8-K
1St Source Corp (SRCE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 23, 2020
1st Source Corporation
(Exact name of registrant as specified in its charter)
| Indiana | 0-6233 | 35-1068133 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) |
100 North Michigan Street, South Bend, Indiana 46601
(Address of principal executive offices) (Zip Code)
574-235-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock - without par value | SRCE | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
ITEM 2.02 Results of Operations and Financial Condition.
On January 23, 2020, 1st Source Corporation issued a press release that announced its fourth quarter earnings for 2019. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
ITEM 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The Board of Directors amended the Company’s bylaws effective January 23, 2020. Section 3.3 of the bylaws is hereby amended to read as follows:
Special Meetings. Special meetings of Shareholders may be called by the Chief Executive Officer, the President, the Chairman of the Board of Directors, or, if applicable, the Lead Director, and must be called by the Chief Executive Officer, the President, the Chairman of the Board, the Lead Director, or the Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of shareholders holding of record no less than a majority of all shares outstanding. Any notice of a special meeting shall specify by whom such meeting was called.
ITEM 9.01 Financial Statements and Exhibits.
Exhibit 99.1: Press release dated January 23, 2020, with respect to 1st Source Corporation’s financial results for the fourth quarter ended December 31, 2019.
101 Pursuant to Rule 406 of Regulation S-T, the cover page is formatted in Inline XBRL (Inline eXtensible Business reporting Language).
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| 1st SOURCE CORPORATION | |
|---|---|
| (Registrant) | |
| Date: January 23, 2020 | /s/ ANDREA G. SHORT |
| Andrea G. Short | |
| Treasurer and Chief Financial Officer | |
| Principal Accounting Officer |
Wdesk | Exhibit
Exhibit 99.1
| For: | Immediate Release | Contact: | Andrea Short |
|---|---|---|---|
| January 23, 2020 | 574-235-2000 |
1st Source Corporation Reports Continuing Record Earnings in 2019,
History of Increased Dividends Continues
FULL YEAR AND QUARTERLY HIGHLIGHTS
| • | Net income improved to $91.96 million for the year of 2019, up 11.58% from 2018 and improved to $21.94 million for the fourth quarter of 2019, up 2.31% over the fourth quarter of 2018. |
|---|---|
| • | Diluted net income per common share improved to $3.57 for the year of 2019, up 12.97% from 2018 and improved to $0.86 for the fourth quarter of 2019, up 4.88% from the prior year’s fourth quarter of $0.82. |
| --- | --- |
| • | Return on average assets increased to 1.41% and return on average common shareholders’ equity increased to 11.50% for the full year of 2019 from 1.34% and 11.09%, respectively in 2018. For the fourth quarter of 2019, return on average assets was 1.30% and return on average common shareholders’ equity was 10.56% down from 1.36% and 11.22%, respectively in the fourth quarter of 2018. |
| --- | --- |
| • | Net charge-offs of $5.05 million for the full year of 2019 compared to $13.88 million in 2018 and $0.64 million in the fourth quarter of 2019 compared to $2.53 million in the fourth quarter of 2018. Nonperforming assets to loans and leases of 0.37% at December 31, 2019 compared to 0.71% at December 31, 2018. |
| --- | --- |
| • | Average loans and leases grew $244.91 million in the full year of 2019, up 5.15% from 2018 and grew $210.64 million, up 4.36% from the fourth quarter of 2018. |
| --- | --- |
| • | Average deposits grew $313.07 million in the full year of 2019, up 6.31% from 2018 and grew $326.48 million, up 6.42% from the fourth quarter of 2018. |
| --- | --- |
| • | Net interest income increased $9.96 million in the full year of 2019, up 4.66% from 2018 and decreased $0.55 million, or 0.98% from the fourth quarter of 2018. |
| --- | --- |
| • | Noninterest income increased $4.08 million in the full year of 2019, up 4.20% from 2018 and increased $1.42 million, up 5.87% from the fourth quarter of 2018. Excluding leased depreciation, noninterest income increased 7.34% for the year and 11.17% for the quarter. |
| --- | --- |
| • | Noninterest expenses increased $2.54 million in the full year of 2019 or 1.36% from 2018 and increased $1.66 million or 3.47% from the fourth quarter of 2018. Excluding leased depreciation, noninterest expense increased 2.29% for the year and 5.36% for the quarter. |
| --- | --- |
South Bend, IN — 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported a record high net income of $91.96 million for 2019, an improvement of 11.58% compared to $82.41 million earned in 2018. Fourth quarter net income was $21.94 million, an increase of 2.31% compared to $21.45 million earned in the fourth quarter of 2018. The annual net income comparison was positively impacted by increased net interest income of $9.96 million primarily due to rising lending rates during 2018 and higher average loan and lease balances and a $3.63 million decrease in the provision for loan and lease losses primarily due to fewer charge-offs during the year. Non-recurring 2019 items included $2.25 million ($0.83 million in the fourth quarter) of negative valuation adjustments on repossessed assets, a $1.31 million gain on the sale of our former headquarters building, $0.96 million ($0.64 million in the fourth quarter) in rental income from a repossessed asset and $0.88 million ($0.44 million in the fourth quarter) in FDIC insurance premium credits.
– 1 –
Diluted net income per common share for the year was a record high at $3.57, up 12.97% from the $3.16 earned a year earlier. Diluted net income per common share for the fourth quarter was $0.86, up 4.88% from the $0.82 earned in the fourth quarter of the previous year.
At its January 2020 meeting, the Board of Directors approved a cash dividend of $0.29 per common share, up 7.41% from the $0.27 per common share declared a year ago. The cash dividend is payable to shareholders of record on February 4, 2020 and will be paid on February 14, 2020.
According to Christopher J. Murphy III, Chairman and CEO, “1st Source Corporation again achieved record earnings in 2019 and it was our 32^nd^ consecutive year of dividend growth. Sustained organic growth in average loans and leases and deposits combined with pragmatic and disciplined credit quality decisions continue to yield positive results. Early in the year, we benefited from higher net interest margins. However, due to several Federal Reserve reductions in interest rates during 2019, these margins decreased in the latter part of the year due to lower loan rates and continued competitive rate pressure on deposits.
