1st Source Corporation Reports Third Quarter Results, Cash Dividend Declared

Rhea-AI Summary

1st Source (NASDAQ: SRCE) reported Q3 2024 net income of $34.94 million, up 6.07% from Q3 2023. Diluted earnings per share reached $1.41, a 6.82% increase year-over-year. The Board approved a quarterly cash dividend of $0.36 per share, up 12.50% from last year. Tax-equivalent net interest income was $75.63 million, up 8.97% from Q3 2023, with net interest margin expanding to 3.64%. Credit quality showed some challenges with net charge-offs of $0.85 million. The company maintained strong capital ratios with Common Equity Tier 1 at 14.18%.

Positive

• Net income increased 6.07% YoY to $34.94 million
• Diluted EPS grew 6.82% YoY to $1.41
• Cash dividend increased 12.50% YoY to $0.36 per share
• Tax-equivalent net interest income up 8.97% YoY to $75.63 million
• Net interest margin improved to 3.64%, up 18 basis points YoY
• Strong capital position with Common Equity Tier 1 ratio at 14.18%

Negative

• Net charge-offs of $0.85 million vs net recoveries of $1.99 million in previous quarter
• Nonperforming assets ratio increased to 0.47% from 0.31% in previous quarter
• Noninterest income decreased 8.21% YoY
• Average deposits declined $49.25 million (0.69%) from previous quarter

Insights

Financial Analyst

The Q3 results show notable strength with $34.94 million in net income, up 6.07% year-over-year. Key positives include margin expansion for the fourth consecutive quarter, with net interest margin reaching 3.64% and a healthy 12.50% dividend increase to $0.36 per share.

However, there are some concerns: net charge-offs of $0.85 million versus previous quarter's recoveries of $1.99 million and nonperforming assets rising to 0.47% from 0.31%. The capital position remains strong with Common Equity Tier 1 at 14.18%, providing a solid buffer against potential credit deterioration.

Credit Risk Analyst

While overall credit quality remains manageable, the increase in nonperforming assets and net charge-offs warrants attention. The allowance for loan losses at 2.30% provides adequate coverage, but the jump in special attention loans and a significant charge-off from one commercial account signals potential deterioration in the loan portfolio. The bank's strong capital ratios and conservative lending practices should help weather any credit challenges, but monitoring credit trends in coming quarters will be crucial.

QUARTERLY HIGHLIGHTS

• Net income was $34.94 million for the quarter, up $2.00 million or 6.07% from the third quarter of 2023. Diluted net income per common share was $1.41, up $0.09 or 6.82% from the prior year's third quarter of $1.32.
  
  
• Cash dividend of $0.36 cents per common share for the quarter was approved, up 12.50% from the cash dividend declared a year ago.
  
  
• Tax-equivalent net interest income was $75.63 million, up $1.44 million or 1.94% from the second quarter of 2024 and up $6.22 million, or 8.97% from the third quarter a year ago. Tax-equivalent net interest margin was 3.64%, up five basis points from the previous quarter and up 18 basis points from the third quarter a year ago.
  
  
• Net charge-offs of $0.85 million or 0.05% of average loans and leases occurred during the quarter compared to net recoveries of $1.99 million or 0.12% of average loans and leases during the previous quarter.

South Bend, Indiana--(Newsfile Corp. - October 24, 2024) - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported quarterly net income of $34.94 million for the third quarter of 2024, compared to $36.79 million the previous quarter and up 6.07% from the $32.94 million reported in the third quarter a year ago. Year-to-date 2024 net income was $101.19 million, up 4.86% compared to $96.50 million during the first nine months of 2023. Diluted net income per common share for the third quarter of 2024 was $1.41, down 5.37% compared to $1.49 in the previous quarter and up 6.82%, versus $1.32 in the third quarter of 2023. Diluted net income per common share for the first nine months of 2024 was $4.09, up 5.68% compared to $3.87 a year earlier.

At its October 2024 meeting, the Board of Directors approved a cash dividend of $0.36 cents per common share, up 12.50% from the cash dividend declared a year ago. The cash dividend is payable to shareholders of record on November 5, 2024, and will be paid on November 15, 2024.

Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, "We are pleased with our increase in revenue and net interest margin expansion compared to the previous quarter. Disciplined loan and lease pricing lead to a five basis point improvement from the prior quarter. This marks the fourth consecutive quarter of margin expansion despite persistent deposit rate competition as the Federal Reserve raised rates or held them steady over that period. They have recently begun to lower rates.

"While still very good, credit was challenged in the quarter with elevated net charge-offs, the majority of which were from one business account. Nonperforming assets to loans and leases at September 30, 2024, was 0.47%, up from 0.31% at June 30, 2024, and the allowance for loan and lease losses as a percentage of total loans and leases remained strong at 2.30% up from 2.26% the previous quarter.

"We were very pleased to learn during the third quarter that 1st Source Bank won several accolades. We made Forbes' America's Best-in-State Employers list, which was created by surveying more than 160,000 employees working for companies that had at least 500 employees in the United States. Also, 1st Source Bank's Specialty Finance Group was included in Monitor's Best Companies in Equipment Finance in the Leadership category. Great leadership was defined for this award to include attributes such as accessibility, transparency, communication, and collaboration - an apt description of our Bank leadership team.

"Another welcome honor was when two of our board members along with myself, were named to the Indiana 250 list by IBJ Media. Isaac Torres and Tracy Graham were both included in the list which identifies the state's most influential community and business leaders. We are thrilled to have both Isaac and Tracy's experience and leadership on our Board of Directors. Finally, we once again made the Piper Sandler Sm-All Stars list in the Class of 2024. This list identifies the top performing small-cap banks and thrifts in the U.S. These honors speak directly to our values and mission in the ways that we deliver both for our clients and colleagues - helping them achieve security, build wealth, and realize their dreams." Mr. Murphy concluded.

THIRD QUARTER 2024 FINANCIAL RESULTS

Loans

Third quarter average loans and leases were $6.61 billion, which was flat compared to the previous quarter, and increased $359.79 million, up 5.76% from the third quarter a year ago. Year-to-date average loans and leases increased $430.26 million to $6.57 billion, up 7.01% from the first nine months of 2023.

Deposits

Third quarter average deposits were $7.13 billion, which was down $49.25 million, or 0.69%, from the previous quarter, and up $184.32 million or 2.65% compared to the quarter ended September 30, 2023. Average deposits for the first nine months of 2024 were $7.11 billion, an increase of $190.13 million, up 2.75% from the same period a year ago. Average deposit balances declined from the previous quarter primarily due to expected seasonal public fund outflows and lower brokered deposit balances. Average deposit balance growth from the third quarter of 2023 was primarily in savings, time, and brokered deposits.

Net Interest Income and Net Interest Margin

Third quarter 2024 tax-equivalent net interest income increased $1.44 million to $75.63 million, up 1.94% from the previous quarter and increased $6.22 million, up 8.97% from the third quarter a year ago. For the first nine months of 2024, tax equivalent net interest income increased $14.00 million to $221.89 million, up 6.73% from the first nine months of 2023.

Third quarter 2024 net interest margin was 3.63%, an increase of four basis points from the 3.59% in the previous quarter and an increase of 18 basis points from the same period in 2023. On a fully tax-equivalent basis, third quarter 2024 net interest margin was 3.64%, up five basis points compared to the 3.59% in the previous quarter, and an increase of 18 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 balances and less reliance on higher costing short-term borrowings.

Net interest margin for the first nine months of 2024 was 3.58%, an increase of eight basis points compared to the first nine months of 2023. Net interest margin on a fully-tax equivalent basis for the first nine months of 2024 was 3.59%, an increase of eight basis points compared to the first nine months of the prior year.

Noninterest Income

Third quarter 2024 noninterest income of $22.45 million was down $0.77 million, or 3.33% from the previous quarter, and decreased $2.01 million, down 8.21% compared to the third quarter a year ago. For the first nine months of 2024, noninterest income was $67.83 million, a decrease of $2.72 million, down 3.86% from the same period a year ago.

