QUARTERLY HIGHLIGHTS
- Net income was $27.39 million for the quarter, down $715,000 or
2.54% from the first quarter of 2021. Diluted net income per common
share was $1.10, equal to the prior year’s first quarter of
$1.10.
- Cash dividend of $0.31 per common share was approved, up 3.33%
from the $0.30 per common share declared a year ago.
- Small Business Administration (SBA) forgiveness and customer
pay downs of Paycheck Protection Program (PPP) loans amounted to
approximately $36.61 million during the quarter which contributed
to the recognition of $1.47 million in PPP-related loan fees in the
quarter down from $132.91 million in forgiveness and $3.98 million
in fees in the first quarter of 2021.
- Average loans and leases net PPP loans grew $68.82 million, up
1.32% from December 31, 2021 and $185.66 million, up 3.65% from
March 31, 2021.
- Mortgage banking income was $1.38 million, down $2.52 million,
or 64.70% from the first quarter a year ago. Demand for mortgages
declined as refinancing slowed and inventory of homes for sale
remains low.
1st Source Corporation (NASDAQ: SRCE), parent company of 1st
Source Bank, today reported quarterly net income of $27.39 million
for the first quarter of 2022, down 2.54% from the $28.11 million
reported in the first quarter a year ago. Diluted net income per
common share for the first quarter of 2022 and 2021 was $1.10.
At its April 2022 meeting, the Board of Directors approved a
cash dividend of $0.31 per common share, up 3.33% from the $0.30
per common share declared a year ago. The cash dividend is payable
to shareholders of record on May 3, 2022 and will be paid on May
13, 2022.
Christopher J. Murphy III, Chairman and Chief Executive Officer,
commented, “We are pleased with our financial performance during
the quarter. Average loans grew $185.66 million or 3.65% net of
Paycheck Protection Program (PPP) loans from the first quarter last
year. We continue to help clients finalize the forgiveness process
with the SBA and plan to work through the remaining balances in the
second quarter. The expected reduction in PPP loan fees and
mortgage income had the largest impact on our net income results.
After adjusting for the impact of PPP loans, our first quarter 2022
net interest margin increased 17 basis points from the fourth
quarter of 2021 while maintaining stable loan and lease quality. We
are hopeful that the Federal Reserve can successfully decelerate
runaway inflation through prudent monetary policy as we move
further into 2022 and beyond.
“We were thrilled to learn during the first quarter that Forbes
had named 1st Source among ‘America’s Best Midsize Employers’ for
the second consecutive year. The list consists of 500 companies
with 1,000 employees or more. This ranking was compiled via a
survey in partnership with Statista. Sixty thousand participants
were asked to rate, on a scale of zero to 10, their willingness to
recommend their employer to others. Respondents were also asked to
rate their companies on factors such as working conditions,
development opportunities and compensation. It’s long been our goal
to provide a values-based workplace and culture that uplifts and
encourages every team member. We hope that our colleagues are proud
to be part of that culture, and the achievement of being named
among the top midsize employers in the country once again lets us
know our efforts are making a difference.
“Clearly, the past two years have proven to be difficult as we
all faced, and continue to face, the challenges of the COVID-19
pandemic. We’ve worked hard to keep our 1st Source family healthy
while providing our clients with the exceptional quality service
they expected from us. We were recently able to relax our masking
and gathering protocols following the CDC’s recent guideline
changes and the overall high inoculation rate among our team, and
our colleagues have enjoyed interacting with each other, our
clients and our communities more freely as of late. As always, we
will continue to monitor the information available to us and make
decisions with the best interests of all those we interact with in
mind, but it has been nice to get back to a sense of normalcy in
how we conduct business,” Mr. Murphy concluded.
FIRST QUARTER 2022 FINANCIAL RESULTS
Loans
First quarter average loans and leases of $5.32 billion
increased $185.66 million, up 3.65% net of PPP loans from the year
ago quarter and increased $68.82 million, up 1.32% net of PPP loans
from the previous quarter. PPP forgiveness and customer payments
totaled $36.61 million in the first quarter of 2022. PPP loans of
$37.94 million remained outstanding which is net of $1.24 million
in unearned fees as of March 31, 2022. The aircraft, auto and light
truck and construction equipment portfolios all grew in the first
quarter of 2022 compared to the first quarter of 2021 and the
previous quarter.
