SRCE 8-K

1St Source Corp (SRCE)

8-K 2021-07-22 For: 2021-07-22

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Added on April 11, 2026

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Indiana	0-6233	35-1068133
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)


						1st SOURCE CORPORATION
						(Registrant)


Date: July 22, 2021						/s/ ANDREA G. SHORT
						Andrea G. Short
						Treasurer and Chief Financial Officer
						Principal Accounting Officer


For:	Immediate Release	Contact:	Andrea Short
	July 22, 2021		574-235-2000


1st SOURCE CORPORATION
2nd QUARTER 2021 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)
	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2021			2021			2020			2021			2020
AVERAGE BALANCES
Assets	$	7,657,276		$	7,350,413		$	7,185,406		$	7,504,692		$	6,898,264
Earning assets	7,264,886			6,960,551			6,727,011			7,113,559			6,454,403
Investments	1,339,551			1,230,977			1,045,310			1,285,564			1,037,975
Loans and leases	5,515,387			5,499,009			5,565,160			5,507,243			5,331,779
Deposits	6,278,654			5,980,471			5,810,578			6,130,386			5,541,477
Interest bearing liabilities	4,785,800			4,577,664			4,580,419			4,682,307			4,497,986
Common shareholders’ equity	898,388			894,553			862,209			896,481			853,467
Total equity	942,821			938,451			891,606			940,648			879,605
INCOME STATEMENT DATA
Net interest income	$	56,935		$	57,412		$	54,001		$	114,347		$	108,845
Net interest income - FTE(1)	57,053			57,533			54,138			114,586			109,133
(Recovery of) provision for credit losses	(3,025)			2,398			10,375			(627)			21,728
Noninterest income	24,898			25,869			25,241			50,767			49,863
Noninterest expense	45,198			44,140			44,825			89,338			91,360
Net income	30,235			28,106			18,526			58,341			34,944
Net income available to common shareholders	30,223			28,105			18,502			58,328			34,915
PER SHARE DATA
Basic net income per common share	$	1.19		$	1.10		$	0.72		$	2.29		$	1.36
Diluted net income per common share	1.19			1.10			0.72			2.29			1.36
Common cash dividends declared	0.30			0.29			0.28			0.59			0.57
Book value per common share(2)	36.05			35.27			33.85			36.05			33.85
Tangible book value per common share(1)	32.69			31.95			30.57			32.69			30.57
Market value - High	51.02			50.38			38.70			51.02			52.16
Market value - Low	45.22			38.73			26.72			38.73			26.07
Basic weighted average common shares outstanding	25,143,712			25,320,930			25,540,855			25,231,789			25,532,105
Diluted weighted average common shares outstanding	25,143,712			25,320,930			25,540,855			25,231,789			25,532,105
KEY RATIOS
Return on average assets	1.58		%	1.55		%	1.04		%	1.57		%	1.02		%
Return on average common shareholders’ equity	13.49			12.74			8.63			13.12			8.23
Average common shareholders’ equity to average assets	11.73			12.17			12.00			11.95			12.37
End of period tangible common equity to tangible assets(1)	10.70			10.87			10.73			10.70			10.73
Risk-based capital - Common Equity Tier 1(3)	13.62			13.43			12.76			13.62			12.76
Risk-based capital - Tier 1(3)	15.32			15.12			14.32			15.32			14.32
Risk-based capital - Total(3)	16.58			16.39			15.58			16.58			15.58
Net interest margin	3.14			3.35			3.23			3.24			3.39
Net interest margin - FTE(1)	3.15			3.35			3.24			3.25			3.40
Efficiency ratio: expense to revenue	55.23			53.00			56.57			54.11			57.56
Efficiency ratio: expense to revenue - adjusted(1)	52.89			50.99			53.63			51.94			54.71
Net charge offs to average loans and leases	0.01			0.26			(0.01)			0.13			0.06
Loan and lease loss allowance to loans and leases	2.49			2.53			2.31			2.49			2.31
Nonperforming assets to loans and leases	1.06			1.12			1.20			1.06			1.20

	June 30,			March 31,			December 31,			September 30,			June 30,
	2021			2021			2020			2020			2020
END OF PERIOD BALANCES
Assets	$	7,718,694		$	7,511,931		$	7,316,411		$	7,290,949		$	7,365,146
Loans and leases	5,483,045			5,523,085			5,489,301			5,627,036			5,692,322
Deposits	6,345,410			6,131,341			5,946,028			5,896,855			5,993,456
Allowance for loan and lease losses	136,361			139,550			140,654			136,817			131,283
Goodwill and intangible assets	83,937			83,942			83,948			83,953			83,959
Common shareholders’ equity	901,226			891,295			886,845			877,754			864,995
Total equity	945,457			935,759			930,670			915,015			901,653
ASSET QUALITY
Loans and leases past due 90 days or more	$	44		$	66		$	115		$	81		$	256
Nonaccrual loans and leases	55,864			58,513			60,388			70,595			62,800
Other real estate	—			369			359			303			303
Repossessions	1,213			2,214			1,976			4,639			6,132
Equipment owned under operating leases	1,728			1,647			1,695			136			57
Total nonperforming assets	$	58,849		$	62,809		$	64,533		$	75,754		$	69,548