The decrease in noninterest income compared to the previous quarter was mainly due to lower trust and wealth advisory income from seasonal tax preparation fees during the second quarter, a decline in mortgage banking income from lower sales volumes, a decrease in partnership investment gains, lower interest rate swaps fees, and a reduction in equipment rental income as demand for leases declined. These decreases were offset by increased bank owned life insurance policy claims recognized.

The decrease in noninterest income compared to the third quarter and first nine months of 2023 was primarily due to fewer gains on the sale of renewable energy tax equity investments, reduced equipment rental income as demand for leases declined, lower contingent insurance commissions received, a decline in bank owned life insurance policy claims recognized, and less interest rate swap fees. These declines were offset by higher trust and wealth advisory income due to improvements in overall market performance and increased mortgage banking income from higher sales volumes and margins.

Noninterest Expense

Third quarter 2024 noninterest expense of $49.44 million was flat compared to the prior quarter and decreased $0.72 million or 1.44% from the third quarter a year ago. For the first nine months of 2024, noninterest expense was $148.52 million, down slightly from the same period a year ago.

Total noninterest income was flat compared to the previous quarter. Increases were the result of higher employee benefit costs from increased group insurance claims and higher incentive compensation. These increases were offset by a decrease in the provision for unfunded loan commitments due to higher loan fundings and higher gains on the sale of fixed assets.

The decrease in noninterest expense compared to the third quarter and first nine months of 2023, was the result of a decrease in the loan loss provision for unfunded commitments due to higher loan fundings, lower leased equipment depreciation, reduced group insurance claims, and higher gains on the sale of fixed assets. These decreases were offset by 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, increased data processing costs from technology projects, and an increase in professional fees as a result of a $1.08 million reversal of accrued legal fees during the first quarter of 2023.

Credit

The allowance for loan and lease losses increased to $152.32 million as of September 30, 2024, or 2.30% of total loans and leases. This percentage compared to 2.26% at June 30, 2024, and 2.27% at September 30, 2023. Net charge-offs of $0.85 million were recorded for the third quarter of 2024, compared with net recoveries of $1.99 million in the prior quarter and net charge-offs of $0.33 million in the same quarter a year ago. The majority of the third quarter's charge-offs related to one account in the commercial and agricultural portfolio.

The provision for credit losses was $3.11 million for the third quarter of 2024, an increase of $3.05 million from the previous quarter and an increase of $2.25 million compared with the same period in 2023. Net charge-offs and higher special attention outstandings compared to net recoveries in the previous quarter were the primary reasons for the increase in the provision for credit losses during the quarter, along with a change in quantitative assumptions during the quarter regarding the treatment of renewals for loans in special attention. The ratio of nonperforming assets to loans and leases was 0.47% as of September 30, 2024, compared to 0.31% on June 30, 2024, and 0.27% on September 30, 2023.

Capital

As of September 30, 2024, the common equity-to-assets ratio was 12.60%, compared to 11.75% at June 30, 2024, and 10.84% a year ago. The tangible common equity-to-tangible assets ratio was 11.76% at September 30, 2024, compared to 10.91% at June 30, 2024, and 9.96% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 14.18% at September 30, 2024, compared to 13.74% at June 30, 2024, and 13.31% 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 third 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 77 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

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(charts attached)