Deposits
Average deposits of $6.62 billion grew $636.40 million for the
quarter ended March 31, 2022, up 10.64% from the year ago quarter
and decreased $83.71 million, down 1.25% from the previous quarter.
Deposit growth over the last year came from all areas - business,
consumer and public fund deposits while brokered deposits have
declined over the year.
Net Interest Income and Net Interest Margin
First quarter 2022 tax-equivalent net interest income of $59.73
million increased $2.19 million, or 3.81% from the first quarter a
year ago and decreased $0.45 million, or 0.75% from the fourth
quarter of 2021. We recognized $1.47 million in PPP loan fees
during the first quarter of 2022 compared to $3.98 million in the
first quarter of 2021.
First quarter 2022 net interest margin was 3.17%, a decrease of
18 basis points from the 3.35% for the same period in 2021 and an
increase of eight basis points from the previous quarter. On a
fully tax-equivalent basis, first quarter 2022 net interest margin
was 3.18%, a decrease of 17 basis points from the 3.35% for the
same period in 2021 and was higher by nine basis points compared to
the previous quarter. Fees for PPP loans had a positive impact on
the net interest margin of six basis points for the current quarter
compared to a positive impact of 10 basis points in the same period
a year ago. Additionally, lower interest expense on mandatorily
redeemable securities due to book value adjustments had a positive
six basis point impact on the net interest margin during the first
quarter of 2022.
During the prior quarter, PPP loans had a positive impact on the
net interest margin of 16 basis points, and we recognized $3.58
million in PPP loan fees during that quarter. Although the margin
continues to experience pressure from the low interest rate
environment, the Federal Reserve’s 25 basis point interest rate
increase during the quarter and its signaling of additional rate
increases throughout the remainder of 2022 could contribute to some
relief.
Noninterest Income
First quarter 2022 noninterest income of $23.15 million
decreased $2.72 million, or 10.53% from the first quarter a year
ago and decreased $0.68 million, or 2.87% from the fourth quarter
of 2021.
Noninterest income was lower compared to the first quarter a
year ago mainly from reduced mortgage banking income resulting from
a lower balance of loans originated and sold in the secondary
market as well as a lower margin recognized on those loans.
Equipment rental income continued to shrink as demand for leases
declined. This was offset by higher trust and wealth advisory fees
and a rise in service charges on deposit accounts.
The decrease in noninterest income from the prior quarter was
mainly due to decreased mortgage banking income as described above,
reduced debit card income and lower equipment rental income offset
by increased insurance commissions due to seasonal contingent
commissions received and higher partnership investment gains.
Noninterest Expense
First quarter 2022 noninterest expense of $45.34 million
increased $1.20 million, or 2.71% from the first quarter a year ago
and decreased $3.41 million, or 7.00% from the prior quarter.
The increase in noninterest expense from the first quarter a
year ago was mainly the result of a higher loan loss provision for
unfunded loan commitments, higher business development costs tied
to fewer COVID-19 restrictions and increased data processing
charges offset by decreased leased equipment depreciation as the
average equipment rental portfolio continues to decline.
The decrease in noninterest expense from the prior quarter was
primarily the result of lower salaries and wages due to a one-time
special COVID-19 vaccination reward in the prior quarter, reduced
commission compensation, and decreased legal and professional
consulting fees offset by an increased loan loss provision for
unfunded loan commitments, higher snow removal costs due to
seasonal weather conditions and increased data processing.
Credit
The allowance for loan and lease losses as of March 31, 2022 was
2.41% of total loans and leases compared to 2.38% at December 31,
2021 and 2.53% at March 31, 2021. The allowance calculation
includes PPP loans which are guaranteed by the SBA. Excluding these
loans from the calculation results in an allowance of 2.43% at
March 31, 2022, compared to 2.42% at December 31, 2021 and 2.74% at
March 31, 2021. Net recoveries of $0.23 million were recorded for
the first quarter of 2022 compared with net charge-offs of $3.50
million in the same quarter a year ago and $5.15 million of net
charge-offs in the prior quarter. The majority of recoveries during
the quarter were related to the aircraft portfolio.