“We ended the year with statewide recognition of our leadership in small business lending. For the seventh year in a row, the Indiana Small Business Administration (SBA) awarded 1st Source Bank with the Gold Level award in the Community Lender category. The award recognized the Bank’s production of the most SBA loans in the state of Indiana among banks with less than $10 billion in assets. This is a welcome affirmation of our commitment to small businesses throughout the communities we serve. 1st Source Bank was also honored as the first recipient of the inaugural Indiana Rural Lender of the Year award, which recognized us for making the most SBA loans in rural areas of the state. As a community bank with a mission of helping individuals directly or through their businesses realize their dreams, these awards are important proof that our efforts in supporting small businesses and small communities across northern Indiana have been successful, and that we are truly delivering on our mission through the work we do every day.
“I’m also pleased to report that our employees collectively volunteered more than 22,000 hours of their time during 2019 to help individuals and organizations. Community involvement is a pillar of the 1st Source culture, and the commitment our team members show toward the organizations and causes that they are passionate about is inspiring. It is through community leadership, teamwork, integrity, outstanding customer service, and superior quality in all that we do that we are able to help people achieve security, build wealth and realize their dreams.” Mr. Murphy concluded.
FULL YEAR AND FOURTH QUARTER 2019 FINANCIAL RESULTS
Loans
Annual average loans and leases of $5.00 billion increased $244.91 million, up 5.15% from the full year 2018. Quarterly average loans and leases of $5.05 billion increased $210.64 million, up 4.36% in the fourth quarter of 2019 from the year ago quarter and have decreased $44.72 million from the third quarter due to several large payoffs and a decline in seasonal activity in our specialty finance lending offsetting loan growth.
– 2 –
Deposits
Annual average deposits for 2019 were $5.28 billion, an increase of $313.07 million, up 6.31% from 2018. Quarterly average deposits of $5.41 billion grew $326.48 million, up 6.42% for the quarter ended December 31, 2019 compared to the year ago quarter and have increased $51.03 million, up 0.95% compared to the third quarter.
Net Interest Income and Net Interest Margin
For the twelve months of 2019, tax-equivalent net interest income was $224.55 million, an increase of $9.84 million, up 4.58% compared to the full year 2018. Fourth quarter 2019 tax-equivalent net interest income of $55.46 million decreased $0.58 million, or 1.03% from the fourth quarter a year ago and decreased $1.91 million, or 3.32% from the third quarter.
Net interest margin for the year ending December 31, 2019 was 3.67%, a decrease of four basis points from the 3.71% for the year ending December 31, 2018. Net interest margin on a tax-equivalent basis for the year ending December 31, 2019 was 3.68%, a decrease of five basis points from the 3.73% for the year ending December 31, 2018.
Fourth quarter 2019 net interest margin was 3.51%, a reduction of 26 basis points from the 3.77% for the same period in 2018 and a decrease of 16 basis points from the third quarter. Fourth quarter 2019 net interest margin on a fully tax-equivalent basis was 3.52%, a decrease of 26 basis points from the 3.78% for the same period in 2018 and a decrease of 16 basis points from the 3.68% in the third quarter. The decreased yield during the quarter was negatively impacted by one basis point due to zero net interest recoveries in the fourth quarter of 2019 vs. net interest recoveries of $0.31 million during the fourth quarter of 2018. Additionally, the margin continued to see pressure from deposit competition and Federal Reserve interest rate decreases. Loan rates have repriced at a faster pace than deposit rates.
Noninterest Income
Noninterest income for the twelve months ended December 31, 2019 was $101.13 million, up $4.08 million or 4.20% compared to the twelve months ended December 31, 2018. Fourth quarter 2019 noninterest income of $25.58 million increased $1.42 million, or 5.87% from the fourth quarter a year ago and decreased slightly from the third quarter.
Noninterest income during the twelve months ended December 31, 2019 was higher compared to a year ago mainly due to improved mortgage banking income driven by gains on a higher volume of loan sales, increased debit card income from increased customer use, fewer losses on the sale of available-for-sale securities, increased customer swap fees, higher claim proceeds on bank owned life insurance and nonrecurring rental income derived from a repossessed asset. These positives were offset by reduced equipment rental income due to a decrease in the size of the average equipment rental portfolio and less trust and wealth advisory fees resulting from a lower value of assets under management during the first nine months of 2019 compared to the same period in 2018.
The decrease in noninterest income from the third quarter was mainly due to less claim proceeds on bank owned life insurance, fewer partnership investment gains, a reduction in equipment rental income due to a decrease in the size of the average equipment rental portfolio, and decreased debit card income. These negatives were offset by nonrecurring rental income on a repossessed asset and an increase in trust and wealth advisory fees due to stock market recoveries which helped improve the market value of trust assets under management.
– 3 –
Noninterest Expense
Noninterest expense for the twelve months ended December 31, 2019 was $189.01 million, an increase of $2.54 million, or 1.36% compared to the same period a year ago. Fourth quarter 2019 noninterest expense of $49.35 million increased $1.66 million, or 3.47% from the fourth quarter a year ago and increased $2.24 million or 4.76% from the prior quarter. Excluding depreciation on leased equipment, noninterest expenses were up 5.36% and 2.29% for the fourth quarter and twelve months ended December 31, 2019, respectively.
The increase in noninterest expense for 2019 from 2018 was primarily due to higher salaries as a result of normal merit increases and a slight increase in full-time equivalent employees, increased group insurance costs, a rise in furniture and equipment expense due to increased software maintenance costs, and valuation adjustments on repossessed assets. These increases were offset by higher gains on the sale of fixed assets, reduced insurance expenses due to FDIC assessment credits, lower leased equipment depreciation resulting from a reduction in the average equipment rental portfolio, decreased incentive compensation from fewer vestings of share-based compensation arrangements and reduced professional fees from consulting services.
