wealth Management locations with approximately $4 billion of assets under management In person Online Over the phone Mobile PAGE 6
Slide 7: Community Banking Market Area
COMMUNITY BANKING MARKET AREA 17 – County Market Market Households 794,417 Client Households 100,978 Penetration 12.7% Businesses (approx) 74,600 Business Clients 14,761 Penetration 19.8% As of December 31, 2015 Higher Education Steel Production Regional Medical Hub Medical Devices Agriculture Distr
Slide 8: Specialty Finance Group Services
SPECIALTY FINANCE GROUP SERVICES Aircraft Division— $823MM Aircraft division provides 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 oth
Slide 9: Experienced and Proven Team
EXPERIENCED AND PROVEN TEAM Executive Team ■ 6 executives with an average 37 years each of banking experience and 24 years with 1st Source Business Banking Officers ■ 37 business banking officers with an average 21 years each of lending experience and 11 years with 1st Source Specialty Finance Group
Slide 10: Performance – Client
PAGE ELEVEN PERFORMANCE – CLIENT ■ #1 deposit share in our 15 contiguous county market ■ #1 SBA Lender in every county where located ■ #2 SBA Lender in State of Indiana ■ Best Branch Service in the Midwest – MSR Group ■ Indiana SBA Community Lender Award – 2013 - 2015 ■ Michiana’s Best Bank for Busi
Slide 11: Financial Review
FINANCIAL REVIEW PAGE 11
Slide 12: Diversified & Growing Loan Portfolio
DIVERSIFIED & GROWING LOAN PORTFOLIO 3079 3209 3434 3640 3837 4057 5.33 5.02 4.69 4.42 4.39 4.30 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2011 2012 2013 2014 2015 2016 YTD Loans & Leases Yield on Loans & Leases (%) Total Average
Slide 13: Strong Credit Quality
STRONG CREDIT QUALITY PAGE 13 2.64% 2.50% 2.35% 2.31% 2.21% 2.20% 2011 2012 2013 2014 2015 2016 % of Net Loans and Leases Loan & Lease Loss Reserve Nonperforming Assets Net Charge-Offs / (Recoveries) Stable Reserves 2.28% 1.25% 1.29% 1.13% 0.50% 0.49% 2011 2012 2013 2014 2015 2016 Improving Credit Q
Slide 14: Attractive Core Deposit Franchise
ATTRACTIVE CORE DEPOSIT FRANCHISE 3555 3574 3701 3778 3961 4227 0.87 0.61 0.45 0.30 0.29 0.36 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2011 2012 2013 2014 2015 2016 Deposits Effective Rate on Interest- bearing Deposits (%) Total A
Slide 15: 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 16: Net Income & Earnings Per Share
48.20 49.63 54.96 58.07 57.49 29.14 28.30 1.78 1.83 2.03 2.17 2.17 1.10 1.08 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $0 $10 $20 $30 $40 $50 $60 $70 2011 2012 2013 2014 2015 2015 YTD 2016 YTD Net Income EPCS (Diluted) ($MM) NET INCOME & EARNINGS PER SHARE* * Note: EPS adjusted for 10% s
Slide 17: Net Interest Margin (FTE)
150.9 153.8 158.6 162.2 168.2 81.9 84.5 3.69 3.69 3.67 3.59 3.60 3.61 3.45 0.00% 1.40% 2.80% 4.20% 5.60% 7.00% $0 $44 $88 $132 $176 $220 2011 2012 2013 2014 2015 2015 YTD 2016 YTD Net Interest Income ($MM) Net Interest Margin (%) ($MM) NET INTEREST MARGIN (FTE) PAGE 17
Slide 18: Diverse Sources of Noninterest Income
DIVERSE SOURCES OF NONINTEREST INCOME Noninterest Income Composition PAGE 18 * Note: Equipment rental income is shown net of leased equipment depreciation.
Slide 19: Operating Expenses
OPERATING EXPENSES PAGE 19 133.7 136.3 136.3 136.1 140.8 67.8 70.2 64.4 63.3 62.4 60.6 60.9 59.9 60.5 0.0% 25.0% 50.0% 75.0% 100.0% $0.0 $40.0 $80.0 $120.0 $160.0 2011 2012 2013 2014 2015 2015 YTD 2016 YTD Noninterest Expense ($MM)* Efficiency (%) ($MM) * Note: Noninterest expense is shown net of le
Slide 20: Strong Capital Position
16.51% 15.57% 15.86% 15.89% 14.97% 14.73% 2011 2012 2013 2014 2015 2016 YTD 15.21% 14.26% 14.54% 14.57% 13.65% 13.41% 2011 2012 2013 2014 2015 2016 YTD 11.72% 11.47% 12.08% 12.16% 12.21% 11.99% 2011 2012 2013 2014 2015 2016 YTD STRONG CAPITAL POSITION PAGE 20 Total Risk Based Capital Ratio Tier 1 Le
Slide 21: Tangible Book Value Per Common Share
$14.15 $14.95 $16.38 $17.67 $18.65 $20.16 $21.49 $22.32 $10.00 $13.50 $17.00 $20.50 $24.00 $27.50 2009 2010 2011 2012 2013 2014 2015 2016 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. PAGE 21
Slide 22: Common Dividends Per Share
0.482 0.509 0.527 0.536 0.555 0.582 0.600 0.618 0.645 0.671 0.540 $0.000 $0.100 $0.200 $0.300 $0.400 $0.500 $0.600 $0.700 $0.800 $0.900 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD COMMON DIVIDENDS PER SHARE* 28 YEARS OF CONSECUTIVE DIVIDEND GROWTH * Note: Adjusted for 10% stock divide
Slide 23: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS PAGE 23
Slide 24: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS PAGE 24
Slide 25: 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 ■ 5 Star “Superior” Rating – Bauer Financial ■ 28 years of consecutive dividend growth PAGE 25
Slide 26: 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 ■ Le
Slide 27: 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 27
Slide 28: Appendix
APPENDIX PAGE 28
Slide 29: 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
Slide 30: Ownership Summary
Ownership Summary Shareholder Type Shares % of Total Institutional 9,670,815 37.4% Insiders 9,036,279 35.0% Retail/Other 5,762,294 22.3% 1st Source ESOP 1,379,869 5.3% Total Shares Outstanding 25,849,257 100.0% Rank Institution (Top 10 Institutions) Shares % of Total 1 Dimensional Fund Advisors LP 2
Slide 31: Aircraft Portfolio – Industries by NAICS
Aircraft Portfolio – Industries by NAICS As of June 30, 2016 PAGE 31 *Other includes: Mining & Utilities, Information, & Public Administration