1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
	June 30,		March 31,		December 31,		June 30,
	2021		2021		2020		2020
ASSETS
Cash and due from banks	$	69,101	$	69,683	$	74,186	$	67,591
Federal funds sold and interest bearing deposits with other banks	400,346		266,271		168,861		112,645
Investment securities available-for-sale	1,413,022		1,291,340		1,197,467		1,055,797
Other investments	27,429		27,429		27,429		30,619
Mortgages held for sale	6,453		9,351		12,885		36,508
Loans and leases, net of unearned discount:
Commercial and agricultural	1,125,965		1,238,708		1,186,118		1,469,839
Solar	305,250		296,124		292,604		240,873
Auto and light truck	595,326		552,676		542,369		563,606
Medium and heavy duty truck	256,169		268,636		279,172		284,432
Aircraft	883,559		873,770		861,460		782,160
Construction equipment	729,055		705,744		714,888		739,027
Commercial real estate	966,171		975,383		969,864		942,971
Residential real estate and home equity	492,552		486,156		511,379		531,972
Consumer	128,998		125,888		131,447		137,442
Total loans and leases	5,483,045		5,523,085		5,489,301		5,692,322
Allowance for loan and lease losses*	(136,361)		(139,550)		(140,654)		(131,283)
Net loans and leases	5,346,684		5,383,535		5,348,647		5,561,039
Equipment owned under operating leases, net	56,011		61,395		65,040		86,183
Net premises and equipment	47,617		48,288		49,373		51,486
Goodwill and intangible assets	83,937		83,942		83,948		83,959
Accrued income and other assets	268,094		270,697		288,575		279,319
Total assets	$	7,718,694	$	7,511,931	$	7,316,411	$	7,365,146
LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,851,932	$	1,833,116	$	1,636,684	$	1,684,102
Interest-bearing deposits:
Interest-bearing demand	2,318,210		2,068,382		2,059,139		1,866,415
Savings	1,182,643		1,148,823		1,082,848		942,891
Time	992,625		1,081,020		1,167,357		1,500,048
Total interest-bearing deposits	4,493,478		4,298,225		4,309,344		4,309,354
Total deposits	6,345,410		6,131,341		5,946,028		5,993,456
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	167,097		173,302		143,564		169,483
Other short-term borrowings	5,247		7,299		7,077		7,536
Total short-term borrowings	172,344		180,601		150,641		177,019
Long-term debt and mandatorily redeemable securities	81,330		81,722		81,864		81,760
Subordinated notes	58,764		58,764		58,764		58,764
Accrued expenses and other liabilities	115,389		123,744		148,444		152,494
Total liabilities	6,773,237		6,576,172		6,385,741		6,463,493
SHAREHOLDERS’ EQUITY
Preferred stock; no par value Authorized 10,000,000 shares; none issued or outstanding	—		—		—		—
Common stock; no par value Authorized 40,000,000 shares; issued 28,205,674 shares at June 30, 2021, March 31, 2021, December 31, 2020, and June 30, 2020, respectively	436,538		436,538		436,538		436,538
Retained earnings	558,795		535,737		514,176		484,491
Cost of common stock in treasury (3,204,947, 2,936,987, 2,816,557, and 2,655,319 shares at June 30, 2021, March 31, 2021, December 31, 2020, and June 30, 2020, respectively)	(101,711)		(88,223)		(82,240)		(75,922)
Accumulated other comprehensive income	7,604		7,243		18,371		19,888
Total shareholders’ equity	901,226		891,295		886,845		864,995
Noncontrolling interests	44,231		44,464		43,825		36,658
Total equity	945,457		935,759		930,670		901,653
Total liabilities and equity	$	7,718,694	$	7,511,931	$	7,316,411	$	7,365,146