The increase in noninterest expense from the third quarter was mainly due to higher group insurance costs, increased professional fees from consulting services, valuation adjustments on repossessed assets and a rise in furniture and equipment expense due to increased software maintenance costs and computer processing charges. These increases were offset by a decrease in the interest rate swap valuation provision and lower leased equipment depreciation resulting from a reduction in the average equipment rental portfolio.
Credit
The reserve for loan and lease losses as of December 31, 2019 was 2.19% of total loans and leases compared to 2.14% at September 30, 2019 and 2.08% at December 31, 2018. Net charge-offs that have been recorded for the full year of 2019 were $5.05 million compared to net charge-offs of $13.88 million in 2018. The majority of the 2019 net charge-offs were related to one relationship within the aircraft portfolio and one relationship in the medium and heavy duty truck portfolio. Overall, Aircraft accounted for 38% and Medium and Heavy Duty Truck accounted for 22% of total net charge-offs for the year. Net charge-offs of $0.64 million were recorded for the fourth quarter of 2019 compared with net charge-offs of $2.53 million in the same quarter a year ago and up from the $0.31 million of net recoveries in the third quarter.
The provision for loan and lease losses was $15.83 million for the twelve months ended December 31, 2019 and $2.95 million for the fourth quarter of 2019, a decrease of $3.63 million and $1.75 million, respectively, compared with the same periods in 2018. The ratio of nonperforming assets to loans and leases was 0.37% as of December 31, 2019, compared to 0.34% on September 30, 2019 and 0.71% on December 31, 2018.
– 4 –
Capital
As of December 31, 2019, the common equity-to-assets ratio was 12.51%, compared to 12.15% at September 30, 2019 and 12.11% a year ago. The tangible common equity-to-tangible assets ratio was 11.38% at December 31, 2019 compared to 11.04% at September 30, 2019 and 10.92% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 12.55% at December 31, 2019 compared to 12.26% at September 30, 2019 and 12.38% a year ago. During 2019, 325,787 shares were repurchased for treasury reducing common shareholders’ equity by $15.09 million.
ABOUT 1ST SOURCE CORPORATION
1st Source common stock is traded on the NASDAQ Global Select Market under “SRCE” and appears in the National Market System tables in many daily newspapers under the code name “1st Src.” Since 1863, 1st Source has been committed to the success of its clients, individuals, businesses and the communities it serves. For more information, visit www.1stsource.com.
1st Source serves the northern half of Indiana and southwest Michigan and is the largest locally controlled financial institution headquartered in the area. While delivering a comprehensive range of consumer and commercial banking services through its community bank offices, 1st Source has distinguished itself with highly personalized services. 1st Source Bank also competes for business nationally by offering specialized financing services for new and used private and cargo aircraft, automobiles for leasing and rental agencies, medium and heavy duty trucks, and construction equipment. The Corporation includes 80 banking centers, 15 1st Source Bank Specialty Finance Group locations nationwide, eight Wealth Advisory Services locations and ten 1st Source Insurance offices.
FORWARD LOOKING STATEMENTS
Except for historical information contained herein, the matters discussed in this document express “forward-looking statements.” Generally, the words “believe,” “contemplate,” “seek,” “plan,” “possible,” “assume,” “expect,” “intend,” “targeted,” “continue,” “remain,” “estimate,” “anticipate,” “project,” “will,” “should,” “indicate,” “would,” “may” and similar expressions indicate forward-looking statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.
1st Source may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause 1st Source’s actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors, among others, include changes in laws, regulations or accounting principles generally accepted in the United States; 1st Source’s competitive position within its markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen downturns in the local, regional or national economies or in the industries in which 1st Source has credit concentrations; and other risks discussed in 1st Source’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which filings are available from the SEC. 1st Source undertakes no obligation to publicly update or revise any forward-looking statements.
– 5 –
NON-GAAP FINANCIAL MEASURES
The accounting and reporting policies of 1st Source conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures are used by management to evaluate and measure the Company’s performance. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity-to-tangible assets ratio and tangible book value per common share. Management believes that these measures provide users of the Company’s financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses and lease depreciation), measures how much it costs to produce one dollar of revenue. Securities gains or losses and lease depreciation are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity-to-tangible assets ratio and tangible book value per common share as useful measurements of the Company’s equity.
See the table marked “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of certain non-GAAP financial measures used by the Company with their most closely related GAAP measures.
