1st Source Corporation Reports Record Second Quarter Results, Increased Cash Dividend Declared

Rhea-AI Summary

1st Source (NASDAQ: SRCE) reported record quarterly net income of $36.79 million for Q2 2024, up 13.44% year-over-year. Diluted EPS reached $1.49, a 14.62% increase from Q2 2023. The company declared a cash dividend of $0.36 per share, up 12.50% from last year. Key highlights include:

- Average loans and leases grew 7.57% YoY to $6.61 billion
- Average deposits increased 3.52% YoY to $7.18 billion
- Tax-equivalent net interest income rose 8.00% YoY to $74.19 million
- Net interest margin improved to 3.59%, up 11 basis points YoY
- Net recoveries of $1.99 million recorded for the quarter

The company maintained a strong financial position with a common equity-to-assets ratio of 11.75% and a Common Equity Tier 1 ratio of 13.74%.

Positive

• Record quarterly net income of $36.79 million, up 13.44% year-over-year
• Diluted EPS increased 14.62% to $1.49
• Cash dividend raised by 12.50% to $0.36 per share
• Average loans and leases grew 7.57% year-over-year
• Average deposits increased 3.52% year-over-year
• Tax-equivalent net interest income rose 8.00% year-over-year
• Net interest margin improved by 11 basis points year-over-year
• Net recoveries of $1.99 million recorded for the quarter
• Common equity-to-assets ratio improved to 11.75% from 10.95% a year ago

Negative

• None.

Financial Analyst

1st Source 's Q2 2024 results demonstrate robust financial performance and strategic growth. Net income reached a record $36.79 million, up 13.44% year-over-year, with diluted EPS at $1.49, a 14.62% increase. This growth is particularly impressive given the challenging economic environment.

The bank's loan portfolio expanded by 7.57% year-over-year, indicating strong demand and effective lending strategies. Notably, the net interest margin improved to 3.59%, up 11 basis points from Q2 2023, showcasing the bank's ability to manage interest rate pressures effectively.

Asset quality remains strong, with nonperforming assets to loans and leases at 0.31%, down from 0.34% in Q1 2024. The net recoveries of $1.99 million this quarter, compared to net charge-offs in the previous quarter, is a positive sign of the bank's risk management practices.

The increase in cash dividend to $0.36 per share, up 12.50% year-over-year, signals management's confidence in the bank's financial strength and commitment to shareholder returns.

However, investors should monitor the bank's deposit costs and competitive pressures in the coming quarters, as the report mentions persistent deposit rate competition. Overall, 1st Source 's Q2 results indicate a well-managed, growing institution with solid fundamentals.

Market Research Analyst

1st Source 's Q2 performance is noteworthy in the context of the broader banking sector. The bank's ability to grow its loan portfolio by 7.57% year-over-year is impressive, especially considering the current economic uncertainties and tightening credit conditions many banks are facing.

The bank's deposit growth of 3.52% year-over-year, while modest, is still positive in a highly competitive environment. However, the shift in deposit mix towards time deposits and brokered deposits could potentially pressure margins in future quarters if interest rates remain elevated.

1st Source's recognition by Forbes as one of America's Best Banks (ranked #14) and its inclusion in other prestigious lists like 'Best in State Banks' and 'Best Employers for New Grads' could enhance its brand value and potentially aid in customer acquisition and retention. This positive reputation could be particularly valuable in attracting and retaining deposits in a competitive market.

The bank's focus on community engagement and branch remodeling to feature a 'side-by-side banking model' aligns with industry trends towards more personalized, relationship-based banking. This strategy could help differentiate 1st Source in a crowded market and potentially lead to higher customer satisfaction and loyalty.

Investors should keep an eye on the bank's ability to maintain its strong performance in the face of potential economic headwinds and ongoing interest rate uncertainties. The bank's solid capital position and improving asset quality provide a buffer against potential challenges, but continued vigilance in risk management will be crucial.

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, Indiana--(Newsfile Corp. - July 25, 2024) - 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.

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.

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.

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.

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.

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.

# # #

Category: Earnings

(charts attached)

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. 

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			436,538			436,538			436,538			436,538
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
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			(129,248)			(129,790)			(130,489)			(120,410)
shares at June 30, 2024, March 31, 2024, December 31, 2023, and June 30, 2023, respectively)
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

 

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

 

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.

 

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.

 

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

Contact:
Brett Bauer
574-235-2000

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/217646

FAQ

What was 1st Source 's (SRCE) net income for Q2 2024?

1st Source (SRCE) reported a record quarterly net income of $36.79 million for Q2 2024, up 13.44% from the same quarter last year.

How much did SRCE's diluted earnings per share (EPS) increase in Q2 2024?

SRCE's diluted earnings per share (EPS) increased by 14.62% to $1.49 in Q2 2024, compared to $1.30 in Q2 2023.

What was the cash dividend declared by SRCE for Q2 2024?

SRCE declared a cash dividend of $0.36 per share for Q2 2024, which represents a 12.50% increase from the dividend declared a year ago.

How much did SRCE's average loans and leases grow in Q2 2024?

SRCE's average loans and leases grew by $465.05 million or 7.57% year-over-year to $6.61 billion in Q2 2024.

What was SRCE's net interest margin in Q2 2024?

SRCE's net interest margin improved to 3.59% in Q2 2024, up 11 basis points from the same quarter a year ago.