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
$4.9 billion bank holding company Headquartered in South Bend, IN, serving Northern Indiana and Southwest Michigan Celebrating 150 years, with a history dating to 1863 Diversified business model, offering personal and business banking, specialty finance, investment management, trust & estate
Slide 4: History, Values, Mission, and Vision
History, Values, Mission, and Vision 4
Slide 5: Community Banking Market Area
Community Banking Market Area 5 Higher education Regional medical hub Medical devices Recreational vehicle manufacturing Agriculture Steel production Distribution hub 17 – County Market Market Households 780,424 Client Households 99,205 Penetration 12.7% Businesses 74,634 Business Clients 14,356 Pen
Slide 6: 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 7: Financial Results
Financial Results 7
Slide 8: Deposit Franchise: Average Deposit Composition Over Time
1.54 1.71 1.72 1.80 1.93 1.91 2.00 1.60 1.42 1.30 1.15 1.08 1.12 0.99 0.43 0.48 0.54 0.62 0.69 0.66 0.73 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 2009 2010 2011 2012 2013 2013 YTD 2014 YTD % DDA Total Deposits $3.57 $3.61 $3.56 $3.57 $3.70 $3.69 $3.72 12.0% 13.4% 15.2% 17.2% 18.7% 18.0%
Slide 9: Deposit Franchise: Cost of Total Average Deposits
Deposit Franchise 9 1.78% 1.24% 0.87% 0.61% 0.45% 0.49% 0.32% 0.00% 0.50% 1.00% 1.50% 2.00% 2009 2010 2011 2012 2013 2013 YTD 2014 YTD Cost of Total Average Deposits (%)
Slide 10: Loan Mix
Aircraft financing $733M 40% Auto and light truck $471M 26% Construction equipment financing $370M 20% Medium and heavy duty truck $243M 14% Specialty Finance $1.8B 49%Personal Community Banking $0.6B 16% Business Community Banking $1.3B 35% Loan Portfolio (6/30/14) Specialty Finance Loans (6/30/14)
Slide 11: Loan Distribution and Performance
Medium and heavy duty truck $243M 7% Construction equipment financing $370M 10% Aircraft financing $733M 20% Auto and light truck $471M 13% Commercial and agricultural loans $720M 19% Commercial real estate $602M 16% Residential real estate $455M 12% Consumer $129M 3% Medium and heavy duty truck $0.
Slide 12: Loan Portfolio: Average Composition Over Time
Loan Portfolio 12 627 614 606 652 701 693 729 234 309 373 414 423 419 408 342 304 268 271 302 289 352 321 266 220 217 218 209 239 593 539 551 568 651 649 705 579 584 569 546 571 564 589 340 392 396 437 450 444 456 119 102 96 104 118 114 125 $0 $625 $1250 $1875 $2500 $3125 $3750 2009 2010 2011 2012 2
Slide 13: Loan Yields
Loan Yields 13 5.44% 5.53% 5.33% 5.02% 4.69% 4.73% 4.44% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 2009 2010 2011 2012 2013 2013 YTD 2014 YTD Return on Net Loans and Leases (%)
Slide 14: Credit Quality
Credit Quality 14 2.85 2.83 2.64 2.50 2.35 2.45 2.38 3.15 2.81 2.28 1.25 1.29 1.01 1.08 0.72 0.66 0.27 0.13 0.02 0.03 (0.03) (0.5) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2009 2010 2011 2012 2013 2013 YTD 2014 YTD Loan & Lease Loss Reserve Nonperforming Assets Net Charge-Offs * Note: YTD 2013 & 2014 net cha
Slide 15: Net Interest Margin (FTE)
Net Interest Margin (FTE) 15 132.0 150.9 150.9 153.8 158.6 77.5 79.7 3.14 3.59 3.69 3.69 3.67 3.64 3.59 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% $0 $20 $40 $60 $80 $100 $120 $140 $160 2009 2010 2011 2012 2013 2013 YTD 2014 YTD Net Interest Income ($MM) Net Interest Margin (%)
Slide 16: Diverse Sources of Noninterest Income
Trust fees 25% Equipment rental income 21% Other income 17% Debit card income 12% Service charges on deposit accounts 11% Mortgage banking income 7% Insurance commissions 7% Noninterest Income Composition YTD at 6/30/14 = $38.6M Diverse Sources of Noninterest Income 16 Assets Under Management of $3.
