SRCE 8-K

1St Source Corp (SRCE)

8-K 2022-07-21 For: 2022-07-21

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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 21, 2022						/s/ BRETT A. BAUER
						Brett A. Bauer
						Treasurer and Chief Financial Officer
						Principal Accounting Officer



For:	Immediate Release	Contact:	Brett Bauer
	July 21, 2022		574-235-2000


1st SOURCE CORPORATION
2nd QUARTER 2022 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,
	2022			2022			2021			2022			2021
AVERAGE BALANCES
Assets	$	8,092,316		$	8,008,738		$	7,657,276		$	8,050,758		$	7,504,692
Earning assets	7,685,631			7,620,248			7,264,886			7,653,120			7,113,559
Investments	1,835,974			1,887,055			1,339,551			1,861,374			1,285,564
Loans and leases	5,467,808			5,324,344			5,515,387			5,396,472			5,507,243
Deposits	6,795,793			6,616,869			6,278,654			6,706,826			6,130,386
Interest bearing liabilities	5,049,145			4,913,453			4,785,800			4,981,675			4,682,307
Common shareholders’ equity	861,134			910,793			898,388			885,826			896,481
Total equity	915,714			964,156			942,821			939,801			940,648
INCOME STATEMENT DATA
Net interest income	$	63,462		$	59,618		$	56,935		$	123,080		$	114,347
Net interest income - FTE(1)	63,585			59,726			57,053			123,311			114,586
Provision (recovery of provision) for credit losses	2,503			2,233			(3,025)			4,736			(627)
Noninterest income	22,830			23,145			24,898			45,975			50,767
Noninterest expense	45,655			45,336			45,198			90,991			89,338
Net income	29,330			27,401			30,235			56,731			58,341
Net income available to common shareholders	29,314			27,390			30,223			56,704			58,328
PER SHARE DATA
Basic net income per common share	$	1.18		$	1.10		$	1.19		$	2.28		$	2.29
Diluted net income per common share	1.18			1.10			1.19			2.28			2.29
Common cash dividends declared	0.31			0.31			0.30			0.62			0.59
Book value per common share(2)	34.74			34.97			36.05			34.74			36.05
Tangible book value per common share(1)	31.33			31.57			32.69			31.33			32.69
Market value - High	48.42			52.70			51.02			52.70			51.02
Market value - Low	42.29			45.78			45.22			42.29			38.73
Basic weighted average common shares outstanding	24,691,747			24,743,790			25,143,712			24,717,625			25,231,789
Diluted weighted average common shares outstanding	24,691,747			24,743,790			25,143,712			24,717,625			25,231,789
KEY RATIOS
Return on average assets	1.45		%	1.39		%	1.58		%	1.42		%	1.57		%
Return on average common shareholders’ equity	13.65			12.20			13.49			12.91			13.12
Average common shareholders’ equity to average assets	10.64			11.37			11.73			11.00			11.95
End of period tangible common equity to tangible assets(1)	9.72			9.85			10.70			9.72			10.70
Risk-based capital - Common Equity Tier 1(3)	13.79			13.88			13.62			13.79			13.62
Risk-based capital - Tier 1(3)	15.53			15.67			15.32			15.53			15.32
Risk-based capital - Total(3)	16.79			16.93			16.58			16.79			16.58
Net interest margin	3.31			3.17			3.14			3.24			3.24
Net interest margin - FTE(1)	3.32			3.18			3.15			3.25			3.25
Efficiency ratio: expense to revenue	52.91			54.78			55.23			53.82			54.11
Efficiency ratio: expense to revenue - adjusted(1)	51.72			53.29			52.89			52.49			51.94
Net (recoveries) charge offs to average loans and leases	(0.03)			(0.02)			0.01			(0.02)			0.13
Loan and lease loss allowance to loans and leases	2.39			2.41			2.49			2.39			2.49
Nonperforming assets to loans and leases	0.60			0.66			1.06			0.60			1.06

	June 30,			March 31,			December 31,			September 30,			June 30,
	2022			2022			2021			2021			2021
END OF PERIOD BALANCES
Assets	$	8,029,359		$	8,012,463		$	8,096,289		$	7,964,092		$	7,718,694
Loans and leases	5,551,216			5,394,003			5,346,214			5,358,797			5,483,045
Deposits	6,744,896			6,673,092			6,679,065			6,522,505			6,345,410
Allowance for loan and lease losses	132,865			129,959			127,492			133,755			136,361
Goodwill and intangible assets	83,916			83,921			83,926			83,931			83,937
Common shareholders’ equity	856,251			864,850			916,255			911,333			901,226
Total equity	910,667			919,470			969,464			956,397			945,457
ASSET QUALITY
Loans and leases past due 90 days or more	$	50		$	274		$	249		$	96		$	44
Nonaccrual loans and leases	33,490			35,435			38,706			43,166			55,864