1st SOURCE CORPORATION
3rd QUARTER 2024 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,
		2024			2024			2023			2024			2023
AVERAGE BALANCES
Assets	$	8,719,824		$	8,761,006		$	8,417,391		$	8,711,023		$	8,368,054
Earning assets		8,273,301			8,303,518			7,963,537			8,253,068			7,917,763
Investments		1,539,219			1,554,362			1,645,906			1,567,123			1,703,626
Loans and leases		6,605,677			6,606,209			6,245,883			6,572,108			6,141,849
Deposits		7,134,426			7,183,678			6,950,105			7,109,827			6,919,695
Interest bearing liabilities		5,806,983			5,922,916			5,566,874			5,837,681			5,470,305
Common shareholders' equity		1,079,543			1,027,138			940,544			1,037,809			919,182
Total equity		1,150,795			1,098,740			999,552			1,111,540			987,461
INCOME STATEMENT DATA
Net interest income	$	75,486		$	74,050		$	69,236		$	221,451		$	207,317
Net interest income - FTE(1)		75,630			74,194			69,406			221,887			207,892
Provision for credit losses		3,108			56			859			9,759			3,955
Noninterest income		22,448			23,221			24,455			67,825			70,547
Noninterest expense		49,443			49,491			50,166			148,520			148,752
Net income		34,914			36,805			32,939			101,181			96,517
Net income available to common shareholders		34,937			36,793			32,939			101,185			96,498
PER SHARE DATA
Basic net income per common share	$	1.41		$	1.49		$	1.32		$	4.09		$	3.87
Diluted net income per common share		1.41			1.49			1.32			4.09			3.87
Common cash dividends declared		0.36			0.34			0.32			1.04			0.96
Book value per common share(2)		45.05			42.58			37.83			45.05			37.83
Tangible book value per common share(1)		41.62			39.16			34.40			41.62			34.40
Market value - High		65.63			53.74			49.36			65.63			53.85
Market value - Low		51.80			47.30			40.96			47.30			38.77
Basic weighted average common shares outstanding		24,514,144			24,495,495			24,660,508			24,489,665			24,677,914
Diluted weighted average common shares outstanding		24,514,144			24,495,495			24,660,508			24,489,665			24,677,914
KEY RATIOS
Return on average assets		1.59 %			1.69 %			1.55 %			1.55 %			1.54 %
Return on average common shareholders' equity		12.87			14.41			13.89			13.02			14.04
Average common shareholders' equity to average assets		12.38			11.72			11.17			11.91			10.98
End of period tangible common equity to tangible assets(1)		11.76			10.91			9.96			11.76			9.96
Risk-based capital - Common Equity Tier 1(3)		14.18			13.74			13.31			14.18			13.31
Risk-based capital - Tier 1(3)		15.84			15.38			14.86			15.84			14.86
Risk-based capital - Total(3)		17.10			16.64			16.12			17.10			16.12
Net interest margin		3.63			3.59			3.45			3.58			3.50
Net interest margin - FTE(1)		3.64			3.59			3.46			3.59			3.51
Efficiency ratio: expense to revenue		50.49			50.88			53.54			51.34			53.53
Efficiency ratio: expense to revenue - adjusted(1)		50.32			50.78			54.24			51.20			53.46
Net charge-offs (recoveries) to average loans and leases		0.05			(0.12)			0.02			0.10			(0.02)
Loan and lease loss allowance to loans and leases		2.30			2.26			2.27			2.30			2.27
Nonperforming assets to loans and leases		0.47			0.31			0.27			0.47			0.27
		September 30,			June 30,			March 31,			December 31,			September 30,
		2024			2024			2024			2023			2023
END OF PERIOD BALANCES
Assets	$	8,763,946		$	8,878,003		$	8,667,837		$	8,727,958		$	8,525,058
Loans and leases		6,616,100			6,652,999			6,562,772			6,518,505			6,353,648
Deposits		7,125,944			7,195,924			7,055,311			7,038,581			6,967,492
Allowance for loan and lease losses		152,324			150,067			148,024			147,552			144,074
Goodwill and intangible assets		83,902			83,907			83,912			83,916			83,921
Common shareholders' equity		1,104,253			1,043,515			1,009,886			989,568			924,250
Total equity		1,175,205			1,114,855			1,081,549			1,068,263			982,997
ASSET QUALITY
Loans and leases past due 90 days or more	$	100		$	185		$	26		$	149		$	154
Nonaccrual loans and leases		30,678			20,297			22,097			23,381			16,617
Other real estate		—			—			—			—			117
Repossessions		109			352			308			705			233
Total nonperforming assets	$	30,887		$	20,834		$	22,431		$	24,235		$	17,121

 