Slide 17: Noninterest Income to Total Revenue
Noninterest Income to Total Revenue 17 33.7% 30.9% 29.5% 30.3% 29.0% 29.8% 28.9% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2009 2010 2011 2012 2013 2013 YTD 2014 YTD Note: Noninterest income to total revenue has been adjusted for equipment lease depreciation. Stable Source of Revenue
Slide 18: Noninterest Expense Composition
Personnel expense 54% Other expense 46% YTD at 6/30/14 = $70.4M Noninterest Expense 18 YTD at 6/30/13 = $72.3M Personnel expense 54% Other expense 46% Efficiency ratio: 61.03% Efficiency ratio: 57.01% Noninterest Expense Composition
Slide 19: Net Income and Earnings Per Share
Net Income and Earnings Per Share 19 25.49 41.24 48.20 49.63 54.96 26.35 28.13 0.79 1.21 1.96 2.02 2.23 1.07 1.15 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% $0 $10 $20 $30 $40 $50 $60 2009 2010 2011 2012 2013 2013 YTD 2014 YTD Net Income EPCS (Diluted) ($MM) Record Net Income
Slide 20: Pre-tax, Pre-provision Return on Average Assets
1.39% 1.75% 1.75% 1.82% 1.84% 1.91% 1.99% 1.44% 1.67% 1.63% 1.72% 1.47% 1.68% 1.57% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 2009 2010 2011 2012 2013 2013 YTD 2014 YTD 1st Source US Banks with $3B - $10B in Assets Pre-tax, Pre-provision (PTPP) Return on Average Assets (ROAA) Note: PTPP
Slide 21: Strong Capital Position
Strong Capital Position 21 17.72% 15.34% 16.51% 15.57% 15.86% 15.55% 15.28% 12.74% 10.39% 11.72% 11.47% 12.08% 11.76% 11.73% 8.43% 9.12% 10.18% 10.56% 10.76% 10.56% 10.50% 4.0% 8.0% 12.0% 16.0% 20.0% 2009 2010 2011 2012 2013 2013 YTD 2014 YTD Total Risk-Based Capital/ Risk-Weighted Assets Tier 1 Lev
Slide 22: Common Dividends per Share
$0.38 $0.45 $0.53 $0.56 $0.58 $0.59 $0.61 $0.64 $0.66 $0.68 $0.53 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD Common Dividends per Share 22
Slide 23: Tangible Book Value Per Common Share
Tangible Book Value Per Common Share 23 $13.99 $15.01 $15.56 $16.44 $18.02 $19.43 $20.52 $21.30 $10.00 $15.00 $20.00 $25.00 2007 2008 2009 2010 2011 2012 2013 2014 YTD Consistent Growth
Slide 24: Performance Recognition
Performance Recognition Forbes The Banker bah-hohes iAiteria's Best Barus TOP 1000 BauerFinancial Ranked #25 in 2013 based on WORLD BANKS 20/3 5 Star “Superior” Rating an analysis of asset quality, capital #859 on global ist Highest rating possible. Based on capital ratio, BankDirector pha BankDirec
Slide 25: Investment Considerations
Consistent and superior financial performance Seasoned executive management 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 oppor
Slide 26: Contact Information
Contact Information 26 Christopher J. Murphy III Chairman of the Board, President and CEO (574) 235-2711 Murphy-C@1stsource.com Andrea G. Short CFO and Treasurer (574) 235-2348 ShortA@1stsource.com