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1st Source Corporation$45.33$1.192.70%

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 1st Source Corporation Reports Record First Quarter Results, Increased Cash Dividend Declared
   Thursday, April 18, 2019 4:10:00 PM ET

QUARTERLY HIGHLIGHTS

  • Net income was a record $22.20 million, up 16.11% over the first quarter of 2018. Diluted net income per common share was also a record of $0.86, up from the prior year’s first quarter of $0.73.
  • Return on average assets increased to 1.43% and return on average common shareholders’ equity increased to 11.61% from 1.31% and 10.67%, respectively in the first quarter of 2018.
  • Net charge-offs of $3.54 million and nonperforming assets to loans and leases of 0.49% compared to $0.34 million and 0.74%, respectively in the first quarter of 2018.
  • Average loans and leases grew $269.40 million, up 5.87% from the first quarter of 2018.
  • Average deposits grew $350.92 million, up 7.45% from the first quarter of 2018.
  • Net interest income increased $4.42 million, up 8.74% from the first quarter of 2018.
  • Noninterest income increased $0.32 million, up 1.33% from the first quarter of 2018 (increased 1.27% excluding leased equipment depreciation).
  • Noninterest expenses decreased $0.35 million, down 0.77% from the first quarter of 2018 (decreased 1.15% excluding leased equipment depreciation).


SOUTH BEND, Ind.--(BUSINESS WIRE)-- 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported a record high net income of $22.20 million for the first quarter of 2019, an improvement of 16.11% compared to $19.12 million reported in the first quarter a year ago. The net income comparison was positively impacted by increased net interest income of $4.42 million primarily due to higher loan rates and higher average loan and lease balances. It was negatively impacted by a $1.13 million increase in the provision for loan and lease losses to cover loan and lease growth along with higher net charge-offs. Non-recurring 2019 items included a negative $1.10 million valuation adjustment on a repossessed asset and $1.32 million gain on the sale of our former headquarters building.

Diluted net income per common share for the first quarter of 2019 was a record high of $0.86, versus $0.73 in the first quarter of 2018.

At its April 2019 meeting, the Board of Directors approved a cash dividend of $0.27 per common share, up 12.5% from the $0.24 per common share declared a year ago. The cash dividend is payable to shareholders of record on May 6, 2019 and will be paid on May 15, 2019.

According to Christopher J. Murphy III, Chairman, “1st Source Corporation had a strong first quarter. We continue to achieve steady growth in net income and see healthy increases in loans, leases, and deposits. Our biggest credit challenge in the quarter was due to a further charge-off of $3.0 million on the large syndicated aircraft account which I have mentioned previously. The remaining balance is less than $1 million, payment of which is anticipated to come from a final settlement of escrowed funds. The cost of resolving the complex issues of this bankruptcy from legal, investment banking, and consulting fees has proven to be exceedingly high. This reminds us we should be wary of complex lending structures.

“At 1st Source, we value integrity, teamwork, superior quality, outstanding client service, community leadership, true relationship banking and operating with strong capital and reserves. We believe it is these values that differentiate us from our competition, and it seems others have taken notice. In March, we once again received the BauerFinancial ‘Superior’ Five-Star rating - the highest rating possible. BauerFinancial bases its rating on capital ratio, profitability/loss trend, credit quality and CRA ratings. We would not be able to achieve high scores in such categories without conducting our daily business with those values at the core of what we do.

“Our focus on smaller businesses continues to receive recognition across the state of Indiana. For the sixth year in a row, we were honored with the ‘Gold Level Award’ in the Community Lender’s category by the Small Business Administration. This award honors 1st Source Bank as #1 among Indiana Community Banks with less than $10 billion in assets for making the greatest number of SBA loans during 2018. We have devoted over 155 years to serving small businesses and maintain a dedicated SBA department to ensure the highest level of service to our clients, and this recognition confirms our strategic focus is successful.”