#
(charts attached)
– 6 –
| 1st SOURCE CORPORATION | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 4th QUARTER 2019 FINANCIAL HIGHLIGHTS | |||||||||||||||
| (Unaudited - Dollars in thousands, except per share data) | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||
| AVERAGE BALANCES | |||||||||||||||
| Assets | $ | 6,708,475 | $ | 6,620,880 | $ | 6,270,544 | $ | 6,528,274 | $ | 6,151,439 | |||||
| Earning assets | 6,258,938 | 6,190,264 | 5,873,476 | 6,104,673 | 5,761,761 | ||||||||||
| Investments | 1,044,917 | 1,024,250 | 976,856 | 1,014,659 | 951,812 | ||||||||||
| Loans and leases | 5,046,639 | 5,091,358 | 4,835,995 | 5,000,161 | 4,755,256 | ||||||||||
| Deposits | 5,414,423 | 5,363,391 | 5,087,948 | 5,276,736 | 4,963,663 | ||||||||||
| Interest bearing liabilities | 4,483,686 | 4,493,376 | 4,304,067 | 4,440,905 | 4,288,617 | ||||||||||
| Common shareholders’ equity | 824,361 | 809,279 | 758,450 | 799,736 | 743,173 | ||||||||||
| Total equity | 844,447 | 819,734 | 759,220 | 808,785 | 743,367 | ||||||||||
| INCOME STATEMENT DATA | |||||||||||||||
| Net interest income | $ | 55,296 | $ | 57,195 | $ | 55,843 | $ | 223,866 | $ | 213,906 | |||||
| Net interest income - FTE^(1)^ | 55,456 | 57,362 | 56,034 | 224,552 | 214,709 | ||||||||||
| Provision for loan and lease losses | 2,951 | 3,717 | 4,702 | 15,833 | 19,462 | ||||||||||
| Noninterest income | 25,577 | 25,765 | 24,160 | 101,130 | 97,050 | ||||||||||
| Noninterest expense | 49,346 | 47,106 | 47,691 | 189,009 | 186,467 | ||||||||||
| Net income | 21,954 | 24,448 | 21,446 | 92,015 | 82,414 | ||||||||||
| Net income available to common shareholders | 21,941 | 24,438 | 21,446 | 91,960 | 82,414 | ||||||||||
| PER SHARE DATA | |||||||||||||||
| Basic net income per common share | $ | 0.86 | $ | 0.95 | $ | 0.82 | $ | 3.57 | $ | 3.16 | |||||
| Diluted net income per common share | 0.86 | 0.95 | 0.82 | 3.57 | 3.16 | ||||||||||
| Common cash dividends declared | 0.29 | 0.27 | 0.25 | 1.10 | 0.96 | ||||||||||
| Book value per common share^(2)^ | 32.47 | 31.88 | 29.56 | 32.47 | 29.56 | ||||||||||
| Tangible book value per common share^(1)^ | 29.18 | 28.59 | 26.30 | 29.18 | 26.30 | ||||||||||
| Market value - High | 53.42 | 48.31 | 54.30 | 53.42 | 59.33 | ||||||||||
| Market value - Low | 44.12 | 42.31 | 38.44 | 39.11 | 38.44 | ||||||||||
| Basic weighted average common shares outstanding | 25,509,240 | 25,520,035 | 25,876,687 | 25,600,138 | 25,937,599 | ||||||||||
| Diluted weighted average common shares outstanding | 25,509,240 | 25,520,035 | 25,876,687 | 25,600,138 | 25,937,599 | ||||||||||
| KEY RATIOS | |||||||||||||||
| Return on average assets | 1.30 | % | 1.46 | % | 1.36 | % | 1.41 | % | 1.34 | % | |||||
| Return on average common shareholders’ equity | 10.56 | 11.98 | 11.22 | 11.50 | 11.09 | ||||||||||
| Average common shareholders’ equity to average assets | 12.29 | 12.22 | 12.10 | 12.25 | 12.08 | ||||||||||
| End of period tangible common equity to tangible assets^(1)^ | 11.38 | 11.04 | 10.92 | 11.38 | 10.92 | ||||||||||
| Risk-based capital - Common Equity Tier 1^(3)^ | 12.55 | 12.26 | 12.38 | 12.55 | 12.38 | ||||||||||
| Risk-based capital - Tier 1^(3)^ | 13.64 | 13.33 | 13.42 | 13.64 | 13.42 | ||||||||||
| Risk-based capital - Total^(3)^ | 14.90 | 14.59 | 14.68 | 14.90 | 14.68 | ||||||||||
| Net interest margin | 3.51 | 3.67 | 3.77 | 3.67 | 3.71 | ||||||||||
| Net interest margin - FTE^(1)^ | 3.52 | 3.68 | 3.78 | 3.68 | 3.73 | ||||||||||
| Efficiency ratio: expense to revenue | 61.02 | 56.78 | 59.61 | 58.16 | 59.97 | ||||||||||
| Efficiency ratio: expense to revenue - adjusted^(1)^ | 57.87 | 53.44 | 55.90 | 54.65 | 56.18 | ||||||||||
| Net charge offs (recoveries) to average loans and leases | 0.05 | (0.02 | ) | 0.21 | 0.10 | 0.29 | |||||||||
| Loan and lease loss reserve to loans and leases | 2.19 | 2.14 | 2.08 | 2.19 | 2.08 | ||||||||||
| Nonperforming assets to loans and leases | 0.37 | 0.34 | 0.71 | 0.37 | 0.71 | ||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | |||||||||||
| END OF PERIOD BALANCES | |||||||||||||||
| Assets | $ | 6,622,776 | $ | 6,691,070 | $ | 6,650,105 | $ | 6,379,086 | $ | 6,293,745 | |||||
| Loans and leases | 5,085,527 | 5,099,546 | 5,109,337 | 4,926,187 | 4,835,464 | ||||||||||
| Deposits | 5,357,326 | 5,391,679 | 5,403,845 | 5,124,091 | 5,122,322 | ||||||||||
| Reserve for loan and lease losses | 111,254 | 108,941 | 104,911 | 101,852 | 100,469 | ||||||||||
| Goodwill and intangible assets | 83,971 | 83,978 | 83,985 | 83,992 | 83,998 | ||||||||||
| Common shareholders’ equity | 828,277 | 813,167 | 794,662 | 778,422 | 762,082 | ||||||||||
| Total equity | 848,636 | 833,042 | 804,686 | 781,101 | 763,590 | ||||||||||
| ASSET QUALITY | |||||||||||||||
| Loans and leases past due 90 days or more | $ | 309 | $ | 311 | $ | 156 | $ | 178 | $ | 366 | |||||
| Nonaccrual loans and leases | 9,789 | 10,188 | 12,212 | 13,622 | 27,859 | ||||||||||
| Other real estate | 522 | 629 | 543 | 417 | 299 | ||||||||||
| Repossessions | 8,623 | 6,610 | 8,799 | 10,411 | 6,666 | ||||||||||
| Equipment owned under operating leases | — | — | — | 64 | 126 | ||||||||||
| Total nonperforming assets | $ | 19,243 | $ | 17,738 | $ | 21,710 | $ | 24,692 | $ | 35,316 |
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
(2) Calculated as common shareholders’ equity divided by common shares outstanding at the end of the period.
(3) Calculated under banking regulatory guidelines.