Repossessions	102			73			861			690			1,213
Equipment owned under operating leases	43			343			1,518			1,598			1,728
Total nonperforming assets	$	33,685		$	36,125		$	41,334		$	45,550		$	58,849


1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
	June 30,		March 31,		December 31,		June 30,
	2022		2022		2021		2021
ASSETS
Cash and due from banks	$	116,915	$	69,195	$	54,420	$	69,101
Federal funds sold and interest bearing deposits with other banks	164,848		347,697		470,767		400,346
Investment securities available-for-sale	1,836,389		1,857,431		1,863,041		1,413,022
Other investments	25,538		25,538		27,189		27,429
Mortgages held for sale	5,525		4,757		13,284		6,453
Loans and leases, net of unearned discount:
Commercial and agricultural	842,618		869,093		918,712		1,125,965
Solar	350,472		337,485		348,302		305,250
Auto and light truck	708,720		629,780		603,775		595,326
Medium and heavy duty truck	278,334		255,277		259,740		256,169
Aircraft	959,876		957,040		898,401		883,559
Construction equipment	803,734		775,972		754,273		729,055
Commercial real estate	931,058		920,807		929,341		966,171
Residential real estate and home equity	535,589		510,537		500,590		492,552
Consumer	140,815		138,012		133,080		128,998
Total loans and leases	5,551,216		5,394,003		5,346,214		5,483,045
Allowance for loan and lease losses	(132,865)		(129,959)		(127,492)		(136,361)
Net loans and leases	5,418,351		5,264,044		5,218,722		5,346,684
Equipment owned under operating leases, net	36,579		41,792		48,433		56,011
Net premises and equipment	45,250		45,960		47,038		47,617
Goodwill and intangible assets	83,916		83,921		83,926		83,937
Accrued income and other assets	296,048		272,128		269,469		268,094
Total assets	$	8,029,359	$	8,012,463	$	8,096,289	$	7,718,694
LIABILITIES
Deposits:
Noninterest-bearing demand	$	2,032,566	$	2,061,111	$	2,052,981	$	1,851,932
Interest-bearing deposits:
Interest-bearing demand	2,644,590		2,430,979		2,455,580		2,318,210
Savings	1,282,791		1,328,981		1,286,367		1,182,643
Time	784,949		852,021		884,137		992,625
Total interest-bearing deposits	4,712,330		4,611,981		4,626,084		4,493,478
Total deposits	6,744,896		6,673,092		6,679,065		6,345,410
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	162,649		193,798		194,727		167,097
Other short-term borrowings	5,190		5,360		5,300		5,247
Total short-term borrowings	167,839		199,158		200,027		172,344
Long-term debt and mandatorily redeemable securities	48,459		69,563		71,251		81,330
Subordinated notes	58,764		58,764		58,764		58,764
Accrued expenses and other liabilities	98,734		92,416		117,718		115,389
Total liabilities	7,118,692		7,092,993		7,126,825		6,773,237
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, 2022, March 31, 2022, December 31, 2021, and June 30, 2021, respectively	436,538		436,538		436,538		436,538
Retained earnings	646,600		624,503		603,787		558,795
Cost of common stock in treasury (3,555,267, 3,473,139, 3,466,162, and 3,204,947 shares at June 30, 2022, March 31, 2022, December 31, 2021, and June 30, 2021, respectively)	(119,876)		(115,654)		(114,209)		(101,711)
Accumulated other comprehensive (loss) income	(107,011)		(80,537)		(9,861)		7,604
Total shareholders’ equity	856,251		864,850		916,255		901,226
Noncontrolling interests	54,416		54,620		53,209		44,231
Total equity	910,667		919,470		969,464		945,457
Total liabilities and equity	$	8,029,359	$	8,012,463	$	8,096,289	$	7,718,694


