source-20221020
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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): October 20, 2022

1st Source Corporation
(Exact name of registrant as specified in its charter)
Indiana
0-623335-1068133
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock - without par valueSRCEThe 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 October 20, 2022, 1st Source Corporation issued a press release that announced its third quarter earnings for 2022. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.



ITEM 9.01    Financial Statements and Exhibits.
Exhibit 99.1:    Press release dated October 20, 2022, with respect to 1st Source Corporation’s financial results for the third quarter ended September 30, 2022.

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: October 20, 2022/s/ BRETT A. BAUER
Brett A. Bauer
Treasurer and Chief Financial Officer
Principal Accounting Officer



                                                Exhibit 99.1
pressreleasecorplogo.jpg
For:Immediate ReleaseContact:Brett Bauer
October 20, 2022574-235-2000


1st Source Corporation Reports Record Third Quarter Results,
Cash Dividend Declared
QUARTERLY HIGHLIGHTS
•Net income was a record $32.74 million for the quarter, up $0.25 million or 0.78% from the third quarter of 2021. Diluted net income per common share was $1.32, up $0.03 from the prior year’s third quarter of $1.29.
•Cash dividend of $0.32 per common share was approved, up 3.23% from the cash dividend declared a year ago.
•Return on average assets of 1.62% and return on average common shareholders’ equity of 14.87% compared to 1.65% and 14.08%, respectively in the third quarter of 2021.
•Average loans and leases net PPP loans grew $177.10 million in the third quarter, up 3.25% (13% annualized growth) from the previous quarter and $451.88 million, up 8.74% from the third quarter of 2021.
•Tax-equivalent net interest income was $69.12 million, up $6.78 million, or 10.88% from the third quarter a year ago. Tax-equivalent net interest margin was 3.60%, up 26 basis points from the third quarter a year ago.
•Mortgage banking income was $0.86 million, down $2.29 million, or 72.56% from the third quarter a year ago.
South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported record quarterly net income of $32.74 million for the third quarter of 2022, up 0.78% from the $32.48 million reported in the third quarter a year ago, bringing the 2022 year-to-date net income to $89.44 million compared to $90.81 million in 2021. Diluted net income per common share for the third quarter of 2022 was $1.32 versus $1.29 in the third quarter of 2021. Diluted net income per common share for the first nine months of 2022 and 2021 was $3.59.
At its October 2022 meeting, the Board of Directors approved a cash dividend of $0.32 per common share, up 3.23% from the $0.31 per common share declared a year ago. The cash dividend is payable to shareholders of record on November 1, 2022 and will be paid on November 10, 2022.
Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “We are pleased to announce that we had record net income for the third quarter. Average loans grew $451.88 million or 8.74% net of Paycheck Protection Program (PPP) loans from the third quarter last year. Average deposits increased $271.40 million, up 4.24% from the prior year third quarter. Our tax-equivalent net interest margin for the quarter was 3.60% compared to 3.34% in the prior year third quarter. The expansion in our net interest margin over the last two quarters has been largely the result of numerous Federal Reserve rate increases during the first nine months of this year. As the Federal Reserve continues its attempt to cool down runaway inflation without triggering a recession, continued rate changes are a distinct possibility and deposit rate competition will likely have an impact on the margin expansion we have seen over the last two quarters. We are very proud to have achieved record net income and impressive loan growth during the quarter but must be focused on organic, core deposit growth as we move into the next quarter and beyond.