(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)
			September 30,				June 30,			December 31,			September 30,
			2024				2024			2023			2023
ASSETS
Cash and due from banks		$	99,900		$		89,592		$	77,474		$	75,729
Federal funds sold and interest bearing deposits with other banks			69,461				179,651			52,194			35,406
Investment securities available-for-sale, at fair value			1,563,461				1,523,548			1,622,600			1,605,242
Other investments			23,855				24,585			25,075			25,075
Mortgages held for sale			3,690				2,763			1,442			3,118
Loans and leases, net of unearned discount:
Commercial and agricultural			723,176				721,235			766,223			763,051
Renewable energy			479,947				459,441			399,708			364,949
Auto and light truck			949,473				1,009,967			966,912			901,484
Medium and heavy duty truck			299,208				315,157			311,947			323,202
Aircraft			1,065,801				1,058,591			1,078,172			1,079,581
Construction equipment			1,141,367				1,132,556			1,084,752			1,062,097
Commercial real estate			1,156,823				1,164,598			1,129,861			1,088,199
Residential real estate and home equity			664,581				654,357			637,973			627,515
Consumer			135,724				137,097			142,957			143,570
Total loans and leases			6,616,100				6,652,999			6,518,505			6,353,648
Allowance for loan and lease losses			(152,324)				(150,067)			(147,552)			(144,074)
Net loans and leases			6,463,776				6,502,932			6,370,953			6,209,574
Equipment owned under operating leases, net			13,011				13,886			20,366			24,096
Premises and equipment, net			48,185				48,201			46,159			43,951
Goodwill and intangible assets			83,902				83,907			83,916			83,921
Accrued income and other assets			394,705				405,938			427,779			418,946
Total assets		$	8,763,946		$		8,875,003		$	8,727,958		$	8,525,058
LIABILITIES
Deposits:
Noninterest-bearing demand		$	1,635,981		$		1,578,762		$	1,655,728		$	1,680,725
Interest-bearing deposits:
Interest-bearing demand			2,404,805				2,543,724			2,430,833			2,416,864
Savings			1,242,551				1,255,154			1,213,334			1,180,837
Time			1,842,607				1,818,284			1,738,686			1,689,066
Total interest-bearing deposits			5,489,963				5,617,162			5,382,853			5,286,767
Total deposits			7,125,944				7,195,924			7,038,581			6,967,492
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase			63,553				70,767			55,809			48,335
Other short-term borrowings			102,124				217,450			256,550			223,757
Total short-term borrowings			165,677				288,217			312,359			272,092
Long-term debt and mandatorily redeemable securities			39,220				39,136			47,911			46,533
Subordinated notes			58,764				58,764			58,764			58,764
Accrued expenses and other liabilities			199,136				181,107			202,080			197,180
Total liabilities			7,588,741				7,763,148			7,659,695			7,542,061
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, 2024, June 30, 2024, December 31, 2023, and September 30, 2023, respectively			436,538				436,538			436,538			436,538
Retained earnings			868,075				841,790			789,842			769,603
Cost of common stock in treasury (3,691,291, 3,698,651, 3,771,070, and 3,776,591
shares at September 30, 2024, June 30, 2024, December 31, 2023, and September 30, 2023, respectively)			(129,134)				(129,248)			(130,489)			(130,579)
Accumulated other comprehensive loss			(71,226)				(105,565)			(106,323)			(151,312)
Total shareholders' equity			1,104,253				1,043,515			989,568			924,250
Noncontrolling interests			70,952				71,340			78,695			58,747
Total equity			1,175,205				1,114,855			1,068,263			982,997
Total liabilities and equity		$	8,763,946		$		8,878,003		$	8,727,958		$	8,525,058

 