The provision for credit losses was $2.23 million for the first
quarter of 2022, a decrease of $0.17 million compared with the same
period in 2021 and an increase of $3.35 million from the previous
quarter. The ratio of nonperforming assets to loans and leases was
0.66% as of March 31, 2022, compared to 0.77% on December 31, 2021
and 1.12% on March 31, 2021. Excluding PPP loans, the ratio of
non-performing assets to loans and leases was 0.67% at March 31,
2022, 0.78% at December 31, 2021 and 1.22% at March 31, 2021. While
nonperforming assets showed improvement during the quarter, the
allowance for loan and lease losses increased at March 31, 2022 due
to economic uncertainty stemming from the war in Ukraine,
inflationary pressures and prolonged supply chain disruptions.
Capital
As of March 31, 2022, the common equity-to-assets ratio was
10.79%, compared to 11.32% at December 31, 2021 and 11.87% a year
ago. The tangible common equity-to-tangible assets ratio was 9.85%
at March 31, 2022 compared to 10.39% at December 31, 2021 and
10.87% a year earlier. The Common Equity Tier 1 ratio, calculated
under banking regulatory guidelines, was 13.88% at March 31, 2022
compared to 13.72% at December 31, 2021 and 13.43% a year ago.
During the first quarter of 2022, 45,419 shares were repurchased
for treasury reducing common shareholders’ equity by $2.18
million.
Book value per share declined to $34.97 primarily due to
non-credit-related, negative market value adjustments to our
investment securities available-for-sale portfolio during the
quarter. Market value adjustments were the result of changes in
interest rates, market spreads and market conditions subsequent to
purchase.
ABOUT 1ST SOURCE CORPORATION
1st Source common stock is traded on the NASDAQ Global Select
Market under “SRCE” and appears in the National Market System
tables in many daily newspapers under the code name “1st Src.”
Since 1863, 1st Source has been committed to the success of its
clients, individuals, businesses and the communities it serves. For
more information, visit www.1stsource.com.
1st Source serves the northern half of Indiana and southwest
Michigan and is the largest locally controlled financial
institution headquartered in the area. While delivering a
comprehensive range of consumer and commercial banking services
through its community bank offices, 1st Source has distinguished
itself with highly personalized services. 1st Source Bank also
competes for business nationally by offering specialized financing
services for new and used private and cargo aircraft, automobiles
for leasing and rental agencies, medium and heavy-duty trucks, and
construction equipment. The Corporation includes 79 banking
centers, 18 1st Source Bank Specialty Finance Group locations
nationwide, nine Wealth Advisory Services locations and 10 1st
Source Insurance offices.
FORWARD LOOKING STATEMENTS
Except for historical information contained herein, the matters
discussed in this document express “forward-looking statements.”
Generally, the words “believe,” “contemplate,” “seek,” “plan,”
“possible,” “assume,” “hope,” “expect,” “intend,” “targeted,”
“continue,” “remain,” “estimate,” “anticipate,” “project,” “will,”
“should,” “indicate,” “would,” “may” and similar expressions
indicate forward-looking statements. Those statements, including
statements, projections, estimates or assumptions concerning future
events or performance, and other statements that are other than
statements of historical fact, are subject to material risks and
uncertainties. 1st Source cautions readers not to place undue
reliance on any forward-looking statements, which speak only as of
the date made.
1st Source may make other written or oral forward-looking
statements from time to time. Readers are advised that various
important factors could cause 1st Source’s actual results or
circumstances for future periods to differ materially from those
anticipated or projected in such forward-looking statements. Such
factors, among others, include changes in laws, regulations or
accounting principles generally accepted in the United States; 1st
Source’s competitive position within its markets served; increasing
consolidation within the banking industry; unforeseen changes in
interest rates; unforeseen downturns in the local, regional or
national economies or in the industries in which 1st Source has
credit concentrations; and other risks discussed in 1st Source’s
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K, which filings are available from the
SEC. 1st Source undertakes no obligation to publicly update or
revise any forward-looking statements.