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,
	2022		2022		2021		2022		2021
Interest income:
Loans and leases	$	60,415	$	55,208	$	57,144	$	115,623	$	115,008
Investment securities, taxable	6,289		6,344		4,155		12,633		8,143
Investment securities, tax-exempt	157		134		154		291		328
Other	1,168		363		317		1,531		583
Total interest income	68,029		62,049		61,770		130,078		124,062
Interest expense:
Deposits	3,553		2,376		3,202		5,929		6,728
Short-term borrowings	23		24		29		47		65
Subordinated notes	851		823		814		1,674		1,632
Long-term debt and mandatorily redeemable securities	140		(792)		790		(652)		1,290
Total interest expense	4,567		2,431		4,835		6,998		9,715
Net interest income	63,462		59,618		56,935		123,080		114,347
Provision (recovery of provision) for credit losses	2,503		2,233		(3,025)		4,736		(627)
Net interest income after provision for credit losses	60,959		57,385		59,960		118,344		114,974
Noninterest income:
Trust and wealth advisory	6,087		5,914		6,466		12,001		11,947
Service charges on deposit accounts	2,942		2,792		2,508		5,734		4,955
Debit card	4,561		4,194		4,754		8,755		8,936
Mortgage banking	1,062		1,377		2,859		2,439		6,760
Insurance commissions	1,568		1,905		1,684		3,473		3,836
Equipment rental	3,295		3,662		4,255		6,957		8,884
Losses on investment securities available-for-sale	—		—		(680)		—		(680)
Other	3,315		3,301		3,052		6,616		6,129
Total noninterest income	22,830		23,145		24,898		45,975		50,767
Noninterest expense:
Salaries and employee benefits	25,562		25,467		25,510		51,029		50,706
Net occupancy	2,524		2,811		2,527		5,335		5,246
Furniture and equipment	1,384		1,295		1,420		2,679		2,894
Data processing	5,402		5,208		4,917		10,610		9,901
Depreciation – leased equipment	2,664		3,015		3,550		5,679		7,323
Professional fees	2,094		1,608		2,146		3,702		3,759
FDIC and other insurance	893		850		772		1,743		1,437
Business development and marketing	1,669		1,268		1,351		2,937		2,348
Loan and lease collection and repossession	(265)		134		486		(131)		615
Other	3,728		3,680		2,519		7,408		5,109
Total noninterest expense	45,655		45,336		45,198		90,991		89,338
Income before income taxes	38,134		35,194		39,660		73,328		76,403
Income tax expense	8,804		7,793		9,425		16,597		18,062
Net income	29,330		27,401		30,235		56,731		58,341
Net (income) loss attributable to noncontrolling interests	(16)		(11)		(12)		(27)		(13)
Net income available to common shareholders	$	29,314	$	27,390	$	30,223	$	56,704	$	58,328
Per common share:
Basic net income per common share	$	1.18	$	1.10	$	1.19	$	2.28	$	2.29
Diluted net income per common share	$	1.18	$	1.10	$	1.19	$	2.28	$	2.29
Cash dividends	$	0.31	$	0.31	$	0.30	$	0.62	$	0.59
Basic weighted average common shares outstanding	24,691,747		24,743,790		25,143,712		24,717,625		25,231,789
Diluted weighted average common shares outstanding	24,691,747		24,743,790		25,143,712		24,717,625		25,231,789


1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
							Three Months Ended
	June 30, 2022						March 31, 2022						June 30, 2021
	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	$	1,805,044	$	6,289	1.40	%	$	1,857,557	$	6,344	1.39	%	$	1,305,988	$	4,156	1.28	%
Tax exempt(1)	30,930		195		2.53	%	29,498		165		2.27	%	33,563		192		2.29	%
Mortgages held for sale	4,889		52		4.27	%	8,791		67		3.09	%	7,208		54		3.00	%
Loans and leases, net of unearned discount(1)	5,467,808		60,448		4.43	%	5,324,344		55,218		4.21	%	5,515,387		57,169		4.16	%
Other investments	376,960		1,168		1.24	%	400,058		363		0.37	%	402,740		317		0.32	%
Total earning assets(1)	7,685,631		68,152		3.56	%	7,620,248		62,157		3.31	%	7,264,886		61,888		3.42	%
Cash and due from banks	90,101						77,063						76,198
Allowance for loan and lease losses	(132,020)						(128,647)						(142,056)
Other assets	448,604						440,074						458,248
Total assets	$	8,092,316					$	8,008,738					$	7,657,276