FIRST QUARTER 2019 FINANCIAL RESULTS

Loans

Average loans and leases of $4.86 billion increased $269.40 million, up 5.87% in the first quarter of 2019 from the year ago quarter and have increased $22.19 million, up 0.46% from the fourth quarter of 2018.

Deposits

Average deposits of $5.06 billion grew $350.92 million, up 7.45% for the quarter ended March 31, 2019 from the year ago quarter and have decreased $28.59 million, down 0.56% compared to the fourth quarter of 2018.

Net Interest Income and Net Interest Margin

First quarter 2019 net interest income of $54.95 million increased $4.42 million, up 8.74% from the first quarter a year ago and decreased $0.90 million, down 1.60% from the prior quarter.

First quarter 2019 net interest margin was 3.78%, an improvement of nine basis points from the 3.69% for the same period in 2018 and increased one basis point from the fourth quarter of 2018. First quarter 2019 net interest margin on a fully tax-equivalent basis was 3.79%, an increase of eight basis points from the 3.71% for the same period in 2018 and was higher by one basis point compared to the prior quarter. With the Federal Reserve announcing rate increases will be put on hold, interest margins may have reached their peak. Also, there is significant competition for deposits with many local market participants increasing their rates and there is considerable price competition for loans.

Noninterest Income

First quarter 2019 noninterest income of $24.12 million increased $0.32 million, up 1.33% from the first quarter a year ago and was relatively flat from the fourth quarter of 2018.

Noninterest income during the three months ended March 31, 2019 was higher compared to a year ago mainly from increased equipment rental income from an increase in the average lease portfolio, higher insurance commissions primarily from increased business and higher contingent commissions, and higher debit card income from increased customer use. These positives were offset by reduced net gains on partnership investments and lower trust and wealth advisory fees resulting from a lower value of assets under management due to stock market movements.

Noninterest Expense

First quarter 2019 noninterest expense of $45.20 million was down slightly from the first quarter a year ago and decreased $2.49 million, down 5.21% from the prior quarter. Excluding depreciation on leased equipment, noninterest expenses were down 1.15% from the first quarter a year ago and down 5.97% from the prior quarter.

The decrease in noninterest expense from the fourth quarter was primarily the result of higher gains on the sale of fixed assets, reduced professional fees from consulting services, and fewer group insurance claims offset by higher repossessed asset valuation adjustments and lower gains on the sale of repossessed assets.

Credit

The reserve for loan and lease losses as of March 31, 2019 was 2.07% of total loans and leases compared to 2.08% at December 31, 2018 and 2.10% at March 31, 2018. Net charge-offs of $3.54 million were recorded for the first quarter of 2019 compared with net charge-offs of $0.34 million in the same quarter a year ago and up from the $2.53 million of net charge-offs in the fourth quarter. The majority of the first quarter charge-offs was related to one relationship within the aircraft portfolio. This account had experienced significant charge-offs during the second half of 2018.

The provision for loan and lease losses was $4.92 million for the first quarter of 2019, an increase of $1.13 million compared with the same period in 2018 and an increase of $0.22 million from the fourth quarter. The ratio of nonperforming assets to loans and leases was an improved 0.49% as of March 31, 2019, compared to 0.71% on December 31, 2018 and 0.74% on March 31, 2018.

Capital

As of March 31, 2019, the common equity-to-assets ratio was 12.20%, compared to 12.11% at December 31, 2018 and 11.99% a year ago. The tangible common equity-to-tangible assets ratio was 11.03% at March 31, 2019 compared to 10.92% at December 31, 2018 and 10.75% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 12.28% at March 31, 2019 compared to 12.38% at December 31, 2018 and 12.22% a year ago.

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 80 banking centers, 19 1st Source Bank Specialty Finance Group locations nationwide, eight Wealth Advisory Services locations and ten 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,” “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.