– 7 –
| 1st SOURCE CORPORATION | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||||
| (Unaudited - Dollars in thousands) | ||||||||||||
| December 31, | September 30, | June 30, | December 31, | |||||||||
| 2019 | 2019 | 2019 | 2018 | |||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 67,215 | $ | 94,160 | $ | 71,910 | $ | 94,907 | ||||
| Federal funds sold and interest bearing deposits with other banks | 16,150 | 33,325 | 24,578 | 4,172 | ||||||||
| Investment securities available-for-sale | 1,040,583 | 1,032,185 | 1,021,786 | 990,129 | ||||||||
| Other investments | 28,414 | 28,404 | 28,404 | 28,404 | ||||||||
| Mortgages held for sale | 20,277 | 28,654 | 19,178 | 11,290 | ||||||||
| Loans and leases, net of unearned discount: | ||||||||||||
| Commercial and agricultural | 1,132,791 | 1,175,936 | 1,173,000 | 1,073,205 | ||||||||
| Auto and light truck | 588,807 | 612,921 | 635,100 | 559,987 | ||||||||
| Medium and heavy duty truck | 294,824 | 289,925 | 300,042 | 283,544 | ||||||||
| Aircraft | 784,040 | 805,568 | 811,163 | 803,111 | ||||||||
| Construction equipment | 705,451 | 685,696 | 686,633 | 645,239 | ||||||||
| Commercial real estate | 908,177 | 858,402 | 835,919 | 809,886 | ||||||||
| Residential real estate and home equity | 532,003 | 531,630 | 529,749 | 523,855 | ||||||||
| Consumer | 139,434 | 139,468 | 137,731 | 136,637 | ||||||||
| Total loans and leases | 5,085,527 | 5,099,546 | 5,109,337 | 4,835,464 | ||||||||
| Reserve for loan and lease losses | (111,254 | ) | (108,941 | ) | (104,911 | ) | (100,469 | ) | ||||
| Net loans and leases | 4,974,273 | 4,990,605 | 5,004,426 | 4,734,995 | ||||||||
| Equipment owned under operating leases, net | 111,684 | 119,171 | 126,502 | 134,440 | ||||||||
| Net premises and equipment | 52,219 | 51,680 | 51,570 | 52,139 | ||||||||
| Goodwill and intangible assets | 83,971 | 83,978 | 83,985 | 83,998 | ||||||||
| Accrued income and other assets | 227,990 | 228,908 | 217,766 | 159,271 | ||||||||
| Total assets | $ | 6,622,776 | $ | 6,691,070 | $ | 6,650,105 | $ | 6,293,745 | ||||
| LIABILITIES | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest bearing demand | $ | 1,216,834 | $ | 1,246,063 | $ | 1,238,604 | $ | 1,217,120 | ||||
| Interest-bearing deposits: | ||||||||||||
| Interest-bearing demand | 1,677,200 | 1,605,602 | 1,665,456 | 1,614,959 | ||||||||
| Savings | 814,794 | 820,409 | 810,122 | 822,477 | ||||||||
| Time | 1,648,498 | 1,719,605 | 1,689,663 | 1,467,766 | ||||||||
| Total interest-bearing deposits | 4,140,492 | 4,145,616 | 4,165,241 | 3,905,202 | ||||||||
| Total deposits | 5,357,326 | 5,391,679 | 5,403,845 | 5,122,322 | ||||||||
| Short-term borrowings: | ||||||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 120,459 | 139,417 | 119,781 | 113,627 | ||||||||
| Other short-term borrowings | 25,434 | 57,734 | 66,228 | 85,717 | ||||||||
| Total short-term borrowings | 145,893 | 197,151 | 186,009 | 199,344 | ||||||||
| Long-term debt and mandatorily redeemable securities | 71,639 | 71,520 | 71,542 | 71,123 | ||||||||
| Subordinated notes | 58,764 | 58,764 | 58,764 | 58,764 | ||||||||
| Accrued expenses and other liabilities | 140,518 | 138,914 | 125,259 | 78,602 | ||||||||
| Total liabilities | 5,774,140 | 5,858,028 | 5,845,419 | 5,530,155 | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Preferred stock; no par value<br><br>Authorized 10,000,000 shares; none issued or outstanding | — | — | — | — | ||||||||
| Common stock; no par value <br> Authorized 40,000,000 shares; issued 28,205,674 shares at December 31,<br> 2019, September 30, 2019, June 30, 2019, and December 31, 2018, <br> respectively) | 436,538 | 436,538 | 436,538 | 436,538 | ||||||||
| Retained earnings | 463,269 | 448,715 | 431,091 | 398,980 | ||||||||
| Cost of common stock in treasury (2,696,200, 2,696,918, 2,670,462, and 2,421,946 shares at December 31, 2019, September 30, 2019, June 30, 2019, and December 31, 2018, respectively) | (76,702 | ) | (76,716 | ) | (75,380 | ) | (62,760 | ) | ||||
| Accumulated other comprehensive income (loss) | 5,172 | 4,630 | 2,413 | (10,676 | ) | |||||||
| Total shareholders’ equity | 828,277 | 813,167 | 794,662 | 762,082 | ||||||||
| Noncontrolling interests | 20,359 | 19,875 | 10,024 | 1,508 | ||||||||
| Total equity | 848,636 | 833,042 | 804,686 | 763,590 | ||||||||
| Total liabilities and equity | $ | 6,622,776 | $ | 6,691,070 | $ | 6,650,105 | $ | 6,293,745 |
– 8 –
| 1st SOURCE CORPORATION | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
| (Unaudited - Dollars in thousands, except per share amounts) | ||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||
| Interest income: | ||||||||||||||