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“It was a welcome surprise and honor when two of our board members were named to the inaugural Indiana 250 list by IBJ Media this quarter. Isaac Torres, our newest board member and founder, President and Chief Executive Officer of InterCambio Express, Inc., as well as Tracy Graham, Managing Principal of Graham-Allen Partners, LLC and Chief Executive Officer of Aunalytics, Inc. were among those recognized. The Indiana 250 is a list of the state’s most influential community and business leaders, representing the sectors of civic leadership, energy and agriculture, financial and business services, healthcare and life sciences, hospitality, entertainment and arts, law, manufacturing and logistics, non-for-profit, education, real estate, and tech and media. The Indiana 250 was compiled by IBJ Media’s staff and executives after months of reviewing nominations, researching Indiana organizations and interviewing community leaders across the state. We are thrilled to have Isaac and Tracy as members of our board, and we greatly value their thoughtfulness and contributions to the work we do. It’s a great honor to have those who are helping shape our future be applauded and celebrated among the leadership community in our state, and we congratulate them on this much-deserved recognition of their vision and accomplishments. Additionally, due to the great work of everyone on the 1st Source team with the shared goal of serving customers’ needs, I was also recognized among the Indiana 250. I have been honored by the recognition and thank my colleagues for helping make that happen,” Mr. Murphy concluded.
THIRD QUARTER 2022 FINANCIAL RESULTS
Loans
Third quarter average loans and leases of $5.63 billion increased $451.88 million, up 8.74% net of PPP loans from the year ago quarter and increased $177.10 million, up 3.25% net of PPP loans from the previous quarter. Year-to-date average loans and leases of $5.47 billion increased $324.88 million, up 6.34% net of PPP loans from the first nine months of 2021. PPP loans of $6.35 million remained outstanding which is net of $0.13 million in unearned fees as of September 30, 2022. Strong growth primarily within our specialty finance group portfolios drove total average loans and leases higher compared to the third quarter of 2021 and the previous quarter.
Deposits
Average deposits of $6.67 billion grew $271.40 million for the quarter ended September 30, 2022, up 4.24% from the year ago quarter and decreased $122.55 million, down 1.80% from the previous quarter. Average deposits for the first nine months of 2022 were $6.70 billion, an increase of $473.64 million, up 7.61% from the same period a year ago. Deposit growth over the last year came from business and consumer clients while brokered deposits have declined.
Net Interest Income and Net Interest Margin
Third quarter 2022 tax-equivalent net interest income of $69.12 million increased $6.78 million, up 10.88% from the third quarter a year ago and grew $5.53 million, up 8.70% from the previous quarter. For the first nine months of 2022, tax-equivalent net interest income was $192.43 million, an increase of $15.51 million, up 8.76% from the first nine months of 2021. We recognized $0.08 million in PPP loan fees during the quarter and $2.58 million during the first nine months of 2022 compared to $6.69 million in the previous year quarter and $13.26 million during the first nine months of 2021.
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Third quarter 2022 net interest margin was 3.59%, an increase of 26 basis points from the 3.33% for the same period in 2021 and an increase of 28 basis points from the previous quarter. On a fully tax-equivalent basis, third quarter 2022 net interest margin was 3.60%, an increase of 26 basis points from the 3.34% for the same period in 2021 and was higher by 28 basis points compared to the previous quarter. Non-recurring items during the quarter contributed seven basis points of the 28-basis point increase. Those items include lower interest expense on mandatorily redeemable securities due to book value adjustments of five basis points and net interest recoveries of two basis points.
Net interest margin for the first nine months of 2022 was 3.36%, an increase of nine basis points from the 3.27% for the first nine months of 2021. Net interest margin on a fully-tax-equivalent basis for the first nine months of 2022 was 3.37%, an increase of nine basis points from the 3.28% from the prior year. PPP loans had a positive impact on the net margin of four basis points for the first nine months of 2022 and 14 basis points for the first nine months of 2021.
Multiple Federal Reserve rate increases during 2022 contributed to net interest margin expansion as loans repriced faster than deposits during the second and third quarters of 2022.
Noninterest Income
Third quarter 2022 noninterest income of $22.01 million decreased $3.49 million, or 13.69% from the third quarter a year ago and decreased $0.82 million, or 3.60% from the second quarter of 2022. For the first nine months of 2022, noninterest income was $67.98 million, a decrease of $8.28 million, or 10.86% from the same period a year ago.