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,
		2024			2024			2023			2024			2023
Interest income:
Loans and leases	$	115,200		$	113,101		$	100,206		$	337,503		$	280,195
Investment securities, taxable		6,120			5,900			5,918			18,099			18,512
Investment securities, tax-exempt		251			254			319			765			1,131
Other		1,659			1,914			883			4,500			2,498
Total interest income		123,230			121,169			107,326			360,867			302,336
Interest expense:
Deposits		43,782			43,095			34,405			126,621			84,538
Short-term borrowings		1,509			2,158			2,136			6,769			5,154
Subordinated notes		1,054			1,061			1,060			3,176			3,108
Long-term debt and mandatorily redeemable securities		1,399			805			489			2,850			2,219
Total interest expense		47,744			47,119			38,090			139,416			95,019
Net interest income		75,486			74,050			69,236			221,451			207,317
Provision for credit losses		3,108			56			859			9,759			3,955
Net interest income after provision for credit losses		72,378			73,994			68,377			211,692			203,362
Noninterest income:
Trust and wealth advisory		6,524			7,081			5,648			19,892			17,794
Service charges on deposit accounts		3,279			3,203			3,297			9,552			9,418
Debit card		4,598			4,562			4,377			13,361			13,585
Mortgage banking		1,042			1,280			971			3,272			2,699
Insurance commissions		1,641			1,611			1,714			5,028			5,384
Equipment rental		1,141			1,257			2,101			4,069			6,930
Losses on investment securities available-for-sale		—			—			—			—			(44)
Other		4,223			4,227			6,347			12,651			14,781
Total noninterest income		22,448			23,221			24,455			67,825			70,547
Noninterest expense:
Salaries and employee benefits		31,274			29,238			28,866			90,084			85,699
Net occupancy		3,011			2,908			2,867			8,915			8,165
Furniture and equipment		1,496			1,265			1,217			3,910			3,938
Data processing		7,002			6,712			6,289			20,214			18,714
Depreciation - leased equipment		907			999			1,672			3,194			5,570
Professional fees		1,928			1,713			1,763			4,986			4,149
FDIC and other insurance		1,423			1,627			1,598			4,707			4,302
Business development and marketing		1,671			2,026			1,201			5,441			4,822
Other		731			3,003			4,693			7,069			13,393
Total noninterest expense		49,443			49,491			50,166			148,520			148,752
Income before income taxes		45,383			47,724			42,666			130,997			125,157
Income tax expense		10,469			10,919			9,727			29,816			28,640
Net income		34,914			36,805			32,939			101,181			96,517
Net loss (income) attributable to noncontrolling interests		23			(12)			—			4			(19)
Net income available to common shareholders	$	34,937		$	36,793		$	32,939		$	101,185		$	96,498
Per common share:
Basic net income per common share	$	1.41		$	1.49		$	1.32		$	4.09		$	3.87
Diluted net income per common share	$	1.41		$	1.49		$	1.32		$	4.09		$	3.87
Basic weighted average common shares outstanding		24,514,144			24,495,495			24,660,508			24,489,665			24,677,914
Diluted weighted average common shares outstanding		24,514,144			24,495,495			24,660,508			24,489,665			24,677,914

 

