SRCE 8-K

1St Source Corp (SRCE)

8-K 2023-10-19 For: 2023-10-19

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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: October 19, 2023						/s/ BRETT A. BAUER
						Brett A. Bauer
						Treasurer and Chief Financial Officer
						Principal Accounting Officer



For:	Immediate Release	Contact:	Brett Bauer
	October 19, 2023		574-235-2000


1st SOURCE CORPORATION
3rd QUARTER 2023 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2023			2023			2022			2023			2022
AVERAGE BALANCES
Assets	$	8,417,391		$	8,362,308		$	8,019,104		$	8,368,054		$	8,040,090
Earning assets	7,963,537			7,921,528			7,615,593			7,917,763			7,645,464
Investments	1,645,906			1,697,699			1,863,979			1,703,626			1,862,252
Loans and leases	6,245,883			6,141,157			5,627,718			6,141,849			5,474,401
Deposits	6,950,105			6,939,082			6,673,239			6,919,695			6,695,507
Interest bearing liabilities	5,566,874			5,496,112			4,958,209			5,470,305			4,973,767
Common shareholders’ equity	940,544			926,157			873,209			919,182			881,574
Total equity	999,552			985,406			931,412			978,461			936,974
INCOME STATEMENT DATA
Net interest income	$	69,236		$	68,516		$	68,934		$	207,317		$	192,014
Net interest income - FTE(1)	69,406			68,695			69,116			207,892			192,427
Provision for credit losses	859			47			3,167			3,955			7,903
Noninterest income	24,455			22,769			22,007			70,547			67,982
Noninterest expense	50,166			49,165			45,331			148,752			136,322
Net income	32,939			32,447			32,745			96,517			89,476
Net income available to common shareholders	32,939			32,435			32,737			96,498			89,441
PER SHARE DATA
Basic net income per common share	$	1.32		$	1.30		$	1.32		$	3.87		$	3.59
Diluted net income per common share	1.32			1.30			1.32			3.87			3.59
Common cash dividends declared	0.32			0.32			0.32			0.96			0.94
Book value per common share(2)	37.83			37.31			33.50			37.83			33.50
Tangible book value per common share(1)	34.40			33.92			30.10			34.40			30.10
Market value - High	49.36			47.94			51.29			53.85			52.70
Market value - Low	40.96			38.77			42.38			38.77			42.29
Basic weighted average common shares outstanding	24,660,508			24,686,435			24,656,736			24,677,914			24,697,106
Diluted weighted average common shares outstanding	24,660,508			24,686,435			24,656,736			24,677,914			24,697,106
KEY RATIOS
Return on average assets	1.55		%	1.56		%	1.62		%	1.54		%	1.49		%
Return on average common shareholders’ equity	13.89			14.05			14.87			14.04			13.56



Average common shareholders’ equity to average assets	11.17			11.08			10.89			10.98			10.96
End of period tangible common equity to tangible assets(1)	9.96			10.05			9.26			9.96			9.26




Risk-based capital - Common Equity Tier 1(3)	13.31			13.59			13.50			13.31			13.50
Risk-based capital - Tier 1(3)	14.86			15.20			15.24			14.86			15.24
Risk-based capital - Total(3)	16.12			16.46			16.50			16.12			16.50
Net interest margin	3.45			3.47			3.59			3.50			3.36
Net interest margin - FTE(1)	3.46			3.48			3.60			3.51			3.37
Efficiency ratio: expense to revenue	53.54			53.86			49.85			53.53			52.43
Efficiency ratio: expense to revenue - adjusted(1)	54.24			53.23			48.71			53.46			51.16
Net charge-offs (recoveries) to average loans and leases	0.02			(0.06)			0.02			(0.02)			(0.01)
Loan and lease loss allowance to loans and leases	2.27			2.31			2.36			2.27			2.36
Nonperforming assets to loans and leases	0.27			0.33			0.48			0.27			0.48



	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022
END OF PERIOD BALANCES
Assets	$	8,525,058		$	8,414,818		$	8,329,803		$	8,339,416		$	8,097,486
Loans and leases	6,353,648			6,215,343			6,116,716			6,011,162			5,762,078
Deposits	6,967,492			6,976,518			6,801,464			6,928,265			6,621,231
Allowance for loan and lease losses	144,074			143,542			142,511			139,268			135,736
Goodwill and intangible assets	83,921			83,897			83,901			83,907			83,911
Common shareholders’ equity	924,250			921,020			909,159			864,068			826,059
Total equity	982,997			980,087			968,444			923,766			886,360
ASSET QUALITY
Loans and leases past due 90 days or more	$	154		$	56		$	24		$	54		$	165
Nonaccrual loans and leases	16,617			20,481			18,062			26,420			27,813
Other real estate	117			193			117			104			—
Repossessions	233			47			445			327			26
Equipment owned under operating leases	—			—			—			22			1
Total nonperforming assets	$	17,121		$	20,777		$	18,648		$	26,927		$	28,005