The reduction for both periods is mainly from reduced mortgage banking origination volumes resulting in lower income from loans sold in the secondary market. Demand for mortgages has continued to decline as higher rates have negatively impacted refinancing volumes. Equipment rental income continued to shrink as demand for leases declined. This was offset by a rise in service charges on deposit accounts and the absence of losses on the sale of investment securities. The decline in noninterest income from the prior quarter was mainly due to lower trust and wealth advisory income as a result of seasonal fee income recognized in the second quarter.
Noninterest Expense
Third quarter 2022 noninterest expense of $45.33 million decreased $2.73 million, or 5.69% from the third quarter a year ago and decreased $0.32 million, or 0.71% from the prior quarter. For the first nine months of 2022, noninterest expense was $136.32 million, a decrease of $1.08 million, or 0.79% compared to the same period in 2021.
The decrease in noninterest expense for the third quarter and the first nine months of 2022 compared to a year ago was mainly the result of lower charitable contributions, decreased leased equipment depreciation as the average equipment rental portfolio continues to decline, fewer legal fees and a reduction in group insurance costs offset by higher data processing charges for technology projects, an increase in the interest rate swap valuation provision and a rise in professional consulting fees.
The decrease in noninterest expense from the prior quarter was primarily the result of a reduction in the loan loss provision for unfunded loan commitments, decreased legal fees and lower leased equipment depreciation offset by higher data processing charges for technology projects, fewer gains on the sale of repossessed assets and an increase in the interest rate swap valuation provision.
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Credit
The allowance for loan and lease losses as of September 30, 2022 was 2.36% of total loans and leases compared to 2.39% at June 30, 2022 and 2.50% at September 30, 2021. The allowance calculation includes PPP loans which are guaranteed by the SBA. Excluding these loans from the calculation results in an allowance which was unchanged at September 30, 2022, compared to 2.40% at June 30, 2022 and 2.58% at September 30, 2021. Net charge-offs of $0.30 million were recorded for the third quarter of 2022 compared with net charge-offs of $0.04 million in the same quarter a year ago and $0.40 million of net recoveries in the prior quarter. The majority of charge-offs during the quarter were related to the commercial and agricultural and consumer portfolios.
The provision for credit losses was $3.17 million for the third quarter of 2022, an increase of $5.73 million compared with the same period in 2021 and an increase of $0.66 million from the previous quarter. The increase in provision for credit losses during the quarter was primarily due to loan growth. The ratio of nonperforming assets to loans and leases was 0.48% as of September 30, 2022, compared to 0.60% on June 30, 2022 and 0.84% on September 30, 2021. Excluding PPP loans, the ratio of non-performing assets to loans and leases was unchanged at September 30, 2022 and June 30, 2022 and 0.87% at September 30, 2021. While nonperforming assets showed improvement during the quarter, the allowance for loan and lease losses increased at September 30, 2022 due to loan growth.
Capital
As of September 30, 2022, the common equity-to-assets ratio was 10.20%, compared to 10.66% at June 30, 2022 and 11.44% a year ago. The tangible common equity-to-tangible assets ratio was 9.26% at September 30, 2022 compared to 9.72% at June 30, 2022 and 10.50% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 13.50% at September 30, 2022 compared to 13.79% at June 30, 2022 and 13.65% a year ago.
Book value per share declined to $33.50 primarily due to non-credit-related, negative market value adjustments to our investment securities available-for-sale portfolio during the quarter. Market value adjustments were the result of changes in interest rates, market spreads and market conditions subsequent to purchase.
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.
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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 79 banking centers, 18 1st Source Bank Specialty Finance Group locations nationwide, nine Wealth Advisory Services locations and 10 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,” “hope,” “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.
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.