1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2021		2021		2020		2021		2020
Interest income:
Loans and leases	$	57,144	$	57,864	$	58,815	$	115,008	$	120,341
Investment securities, taxable	4,155		3,988		4,487		8,143		10,037
Investment securities, tax-exempt	154		174		232		328		496
Other	317		266		316		583		662
Total interest income	61,770		62,292		63,850		124,062		131,536
Interest expense:
Deposits	3,202		3,526		8,265		6,728		19,116
Short-term borrowings	29		36		90		65		344
Subordinated notes	814		818		835		1,632		1,719
Long-term debt and mandatorily redeemable securities	790		500		659		1,290		1,512
Total interest expense	4,835		4,880		9,849		9,715		22,691
Net interest income	56,935		57,412		54,001		114,347		108,845
(Recovery of) provision for credit losses*	(3,025)		2,398		10,375		(627)		21,728
Net interest income after provision for loan and lease losses	59,960		55,014		43,626		114,974		87,117
Noninterest income:
Trust and wealth advisory	6,466		5,481		5,589		11,947		10,437
Service charges on deposit accounts	2,508		2,447		1,910		4,955		4,515
Debit card	4,754		4,182		3,601		8,936		6,974
Mortgage banking	2,859		3,901		3,315		6,760		5,651
Insurance commissions	1,684		2,152		1,695		3,836		3,576
Equipment rental	4,255		4,629		5,990		8,884		12,620
(Losses) gains on investment securities available-for-sale	(680)		—		(1)		(680)		279
Other	3,052		3,077		3,142		6,129		5,811
Total noninterest income	24,898		25,869		25,241		50,767		49,863
Noninterest expense:
Salaries and employee benefits	25,510		25,196		23,999		50,706		48,400
Net occupancy	2,527		2,719		2,504		5,246		5,225
Furniture and equipment	6,337		6,458		6,258		12,795		12,665
Depreciation – leased equipment	3,550		3,773		5,142		7,323		10,569
Professional fees	2,146		1,613		1,258		3,759		2,700
Supplies and communication	1,430		1,475		1,390		2,905		3,024
FDIC and other insurance	772		665		599		1,437		887
Business development and marketing	1,351		997		1,121		2,348		2,480
Loan and lease collection and repossession	486		129		838		615		1,601
Other	1,089		1,115		1,716		2,204		3,809
Total noninterest expense	45,198		44,140		44,825		89,338		91,360
Income before income taxes	39,660		36,743		24,042		76,403		45,620
Income tax expense	9,425		8,637		5,516		18,062		10,676
Net income	30,235		28,106		18,526		58,341		34,944
Net (income) loss attributable to noncontrolling interests	(12)		(1)		(24)		(13)		(29)
Net income available to common shareholders	$	30,223	$	28,105	$	18,502	$	58,328	$	34,915
Per common share:
Basic net income per common share	$	1.19	$	1.10	$	0.72	$	2.29	$	1.36
Diluted net income per common share	$	1.19	$	1.10	$	0.72	$	2.29	$	1.36
Cash dividends	$	0.30	$	0.29	$	0.28	$	0.59	$	0.57
Basic weighted average common shares outstanding	25,143,712		25,320,930		25,540,855		25,231,789		25,532,105
Diluted weighted average common shares outstanding	25,143,712		25,320,930		25,540,855		25,231,789		25,532,105


1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
							Three Months Ended
	June 30, 2021						March 31, 2021						June 30, 2020
	Average Balance		Interest Income/Expense		Yield/ Rate		Average Balance		Interest Income/Expense		Yield/ Rate		Average Balance		Interest Income/Expense		Yield/ Rate
ASSETS
Investment securities available-for-sale:
Taxable	$	1,305,988	$	4,156	1.28	%	$	1,193,583	$	3,987	1.35	%	$	995,776	$	4,487	1.81	%
Tax exempt(1)	33,563		192		2.29	%	37,394		214		2.32	%	49,534		286		2.32	%
Mortgages held for sale	7,208		54		3.00	%	14,285		86		2.44	%	27,016		198		2.95	%
Loans and leases, net of unearned discount(1)	5,515,387		57,169		4.16	%	5,499,009		57,860		4.27	%	5,565,160		58,700		4.24	%
Other investments	402,740		317		0.32	%	216,280		266		0.50	%	89,525		316		1.42	%
Total earning assets(1)	7,264,886		61,888		3.42	%	6,960,551		62,413		3.64	%	6,727,011		63,987		3.83	%
Cash and due from banks	76,198						75,178						73,523
Allowance for loan and lease losses	(142,056)						(143,206)						(124,186)
Other assets	458,248						457,890						509,058
Total assets	$	7,657,276					$	7,350,413					$	7,185,406