1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
	September 30,		June 30,		December 31,		September 30,
	2023		2023		2022		2022
ASSETS
Cash and due from banks	$	75,729	$	86,742	$	84,703	$	86,952
Federal funds sold and interest bearing deposits with other banks	35,406		25,933		38,094		30,652
Investment securities available-for-sale	1,605,242		1,661,405		1,775,128		1,801,194
Other investments	25,075		25,320		25,293		25,538
Mortgages held for sale	3,118		2,321		3,914		3,058
Loans and leases, net of unearned discount:
Commercial and agricultural	763,051		797,188		812,031		835,762
Solar	364,949		376,905		381,163		358,635
Auto and light truck	901,484		901,054		808,117		743,324
Medium and heavy duty truck	323,202		319,634		313,862		293,068
Aircraft	1,079,581		1,060,340		1,077,722		997,995
Construction equipment	1,062,097		1,012,969		938,503		878,692
Commercial real estate	1,088,199		985,323		943,745		937,423
Residential real estate and home equity	627,515		617,495		584,737		568,602
Consumer	143,570		144,435		151,282		148,577
Total loans and leases	6,353,648		6,215,343		6,011,162		5,762,078
Allowance for loan and lease losses	(144,074)		(143,542)		(139,268)		(135,736)
Net loans and leases	6,209,574		6,071,801		5,871,894		5,626,342
Equipment owned under operating leases, net	24,096		26,582		31,700		32,964
Net premises and equipment	43,951		44,089		44,773		44,837
Goodwill and intangible assets	83,921		83,897		83,907		83,911
Accrued income and other assets	418,946		386,728		380,010		362,038
Total assets	$	8,525,058	$	8,414,818	$	8,339,416	$	8,097,486
LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,680,725	$	1,721,947	$	1,998,151	$	2,047,328
Interest-bearing deposits:
Interest-bearing demand	2,416,864		2,528,231		2,591,464		2,527,461
Savings	1,180,837		1,163,166		1,198,191		1,267,531
Time	1,689,066		1,563,174		1,140,459		778,911
Total interest-bearing deposits	5,286,767		5,254,571		4,930,114		4,573,903
Total deposits	6,967,492		6,976,518		6,928,265		6,621,231
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	48,335		69,308		141,432		145,192
Other short-term borrowings	223,757		118,377		74,097		195,270
Total short-term borrowings	272,092		187,685		215,529		340,462
Long-term debt and mandatorily redeemable securities	46,533		46,649		46,555		47,587
Subordinated notes	58,764		58,764		58,764		58,764
Accrued expenses and other liabilities	197,180		165,115		166,537		143,082
Total liabilities	7,542,061		7,434,731		7,415,650		7,211,126
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, 2023, June 30, 2023, December 31, 2022, and September 30, 2022, respectively	436,538		436,538		436,538		436,538
Retained earnings	769,603		744,442		694,862		671,541
Cost of common stock in treasury (3,776,591, 3,523,113, 3,543,388, and 3,548,496 shares at September 30, 2023, June 30, 2023, December 31, 2022, and September 30, 2022, respectively)	(130,579)		(120,410)		(119,642)		(119,743)
Accumulated other comprehensive loss	(151,312)		(139,550)		(147,690)		(162,277)
Total shareholders’ equity	924,250		921,020		864,068		826,059
Noncontrolling interests	58,747		59,067		59,698		60,301
Total equity	982,997		980,087		923,766		886,360
Total liabilities and equity	$	8,525,058	$	8,414,818	$	8,339,416	$	8,097,486