1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
		Three Months Ended
		September 30, 2024									June 30, 2024											September 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	$	1,510,162		$	6,120		1.61 %		$		1,524,751		$	5,900				1.56 %		$		1,605,912			$	5,918			1.46 %
Tax exempt(1)		29,057			316		4.33 %				29,611			319				4.33 %				39,994				397			3.94 %
Mortgages held for sale		3,758			63		6.67 %				4,179			65				6.26 %				3,169				54			6.76 %
Loans and leases, net of unearned discount(1)		6,605,677			115,216		6.94 %				6,606,209			113,115				6.89 %				6,245,883				100,244			6.37 %
Other investments		124,647			1,659		5.29 %				138,768			1,914				5.55 %				68,579				883			5.11 %
Total earning assets(1)		8,273,301			123,374		5.93 %				8,303,518			121,313				5.88 %				7,963,537				107,496			5.36 %
Cash and due from banks		64,014									60,908											68,640
Allowance for loan and lease losses		(151,693)									(149,688)											(145,197)
Other assets		534,202									546,268											530,411
Total assets	$	8,719,824							$		8,761,006									$		8,417,391
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits	$	5,534,358		$	43,782		3.15 %		$		5,603,880		$	43,095				3.09 %		$		5,247,332			$	34,405			2.60 %
Short-term borrowings:
Securities sold under agreements to repurchase		64,032			173		1.07 %				61,729			146				0.95 %				60,736				35			0.23 %
Other short-term borrowings		110,710			1,336		4.80 %				159,953			2,012				5.06 %				153,523				2,101			5.43 %
Subordinated notes		58,764			1,054		7.14 %				58,764			1,061				7.26 %				58,764				1,060			7.16 %
Long-term debt and mandatorily redeemable securities		39,119			1,399		14.23 %				38,590			805				8.39 %				46,519				489			4.17 %
Total interest-bearing liabilities		5,806,983			47,744		3.27 %				5,922,916			47,119				3.20 %				5,566,874				38,090			2.71 %
Noninterest-bearing deposits		1,600,068									1,579,798											1,702,773
Other liabilities		161,978									159,552											148,192
Shareholders' equity		1,079,543									1,027,138											940,544
Noncontrolling interests		71,252									71,602											59,008
Total liabilities and equity	$	8,719,824							$		8,761,006									$		8,417,391
Less: Fully tax-equivalent adjustments					(144)									(144)												(170)
Net interest income/margin (GAAP-derived)(1)				$	75,486		3.63 %						$	74,050				3.59 %							$	69,236			3.45 %
Fully tax-equivalent adjustments					144									144												170
Net interest income/margin - FTE(1)				$	75,630		3.64 %						$	74,194				3.59 %							$	69,406			3.46 %
(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)
			Nine Months Ended
			September 30, 2024												September 30, 2023
			Average Balance				Interest Income /Expense				Yield/ Rate				Average Balance				Interest Income/ Expense				Yield/ Rate
ASSETS
Investment securities available-for-sale:
Taxable	$		1,537,066		$		18,099				1.57 %		$		1,657,241		$		18,512				1.49 %
Tax exempt(1)			30,057				962				4.28 %				46,385				1,413				4.07 %
Mortgages held for sale			3,257				162				6.64 %				2,489				114				6.12 %
Loans and leases, net of unearned discount(1)			6,572,108				337,580				6.86 %				6,141,849				280,374				6.10 %
Other investments			110,580				4,500				5.44 %				69,799				2,498				4.78 %
Total earning assets(1)			8,253,068				361,303				5.85 %				7,917,763				302,911				5.11 %
Cash and due from banks			62,277												70,288
Allowance for loan and lease losses			(150,127)												(143,545)
Other assets			545,805												523,548
Total assets	$		8,711,023										$		8,368,054
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits			5,511,116				126,621				3.07 %				5,143,493				84,538				2.20 %
Short-term borrowings:
Securities sold under agreements to repurchase			57,934				366				0.84 %				87,909				107				0.16 %
Other short-term borrowings			168,234				6,403				5.08 %				133,965				5,047				5.04 %
Subordinated notes			58,764				3,176				7.22 %				58,764				3,108				7.07 %
Long-term debt and mandatorily redeemable securities			41,633				2,850				9.14 %				46,174				2,219				6.43 %
Total interest-bearing liabilities			5,837,681				139,416				3.19 %				5,470,305				95,019				2.32 %
Noninterest-bearing deposits			1,598,711												1,776,202
Other liabilities			163,091												143,086
Shareholders' equity			1,037,809												919,182