NON-GAAP FINANCIAL MEASURES
The accounting and reporting policies of 1st Source conform to
generally accepted accounting principles (“GAAP”) in the United
States and prevailing practices in the banking industry. However,
certain non-GAAP performance measures are used by management to
evaluate and measure the Company’s performance. Although these
non-GAAP financial measures are frequently used by investors to
evaluate a financial institution, they have limitations as
analytical tools, and should not be considered in isolation, or as
a substitute for analyses of results as reported under GAAP. These
include taxable-equivalent net interest income (including its
individual components), net interest margin (including its
individual components), the efficiency ratio, tangible common
equity-to-tangible assets ratio and tangible book value per common
share. Management believes that these measures provide users of the
Company’s financial information a more meaningful view of the
performance of the interest-earning assets and interest-bearing
liabilities and of the Company’s operating efficiency. Other
financial holding companies may define or calculate these measures
differently.
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
1st QUARTER 2022 FINANCIAL
HIGHLIGHTS
(Unaudited - Dollars in thousands, except
per share data)
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2021
AVERAGE BALANCES
Assets
$
8,008,738
$
8,111,055
$
7,350,413
Earning assets
7,620,248
7,715,838
6,960,551
Investments
1,887,055
1,715,227
1,230,977
Loans and leases
5,324,344
5,311,964
5,499,009
Deposits
6,616,869
6,700,575
5,980,471
Interest bearing liabilities
4,913,453
4,959,322
4,577,664
Common shareholders’ equity
910,793
918,950
894,553
Total equity
964,156
966,063
938,451
INCOME STATEMENT DATA
Net interest income
$
59,618
$
60,067
$
57,412
Net interest income - FTE(1)
59,726
60,176
57,533
Provision (recovery of provision) for
credit losses
2,233
(1,117
)
2,398
Noninterest income
23,145
23,828
25,869
Noninterest expense
45,336
48,746
44,140
Net income
27,401
27,735
28,106
Net income available to common
shareholders
27,390
27,723
28,105
PER SHARE DATA
Basic net income per common share
$
1.10
$
1.11
$
1.10
Diluted net income per common share
1.10
1.11
1.10
Common cash dividends declared
0.31
0.31
0.29
Book value per common share(2)
34.97
37.04
35.27
Tangible book value per common
share(1)
31.57
33.64
31.95
Market value - High
52.70
51.20
50.38
Market value - Low
45.78
45.91
38.73
Basic weighted average common shares
outstanding
24,743,790
24,775,288
25,320,930
Diluted weighted average common shares
outstanding
24,743,790
24,775,288
25,320,930
KEY RATIOS
Return on average assets
1.39
%
1.36
%
1.55
%
Return on average common shareholders’
equity
12.20
11.97
12.74
Average common shareholders’ equity to
average assets
11.37
11.33
12.17
End of period tangible common equity to
tangible assets(1)
9.85
10.39
10.87
Risk-based capital - Common Equity Tier
1(3)
13.88
13.72
13.43
Risk-based capital - Tier 1(3)
15.67
15.50
15.12
Risk-based capital - Total(3)
16.93
16.76
16.39
Net interest margin
3.17
3.09
3.35
Net interest margin - FTE(1)
3.18
3.09
3.35
Efficiency ratio: expense to revenue
54.78
58.10
53.00
Efficiency ratio: expense to revenue -
adjusted(1)
53.29
56.60
50.99
Net charge offs to average loans and
leases
(0.02
)
0.38
0.26
Loan and lease loss allowance to loans and
leases
2.41
2.38
2.53
Nonperforming assets to loans and
leases
0.66
0.77
1.12
March 31,
December 31,
September 30,
June 30,
March 31,
2022
2021
2021
2021
2021
END OF PERIOD BALANCES
Assets
$
8,012,463
$
8,096,289
$
7,964,092
$
7,718,694
$
7,511,931
Loans and leases