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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)
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1st SOURCE CORPORATION
3rd QUARTER 2022 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20222022202120222021
AVERAGE BALANCES
Assets$8,019,104 $8,092,316 $7,796,763 $8,040,090 $7,603,119 
Earning assets7,615,593 7,685,631 7,404,252 7,645,464 7,211,523 
Investments1,863,979 1,835,974 1,482,016 1,862,252 1,351,768 
Loans and leases5,627,718 5,467,808 5,427,080 5,474,401 5,480,229 
Deposits6,673,239 6,795,793 6,401,844 6,695,507 6,221,866 
Interest bearing liabilities4,958,209 5,049,145 4,811,516 4,973,767 4,725,850 
Common shareholders’ equity873,209 861,134 915,552 881,574 902,907 
Total equity931,412 915,714 960,235 936,974 947,248 
INCOME STATEMENT DATA
Net interest income$68,934 $63,462 $62,224 $192,014 $176,571 
Net interest income - FTE(1)
69,116 63,585 62,335 192,427 176,921 
Provision (recovery of provision) for credit losses3,167 2,503 (2,559)7,903 (3,186)
Noninterest income22,007 22,830 25,497 67,982 76,264 
Noninterest expense45,331 45,655 48,064 136,322 137,402 
Net income32,745 29,330 32,481 89,476 90,822 
Net income available to common shareholders32,737 29,314 32,483 89,441 90,811 
PER SHARE DATA
Basic net income per common share$1.32 $1.18 $1.29 $3.59 $3.59 
Diluted net income per common share1.32 1.18 1.29 3.59 3.59 
Common cash dividends declared0.32 0.31 0.31 0.94 0.90 
Book value per common share(2)
33.50 34.74 36.75 33.50 36.75 
Tangible book value per common share(1)
30.10 31.33 33.37 30.10 33.37 
Market value - High51.29 48.42 48.63 52.70 51.02 
Market value - Low42.38 42.29 41.19 42.29 38.73 
Basic weighted average common shares outstanding24,656,736 24,691,747 24,919,956 24,697,106 25,126,703 
Diluted weighted average common shares outstanding24,656,736 24,691,747 24,919,956 24,697,106 25,126,703 
KEY RATIOS
Return on average assets1.62 %1.45 %1.65 %1.49 %1.60 %
Return on average common shareholders’ equity14.87 13.65 14.08 13.56 13.45 
Average common shareholders’ equity to average assets10.89 10.64 11.74 10.96 11.88 
End of period tangible common equity to tangible assets(1)
9.26 9.72 10.50 9.26 10.50 
Risk-based capital - Common Equity Tier 1(3)
13.50 13.79 13.65 13.50 13.65 
Risk-based capital - Tier 1(3)
15.24 15.53 15.33 15.24 15.33 
Risk-based capital - Total(3)
16.50 16.79 16.59 16.50 16.59 
Net interest margin3.59 3.31 3.33 3.36 3.27 
Net interest margin - FTE(1)
3.60 3.32 3.34 3.37 3.28 
Efficiency ratio: expense to revenue49.85 52.91 54.79 52.43 54.34 
Efficiency ratio: expense to revenue - adjusted(1)
48.71 51.72 53.38 51.16 52.44 
Net charge offs (recoveries) to average loans and leases0.02 (0.03)0.00 (0.01)0.09 
Loan and lease loss allowance to loans and leases2.36 2.39 2.50 2.36 2.50 
Nonperforming assets to loans and leases0.48 0.60 0.84 0.48 0.84 
September 30,June 30,March 31,December 31,September 30,
20222022202220212021
END OF PERIOD BALANCES
Assets$8,097,486 $8,029,359 $8,012,463 $8,096,289 $7,964,092 
Loans and leases5,762,078 5,551,216 5,394,003 5,346,214 5,358,797 
Deposits6,621,231 6,744,896 6,673,092 6,679,065 6,522,505 
Allowance for loan and lease losses135,736 132,865 129,959 127,492 133,755 
Goodwill and intangible assets83,911 83,916 83,921 83,926 83,931 
Common shareholders’ equity826,059 856,251 864,850 916,255 911,333 
Total equity886,360 910,667 919,470 969,464 956,397 
ASSET QUALITY
Loans and leases past due 90 days or more$165 $50 $274 $249 $96 
Nonaccrual loans and leases27,813 33,490 35,435 38,706 43,166 
Repossessions26 102 73 861 690 
Equipment owned under operating leases1 43 343 1,518 1,598 
Total nonperforming assets$28,005 $33,685 $36,125 $41,334 $45,550 
(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.