Noncontrolling interests			73,731												59,279
Total liabilities and equity	$		8,711,023										$		8,368,054
Less: Fully tax-equivalent adjustments							(436)												(575)
Net interest income/margin (GAAP-derived)(1)					$		221,451				3.58 %						$		207,317				3.50 %
Fully tax-equivalent adjustments							436												575
Net interest income/margin - FTE(1)					$		221,887				3.59 %						$		207,892				3.51 %
(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,
			2024				2024			2023			2024			2023
Calculation of Net Interest Margin
(A)	Interest income (GAAP)	$	123,230		$		121,169		$	107,326		$	360,867		$	302,336
	Fully tax-equivalent adjustments:
(B)	- Loans and leases		79				79			92			239			293
(C)	- Tax exempt investment securities		65				65			78			197			282
(D)	Interest income - FTE (A+B+C)		123,374				121,313			107,496			361,303			302,911
(E)	Interest expense (GAAP)		47,744				47,119			38,090			139,416			95,019
(F)	Net interest income (GAAP) (A-E)		75,486				74,050			69,236			221,451			207,317
(G)	Net interest income - FTE (D-E)		75,630				74,194			69,406			221,887			207,892
(H)	Annualization factor		3.978				4.022			3.967			1.336			1.337
(I)	Total earning assets	$	8,273,301		$		8,303,518		$	7,963,537		$	8,253,068		$	7,917,763
	Net interest margin (GAAP-derived) (F*H)/I		3.63 %				3.59 %			3.45 %			3.58 %			3.50 %
	Net interest margin - FTE (G*H)/I		3.64 %				3.59 %			3.46 %			3.59 %			3.51 %
Calculation of Efficiency Ratio
(F)	Net interest income (GAAP)	$	75,486		$		74,050		$	69,236		$	221,451		$	207,317
(G)	Net interest income - FTE		75,630				74,194			69,406			221,887			207,892
(J)	Plus: noninterest income (GAAP)		22,448				23,221			24,455			67,825			70,547
(K)	Less: gains/losses on investment securities and partnership  investments		(712)				(929)			(2,779)			(2,678)			(5,049)
(L)	Less: depreciation - leased equipment		(907)				(999)			(1,672)			(3,194)			(5,570)
(M)	Total net revenue (GAAP) (F+J)		97,934				97,271			93,691			289,276			277,864
(N)	Total net revenue - adjusted (G+J-K-L)		96,459				95,487			89,410			283,840			267,820
(O)	Noninterest expense (GAAP)		49,443				49,491			50,166			148,520			148,752
(L)	Less: depreciation - leased equipment		(907)				(999)			(1,672)			(3,194)			(5,570)
(P)	Noninterest expense - adjusted (O-L)		48,536				48,492			48,494			145,326			143,182
	Efficiency ratio (GAAP-derived) (O/M)		50.49 %				50.88 %			53.54 %			51.34 %			53.53 %
	Efficiency ratio - adjusted (P/N)		50.32 %				50.78 %			54.24 %			51.20 %			53.46 %
			End of Period
			September 30,				June 30,			September 30,
			2024				2024			2023
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)	Total common shareholders' equity (GAAP)	$	1,104,253		$		1,043,515		$	924,250
(R)	Less: goodwill and intangible assets		(83,902)				(83,907)			(83,921)
(S)	Total tangible common shareholders' equity (Q-R)	$	1,020,351		$		959,608		$	840,329
(T)	Total assets (GAAP)		8,763,946				8,878,003			8,525,058
(R)	Less: goodwill and intangible assets		(83,902)				(83,907)			(83,921)
(U)	Total tangible assets (T-R)	$	8,680,044		$		8,794,096		$	8,441,137
	Common equity-to-assets ratio (GAAP-derived) (Q/T)		12.60 %				11.75 %			10.84 %
	Tangible common equity-to-tangible assets ratio (S/U)		11.76 %				10.91 %			9.96 %
Calculation of Tangible Book Value per Common Share
(Q)	Total common shareholders' equity (GAAP)	$	1,104,253		$		1,043,515		$	924,250
(V)	Actual common shares outstanding		24,514,383				24,507,023			24,429,083
	Book value per common share (GAAP-derived) (Q/V)*1000	$	45.05		$		42.58		$	37.83
	Tangible common book value per share (S/V)*1000	$	41.62		$		39.16		$	34.40

 

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/227682

FAQ

What was 1st Source 's (SRCE) earnings per share in Q3 2024?

1st Source reported diluted earnings per share of $1.41 in Q3 2024, up 6.82% from $1.32 in Q3 2023.

How much did SRCE increase its dividend in Q3 2024?

SRCE increased its quarterly cash dividend by 12.50% to $0.36 per share, payable on November 15, 2024.

What was SRCE's net interest margin in Q3 2024?

SRCE's net interest margin was 3.64% on a fully tax-equivalent basis, up 5 basis points from the previous quarter and 18 basis points year-over-year.

How did SRCE's credit quality perform in Q3 2024?

SRCE reported net charge-offs of $0.85 million and an increase in nonperforming assets ratio to 0.47%, up from 0.31% in the previous quarter.