5,394,003
5,346,214
5,358,797
5,483,045
5,523,085
Deposits
6,673,092
6,679,065
6,522,505
6,345,410
6,131,341
Allowance for loan and lease losses
129,959
127,492
133,755
136,361
139,550
Goodwill and intangible assets
83,921
83,926
83,931
83,937
83,942
Common shareholders’ equity
864,850
916,255
911,333
901,226
891,295
Total equity
919,470
969,464
956,397
945,457
935,759
ASSET QUALITY
Loans and leases past due 90 days or
more
$
274
$
249
$
96
$
44
$
66
Nonaccrual loans and leases
35,435
38,706
43,166
55,864
58,513
Other real estate
—
—
—
—
369
Repossessions
73
861
690
1,213
2,214
Equipment owned under operating leases
343
1,518
1,598
1,728
1,647
Total nonperforming assets
$
36,125
$
41,334
$
45,550
$
58,849
$
62,809
(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)
March 31,
December 31,
September 30,
March 31,
2022
2021
2021
2021
ASSETS
Cash and due from banks
$
69,195
$
54,420
$
77,740
$
69,683
Federal funds sold and interest bearing
deposits with other banks
347,697
470,767
559,542
266,271
Investment securities
available-for-sale
1,857,431
1,863,041
1,583,240
1,291,340
Other investments
25,538
27,189
27,189
27,429
Mortgages held for sale
4,757
13,284
34,594
9,351
Loans and leases, net of unearned
discount:
Commercial and agricultural
869,093
918,712
1,005,849
1,238,708
Solar
337,485
348,302
303,995
296,124
Auto and light truck
629,780
603,775
605,258
552,676
Medium and heavy duty truck
255,277
259,740
248,604
268,636
Aircraft
957,040
898,401
900,077
873,770
Construction equipment
775,972
754,273
729,412
705,744
Commercial real estate
920,807
929,341
939,131
975,383
Residential real estate and home
equity
510,537
500,590
492,893
486,156
Consumer
138,012
133,080
133,578
125,888
Total loans and leases
5,394,003
5,346,214
5,358,797
5,523,085
Allowance for loan and lease losses
(129,959
)
(127,492
)
(133,755
)
(139,550
)
Net loans and leases
5,264,044
5,218,722
5,225,042
5,383,535
Equipment owned under operating leases,
net
41,792
48,433
51,478
61,395
Net premises and equipment
45,960
47,038
46,748
48,288
Goodwill and intangible assets
83,921
83,926
83,931
83,942
Accrued income and other assets
272,128
269,469
274,588
270,697
Total assets
$
8,012,463
$
8,096,289
$
7,964,092
$
7,511,931
LIABILITIES
Deposits:
Noninterest-bearing demand
$
2,061,111
$
2,052,981
$
2,012,389
$
1,833,116
Interest-bearing deposits:
Interest-bearing demand
2,430,979
2,455,580
2,358,512
2,068,382
Savings
1,328,981
1,286,367
1,214,088
1,148,823
Time
852,021
884,137
937,516
1,081,020
Total interest-bearing deposits
4,611,981
4,626,084
4,510,116
4,298,225
Total deposits
6,673,092
6,679,065
6,522,505
6,131,341
Short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase
193,798
194,727
210,275
173,302
Other short-term borrowings
5,360
5,300
5,390
7,299
Total short-term borrowings
199,158
200,027
215,665
180,601
Long-term debt and mandatorily redeemable
securities
69,563
71,251
81,301
81,722
Subordinated notes
58,764
58,764
58,764
58,764
Accrued expenses and other liabilities
92,416
117,718
129,460
123,744
Total liabilities
7,092,993
7,126,825
7,007,695
6,576,172
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 March 31, 2022, December 31, 2021, September
30, 2021, and March 31, 2021, respectively
436,538
436,538
436,538
436,538
Retained earnings
624,503
603,787
583,631
535,737
Cost of common stock in treasury
(3,473,139, 3,466,162, 3,408,141, and 2,936,987 shares at March 31,
2022, December 31, 2021, September 30, 2021, and
March 31, 2021, respectively)
(115,654
)
(114,209
)
(111,253
)
(88,223
)
Accumulated other comprehensive (loss)
income
(80,537
)
(9,861
)
2,417
7,243
Total shareholders’ equity
864,850