| Loans and leases | $ | 63,259 | $ | 66,807 | $ | 62,283 | $ | 258,348 | $ | 234,455 | ||||
| Investment securities, taxable | 5,189 | 5,056 | 5,363 | 20,946 | 19,356 | |||||||||
| Investment securities, tax-exempt | 297 | 316 | 419 | 1,351 | 1,857 | |||||||||
| Other | 798 | 497 | 452 | 2,232 | 1,648 | |||||||||
| Total interest income | 69,543 | 72,676 | 68,517 | 282,877 | 257,316 | |||||||||
| Interest expense: | ||||||||||||||
| Deposits | 12,523 | 13,524 | 10,345 | 50,495 | 34,631 | |||||||||
| Short-term borrowings | 170 | 293 | 718 | 1,934 | 2,838 | |||||||||
| Subordinated notes | 907 | 914 | 916 | 3,677 | 3,625 | |||||||||
| Long-term debt and mandatorily redeemable securities | 647 | 750 | 695 | 2,905 | 2,316 | |||||||||
| Total interest expense | 14,247 | 15,481 | 12,674 | 59,011 | 43,410 | |||||||||
| Net interest income | 55,296 | 57,195 | 55,843 | 223,866 | 213,906 | |||||||||
| Provision for loan and lease losses | 2,951 | 3,717 | 4,702 | 15,833 | 19,462 | |||||||||
| Net interest income after provision for loan and lease losses | 52,345 | 53,478 | 51,141 | 208,033 | 194,444 | |||||||||
| Noninterest income: | ||||||||||||||
| Trust and wealth advisory | 5,269 | 4,982 | 4,974 | 20,692 | 21,071 | |||||||||
| Service charges on deposit accounts | 2,835 | 2,892 | 2,778 | 11,010 | 10,454 | |||||||||
| Debit card | 3,593 | 3,727 | 3,462 | 14,209 | 13,369 | |||||||||
| Mortgage banking | 1,401 | 1,362 | 962 | 4,698 | 3,844 | |||||||||
| Insurance commissions | 1,466 | 1,603 | 1,477 | 6,761 | 6,502 | |||||||||
| Equipment rental | 7,372 | 7,578 | 7,957 | 30,741 | 31,793 | |||||||||
| Losses on investment securities available-for-sale | — | — | — | — | (345 | ) | ||||||||
| Other | 3,641 | 3,621 | 2,550 | 13,019 | 10,362 | |||||||||
| Total noninterest income | 25,577 | 25,765 | 24,160 | 101,130 | 97,050 | |||||||||
| Noninterest expense: | ||||||||||||||
| Salaries and employee benefits | 25,382 | 24,434 | 24,466 | 97,098 | 93,857 | |||||||||
| Net occupancy | 2,640 | 2,635 | 2,537 | 10,528 | 10,041 | |||||||||
| Furniture and equipment | 6,475 | 6,027 | 6,491 | 24,815 | 23,433 | |||||||||
| Depreciation — leased equipment | 6,006 | 6,198 | 6,556 | 25,128 | 26,248 | |||||||||
| Professional fees | 2,045 | 1,603 | 2,052 | 6,952 | 7,680 | |||||||||
| Supplies and communication | 1,710 | 1,643 | 1,633 | 6,454 | 6,320 | |||||||||
| FDIC and other insurance | 282 | 260 | 656 | 1,795 | 2,923 | |||||||||
| Business development and marketing | 1,832 | 1,844 | 1,191 | 6,303 | 6,112 | |||||||||
| Loan and lease collection and repossession | 1,114 | 697 | 296 | 3,402 | 3,375 | |||||||||
| Other | 1,860 | 1,765 | 1,813 | 6,534 | 6,478 | |||||||||
| Total noninterest expense | 49,346 | 47,106 | 47,691 | 189,009 | 186,467 | |||||||||
| Income before income taxes | 28,576 | 32,137 | 27,610 | 120,154 | 105,027 | |||||||||
| Income tax expense | 6,622 | 7,689 | 6,164 | 28,139 | 22,613 | |||||||||
| Net income | 21,954 | 24,448 | 21,446 | 92,015 | 82,414 | |||||||||
| Net (income) loss attributable to noncontrolling interests | (13 | ) | (10 | ) | — | (55 | ) | — | ||||||
| Net income available to common shareholders | $ | 21,941 | $ | 24,438 | $ | 21,446 | $ | 91,960 | $ | 82,414 | ||||
| Per common share: | ||||||||||||||
| Basic net income per common share | $ | 0.86 | $ | 0.95 | $ | 0.82 | $ | 3.57 | $ | 3.16 | ||||
| Diluted net income per common share | $ | 0.86 | $ | 0.95 | $ | 0.82 | $ | 3.57 | $ | 3.16 | ||||
| Cash dividends | $ | 0.29 | $ | 0.27 | $ | 0.25 | $ | 1.10 | $ | 0.96 | ||||
| Basic weighted average common shares outstanding | 25,509,240 | 25,520,035 | 25,876,687 | 25,600,138 | 25,937,599 | |||||||||
| Diluted weighted average common shares outstanding | 25,509,240 | 25,520,035 | 25,876,687 | 25,600,138 | 25,937,599 |
– 9 –
| 1st SOURCE CORPORATION | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
| INTEREST RATES AND INTEREST DIFFERENTIAL | ||||||||||||||||||||||||
| (Unaudited - Dollars in thousands) | ||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| December 31, 2019 | September 30, 2019 | December 31, 2018 | ||||||||||||||||||||||
| Average<br><br>Balance | Interest Income/Expense | Yield/<br><br>Rate | Average<br><br>Balance | Interest Income/Expense | Yield/<br><br>Rate | Average<br><br>Balance | Interest Income/Expense | Yield/<br><br>Rate | ||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Investment securities available-for-sale: | ||||||||||||||||||||||||
| Taxable | $ | 982,839 | $ | 5,189 | 2.09 | % | $ | 959,104 | $ | 5,056 | 2.09 | % | $ | 895,204 | $ | 5,363 | 2.38 | % | ||||||
| Tax-exempt^(1)^ | 62,078 | 365 | 2.33 | % | 65,146 | 388 | 2.36 | % | 81,652 | 516 | 2.51 | % | ||||||||||||
