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Published: 2024-07-25 16:04:15 ET

EX-99.1 2 ex06302024991pressrelease.htm EX-99.1 Q2'24 EARNINGS RELEASE Document

Exhibit 99.1



For:	Immediate Release	Contact:	Brett Bauer
	July 25, 2024		574-235-2000

1st Source Corporation Reports Record Second Quarter Results,

Increased Cash Dividend Declared

QUARTERLY HIGHLIGHTS

•Net income was $36.79 million for the quarter, up $4.36 million or 13.44% from the second quarter of 2023. Diluted net income per common share was $1.49, up $0.19 or 14.62% from the prior year’s second quarter of $1.30.

•Cash dividend increase of two cents per share to $0.36 per common share for the quarter was approved, up 12.50% from the cash dividend declared a year ago.

•Average loans and leases grew $102.14 million in the second quarter, up 1.57% (6.28% annualized growth) from the previous quarter and $465.05 million, up 7.57% from the second quarter of 2023.

•Average deposits grew $172.57 million in the second quarter, up 2.46% from the previous quarter and $244.60 million, up 3.52% from the second quarter of 2023.

•Tax-equivalent net interest income was $74.19 million, up $2.13 million or 2.96% from the first quarter of 2024 and up $5.50 million, or 8.00% from the second quarter a year ago. Tax-equivalent net interest margin was 3.59%, up five basis points from the previous quarter and up 11 basis points from the second quarter a year ago.

•Net recoveries of $1.99 million or 0.12% of average loans and leases occurred during the quarter compared to net charge-offs of $6.12 million or 0.38% of average loans and leases during the previous quarter.

South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported record quarterly net income of $36.79 million for the second quarter of 2024, up $7.34 million or 24.91% from the previous quarter and up 13.44% from the $32.44 million reported in the second quarter a year ago. Year-to-date 2024 net income was $66.25 million compared to $63.56 million during the first six months of 2023. Diluted net income per common share for the second quarter of 2024 was $1.49, up $0.30 or 25.21% from the previous quarter and up 14.62%, versus $1.30 in the second quarter of 2023. Diluted net income per common share for the first half of 2024 was $2.68 compared to $2.55 a year earlier.

At its July 2024 meeting, the Board of Directors approved an increase in the cash dividend of two cents per share, raising the approved dividend for the quarter to $0.36 per common share, up 12.50% from the cash dividend declared a year ago. The cash dividend is payable to shareholders of record on August 5, 2024, and will be paid on August 15, 2024.

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Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “We are very pleased to have achieved record quarterly earnings during the second quarter. Average loans and leases grew $102.14 million, up 1.57%, and average deposits increased $172.53 million, or 2.46% compared to the previous quarter. Disciplined loan and lease pricing led to an improvement in our net interest margin of five basis points from the prior quarter. This marks the third consecutive quarter of margin expansion despite persistent deposit rate competition. We were also helped by net recoveries of $1.99 million during the quarter. Nonperforming assets to loans and leases at June 30, 2024, was 0.31%, down from 0.34% at March 31, 2024, and the allowance for loan and lease losses as a percentage of total loans and leases remained strong and unchanged from the previous quarter at 2.26%. Additionally, our liquidity and capital positions remained strong.

“During the quarter, we were excited to learn that 1st Source was named by Forbes’ as one of America’s Best Banks! We ranked #14 on the list and the only bank in Indiana to be in the top 15. This award is a proof point that we are holding true to our long-standing commitment of helping our clients achieve security, build wealth, and realize their dreams by building a fortress-like balance sheet and quality, sustainable earnings to help us better serve them!

“The proof points continued to roll in this quarter as we also were named to the Forbes’ Best in State Banks and Best Employers for New Grads lists. Finally, US News & World Report recently announced that 1st Source Bank was named a “Best Company to Work For” in the Midwest. It is an honor to receive this blend of awards because it emphasizes our stability as a bank not only financially, but also culturally.

“We strive to provide our colleagues with an engaging work environment that upholds our core values of integrity, teamwork, and superior quality paired with outstanding client service and community leadership. In keeping with our commitment to our community, we have remodeled both our Dunlap and our Bristol Street Banking Centers to feature our side-by-side banking model. This experience invites clients behind the teller line, allowing for clients and bankers to have a more transparent and inclusive relationship.”, Mr. Murphy concluded.