916,255
911,333
891,295
Noncontrolling interests
54,620
53,209
45,064
44,464
Total equity
919,470
969,464
956,397
935,759
Total liabilities and equity
$
8,012,463
$
8,096,289
$
7,964,092
$
7,511,931
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited - Dollars in thousands, except
per share amounts)
Three Months Ended
March 31,
December 31,
March 31,
2022
2021
2021
Interest income:
Loans and leases
$
55,208
$
58,327
$
57,864
Investment securities, taxable
6,344
5,091
3,988
Investment securities, tax-exempt
134
133
174
Other
363
430
266
Total interest income
62,049
63,981
62,292
Interest expense:
Deposits
2,376
2,624
3,526
Short-term borrowings
24
25
36
Subordinated notes
823
819
818
Long-term debt and mandatorily redeemable
securities
(792
)
446
500
Total interest expense
2,431
3,914
4,880
Net interest income
59,618
60,067
57,412
Provision (recovery of provision) for
credit losses
2,233
(1,117
)
2,398
Net interest income after provision for
credit losses
57,385
61,184
55,014
Noninterest income:
Trust and wealth advisory
5,914
5,949
5,481
Service charges on deposit accounts
2,792
2,867
2,447
Debit card
4,194
4,619
4,182
Mortgage banking
1,377
1,913
3,901
Insurance commissions
1,905
1,549
2,152
Equipment rental
3,662
3,817
4,629
Gains on investment securities
available-for-sale
—
—
—
Other
3,301
3,114
3,077
Total noninterest income
23,145
23,828
25,869
Noninterest expense:
Salaries and employee benefits
25,467
28,128
25,196
Net occupancy
2,811
2,624
2,719
Furniture and equipment
1,295
1,589
1,474
Data processing
5,208
5,026
4,984
Depreciation – leased equipment
3,015
3,132
3,773
Professional fees
1,608
3,102
1,613
FDIC and other insurance
850
844
665
Business development and marketing
1,268
1,200
997
Loan and lease collection and
repossession
134
—
129
Other
3,680
3,101
2,590
Total noninterest expense
45,336
48,746
44,140
Income before income taxes
35,194
36,266
36,743
Income tax expense
7,793
8,531
8,637
Net income
27,401
27,735
28,106
Net (income) loss attributable to
noncontrolling interests
(11
)
(12
)
(1
)
Net income available to common
shareholders
$
27,390
$
27,723
$
28,105
Per common share:
Basic net income per common share
$
1.10
$
1.11
$
1.10
Diluted net income per common share
$
1.10
$
1.11
$
1.10
Cash dividends
$
0.31
$
0.31
$
0.29
Basic weighted average common shares
outstanding
24,743,790
24,775,288
25,320,930
Diluted weighted average common shares
outstanding
24,743,790
24,775,288
25,320,930
1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND
SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST
DIFFERENTIAL
(Unaudited - Dollars in thousands)
Three Months Ended
March 31, 2022
December 31, 2021
March 31, 2021
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
$
1,857,557
$
6,344
1.39
%
$
1,686,231
$
5,091
1.20
%
$
1,193,583
$
3,987
1.35
%
Tax exempt(1)
29,498
165
2.27
%
28,996
163
2.23
%
37,394
214
2.32
%
Mortgages held for sale
8,791
67
3.09
%
28,693
188
2.60
%
14,285
86
2.44
%
Loans and leases, net of unearned
discount(1)
5,324,344
55,218
4.21
%
5,311,964
58,218
4.35
%
5,499,009
57,860
4.27
%
Other investments
400,058
363
0.37
%
659,954
430
0.26
%
216,280
266
0.50
%
Total earning assets(1)
7,620,248
62,157
3.31
%
7,715,838
64,090
3.30
%
6,960,551
62,413
3.64
%
Cash and due from banks
77,063
80,754
75,178
Allowance for loan and lease losses
(128,647
)
(134,217
)
(143,206
)
Other assets
440,074
448,680
457,890
Total assets
$
8,008,738
$
8,111,055
$
7,350,413
LIABILITIES AND SHAREHOLDERS’
EQUITY
Interest-bearing deposits
$
4,587,242
$
2,376
0.21
%
$
4,628,802
$
2,624
0.22
%
$
4,261,207
$
3,526
0.34
%
Short-term borrowings:
Securities sold under agreements to
repurchase