| Mortgages held for sale | 21,489 | 192 | 3.54 | % | 19,888 | 190 | 3.79 | % | 9,018 | 107 | 4.71 | % | ||||||||||||
| Loans and leases, net of unearned discount^(1)^ | 5,046,639 | 63,159 | 4.97 | % | 5,091,358 | 66,712 | 5.20 | % | 4,835,995 | 62,270 | 5.11 | % | ||||||||||||
| Other investments | 145,893 | 798 | 2.17 | % | 54,768 | 497 | 3.60 | % | 51,607 | 452 | 3.47 | % | ||||||||||||
| Total earning assets^(1)^ | 6,258,938 | 69,703 | 4.42 | % | 6,190,264 | 72,843 | 4.67 | % | 5,873,476 | 68,708 | 4.64 | % | ||||||||||||
| Cash and due from banks | 73,438 | 66,046 | 67,437 | |||||||||||||||||||||
| Reserve for loan and lease losses | (110,209 | ) | (106,559 | ) | (99,182 | ) | ||||||||||||||||||
| Other assets | 486,308 | 471,129 | 428,813 | |||||||||||||||||||||
| Total assets | $ | 6,708,475 | $ | 6,620,880 | $ | 6,270,544 | ||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
| Interest-bearing deposits | $ | 4,170,250 | $ | 12,523 | 1.19 | % | $ | 4,174,746 | $ | 13,524 | 1.29 | % | $ | 3,932,453 | $ | 10,345 | 1.04 | % | ||||||
| Short-term borrowings | 183,244 | 170 | 0.37 | % | 188,562 | 293 | 0.62 | % | 241,979 | 718 | 1.18 | % | ||||||||||||
| Subordinated notes | 58,764 | 907 | 6.12 | % | 58,764 | 914 | 6.17 | % | 58,764 | 916 | 6.18 | % | ||||||||||||
| Long-term debt and mandatorily redeemable securities | 71,428 | 647 | 3.59 | % | 71,304 | 750 | 4.17 | % | 70,871 | 695 | 3.89 | % | ||||||||||||
| Total interest-bearing liabilities | 4,483,686 | 14,247 | 1.26 | % | 4,493,376 | 15,481 | 1.37 | % | 4,304,067 | 12,674 | 1.17 | % | ||||||||||||
| Noninterest-bearing deposits | 1,244,173 | 1,188,645 | 1,155,495 | |||||||||||||||||||||
| Other liabilities | 136,169 | 119,125 | 51,762 | |||||||||||||||||||||
| Shareholders’ equity | 824,361 | 809,279 | 758,450 | |||||||||||||||||||||
| Noncontrolling interests | 20,086 | 10,455 | 770 | |||||||||||||||||||||
| Total liabilities and equity | $ | 6,708,475 | $ | 6,620,880 | $ | 6,270,544 | ||||||||||||||||||
| Less: Fully tax-equivalent adjustments | (160 | ) | (167 | ) | (191 | ) | ||||||||||||||||||
| Net interest income/margin (GAAP-derived)^(1)^ | $ | 55,296 | 3.51 | % | $ | 57,195 | 3.67 | % | $ | 55,843 | 3.77 | % | ||||||||||||
| Fully tax-equivalent adjustments | 160 | 167 | 191 | |||||||||||||||||||||
| Net interest income/margin - FTE^(1)^ | $ | 55,456 | 3.52 | % | $ | 57,362 | 3.68 | % | $ | 56,034 | 3.78 | % |
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
– 10 –
| 1st SOURCE CORPORATION | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
| INTEREST RATES AND INTEREST DIFFERENTIAL | ||||||||||||||||
| (Unaudited - Dollars in thousands) | ||||||||||||||||
| Twelve Months Ended | ||||||||||||||||
| December 31, 2019 | December 31, 2018 | |||||||||||||||
| Average<br><br>Balance | Interest Income/Expense | Yield/<br><br>Rate | Average<br><br>Balance | Interest Income/Expense | Yield/<br><br>Rate | |||||||||||
| ASSETS | ||||||||||||||||
| Investment securities available-for-sale: | ||||||||||||||||
| Taxable | $ | 945,396 | $ | 20,946 | 2.22 | % | $ | 861,733 | $ | 19,356 | 2.25 | % | ||||
| Tax-exempt^(1)^ | 69,263 | 1,662 | 2.40 | % | 90,079 | 2,293 | 2.55 | % | ||||||||
| Mortgages held for sale | 15,601 | 610 | 3.91 | % | 8,190 | 372 | 4.54 | % | ||||||||
| Loans and leases, net of unearned discount^(1)^ | 5,000,161 | 258,113 | 5.16 | % | 4,755,256 | 234,450 | 4.93 | % | ||||||||
| Other investments | 74,252 | 2,232 | 3.01 | % | 46,503 | 1,648 | 3.54 | % | ||||||||
| Total earning assets^(1)^ | 6,104,673 | 283,563 | 4.65 | % | 5,761,761 | 258,119 | 4.48 | % | ||||||||
| Cash and due from banks | 67,726 | 64,853 | ||||||||||||||
| Reserve for loan and lease losses | (105,340 | ) | (99,258 | ) | ||||||||||||
| Other assets | 461,215 | 424,083 | ||||||||||||||
| Total assets | $ | 6,528,274 | $ | 6,151,439 | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
| Interest-bearing deposits | $ | 4,105,097 | $ | 50,495 | 1.23 | % | $ | 3,893,999 | $ | 34,631 | 0.89 | % | ||||
| Short-term borrowings | 205,911 | 1,934 | 0.94 | % | 265,041 | 2,838 | 1.07 | % | ||||||||
| Subordinated notes | 58,764 | 3,677 | 6.26 | % | 58,764 | 3,625 | 6.17 | % | ||||||||
| Long-term debt and mandatorily redeemable securities | 71,133 | 2,905 | 4.08 | % | 70,813 | 2,316 | 3.27 | % | ||||||||
| Total interest-bearing liabilities | 4,440,905 | 59,011 | 1.33 | % | 4,288,617 | 43,410 | 1.01 | % | ||||||||
| Noninterest-bearing deposits | 1,171,639 | 1,069,664 | ||||||||||||||
| Other liabilities | 106,945 | 49,791 | ||||||||||||||
| Shareholders’ equity | 799,736 | 743,173 | ||||||||||||||
| Noncontrolling interests | 9,049 | 194 | ||||||||||||||