1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
	Three Months Ended						Nine Months Ended
	September 30,		June 30,		September 30,		September 30,		September 30,
	2023		2023		2022		2023		2022
Interest income:
Loans and leases	$	100,206	$	93,300	$	69,027	$	280,195	$	184,650
Investment securities, taxable	5,918		5,946		6,691		18,512		19,324
Investment securities, tax-exempt	319		330		339		1,131		630
Other	883		978		421		2,498		1,952
Total interest income	107,326		100,554		76,478		302,336		206,556
Interest expense:
Deposits	34,405		28,870		6,556		84,538		12,485
Short-term borrowings	2,136		1,625		380		5,154		427
Subordinated notes	1,060		1,028		904		3,108		2,578
Long-term debt and mandatorily redeemable securities	489		515		(296)		2,219		(948)
Total interest expense	38,090		32,038		7,544		95,019		14,542
Net interest income	69,236		68,516		68,934		207,317		192,014
Provision for credit losses	859		47		3,167		3,955		7,903
Net interest income after provision for credit losses	68,377		68,469		65,767		203,362		184,111
Noninterest income:
Trust and wealth advisory	5,648		6,467		5,498		17,794		17,499
Service charges on deposit accounts	3,297		3,118		3,240		9,418		8,974
Debit card	4,377		4,701		4,628		13,585		13,383
Mortgage banking	971		926		864		2,699		3,303
Insurance commissions	1,714		1,641		1,695		5,384		5,168
Equipment rental	2,101		2,326		2,761		6,930		9,718
Losses on investment securities available-for-sale	—		—		—		(44)		—
Other	6,347		3,590		3,321		14,781		9,937
Total noninterest income	24,455		22,769		22,007		70,547		67,982
Noninterest expense:
Salaries and employee benefits	28,866		28,236		26,386		85,699		77,415
Net occupancy	2,867		2,676		2,582		8,165		7,917
Furniture and equipment	1,217		1,414		1,372		3,938		4,051
Data processing	6,289		6,268		5,802		18,714		16,412
Depreciation – leased equipment	1,672		1,876		2,233		5,570		7,912
Professional fees	1,763		1,704		1,539		4,149		5,241
FDIC and other insurance	1,598		1,344		939		4,302		2,682
Business development and marketing	1,201		1,649		1,415		4,822		4,352

Other	4,693		3,998		3,063		13,393		10,340
Total noninterest expense	50,166		49,165		45,331		148,752		136,322
Income before income taxes	42,666		42,073		42,443		125,157		115,771
Income tax expense	9,727		9,626		9,698		28,640		26,295
Net income	32,939		32,447		32,745		96,517		89,476
Net (income) loss attributable to noncontrolling interests	—		(12)		(8)		(19)		(35)
Net income available to common shareholders	$	32,939	$	32,435	$	32,737	$	96,498	$	89,441
Per common share:
Basic net income per common share	$	1.32	$	1.30	$	1.32	$	3.87	$	3.59
Diluted net income per common share	$	1.32	$	1.30	$	1.32	$	3.87	$	3.59
Cash dividends	$	0.32	$	0.32	$	0.32	$	0.96	$	0.94
Basic weighted average common shares outstanding	24,660,508		24,686,435		24,656,736		24,677,914		24,697,106
Diluted weighted average common shares outstanding	24,660,508		24,686,435		24,656,736		24,677,914		24,697,106


1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
							Three Months Ended
	September 30, 2023						June 30, 2023						September 30, 2022
	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	$	1,605,912	$	5,918	1.46	%	$	1,655,790	$	5,946	1.44	%	$	1,816,138	$	6,691	1.46	%
Tax exempt(1)	39,994		397		3.94	%	41,909		411		3.93	%	47,841		426		3.53	%
Mortgages held for sale	3,169		54		6.76	%	1,879		28		5.98	%	4,272		58		5.39	%
Loans and leases, net of unearned discount(1)	6,245,883		100,244		6.37	%	6,141,157		93,370		6.10	%	5,627,718		69,064		4.87	%
Other investments	68,579		883		5.11	%	80,793		978		4.86	%	119,624		421		1.40	%
Total earning assets(1)	7,963,537		107,496		5.36	%	7,921,528		100,733		5.10	%	7,615,593		76,660		3.99	%
Cash and due from banks	68,640						72,880						74,329
Allowance for loan and lease losses	(145,197)						(144,337)						(133,989)
Other assets	530,411						512,237						463,171
Total assets	$	8,417,391					$	8,362,308					$	8,019,104