SECOND QUARTER 2024 FINANCIAL RESULTS

Loans

Second quarter average loans and leases increased $102.14 million to $6.61 billion, up 1.57% from the previous quarter and increased $465.05 million, up 7.57% from the second quarter a year ago. Year-to-date average loans and leases increased $466.17 million to $6.56 billion, up 7.66% from the first six months of 2023. Growth during the quarter occurred primarily within the Construction Equipment, Renewable Energy and Auto and Light Truck portfolios.

Deposits

Average deposits of $7.18 billion, increased $172.57 million, or 2.46% from the previous quarter, and grew $244.60 million or 3.52% compared to the quarter ended June 30, 2023. Average deposits for the first six months of 2024 were $7.10 billion, an increase of $193.15 million, up 2.80% from the same period a year ago. Average deposit balance growth from the previous quarter was primarily due to expected seasonal public fund deposit inflows. Average deposit balance growth from the second quarter of 2023 was primarily in savings, time, and brokered deposits.

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End of period deposits were $7.20 billion at June 30, 2024, compared to $7.06 billion at March 31, 2024. Balances were higher mainly due to increased public fund deposits and time deposits, offset by decreased noninterest bearing deposits and brokered deposits. Rate competition for deposits persisted during the quarter from various areas including traditional bank and credit union competitors, money market funds, bond markets, and other non-bank alternatives.

Net Interest Income and Net Interest Margin

Second quarter 2024 tax-equivalent net interest income increased $2.13 million to $74.19 million, up 2.96% from the previous quarter and increased $5.50 million, up 8.00% from the second quarter a year ago. For the first six months of 2024, tax equivalent net interest income increased $7.77 million to $146.26 million, up 5.61% from the first half of 2023.

Second quarter 2024 net interest margin was 3.59%, an increase of five basis points from the 3.54% in the previous quarter and an increase of 12 basis points from the same period in 2023. On a fully tax-equivalent basis, second quarter 2024 net interest margin was 3.59%, up by five basis points compared to the 3.54% in the previous quarter, and an increase of 11 basis points from the same period in 2023. The five basis point increase from the prior quarter was primarily due to higher rates on loan and lease balances and less reliance on higher costing short-term borrowings.

Net interest margin for the first six months of 2024 was 3.56%, an increase of three basis points compared to the first six months of 2023. Net interest margin on a fully-tax equivalent basis for the first half of 2024 was 3.57%, an increase of three basis points compared to the first half of the prior year.

Noninterest Income

Second quarter 2024 noninterest income of $23.22 million increased $1.07 million, up 4.81% from the previous quarter, and was up modestly compared to the second quarter a year ago. For the first six months of 2024, noninterest income decreased slightly from the same period a year ago.

The increase in noninterest income compared to the previous quarter was mainly due to higher trust and wealth advisory income primarily from seasonal tax preparation fee income and improvements in overall investment market performance. Additionally, increased debit card income, and a rise in mortgage banking income from higher sales volumes were offset by lower equipment rental income due to a change in customer preferences and continued competitive pricing pressure for new business.

Noninterest Expense

Second quarter 2024 noninterest expense of $49.49 million was relatively flat compared to the prior quarter and increased slightly from the second quarter a year ago. For the first six months of 2024, noninterest expense was $99.08 million, up marginally from the same period a year ago.

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The increase in noninterest expense compared to the second quarter and first six months of 2023 was the result of higher salaries and wages from normal merit increases, the impact of wage inflation and an increase in the number of employees filling prior open positions and a $1.08 million reversal of accrued legal fees during the first quarter of 2023. Additionally, increased data processing costs from technology projects, higher blanket bond insurance premium costs, as well as an increase in business development and marketing expenses, added to the increase. These increases were offset by reduced group insurance claims, lower leased equipment depreciation, a decrease in the loan loss provision for unfunded commitments and gains on the sale of leased equipment.

Credit

The allowance for loan and lease losses of $150.07 million as of June 30, 2024, was 2.26% of total loans and leases. This percentage compared to 2.26% at March 31, 2024, and 2.31% at June 30, 2023. Net recoveries of $1.99 million were recorded for the second quarter of 2024, compared with $6.12 million of net charge-offs in the prior quarter and net recoveries of $0.98 million in the same quarter a year ago. The majority of the second quarter’s recoveries were related to activity in our Construction, Auto and Light Truck and Aircraft portfolios.