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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
September 30,June 30,December 31,September 30,
2022202220212021
ASSETS
Cash and due from banks$86,952 $116,915 $54,420 $77,740 
Federal funds sold and interest bearing deposits with other banks30,652 164,848 470,767 559,542 
Investment securities available-for-sale
1,801,194 1,836,389 1,863,041 1,583,240 
Other investments25,538 25,538 27,189 27,189 
Mortgages held for sale3,058 5,525 13,284 34,594 
Loans and leases, net of unearned discount:
Commercial and agricultural835,762 842,618 918,712 1,005,849 
Solar358,635 350,472 348,302 303,995 
Auto and light truck743,324 708,720 603,775 605,258 
Medium and heavy duty truck293,068 278,334 259,740 248,604 
Aircraft997,995 959,876 898,401 900,077 
Construction equipment878,692 803,734 754,273 729,412 
Commercial real estate937,423 931,058 929,341 939,131 
Residential real estate and home equity568,602 535,589 500,590 492,893 
Consumer148,577 140,815 133,080 133,578 
Total loans and leases5,762,078 5,551,216 5,346,214 5,358,797 
Allowance for loan and lease losses(135,736)(132,865)(127,492)(133,755)
Net loans and leases5,626,342 5,418,351 5,218,722 5,225,042 
Equipment owned under operating leases, net32,964 36,579 48,433 51,478 
Net premises and equipment44,837 45,250 47,038 46,748 
Goodwill and intangible assets83,911 83,916 83,926 83,931 
Accrued income and other assets362,038 296,048 269,469 274,588 
Total assets$8,097,486 $8,029,359 $8,096,289 $7,964,092 
LIABILITIES
Deposits:
Noninterest-bearing demand$2,047,328 $2,032,566 $2,052,981 $2,012,389 
Interest-bearing deposits:
Interest-bearing demand2,527,461 2,644,590 2,455,580 2,358,512 
Savings1,267,531 1,282,791 1,286,367 1,214,088 
Time778,911 784,949 884,137 937,516 
Total interest-bearing deposits4,573,903 4,712,330 4,626,084 4,510,116 
Total deposits6,621,231 6,744,896 6,679,065 6,522,505 
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase145,192 162,649 194,727 210,275 
Other short-term borrowings195,270 5,190 5,300 5,390 
Total short-term borrowings340,462 167,839 200,027 215,665 
Long-term debt and mandatorily redeemable securities47,587 48,459 71,251 81,301 
Subordinated notes58,764 58,764 58,764 58,764 
Accrued expenses and other liabilities143,082 98,734 117,718 129,460 
Total liabilities7,211,126 7,118,692 7,126,825 7,007,695 
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 September 30, 2022, June 30, 2022, December 31, 2021, and September 30, 2021, respectively
436,538 436,538 436,538 436,538 
Retained earnings671,541 646,600 603,787 583,631 
Cost of common stock in treasury (3,548,496, 3,555,267, 3,466,162, and 3,408,141 shares at September 30, 2022, June 30, 2022, December 31, 2021, and
 September 30, 2021, respectively)
(119,743)(119,876)(114,209)(111,253)
Accumulated other comprehensive (loss) income (162,277)(107,011)(9,861)2,417 
Total shareholders’ equity826,059 856,251 916,255 911,333 
Noncontrolling interests60,301 54,416 53,209 45,064 
Total equity886,360 910,667 969,464 956,397 
Total liabilities and equity$8,097,486 $8,029,359 $8,096,289 $7,964,092 
- 8 -

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20222022202120222021
Interest income:
Loans and leases$69,027 $60,415 $61,696 $184,650 $176,704 
Investment securities, taxable6,691 6,289 4,533 19,324 12,676 
Investment securities, tax-exempt339 157 140 630 468 
Other421 1,168 360 1,952 943 
Total interest income76,478 68,029 66,729 206,556 190,791 
Interest expense:
Deposits6,556 3,553 2,924 12,485 9,652 
Short-term borrowings380 23 25 427 90 
Subordinated notes904 851 816 2,578 2,448 
Long-term debt and mandatorily redeemable securities(296)140 740 (948)2,030 
Total interest expense7,544 4,567 4,505 14,542 14,220 
Net interest income68,934 63,462 62,224 192,014 176,571 
Provision (recovery of provision) for credit losses3,167 2,503 (2,559)7,903 (3,186)
Net interest income after provision for credit losses65,767 60,959 64,783 184,111 179,757 
Noninterest income:
Trust and wealth advisory5,498 6,087 5,886 17,499 17,833 
Service charges on deposit accounts3,240 2,942 2,767 8,974 7,722 
Debit card4,628 4,561 4,570 13,383 13,506 
Mortgage banking864 1,062 3,149 3,303 9,909 
Insurance commissions1,695 1,568 1,862 5,168 5,698 
Equipment rental2,761 3,295 3,946 9,718 12,830 
Losses on investment securities available-for-sale— — — — (680)
Other3,321 3,315 3,317 9,937 9,446 
Total noninterest income22,007 22,830 25,497 67,982 76,264 
Noninterest expense:
Salaries and employee benefits26,386 25,562 26,974 77,415 77,680 
Net occupancy2,582 2,524 2,654 7,917 7,900 
Furniture and equipment1,372 1,384 1,494 4,051 4,388 
Data processing5,802 5,402 4,950 16,412 14,851 
Depreciation – leased equipment2,233 2,664 3,239 7,912 10,562 
Professional fees1,539 2,094 1,815 5,241 5,574 
FDIC and other insurance939 893 396 2,682 1,833 
Business development and marketing1,415 1,669 4,465 4,352 6,813 
Other3,063 3,463 2,077 10,340 7,801 
Total noninterest expense45,331 45,655 48,064 136,322 137,402 
Income before income taxes42,443 38,134 42,216 115,771 118,619 
Income tax expense9,698 8,804 9,735 26,295 27,797 
Net income32,745 29,330 32,481 89,476 90,822 
Net (income) loss attributable to noncontrolling interests(8)(16)2 (35)(11)
Net income available to common shareholders$32,737 $29,314 $32,483 $89,441 $90,811 
Per common share:
Basic net income per common share$1.32 $1.18 $1.29 $3.59 $3.59 
Diluted net income per common share$1.32 $1.18 $1.29 $3.59 $3.59 
Cash dividends$0.32 $0.31 $0.31 $0.94 $0.90 
Basic weighted average common shares outstanding24,656,736 24,691,747 24,919,956 24,697,106 25,126,703 
Diluted weighted average common shares outstanding24,656,736 24,691,747 24,919,956 24,697,106 25,126,703 
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1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
Three Months Ended
September 30, 2022June 30, 2022September 30, 2021
Average
Balance		Interest Income/ExpenseYield/
Rate		Average
Balance		Interest Income/ExpenseYield/
Rate		Average
Balance		Interest Income/ExpenseYield/
Rate
ASSETS
Investment securities available-for-sale:
Taxable$1,816,138 $6,691 1.46 %$1,805,044 $6,289 1.40 %$1,451,523 $4,533 1.24 %
Tax exempt(1)
47,841 426 3.53 %30,930 195 2.53 %30,493 172 2.24 %
Mortgages held for sale4,272 58 5.39 %4,889 52 4.27 %17,750 120 2.68 %
Loans and leases, net of unearned discount(1)
5,627,718 69,064 4.87 %5,467,808 60,448 4.43 %5,427,080 61,655 4.51 %
