Slide 1: Investor Presentation 3rd Quarter 2021
INVESTOR PRESENTATION 3rd Quarter 2021 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 $8.0 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 ▪ Investment management,
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 ▪ Support a proud family of colleagues
Slide 5: Market Area
MARKET AREA 5page Specialty Finance Loans & Leases $2.56 billion Community Bank Loans & Leases $2.85 billion
Slide 6: Business Mix
BUSINESS MIX Loans & Leases 6page COMMUNITY BANKING 53% SPECIALTY FINANCE 47% Business 78% Personal 22%
Slide 7: Community Banking
COMMUNITY BANKING 79 Banking Centers 99 Twenty-four-hour ATMs 9 Trust & Wealth Advisory locations with approximately $5.1 billion of assets under management 10 1st Source Insurance offices 7page In person OnlineOver the phone Mobile
Slide 8: Specialty Finance Group
SPECIALTY FINANCE GROUP Aircraft Division 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 other aircraft opera
Slide 9: An Experienced and Proven Team
AN EXPERIENCED AND PROVEN TEAM Executive Team 5 executives with an average 35 years each of banking experience and 25 years with 1st Source Business Banking Officers 35 business banking officers with an average 19 years each of lending experience and with 1st Source from 1 to 32 years Specialty Fina
Slide 10: Performance and Client Recognition
PERFORMANCE CLIENT #1 Deposit share in our 16 contiguous county market #1 SBA Lender in our Indiana footprint #1 SBA Lender Headquartered in State of Indiana Indiana SBA Community Lender Award 2013-2020 #223 On Forbes’ 500 Best Midsize Employers 2021 List. One of only ten Indiana-based companies to
Slide 11: Our Response to COVID-19
OUR RESPONSE TO COVID-19 11page EMPLOYEES ▪ High-risk employees given option to work remotely ▪ Virtual meetings and conference calls have largely replaced in- person meetings ▪ Department teams were separated in 2020 to ensure that infection could not spread across entire units but are now being re
Slide 12: Paycheck Protection Program Loans
12page PAYCHECK PROTECTION PROGRAM LOANS 2020 PPP Loans: ▪ 1,972 out of 3,540 loans for less than $50,000 (56%) ▪ Over 99% of total loan amounts funded during 2020 have been submitted to SBA for forgiveness as of September 30, 2021 2021 PPP Loans: ▪ 2,424 out of 3,239 for less than $50,000 (75%) ▪ O
Slide 13: Financial Review
FINANCIAL REVIEW
Slide 14: Growing Loan Portfolio
14page 4333 4755 5000 5463 5480 4.50% 4.93% 5.16% 4.44% 4.31% 3.75% 4.25% 4.75% 5.25% 5.75% 6.25% 2000 3500 5000 6500 2017 2018 2019 2020 2021 YTD Loans & Leases ($MM) Yield on Loans & Leases - FTE (%)* GROWING LOAN PORTFOLIO Total Average Loans & Leases * See “Reconciliation of non-GAAP Financial M
Slide 15: Diversified Loan Portfolio
15page Commercial Real Estate 18% Residential Real Estate 9% Consumer 2% Medium and Heavy Duty Truck 5% Auto and Light Truck 10% Construction Equipment 13% Aircraft 16% Solar 5% Commercial and Agriculture 15% PPP Loans 7% DIVERSIFIED LOAN PORTFOLIO 2021 Average Loans by Type
Slide 16: Pre-Tax, Pre-Provision Income
16page 110.3 124.5 136.0 142.3 103.2 115.4 $0 $35 $70 $105 $140 $175 2017 2018 2019 2020 2020 YTD 2021 YTD PRE-TAX, PRE-PROVISION INCOME ($MM) *See “Reconciliation of non-GAAP Financial Measures” in Appendix.