The provision for credit losses was $0.06 million for the second quarter of 2024, a decrease of $6.54 million from the previous quarter and an increase of $0.01 million compared with the same period in 2023. Net recoveries recorded during the quarter, compared to net charge-offs in the previous quarter, were the primary reason for the decrease in the provision for credit losses. The provision for credit losses during the quarter was driven by modest loan growth, an increase in specific impairments, and overall higher special attention outstandings, offset by a decrease in aircraft portfolio loan balances which carry a higher allowance due to historical risk volatility. The ratio of nonperforming assets to loans and leases was 0.31% as of June 30, 2024, compared to 0.34% on March 31, 2024, and 0.33% on June 30, 2023.

Capital

As of June 30, 2024, the common equity-to-assets ratio was 11.75%, compared to 11.65% at March 31, 2024, and 10.95% a year ago. The tangible common equity-to-tangible assets ratio was 10.91% at June 30, 2024, compared to 10.79% at March 31, 2024, and 10.05% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines was 13.74% at June 30, 2024 compared to 13.48% at March 31, 2024 and 13.59% a year ago.
Capital accretion over the last twelve months has been driven primarily by growth in retained earnings and a reduction in unrealized losses in our short-duration investment securities available-for-sale portfolio.

No shares were repurchased for treasury during the second quarter of 2024.

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 78 banking centers, 18 1st Source Bank Specialty Finance Group locations nationwide, nine Wealth Advisory Services locations, 10 1st Source Insurance offices, and three loan production 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.

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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)

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1st SOURCE CORPORATION
2nd QUARTER 2024 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,
	2024			2024			2023			2024			2023
AVERAGE BALANCES
Assets	$	8,761,006		$	8,652,144		$	8,362,308		$	8,706,575		$	8,342,977
Earning assets	8,303,518			8,182,165			7,921,528			8,242,841			7,893,218
Investments	1,554,362			1,608,094			1,697,699			1,581,228			1,732,964
Loans and leases	6,606,209			6,504,069			6,141,157			6,555,139			6,088,970
Deposits	7,183,678			7,011,105			6,939,082			7,097,391			6,904,237
Interest bearing liabilities	5,922,916			5,783,480			5,496,112			5,853,199			5,421,221
Common shareholders’ equity	1,027,138			1,006,286			926,157			1,016,712			908,325
Total equity	1,098,740			1,084,654			985,406			1,091,697			967,742
INCOME STATEMENT DATA
Net interest income	$	74,050		$	71,915		$	68,516		$	145,965		$	138,081
Net interest income - FTE(1)	74,194			72,063			68,695			146,257			138,486
Provision for credit losses	56			6,595			47			6,651			3,096
Noninterest income	23,221			22,156			22,769			45,377			46,092
Noninterest expense	49,491			49,586			49,165			99,077			98,586
Net income	36,805			29,462			32,447			66,267			63,578
Net income available to common shareholders	36,793			29,455			32,435			66,248			63,559
PER SHARE DATA
Basic net income per common share	$	1.49		$	1.19		$	1.30		$	2.68		$	2.55
Diluted net income per common share	1.49			1.19			1.30			2.68			2.55
Common cash dividends declared	0.34			0.34			0.32			0.68			0.64
Book value per common share(2)	42.58			41.26			37.31			42.58			37.31
Tangible book value per common share(1)	39.16			37.83			33.92			39.16			33.92
Market value - High	53.74			55.25			47.94			55.25			53.85
Market value - Low	47.30			48.32			38.77			47.30			38.77
Basic weighted average common shares outstanding	24,495,495			24,459,088			24,686,435			24,477,292			24,686,760
Diluted weighted average common shares outstanding	24,495,495			24,459,088			24,686,435			24,477,292			24,686,760
KEY RATIOS
Return on average assets	1.69		%	1.37		%	1.56		%	1.53		%	1.54		%
Return on average common shareholders’ equity	14.41			11.77			14.05			13.10			14.11



Average common shareholders’ equity to average assets	11.72			11.63			11.08			11.68			10.89
End of period tangible common equity to tangible assets(1)	10.91			10.79			10.05			10.91			10.05