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	$	4,753,331	$	3,553	0.30	%	$	4,587,242	$	2,376	0.21	%	$	4,458,915	$	3,202	0.29	%
Short-term borrowings:
Securities sold under agreements to repurchase	176,994		23		0.05	%	192,108		23		0.05	%	180,613		28		0.06	%
Other short-term borrowings	5,394		—		—	%	5,372		1		0.08	%	5,992		1		0.07	%
Subordinated notes	58,764		851		5.81	%	58,764		823		5.68	%	58,764		814		5.56	%
Long-term debt and mandatorily redeemable securities	54,662		140		1.03	%	69,967		(792)		(4.59)	%	81,516		790		3.89	%
Total interest-bearing liabilities	5,049,145		4,567		0.36	%	4,913,453		2,431		0.20	%	4,785,800		4,835		0.41	%
Noninterest-bearing deposits	2,042,462						2,029,627						1,819,739
Other liabilities	84,995						101,502						108,916
Shareholders’ equity	861,134						910,793						898,388
Noncontrolling interests	54,580						53,363						44,433
Total liabilities and equity	$	8,092,316					$	8,008,738					$	7,657,276
Less: Fully tax-equivalent adjustments			(123)						(108)						(118)
Net interest income/margin (GAAP-derived)(1)			$	63,462	3.31	%			$	59,618	3.17	%			$	56,935	3.14	%
Fully tax-equivalent adjustments			123						108						118
Net interest income/margin - FTE(1)			$	63,585	3.32	%			$	59,726	3.18	%			$	57,053	3.15	%
(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,
		2022			2022			2021			2022			2021
Calculation of Net Interest Margin
(A)	Interest income (GAAP)	$	68,029		$	62,049		$	61,770		$	130,078		$	124,062
	Fully tax-equivalent adjustments:
(B)	– Loans and leases	85			77			80			162			161
(C)	– Tax exempt investment securities	38			31			38			69			78
(D)	Interest income – FTE (A+B+C)	68,152			62,157			61,888			130,309			124,301
(E)	Interest expense (GAAP)	4,567			2,431			4,835			6,998			9,715
(F)	Net interest income (GAAP) (A-E)	63,462			59,618			56,935			123,080			114,347
(G)	Net interest income - FTE (D-E)	63,585			59,726			57,053			123,311			114,586
(H)	Annualization factor	4.011			4.056			4.011			2.017			2.017
(I)	Total earning assets	$	7,685,631		$	7,620,248		$	7,264,886		$	7,653,120		$	7,113,559
	Net interest margin (GAAP-derived) (F*H)/I	3.31		%	3.17		%	3.14		%	3.24		%	3.24		%
	Net interest margin – FTE (G*H)/I	3.32		%	3.18		%	3.15		%	3.25		%	3.25		%

Calculation of Efficiency Ratio
(F)	Net interest income (GAAP)	$	63,462		$	59,618		$	56,935		$	123,080		$	114,347
(G)	Net interest income – FTE	63,585			59,726			57,053			123,311			114,586
(J)	Plus: noninterest income (GAAP)	22,830			23,145			24,898			45,975			50,767
(K)	Less: gains/losses on investment securities and partnership investments	(636)			(444)			348			(1,080)			(112)
(L)	Less: depreciation – leased equipment	(2,664)			(3,015)			(3,550)			(5,679)			(7,323)
(M)	Total net revenue (GAAP) (F+J)	86,292			82,763			81,833			169,055			165,114
(N)	Total net revenue – adjusted (G+J–K–L)	83,115			79,412			78,749			162,527			157,918
(O)	Noninterest expense (GAAP)	45,655			45,336			45,198			90,991			89,338
(L)	Less:depreciation – leased equipment	(2,664)			(3,015)			(3,550)			(5,679)			(7,323)

(P)	Noninterest expense – adjusted (O–L)	42,991			42,321			41,648			85,312			82,015
	Efficiency ratio (GAAP-derived) (O/M)	52.91		%	54.78		%	55.23		%	53.82		%	54.11		%
	Efficiency ratio – adjusted (P/N)	51.72		%	53.29		%	52.89		%	52.49		%	51.94		%

		End of Period
		June 30,			March 31,			June 30,
		2022			2022			2021
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)	Total common shareholders’ equity (GAAP)	$	856,251		$	864,850		$	901,226
(R)	Less: goodwill and intangible assets	(83,916)			(83,921)			(83,937)
(S)	Total tangible common shareholders’ equity (Q–R)	$	772,335		$	780,929		$	817,289
(T)	Total assets (GAAP)	8,029,359			8,012,463			7,718,694
(R)	Less: goodwill and intangible assets	(83,916)			(83,921)			(83,937)
(U)	Total tangible assets (T–R)	$	7,945,443		$	7,928,542		$	7,634,757
	Common equity-to-assets ratio (GAAP-derived) (Q/T)	10.66		%	10.79		%	11.68		%
	Tangible common equity-to-tangible assets ratio (S/U)	9.72		%	9.85		%	10.70		%

Calculation of Tangible Book Value per Common Share
(Q)	Total common shareholders’ equity (GAAP)	$	856,251		$	864,850		$	901,226
(V)	Actual common shares outstanding	24,650,407			24,732,535			25,000,727
	Book value per common share (GAAP-derived) (Q/V)*1000	$	34.74		$	34.97		$	36.05
	Tangible common book value per share (S/V)*1000	$	31.33		$	31.57		$	32.69