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	$	4,458,915	$	3,202	0.29	%	$	4,261,207	$	3,526	0.34	%	$	4,248,478	$	8,265	0.78	%
Short-term borrowings	186,605		29		0.06	%	176,726		36		0.08	%	191,411		90		0.19	%
Subordinated notes	58,764		814		5.56	%	58,764		818		5.65	%	58,764		835		5.71	%
Long-term debt and mandatorily redeemable securities	81,516		790		3.89	%	80,967		500		2.50	%	81,766		659		3.24	%
Total interest-bearing liabilities	4,785,800		4,835		0.41	%	4,577,664		4,880		0.43	%	4,580,419		9,849		0.86	%
Noninterest-bearing deposits	1,819,739						1,719,264						1,562,100
Other liabilities	108,916						115,034						151,281
Shareholders’ equity	898,388						894,553						862,209
Noncontrolling interests	44,433						43,898						29,397
Total liabilities and equity	$	7,657,276					$	7,350,413					$	7,185,406
Less: Fully tax-equivalent adjustments			(118)						(121)						(137)
Net interest income/margin (GAAP-derived)(1)			$	56,935	3.14	%			$	57,412	3.35	%			$	54,001	3.23	%
Fully tax-equivalent adjustments			118						121						137
Net interest income/margin - FTE(1)			$	57,053	3.15	%			$	57,533	3.35	%			$	54,138	3.24	%
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.


1st SOURCE CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited - Dollars in thousands, except per share data)

		Three Months Ended									Six Months Ended
		June 30,			March 31,			June 30,			June 30,			June 30,
		2021			2021			2020			2021			2020
Calculation of Net Interest Margin
(A)	Interest income (GAAP)	$	61,770		$	62,292		$	63,850		$	124,062		$	131,536
	Fully tax-equivalent adjustments:
(B)	– Loans and leases	80			81			83			161			173
(C)	– Tax exempt investment securities	38			40			54			78			115
(D)	Interest income – FTE (A+B+C)	61,888			62,413			63,987			124,301			131,824
(E)	Interest expense (GAAP)	4,835			4,880			9,849			9,715			22,691
(F)	Net interest income (GAAP) (A-E)	56,935			57,412			54,001			114,347			108,845
(G)	Net interest income - FTE (D-E)	57,053			57,533			54,138			114,586			109,133
(H)	Annualization factor	4.011			4.056			4.022			2.017			2.011
(I)	Total earning assets	$	7,264,886		$	6,960,551		$	6,727,011		$	7,113,559		$	6,454,403
	Net interest margin (GAAP-derived) (F*H)/I	3.14		%	3.35		%	3.23		%	3.24		%	3.39		%
	Net interest margin – FTE (G*H)/I	3.15		%	3.35		%	3.24		%	3.25		%	3.40		%

Calculation of Efficiency Ratio
(F)	Net interest income (GAAP)	$	56,935		$	57,412		$	54,001		$	114,347		$	108,845
(G)	Net interest income – FTE	57,053			57,533			54,138			114,586			109,133
(J)	Plus: noninterest income (GAAP)	24,898			25,869			25,241			50,767			49,863
(K)	Less: gains/losses on investment securities and partnership investments	348			(460)			(248)			(112)			(761)
(L)	Less: depreciation – leased equipment	(3,550)			(3,773)			(5,142)			(7,323)			(10,569)
(M)	Total net revenue (GAAP) (F+J)	81,833			83,281			79,242			165,114			158,708
(N)	Total net revenue – adjusted (G+J–K–L)	78,749			79,169			73,989			157,918			147,666
(O)	Noninterest expense (GAAP)	45,198			44,140			44,825			89,338			91,360
(L)	Less:depreciation – leased equipment	(3,550)			(3,773)			(5,142)			(7,323)			(10,569)

(P)	Noninterest expense – adjusted (O–L)	41,648			40,367			39,683			82,015			80,791
	Efficiency ratio (GAAP-derived) (O/M)	55.23		%	53.00		%	56.57		%	54.11		%	57.56		%
	Efficiency ratio – adjusted (P/N)	52.89		%	50.99		%	53.63		%	51.94		%	54.71		%

		End of Period
		June 30,			March 31,			June 30,
		2021			2021			2020
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)	Total common shareholders’ equity (GAAP)	$	901,226		$	891,295		$	864,995
(R)	Less: goodwill and intangible assets	(83,937)			(83,942)			(83,959)
(S)	Total tangible common shareholders’ equity (Q–R)	$	817,289		$	807,353		$	781,036
(T)	Total assets (GAAP)	7,718,694			7,511,931			7,365,146
(R)	Less: goodwill and intangible assets	(83,937)			(83,942)			(83,959)
(U)	Total tangible assets (T–R)	$	7,634,757		$	7,427,989		$	7,281,187
	Common equity-to-assets ratio (GAAP-derived) (Q/T)	11.68		%	11.87		%	11.74		%
	Tangible common equity-to-tangible assets ratio (S/U)	10.70		%	10.87		%	10.73		%

Calculation of Tangible Book Value per Common Share
(Q)	Total common shareholders’ equity (GAAP)	$	901,226		$	891,295		$	864,995
(V)	Actual common shares outstanding	25,000,727			25,268,687			25,550,355
	Book value per common share (GAAP-derived) (Q/V)*1000	$	36.05		$	35.27		$	33.85
	Tangible common book value per share (S/V)*1000	$	32.69		$	31.95		$	30.57