Risk-based capital - Common Equity Tier 1(3)	13.74			13.48			13.59			13.74			13.59
Risk-based capital - Tier 1(3)	15.38			15.15			15.20			15.38			15.20
Risk-based capital - Total(3)	16.64			16.41			16.46			16.64			16.46
Net interest margin	3.59			3.54			3.47			3.56			3.53
Net interest margin - FTE(1)	3.59			3.54			3.48			3.57			3.54
Efficiency ratio: expense to revenue	50.88			52.71			53.86			51.78			53.53
Efficiency ratio: expense to revenue - adjusted(1)	50.78			52.56			53.23			51.65			53.07
Net (recoveries) charge-offs to average loans and leases	(0.12)			0.38			(0.06)			0.13			(0.04)
Loan and lease loss allowance to loans and leases	2.26			2.26			2.31			2.26			2.31
Nonperforming assets to loans and leases	0.31			0.34			0.33			0.31			0.33



	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023
END OF PERIOD BALANCES
Assets	$	8,878,003		$	8,667,837		$	8,727,958		$	8,525,058		$	8,414,818
Loans and leases	6,652,999			6,562,772			6,518,505			6,353,648			6,215,343
Deposits	7,195,924			7,055,311			7,038,581			6,967,492			6,976,518
Allowance for loan and lease losses	150,067			148,024			147,552			144,074			143,542
Goodwill and intangible assets	83,907			83,912			83,916			83,921			83,897
Common shareholders’ equity	1,043,515			1,009,886			989,568			924,250			921,020
Total equity	1,114,855			1,081,549			1,068,263			982,997			980,087
ASSET QUALITY
Loans and leases past due 90 days or more	$	185		$	26		$	149		$	154		$	56
Nonaccrual loans and leases	20,297			22,097			23,381			16,617			20,481
Other real estate	—			—			—			117			193
Repossessions	352			308			705			233			47

Total nonperforming assets	$	20,834		$	22,431		$	24,235		$	17,121		$	20,777

(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)
	June 30,		March 31,		December 31,		June 30,
	2024		2024		2023		2023
ASSETS
Cash and due from banks	$	89,592	$	41,533	$	77,474	$	86,742
Federal funds sold and interest bearing deposits with other banks	179,651		39,381		52,194		25,933
Investment securities available-for-sale, at fair value	1,523,548		1,583,244		1,622,600		1,661,405
Other investments	24,585		25,075		25,075		25,320
Mortgages held for sale	2,763		2,881		1,442		2,321
Loans and leases, net of unearned discount:
Commercial and agricultural	721,235		731,527		766,223		797,188
Renewable energy	459,441		413,662		399,708		376,905
Auto and light truck	1,009,967		997,465		966,912		901,054
Medium and heavy duty truck	315,157		303,799		311,947		319,634
Aircraft	1,058,591		1,104,058		1,078,172		1,060,340
Construction equipment	1,132,556		1,092,585		1,084,752		1,012,969
Commercial real estate	1,164,598		1,135,595		1,129,861		985,323
Residential real estate and home equity	654,357		643,856		637,973		617,495
Consumer	137,097		140,225		142,957		144,435
Total loans and leases	6,652,999		6,562,772		6,518,505		6,215,343
Allowance for loan and lease losses	(150,067)		(148,024)		(147,552)		(143,542)
Net loans and leases	6,502,932		6,414,748		6,370,953		6,071,801
Equipment owned under operating leases, net	13,886		16,691		20,366		26,582
Premises and equipment, net	48,201		45,689		46,159		44,089
Goodwill and intangible assets	83,907		83,912		83,916		83,897
Accrued income and other assets	408,938		414,683		427,779		386,728
Total assets	$	8,878,003	$	8,667,837	$	8,727,958	$	8,414,818
LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,578,762	$	1,618,498	$	1,655,728	$	1,721,947
Interest-bearing deposits:
Interest-bearing demand	2,543,724		2,364,751		2,430,833		2,528,231
Savings	1,255,154		1,270,401		1,213,334		1,163,166
Time	1,818,284		1,801,661		1,738,686		1,563,174
Total interest-bearing deposits	5,617,162		5,436,813		5,382,853		5,254,571
Total deposits	7,195,924		7,055,311		7,038,581		6,976,518
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	70,767		82,591		55,809		69,308
Other short-term borrowings	217,450		166,989		256,550		118,377
Total short-term borrowings	288,217		249,580		312,359		187,685
Long-term debt and mandatorily redeemable securities	39,136		39,406		47,911		46,649
Subordinated notes	58,764		58,764		58,764		58,764
Accrued expenses and other liabilities	181,107		183,227		202,080		165,115
Total liabilities	7,763,148		7,586,288		7,659,695		7,434,731
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, 2024, March 31, 2024, December 31, 2023, and June 30, 2023, respectively	436,538		436,538		436,538		436,538
Retained earnings	841,790		812,413		789,842		744,442
Cost of common stock in treasury (3,698,651, 3,728,016, 3,771,070, and 3,523,113 shares at June 30, 2024, March 31, 2024, December 31, 2023, and June 30, 2023, respectively)	(129,248)		(129,790)		(130,489)		(120,410)
Accumulated other comprehensive loss	(105,565)		(109,275)		(106,323)		(139,550)
Total shareholders’ equity	1,043,515		1,009,886		989,568		921,020
Noncontrolling interests	71,340		71,663		78,695		59,067
Total equity	1,114,855		1,081,549		1,068,263		980,087
Total liabilities and equity	$	8,878,003	$	8,667,837	$	8,727,958	$	8,414,818