| Total liabilities and equity | $ | 6,528,274 | $ | 6,151,439 | ||||||||||||
| Less: Fully tax-equivalent adjustments | (686 | ) | (803 | ) | ||||||||||||
| Net interest income/margin (GAAP-derived)^(1)^ | $ | 223,866 | 3.67 | % | $ | 213,906 | 3.71 | % | ||||||||
| Fully tax-equivalent adjustments | 686 | 803 | ||||||||||||||
| Net interest income/margin - FTE^(1)^ | $ | 224,552 | 3.68 | % | $ | 214,709 | 3.73 | % |
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
– 11 –
| 1st SOURCE CORPORATION | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (Unaudited - Dollars in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Calculation of Net Interest Margin | ||||||||||||||||
| (A) | Interest income (GAAP) | $ | 69,543 | $ | 72,676 | $ | 68,517 | $ | 282,877 | $ | 257,316 | |||||
| Fully tax-equivalent adjustments: | ||||||||||||||||
| (B) | - Loans and leases | 92 | 95 | 94 | 375 | 367 | ||||||||||
| (C) | - Tax-exempt investment securities | 68 | 72 | 97 | 311 | 436 | ||||||||||
| (D) | Interest income - FTE (A+B+C) | 69,703 | 72,843 | 68,708 | 283,563 | 258,119 | ||||||||||
| (E) | Interest expense (GAAP) | 14,247 | 15,481 | 12,674 | 59,011 | 43,410 | ||||||||||
| (F) | Net interest income (GAAP) (A–E) | 55,296 | 57,195 | 55,843 | 223,866 | 213,906 | ||||||||||
| (G) | Net interest income - FTE (D–E) | 55,456 | 57,362 | 56,034 | 224,552 | 214,709 | ||||||||||
| (H) | Annualization factor | 3.967 | 3.967 | 3.967 | 1.000 | 1.000 | ||||||||||
| (I) | Total earning assets | $ | 6,258,938 | $ | 6,190,264 | $ | 5,873,476 | $ | 6,104,673 | $ | 5,761,761 | |||||
| Net interest margin (GAAP-derived) (F*H)/I | 3.51 | % | 3.67 | % | 3.77 | % | 3.67 | % | 3.71 | % | ||||||
| Net interest margin - FTE (G*H)/I | 3.52 | % | 3.68 | % | 3.78 | % | 3.68 | % | 3.73 | % | ||||||
| Calculation of Efficiency Ratio | ||||||||||||||||
| (F) | Net interest income (GAAP) | $ | 55,296 | $ | 57,195 | $ | 55,843 | $ | 223,866 | $ | 213,906 | |||||
| (G) | Net interest income - FTE | 55,456 | 57,362 | 56,034 | 224,552 | 214,709 | ||||||||||
| (J) | Plus: noninterest income (GAAP) | 25,577 | 25,765 | 24,160 | 101,130 | 97,050 | ||||||||||
| (K) | Less: gains/losses on investment securities and partnership investments | (132 | ) | (374 | ) | (57 | ) | (653 | ) | (320 | ) | |||||
| (L) | Less: depreciation - leased equipment | (6,006 | ) | (6,198 | ) | (6,556 | ) | (25,128 | ) | (26,248 | ) | |||||
| (M) | Total net revenue (GAAP) (F+J) | 80,873 | 82,960 | 80,003 | 324,996 | 310,956 | ||||||||||
| (N) | Total net revenue - adjusted (G+J–K–L) | 74,895 | 76,555 | 73,581 | 299,901 | 285,191 | ||||||||||
| (O) | Noninterest expense (GAAP) | 49,346 | 47,106 | 47,691 | 189,009 | 186,467 | ||||||||||
| (L) | Less: depreciation - leased equipment | (6,006 | ) | (6,198 | ) | (6,556 | ) | (25,128 | ) | (26,248 | ) | |||||
| (P) | Noninterest expense - adjusted (O–L) | 43,340 | 40,908 | 41,135 | 163,881 | 160,219 | ||||||||||
| Efficiency ratio (GAAP-derived) (O/M) | 61.02 | % | 56.78 | % | 59.61 | % | 58.16 | % | 59.97 | % | ||||||
| Efficiency ratio - adjusted (P/N) | 57.87 | % | 53.44 | % | 55.90 | % | 54.65 | % | 56.18 | % | ||||||
| End of Period | ||||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||
| 2019 | 2019 | 2018 | ||||||||||||||
| Calculation of Tangible Common Equity-to-Tangible Assets Ratio | ||||||||||||||||
| (Q) | Total common shareholders’ equity (GAAP) | $ | 828,277 | $ | 813,167 | $ | 762,082 | |||||||||
| (R) | Less: goodwill and intangible assets | (83,971 | ) | (83,978 | ) | (83,998 | ) | |||||||||
| (S) | Total tangible common shareholders’ equity (Q–R) | $ | 744,306 | $ | 729,189 | $ | 678,084 | |||||||||
| (T) | Total assets (GAAP) | 6,622,776 | 6,691,070 | 6,293,745 | ||||||||||||
| (R) | Less: goodwill and intangible assets | (83,971 | ) | (83,978 | ) | (83,998 | ) | |||||||||
| (U) | Total tangible assets (T–R) | $ | 6,538,805 | $ | 6,607,092 | $ | 6,209,747 | |||||||||
| Common equity-to-assets ratio (GAAP-derived) (Q/T) | 12.51 | % | 12.15 | % | 12.11 | % | ||||||||||
| Tangible common equity-to-tangible assets ratio (S/U) | 11.38 | % | 11.04 | % | 10.92 | % | ||||||||||
| Calculation of Tangible Book Value per Common Share | ||||||||||||||||
| (Q) | Total common shareholders’ equity (GAAP) | $ | 828,277 | $ | 813,167 | $ | 762,082 | |||||||||
| (V) | Actual common shares outstanding | 25,509,474 | 25,508,756 | 25,783,728 | ||||||||||||
| Book value per common share (GAAP-derived) (Q/V)*1000 | $ | 32.47 | $ | 31.88 | $ | 29.56 | ||||||||||
| Tangible common book value per share (S/V)*1000 | $ | 29.18 | $ | 28.59 | $ | 26.30 |
The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com
– 12 –