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	$	5,247,332	$	34,405	2.60	%	$	5,192,206	$	28,870	2.23	%	$	4,634,092	$	6,556	0.56	%
Short-term borrowings:
Securities sold under agreements to repurchase	60,736		35		0.23	%	69,301		32		0.19	%	159,345		21		0.05	%
Other short-term borrowings	153,523		2,101		5.43	%	129,230		1,593		4.94	%	57,609		359		2.47	%
Subordinated notes	58,764		1,060		7.16	%	58,764		1,028		7.02	%	58,764		904		6.10	%
Long-term debt and mandatorily redeemable securities	46,519		489		4.17	%	46,611		515		4.43	%	48,399		(296)		(2.43)	%
Total interest-bearing liabilities	5,566,874		38,090		2.71	%	5,496,112		32,038		2.34	%	4,958,209		7,544		0.60	%
Noninterest-bearing deposits	1,702,773						1,746,876						2,039,147
Other liabilities	148,192						133,914						90,336
Shareholders’ equity	940,544						926,157						873,209
Noncontrolling interests	59,008						59,249						58,203
Total liabilities and equity	$	8,417,391					$	8,362,308					$	8,019,104
Less: Fully tax-equivalent adjustments			(170)						(179)						(182)
Net interest income/margin (GAAP-derived)(1)			$	69,236	3.45	%			$	68,516	3.47	%			$	68,934	3.59	%
Fully tax-equivalent adjustments			170						179						182
Net interest income/margin - FTE(1)			$	69,406	3.46	%			$	68,695	3.48	%			$	69,116	3.60	%
(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									Nine Months Ended
		September 30,			June 30,			September 30,			September 30,			September 30,
		2023			2023			2022			2023			2022
Calculation of Net Interest Margin
(A)	Interest income (GAAP)	$	107,326		$	100,554		$	76,478		$	302,336		$	206,556
	Fully tax-equivalent adjustments:
(B)	– Loans and leases	92			98			95			293			257
(C)	– Tax exempt investment securities	78			81			87			282			156
(D)	Interest income – FTE (A+B+C)	107,496			100,733			76,660			302,911			206,969
(E)	Interest expense (GAAP)	38,090			32,038			7,544			95,019			14,542
(F)	Net interest income (GAAP) (A-E)	69,236			68,516			68,934			207,317			192,014
(G)	Net interest income - FTE (D-E)	69,406			68,695			69,116			207,892			192,427
(H)	Annualization factor	3.967			4.011			3.967			1.337			1.337
(I)	Total earning assets	$	7,963,537		$	7,921,528		$	7,615,593		$	7,917,763		$	7,645,464
	Net interest margin (GAAP-derived) (F*H)/I	3.45		%	3.47		%	3.59		%	3.50		%	3.36		%
	Net interest margin – FTE (G*H)/I	3.46		%	3.48		%	3.60		%	3.51		%	3.37		%

Calculation of Efficiency Ratio
(F)	Net interest income (GAAP)	$	69,236		$	68,516		$	68,934		$	207,317		$	192,014
(G)	Net interest income – FTE	69,406			68,695			69,116			207,892			192,427
(J)	Plus: noninterest income (GAAP)	24,455			22,769			22,007			70,547			67,982
(K)	Less: gains/losses on investment securities and partnership investments	(2,779)			(748)			(418)			(5,049)			(1,498)
(L)	Less: depreciation – leased equipment	(1,672)			(1,876)			(2,233)			(5,570)			(7,912)
(M)	Total net revenue (GAAP) (F+J)	93,691			91,285			90,941			277,864			259,996
(N)	Total net revenue – adjusted (G+J–K–L)	89,410			88,840			88,472			267,820			250,999
(O)	Noninterest expense (GAAP)	50,166			49,165			45,331			148,752			136,322
(L)	Less:depreciation – leased equipment	(1,672)			(1,876)			(2,233)			(5,570)			(7,912)

(P)	Noninterest expense – adjusted (O–L)	48,494			47,289			43,098			143,182			128,410
	Efficiency ratio (GAAP-derived) (O/M)	53.54		%	53.86		%	49.85		%	53.53		%	52.43		%
	Efficiency ratio – adjusted (P/N)	54.24		%	53.23		%	48.71		%	53.46		%	51.16		%




		End of Period
		September 30,			June 30,			September 30,
		2023			2023			2022
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)	Total common shareholders’ equity (GAAP)	$	924,250		$	921,020		$	826,059
(R)	Less: goodwill and intangible assets	(83,921)			(83,897)			(83,911)
(S)	Total tangible common shareholders’ equity (Q–R)	$	840,329		$	837,123		$	742,148
(T)	Total assets (GAAP)	8,525,058			8,414,818			8,097,486
(R)	Less: goodwill and intangible assets	(83,921)			(83,897)			(83,911)
(U)	Total tangible assets (T–R)	$	8,441,137		$	8,330,921		$	8,013,575
	Common equity-to-assets ratio (GAAP-derived) (Q/T)	10.84		%	10.95		%	10.20		%
	Tangible common equity-to-tangible assets ratio (S/U)	9.96		%	10.05		%	9.26		%












Calculation of Tangible Book Value per Common Share
(Q)	Total common shareholders’ equity (GAAP)	$	924,250		$	921,020		$	826,059
(V)	Actual common shares outstanding	24,429,083			24,682,561			24,657,178
	Book value per common share (GAAP-derived) (Q/V)*1000	$	37.83		$	37.31		$	33.50
	Tangible common book value per share (S/V)*1000	$	34.40		$	33.92		$	30.10