Other investments119,624 421 1.40 %376,960 1,168 1.24 %477,406 360 0.30 %
Total earning assets(1)
7,615,593 76,660 3.99 %7,685,631 68,152 3.56 %7,404,252 66,840 3.58 %
Cash and due from banks74,329 90,101  76,915   
Allowance for loan and lease losses(133,989)(132,020) (137,206)  
Other assets463,171 448,604  452,802   
Total assets$8,019,104 $8,092,316  $7,796,763   
LIABILITIES AND SHAREHOLDERS’ EQUITY
     
Interest-bearing deposits$4,634,092 $6,556 0.56 %$4,753,331 $3,553 0.30 %$4,488,169 $2,924 0.26 %
Short-term borrowings:
Securities sold under agreements to repurchase159,345 21 0.05 %176,994 23 0.05 %177,720 24 0.05 %
Other short-term borrowings57,609 359 2.47 %5,394 — — %5,492 1 0.07 %
Subordinated notes58,764 904 6.10 %58,764 851 5.81 %58,764 816 5.51 %
Long-term debt and mandatorily redeemable securities
48,399 (296)(2.43)%54,662 140 1.03 %81,371 740 3.61 %
Total interest-bearing liabilities
4,958,209 7,544 0.60 %5,049,145 4,567 0.36 %4,811,516 4,505 0.37 %
Noninterest-bearing deposits
2,039,147   2,042,462   1,913,675   
Other liabilities90,336   84,995   111,337   
Shareholders’ equity873,209   861,134   915,552   
   Noncontrolling interests
58,203 54,580 44,683 
Total liabilities and equity
$8,019,104   $8,092,316   $7,796,763   
Less: Fully tax-equivalent adjustments(182)(123)(111)
Net interest income/margin (GAAP-derived)(1)
 $68,934 3.59 % $63,462 3.31 % $62,224 3.33 %
Fully tax-equivalent adjustments
182 123 111 
Net interest income/margin - FTE(1)
 $69,116 3.60 % $63,585 3.32 % $62,335 3.34 %
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.

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1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
Nine Months Ended
September 30, 2022September 30, 2021
Average
Balance		Interest Income/ExpenseYield/
Rate		Average
Balance		Interest Income/ExpenseYield/
Rate
ASSETS
Investment securities available-for-sale:
Taxable$1,826,095 $19,324 1.41 %$1,317,976 $12,676 1.29 %
Tax exempt(1)
36,157 786 2.91 %33,792 578 2.29 %
Mortgages held for sale5,967 177 3.97 %13,094 260 2.65 %
Loans and leases, net of unearned discount(1)
5,474,401 184,730 4.51 %5,480,229 176,684 4.31 %
Other investments302,844 1,952 0.86 %366,432 943 0.34 %
Total earning assets(1)
7,645,464 206,969 3.62 %7,211,523 191,141 3.54 %
Cash and due from banks75,497 76,103   
Allowance for loan and lease losses(131,572)(140,800)  
Other assets450,701 456,293   
Total assets$8,040,090 $7,603,119   
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Interest-bearing deposits4,658,394 12,485 0.36 %4,403,595 9,652 0.29 %
Short-term borrowings:
Securities sold under agreements to repurchase176,029 67 0.05 %175,869 87 0.07 %
Other short-term borrowings22,983 360 2.09 %6,336 3 0.06 %
Subordinated notes58,764 2,578 5.87 %58,764 2,448 5.57 %
Long-term debt and mandatorily redeemable securities
57,597 (948)(2.20)%81,286 2,030 3.34 %
Total interest-bearing liabilities
4,973,767 14,542 0.39 %4,725,850 14,220 0.40 %
Noninterest-bearing deposits2,037,113   1,818,271   
Other liabilities92,236   111,750   
Shareholders’ equity881,574   902,907   
Noncontrolling interests55,400 44,341 
Total liabilities and equity
$8,040,090   $7,603,119   
Less: Fully tax-equivalent adjustments(413)(350)