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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,
	2024		2024		2023		2024		2023
Interest income:
Loans and leases	$	113,101	$	109,202	$	93,300	$	222,303	$	179,989
Investment securities, taxable	5,900		6,079		5,946		11,979		12,594
Investment securities, tax-exempt	254		260		330		514		812
Other	1,914		927		978		2,841		1,615
Total interest income	121,169		116,468		100,554		237,637		195,010
Interest expense:
Deposits	43,095		39,744		28,870		82,839		50,133
Short-term borrowings	2,158		3,102		1,625		5,260		3,018
Subordinated notes	1,061		1,061		1,028		2,122		2,048
Long-term debt and mandatorily redeemable securities	805		646		515		1,451		1,730
Total interest expense	47,119		44,553		32,038		91,672		56,929
Net interest income	74,050		71,915		68,516		145,965		138,081
Provision for credit losses	56		6,595		47		6,651		3,096
Net interest income after provision for credit losses	73,994		65,320		68,469		139,314		134,985
Noninterest income:
Trust and wealth advisory	7,081		6,287		6,467		13,368		12,146
Service charges on deposit accounts	3,203		3,070		3,118		6,273		6,121
Debit card	4,562		4,201		4,701		8,763		9,208
Mortgage banking	1,280		950		926		2,230		1,728
Insurance commissions	1,611		1,776		1,641		3,387		3,670
Equipment rental	1,257		1,671		2,326		2,928		4,829
Losses on investment securities available-for-sale	—		—		—		—		(44)
Other	4,227		4,201		3,590		8,428		8,434
Total noninterest income	23,221		22,156		22,769		45,377		46,092
Noninterest expense:
Salaries and employee benefits	29,238		29,572		28,236		58,810		56,833
Net occupancy	2,908		2,996		2,676		5,904		5,298
Furniture and equipment	1,265		1,149		1,414		2,414		2,721
Data processing	6,712		6,500		6,268		13,212		12,425
Depreciation – leased equipment	999		1,288		1,876		2,287		3,898
Professional fees	1,713		1,345		1,704		3,058		2,386
FDIC and other insurance	1,627		1,657		1,344		3,284		2,704
Business development and marketing	2,026		1,744		1,649		3,770		3,621

Other	3,003		3,335		3,998		6,338		8,700
Total noninterest expense	49,491		49,586		49,165		99,077		98,586
Income before income taxes	47,724		37,890		42,073		85,614		82,491
Income tax expense	10,919		8,428		9,626		19,347		18,913
Net income	36,805		29,462		32,447		66,267		63,578
Net (income) loss attributable to noncontrolling interests	(12)		(7)		(12)		(19)		(19)
Net income available to common shareholders	$	36,793	$	29,455	$	32,435	$	66,248	$	63,559
Per common share:
Basic net income per common share	$	1.49	$	1.19	$	1.30	$	2.68	$	2.55
Diluted net income per common share	$	1.49	$	1.19	$	1.30	$	2.68	$	2.55

Basic weighted average common shares outstanding	24,495,495		24,459,088		24,686,435		24,477,292		24,686,760
Diluted weighted average common shares outstanding	24,495,495		24,459,088		24,686,435		24,477,292		24,686,760