Slide 17: Strong Credit Quality
17page 2.10% 2.08% 2.19% 2.56% 2.50% 2017 2018 2019 2020 2021 YTD STRONG CREDIT QUALITY % of Net Loans and Leases Loan & Lease Loss Allowance 0.67% 0.71% 0.37% 1.16% 0.84% 2017 2018 2019 2020 2021 YTD Low Nonperforming Assets 0.06% 0.29% 0.10% 0.17% 0.09% 2017 2018 2019 2020 2021 YTD Limited Losses
Slide 18: Core Deposit Franchise
18page 4049 4277 4502 5128 5848 444 687 775 609 374 0.43% 0.70% 0.96% 0.53% 0.21% 0.00% 0.50% 1.00% 1.50% 2.00% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2017 2018 2019 2020 2021 YTD Core Deposits ($MM) Non-core Deposits ($MM) Effective Rate on Deposits (%) CORE DEPOSIT FRANCHISE TOTAL AVERAGE DEPOS
Slide 19: Attractive Deposit Franchise
19page Noninterest Bearing Demand 29% CD and IRA 17% Savings and Interest Bearing Demand 54% ATTRACTIVE DEPOSIT FRANCHISE 2021 Average Deposits By Type
Slide 20: Deposit Market Share
20page $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 June 15 June 16 June 17 June 18 June 19 June 20 June 21 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 21: Net Income & Earnings Per Share
21page 68.1 82.4 92.0 81.4 55.0 90.8 2.60 3.16 3.57 3.17 2.14 3.59 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $0 $15 $30 $45 $60 $75 $90 $105 2017 2018 2019 2020 2020 YTD 2021 YTD Net Income ($MM) EPCS (Diluted) NET INCOME & EARNINGS PER SHARE
Slide 22: Net Interest Margin (FTE)
22page 187.4 214.7 224.6 226.4 164.1 176.9 3.57% 3.73% 3.68% 3.39% 3.33% 3.28% 1.00% 2.00% 3.00% 4.00% 5.00% $0 $50 $100 $150 $200 $250 2017 2018 2019 2020 2020 YTD 2021 YTD Net Interest Income ($MM) Net Interest Margin (%) NET INTEREST MARGIN (FTE)* * See “Reconciliation of non-GAAP Financial Measu
Slide 23: Diverse Sources of Noninterest Income
23page Trust, Wealth Advisory, and Retirement Plan Services 27% Other 14%Debit Card 20% Service Charges on Deposit Accounts 12% Insurance Commissions 9% Mortgage Banking 15% Equipment Rental 3% DIVERSE SOURCES OF NONINTEREST INCOME Fair Value of Assets Under Management of $5.1B * Note: Equipment ren
Slide 24: Operating Expenses
24page 148.8 160.2 163.9 167.2 123.1 126.8 57.7% 56.2% 54.7% 54.2% 54.5% 52.4% 45.0% 55.0% 65.0% 75.0% $0.0 $50.0 $100.0 $150.0 $200.0 2017 2018 2019 2020 2020 YTD 2021 YTD Noninterest Expense ($MM)* Efficiency - Adjusted (%)* OPERATING EXPENSES * Note: Noninterest expense is shown net of leased equ
Slide 25: Strong Capital Position
14.70% 14.68% 14.90% 15.99% 16.59% 2017 2018 2019 2020 2021 YTD 25page 12.17% 12.06% 12.19% 12.15% 12.07% 2017 2018 2019 2020 2021 YTD STRONG CAPITAL POSITION Tier 1 Leverage Ratio 13.44% 13.42% 13.64% 14.73% 15.33% 2017 2018 2019 2020 2021 YTD Tier 1 Risk Based Ratio Total Risk Based Capital Ratio
Slide 26: Tangible Book Value Per Common Share
26page $20.16 $21.49 $22.75 $24.47 $26.30 $29.18 $31.62 $33.37 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 2014 2015 2016 2017 2018 2019 2020 2021 YTD TANGIBLE BOOK VALUE PER COMMON SHARE* Consistent Growth * See “Reconciliation of non-GAAP Financial Measures” in Appendix.