192,108
23
0.05
%
194,678
24
0.05
%
169,180
35
0.08
%
Other short-term borrowings
5,372
1
0.08
%
5,474
1
0.07
%
7,546
1
0.05
%
Subordinated notes
58,764
823
5.68
%
58,764
819
5.53
%
58,764
818
5.65
%
Long-term debt and mandatorily redeemable
securities
69,967
(792
)
(4.59
) %
71,604
446
2.47
%
80,967
500
2.50
%
Total interest-bearing liabilities
4,913,453
2,431
0.20
%
4,959,322
3,914
0.31
%
4,577,664
4,880
0.43
%
Noninterest-bearing deposits
2,029,627
2,071,773
1,719,264
Other liabilities
101,502
113,897
115,034
Shareholders’ equity
910,793
918,950
894,553
Noncontrolling interests
53,363
47,113
43,898
Total liabilities and equity
$
8,008,738
$
8,111,055
$
7,350,413
Less: Fully tax-equivalent adjustments
(108
)
(109
)
(121
)
Net interest income/margin
(GAAP-derived)(1)
$
59,618
3.17
%
$
60,067
3.09
%
$
57,412
3.35
%
Fully tax-equivalent adjustments
108
109
121
Net interest income/margin - FTE(1)
$
59,726
3.18
%
$
60,176
3.09
%
$
57,533
3.35
%
(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
March 31,
December 31,
March 31,
2022
2021
2021
Calculation of Net Interest
Margin
(A)
Interest income (GAAP)
$
62,049
$
63,981
$
62,292
Fully tax-equivalent adjustments:
(B)
– Loans and leases
77
79
81
(C)
– Tax exempt investment securities
31
30
40
(D)
Interest income – FTE (A+B+C)
62,157
64,090
62,413
(E)
Interest expense (GAAP)
2,431
3,914
4,880
(F)
Net interest income (GAAP) (A-E)
59,618
60,067
57,412
(G)
Net interest income - FTE (D-E)
59,726
60,176
57,533
(H)
Annualization factor
4.056
3.967
4.056
(I)
Total earning assets
$
7,620,248
$
7,715,838
$
6,960,551
Net interest margin (GAAP-derived)
(F*H)/I
3.17
%
3.09
%
3.35
%
Net interest margin – FTE (G*H)/I
3.18
%
3.09
%
3.35
%
Calculation of Efficiency Ratio
(F)
Net interest income (GAAP)
$
59,618
$
60,067
$
57,412
(G)
Net interest income – FTE
59,726
60,176
57,533
(J)
Plus: noninterest income (GAAP)
23,145
23,828
25,869
(K)
Less: gains/losses on investment
securities and partnership investments
(444
)
(285
)
(460
)
(L)
Less: depreciation – leased equipment
(3,015
)
(3,132
)
(3,773
)
(M)
Total net revenue (GAAP) (F+J)
82,763
83,895
83,281
(N)
Total net revenue – adjusted (G+J–K–L)
79,412
80,587
79,169
(O)
Noninterest expense (GAAP)
45,336
48,746
44,140
(L)
Less:depreciation – leased equipment
(3,015
)
(3,132
)
(3,773
)
(P)
Noninterest expense – adjusted (O–L)
42,321
45,614
40,367
Efficiency ratio (GAAP-derived) (O/M)
54.78
%
58.10
%
53.00
%
Efficiency ratio – adjusted (P/N)
53.29
%
56.60
%
50.99
%
End of Period
March 31,
December 31,
March 31,
2022
2021
2021
Calculation of Tangible Common
Equity-to-Tangible Assets Ratio
(Q)
Total common shareholders’ equity
(GAAP)
$
864,850
$
916,255
$
891,295
(R)
Less: goodwill and intangible assets
(83,921
)
(83,926
)
(83,942
)
(S)
Total tangible common shareholders’ equity
(Q–R)
$
780,929
$
832,329
$
807,353
(T)
Total assets (GAAP)
8,012,463
8,096,289
7,511,931
(R)
Less: goodwill and intangible assets
(83,921
)
(83,926
)
(83,942
)
(U)
Total tangible assets (T–R)
$
7,928,542
$
8,012,363
$
7,427,989
Common equity-to-assets ratio
(GAAP-derived) (Q/T)
10.79
%
11.32
%
11.87
%
Tangible common equity-to-tangible assets
ratio (S/U)
9.85
%
10.39
%
10.87
%
Calculation of Tangible Book Value per
Common Share
(Q)
Total common shareholders’ equity
(GAAP)
$
864,850
$
916,255
$
891,295
(V)
Actual common shares outstanding
24,732,535
24,739,512
25,268,687
Book value per common share (GAAP-derived)
(Q/V)*1000
$
34.97
$
37.04
$
35.27
Tangible common book value per share
(S/V)*1000
$
31.57
$
33.64
$
31.95
The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP
#336901 10 3)
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