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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
	June 30, 2024						March 31, 2024						June 30, 2023
	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	$	1,524,751	$	5,900	1.56	%	$	1,576,579	$	6,079	1.55	%	$	1,655,790	$	5,946	1.44	%
Tax exempt(1)	29,611		319		4.33	%	31,515		327		4.17	%	41,909		411		3.93	%
Mortgages held for sale	4,179		65		6.26	%	1,830		34		7.47	%	1,879		28		5.98	%
Loans and leases, net of unearned discount(1)	6,606,209		113,115		6.89	%	6,504,069		109,249		6.76	%	6,141,157		93,370		6.10	%
Other investments	138,768		1,914		5.55	%	68,172		927		5.47	%	80,793		978		4.86	%
Total earning assets(1)	8,303,518		121,313		5.88	%	8,182,165		116,616		5.73	%	7,921,528		100,733		5.10	%
Cash and due from banks	60,908						61,889						72,880
Allowance for loan and lease losses	(149,688)						(148,982)						(144,337)
Other assets	546,268						557,072						512,237
Total assets	$	8,761,006					$	8,652,144					$	8,362,308

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	$	5,603,880	$	43,095	3.09	%	$	5,394,854	$	39,744	2.96	%	$	5,192,206	$	28,870	2.23	%
Short-term borrowings:
Securities sold under agreements to repurchase	61,729		146		0.95	%	47,973		47		0.39	%	69,301		32		0.19	%
Other short-term borrowings	159,953		2,012		5.06	%	234,672		3,055		5.24	%	129,230		1,593		4.94	%
Subordinated notes	58,764		1,061		7.26	%	58,764		1,061		7.26	%	58,764		1,028		7.02	%
Long-term debt and mandatorily redeemable securities	38,590		805		8.39	%	47,217		646		5.50	%	46,611		515		4.43	%
Total interest-bearing liabilities	5,922,916		47,119		3.20	%	5,783,480		44,553		3.10	%	5,496,112		32,038		2.34	%
Noninterest-bearing deposits	1,579,798						1,616,251						1,746,876
Other liabilities	159,552						167,759						133,914
Shareholders’ equity	1,027,138						1,006,286						926,157
Noncontrolling interests	71,602						78,368						59,249
Total liabilities and equity	$	8,761,006					$	8,652,144					$	8,362,308
Less: Fully tax-equivalent adjustments			(144)						(148)						(179)
Net interest income/margin (GAAP-derived)(1)			$	74,050	3.59	%			$	71,915	3.54	%			$	68,516	3.47	%
Fully tax-equivalent adjustments			144						148						179
Net interest income/margin - FTE(1)			$	74,194	3.59	%			$	72,063	3.54	%			$	68,695	3.48	%
(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)
	Six Months Ended
	June 30, 2024						June 30, 2023
	Average Balance		Interest Income/Expense		Yield/ Rate		Average Balance		Interest Income/Expense		Yield/ Rate
ASSETS
Investment securities available-for-sale:
Taxable	$	1,550,665	$	11,979	1.55	%	$	1,683,330	$	12,594	1.51	%
Tax exempt(1)	30,563		646		4.25	%	49,634		1,016		4.13	%
Mortgages held for sale	3,004		99		6.63	%	2,143		60		5.65	%
Loans and leases, net of unearned discount(1)	6,555,139		222,364		6.82	%	6,088,970		180,130		5.97	%
Other investments	103,470		2,841		5.52	%	69,141		1,615		4.71	%
Total earning assets(1)	8,242,841		237,929		5.80	%	7,893,218		195,415		4.99	%
Cash and due from banks	61,399						72,403
Allowance for loan and lease losses	(149,335)						(142,705)
Other assets	551,670						520,061
Total assets	$	8,706,575					$	8,342,977