Slide 27: Common Dividends Per Share
27page 0.582 0.600 0.618 0.645 0.671 0.720 0.760 0.960 1.100 1.130 1.210 $0.000 $0.200 $0.400 $0.600 $0.800 $1.000 $1.200 $1.400 $1.600 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 YTD COMMON DIVIDENDS PER SHARE 33 YEARS OF CONSECUTIVE DIVIDEND GROWTH
Slide 28: Delivering Returns to Shareholders
28page DELIVERING RETURNS TO SHAREHOLDERS Value of $100 Invested in 1st Source since 1971 Inception with Dividends Reinvested vs. Total Return of Stock Indices 2 0 2 0 2 0 1 9 2 0 1 8 2 0 1 7 2 0 1 6 2 0 1 5 2 0 1 4 2 0 1 3 2 0 1 2 2 0 1 1 2 0 1 0 2 0 0 9 2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 5 2 0 0 4 2 0
Slide 29: Delivering Returns to Shareholders
29page DELIVERING RETURNS TO SHAREHOLDERS December 31, 2007 – October 25, 2021
Slide 30: Performance and Financial Recognition
PERFORMANCE FINANCIAL 2021 KBW Bank Honor Roll Sixteen banking institutions with more than $500 million in total assets selected #26 Of 123 banks between $5 billion and $50 billion in assets – Bank Performance Scorecard by Bank Director Magazine 5-Star Superior Rating – BauerFinancial 33 Years of co
Slide 31: Investment Considerations
INVESTMENT CONSIDERATIONS Consistent and superior financial performance with a focus on long-term earnings per share and tangible book value growth Experienced and proven team with significant investment in bank Diversification of product mix and geography with asset generation capability Leading ma
Slide 32: Contact Information
CONTACT INFORMATION Christopher J. Murphy III Chairman of the Board, CEO and President (574) 235-2711 Murphy-c@1stsource.com Brett A. Bauer CFO and Treasurer (574) 235-2638 bauerb@1stsource.com 32page
Slide 33: Appendix
APPENDIX
Slide 34: Consolidated Balance Sheet
CONSOLIDATED BALANCE SHEET 34page (Dollars in millions) 2017 2018 2019 2020 2021 YTD Cash and cash equivalents 78$ 99$ 83$ 243$ 637$ Investment securities and other investments 930 1,019 1,069 1,225 1,611 Loans and leases, net of unearned discount 4,541 4,847 5,106 5,502 5,393 Allowance for loan and
Slide 35: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT 35page (Dollars in millions) 2017 2018 2019 2020 2020 YTD 2021 YTD Net interest income 186$ 214$ 224$ 226$ 164$ 177$ Provision for (recovery of) credit losses 9 19 16 36 31 (3) Noninterest income* 73 70 76 83 62 66 Noninterest expense* 149 160 164 167 123 127 Income bef
Slide 36: Aircraft Portfolio Industries by NAICS
36page Transportation & Warehousing 17% Finance & Insurance and Real Estate 13% Services 20% Retail Trade 16% Construction 10% Manufacturing 9% Ag, Forestry, Fishing & Hunting 6% Wholesale Trade 4% Other* 5% * Other includes: Mining & Utilities and Information AIRCRAFT PORTFOLIO INDUSTRIES BY NAICS
Slide 37: Ownership Summary
37page OWNERSHIP SUMMARY Institutional 11,276,808 45.5% Insiders 7,994,601 32.2% Retail/Other 4,763,041 19.2% 1st Source ESOP 763,083 3.1% Total Shares Outstanding (1) 24,797,533 100.0% RankInstitution (Top 10 Institutions) Shares % of Total 1 Dimensional Fund Advisors LP 1,722,621 6.9% 2 BlackRock
Slide 38: Reconciliation of Non-GAAP Financial Measures
38page RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Dollars in thousands) 2017 2018 2019 2020 2021 YTD (A) Loans and leases interest income (GAAP) 194,297$ 234,083$ 257,738$ 242,172$ 176,444$ (B) Plus: loans and leases fully tax-equivalent adjustments 621 367 375 333 240 (C) Loans and leases inter
Slide 39: Reconciliation of Non-GAAP Financial Measures
39page RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 2017 2018 2019 2020 2020 YTD 2021 YTD (A) Noninterest income (GAAP) 98,706$ 97,050$ 101,130$ 103,889$ 77,904$ 76,264$ (B) Less: depreciation - leased equipment (25,215) (26,248) (25,128) (20,203) (15,263) (10,562) Noninterest income - adjusted (A-
Slide 40: Reconciliation of Non-GAAP Financial Measures
40page RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 2017 2018 2019 2020 2021 YTD (A) Total common shareholders' equity (GAAP) 718,537$ 762,082$ 828,277$ 886,845$ 911,333$ (B) Less: goodwill and intangible assets (83,742) (83,998) (83,971) (83,948) (83,931) (C) Total tangible common shareholders' eq