Net interest income/margin (GAAP-derived)(1)
 $192,014 3.36 % $176,571 3.27 %
Fully tax-equivalent adjustments
413 350 
Net interest income/margin - FTE(1)
 $192,427 3.37 % $176,921 3.28 %
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
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1st SOURCE CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited - Dollars in thousands, except per share data)
Three Months EndedNine Months Ended
September 30,June 30,September 30,September 30,September 30,
20222022202120222021
Calculation of Net Interest Margin
(A)Interest income (GAAP)$76,478 $68,029 $66,729 $206,556 $190,791 
Fully tax-equivalent adjustments:
(B) – Loans and leases95 85 79 257 240 
(C) – Tax exempt investment securities87 38 32 156 110 
(D)Interest income – FTE (A+B+C)76,660 68,152 66,840 206,969 191,141 
(E)Interest expense (GAAP)7,544 4,567 4,505 14,542 14,220 
(F)Net interest income (GAAP) (A-E)68,934 63,462 62,224 192,014 176,571 
(G)Net interest income - FTE (D-E)69,116 63,585 62,335 192,427 176,921 
(H)Annualization factor3.967 4.011 3.967 1.337 1.337 
(I)Total earning assets$7,615,593 $7,685,631 $7,404,252 $7,645,464 $7,211,523 
Net interest margin (GAAP-derived) (F*H)/I3.59 %3.31 %3.33 %3.36 %3.27 %
Net interest margin – FTE (G*H)/I3.60 %3.32 %3.34 %3.37 %3.28 %
Calculation of Efficiency Ratio
(F)Net interest income (GAAP)$68,934 $63,462 $62,224 $192,014 $176,571 
(G)Net interest income – FTE69,116 63,585 62,335 192,427 176,921 
(J)Plus: noninterest income (GAAP)22,007 22,830 25,497 67,982 76,264 
(K)Less: gains/losses on investment securities and partnership investments(418)(636)(623)(1,498)(735)
(L)Less: depreciation – leased equipment(2,233)(2,664)(3,239)(7,912)(10,562)
(M)Total net revenue (GAAP) (F+J)90,941 86,292 87,721 259,996 252,835 
(N)Total net revenue – adjusted (G+J–K–L)88,472 83,115 83,970 250,999 241,888 
(O)Noninterest expense (GAAP)45,331 45,655 48,064 136,322 137,402 
(L)Less:depreciation – leased equipment(2,233)(2,664)(3,239)(7,912)(10,562)
(P)Noninterest expense – adjusted (O–L)43,098 42,991 44,825 128,410 126,840 
Efficiency ratio (GAAP-derived) (O/M)49.85 %52.91 %54.79 %52.43 %54.34 %
Efficiency ratio – adjusted (P/N)48.71 %51.72 %53.38 %51.16 %52.44 %
End of Period
September 30,June 30,September 30,
202220222021
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)Total common shareholders’ equity (GAAP)$826,059 $856,251 $911,333 
(R)Less: goodwill and intangible assets(83,911)(83,916)(83,931)
(S)Total tangible common shareholders’ equity (Q–R)$742,148 $772,335 $827,402 
(T)Total assets (GAAP)8,097,486 8,029,359 7,964,092 
(R)Less: goodwill and intangible assets(83,911)(83,916)(83,931)
(U)Total tangible assets (T–R)$8,013,575 $7,945,443 $7,880,161 
Common equity-to-assets ratio (GAAP-derived) (Q/T)10.20 %10.66 %11.44 %
Tangible common equity-to-tangible assets ratio (S/U)9.26 %9.72 %10.50 %
Calculation of Tangible Book Value per Common Share
(Q)Total common shareholders’ equity (GAAP)$826,059 $856,251 $911,333 
(V)Actual common shares outstanding24,657,178 24,650,407 24,797,533 
Book value per common share (GAAP-derived) (Q/V)*1000$33.50 $34.74 $36.75 
Tangible common book value per share (S/V)*1000$30.10 $31.33 $33.37 

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