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	5,499,367		82,839		3.03	%	5,090,713		50,133		1.99	%
Short-term borrowings:
Securities sold under agreements to repurchase	54,851		193		0.71	%	101,721		72		0.14	%
Other short-term borrowings	197,313		5,067		5.16	%	124,024		2,946		4.79	%
Subordinated notes	58,764		2,122		7.26	%	58,764		2,048		7.03	%
Long-term debt and mandatorily redeemable securities	42,904		1,451		6.80	%	45,999		1,730		7.58	%
Total interest-bearing liabilities	5,853,199		91,672		3.15	%	5,421,221		56,929		2.12	%
Noninterest-bearing deposits	1,598,024						1,813,524
Other liabilities	163,655						140,490
Shareholders’ equity	1,016,712						908,325
Noncontrolling interests	74,985						59,417
Total liabilities and equity	$	8,706,575					$	8,342,977
Less: Fully tax-equivalent adjustments			(292)						(405)
Net interest income/margin (GAAP-derived)(1)			$	145,965	3.56	%			$	138,081	3.53	%
Fully tax-equivalent adjustments			292						405
Net interest income/margin - FTE(1)			$	146,257	3.57	%			$	138,486	3.54	%
(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 Ended									Six Months Ended
		June 30,			March 31,			June 30,			June 30,			June 30,
		2024			2024			2023			2024			2023
Calculation of Net Interest Margin
(A)	Interest income (GAAP)	$	121,169		$	116,468		$	100,554		$	237,637		$	195,010
	Fully tax-equivalent adjustments:
(B)	– Loans and leases	79			81			98			160			201
(C)	– Tax exempt investment securities	65			67			81			132			204
(D)	Interest income – FTE (A+B+C)	121,313			116,616			100,733			237,929			195,415
(E)	Interest expense (GAAP)	47,119			44,553			32,038			91,672			56,929
(F)	Net interest income (GAAP) (A-E)	74,050			71,915			68,516			145,965			138,081
(G)	Net interest income - FTE (D-E)	74,194			72,063			68,695			146,257			138,486
(H)	Annualization factor	4.022			4.022			4.011			2.011			2.017
(I)	Total earning assets	$	8,303,518		$	8,182,165		$	7,921,528		$	8,242,841		$	7,893,218
	Net interest margin (GAAP-derived) (F*H)/I	3.59		%	3.54		%	3.47		%	3.56		%	3.53		%
	Net interest margin – FTE (G*H)/I	3.59		%	3.54		%	3.48		%	3.57		%	3.54		%

Calculation of Efficiency Ratio
(F)	Net interest income (GAAP)	$	74,050		$	71,915		$	68,516		$	145,965		$	138,081
(G)	Net interest income – FTE	74,194			72,063			68,695			146,257			138,486
(J)	Plus: noninterest income (GAAP)	23,221			22,156			22,769			45,377			46,092
(K)	Less: gains/losses on investment securities and partnership investments	(929)			(1,037)			(748)			(1,966)			(2,270)
(L)	Less: depreciation – leased equipment	(999)			(1,288)			(1,876)			(2,287)			(3,898)
(M)	Total net revenue (GAAP) (F+J)	97,271			94,071			91,285			191,342			184,173
(N)	Total net revenue – adjusted (G+J–K–L)	95,487			91,894			88,840			187,381			178,410
(O)	Noninterest expense (GAAP)	49,491			49,586			49,165			99,077			98,586
(L)	Less:depreciation – leased equipment	(999)			(1,288)			(1,876)			(2,287)			(3,898)

(P)	Noninterest expense – adjusted (O–L)	48,492			48,298			47,289			96,790			94,688
	Efficiency ratio (GAAP-derived) (O/M)	50.88		%	52.71		%	53.86		%	51.78		%	53.53		%
	Efficiency ratio – adjusted (P/N)	50.78		%	52.56		%	53.23		%	51.65		%	53.07		%




		End of Period
		June 30,			March 31,			June 30,
		2024			2024			2023
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)	Total common shareholders’ equity (GAAP)	$	1,043,515		$	1,009,886		$	921,020
(R)	Less: goodwill and intangible assets	(83,907)			(83,912)			(83,897)
(S)	Total tangible common shareholders’ equity (Q–R)	$	959,608		$	925,974		$	837,123
(T)	Total assets (GAAP)	8,878,003			8,667,837			8,414,818
(R)	Less: goodwill and intangible assets	(83,907)			(83,912)			(83,897)
(U)	Total tangible assets (T–R)	$	8,794,096		$	8,583,925		$	8,330,921
	Common equity-to-assets ratio (GAAP-derived) (Q/T)	11.75		%	11.65		%	10.95		%
	Tangible common equity-to-tangible assets ratio (S/U)	10.91		%	10.79		%	10.05		%












Calculation of Tangible Book Value per Common Share
(Q)	Total common shareholders’ equity (GAAP)	$	1,043,515		$	1,009,886		$	921,020
(V)	Actual common shares outstanding	24,507,023			24,477,658			24,682,561
	Book value per common share (GAAP-derived) (Q/V)*1000	$	42.58		$	41.26		$	37.31
	Tangible common book value per share (S/V)*1000	$	39.16		$	37.83		$	33.92

The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3)

Please contact us at shareholder@1stsource.com

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