(charts attached)

           
1st SOURCE CORPORATION
1st QUARTER 2019 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)
Three Months Ended
March 31, December 31, March 31,
    2019   2018   2018
AVERAGE BALANCES
Assets $ 6,290,386 $ 6,270,544 $ 5,939,574
Earning assets 5,896,697 5,873,476 5,552,779
Investments 987,593 976,856 916,979
Loans and leases 4,858,183 4,835,995 4,588,782
Deposits 5,059,362 5,087,948 4,708,439
Interest bearing liabilities 4,315,545 4,304,067 4,154,214
Common shareholders’ equity 775,657 758,450 726,242
Total equity 777,217 759,220 726,242
INCOME STATEMENT DATA
Net interest income $ 54,948 $ 55,843 $ 50,532
Net interest income - FTE(1) 55,130 56,034 50,744
Provision for loan and lease losses 4,918 4,702 3,786
Noninterest income 24,124 24,160 23,807
Noninterest expense 45,204 47,691 45,557
Net income 22,196 21,446 19,116
Net income available to common shareholders 22,196 21,446 19,116
PER SHARE DATA
Basic net income per common share $ 0.86 $ 0.82 $ 0.73
Diluted net income per common share 0.86 0.82 0.73
Common cash dividends declared 0.27 0.25 0.22
Book value per common share(2) 30.33 29.56 27.96
Tangible book value per common share(1) 27.05 26.30 24.72
Market value - High 50.15 54.30 54.65
Market value - Low 39.11 38.44 48.26
Basic weighted average common shares outstanding 25,759,186 25,876,687 25,950,386
Diluted weighted average common shares outstanding 25,759,186 25,876,687 25,950,386
KEY RATIOS
Return on average assets 1.43 % 1.36 % 1.31 %
Return on average common shareholders’ equity 11.61 11.22 10.67
Average common shareholders’ equity to average assets 12.33 12.10 12.23
End of period tangible common equity to tangible assets(1) 11.03 10.92 10.75
Risk-based capital - Common Equity Tier 1(3) 12.28 12.38 12.22
Risk-based capital - Tier 1(3) 13.32 13.42 13.29
Risk-based capital - Total(3) 14.58 14.68 14.54
Net interest margin 3.78 3.77 3.69
Net interest margin - FTE(1) 3.79 3.78 3.71
Efficiency ratio: expense to revenue 57.17 59.61 61.28
Efficiency ratio: expense to revenue - adjusted(1) 53.20 55.90 57.47
Net charge offs to average loans and leases 0.30 0.21 0.03
Loan and lease loss reserve to loans and leases 2.07 2.08 2.10
Nonperforming assets to loans and leases 0.49 0.71 0.74
 
March 31, December 31, September 30, June 30, March 31,
    2019   2018   2018     2018   2018
END OF PERIOD BALANCES
Assets $ 6,379,086 $ 6,293,745 $ 6,293,169 $ 6,320,058 $ 6,051,463
Loans and leases 4,926,187 4,835,464 4,825,553 4,839,823 4,691,097
Deposits 5,124,091 5,122,322 5,061,977 5,108,439 4,781,325
Reserve for loan and lease losses 101,852 100,469 98,300 103,007 98,331
Goodwill and intangible assets 83,992 83,998 84,097 84,104 84,124
Common shareholders’ equity 778,422 762,082 750,437 740,277 725,609
Total equity 781,101 763,590 750,437 740,277 725,609
ASSET QUALITY
Loans and leases past due 90 days or more $ 178 $ 366 $ 125 $ 263 $ 123
Nonaccrual loans and leases 13,622 27,859 36,028 34,582 25,360
Other real estate 417 299 432 133 1,184
Repossessions 10,411 6,666 13,041 9,389 9,432
Equipment owned under operating leases   64     126     48           2
Total nonperforming assets   $ 24,692     $ 35,316     $ 49,674       $ 44,367     $ 36,101
(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,
    2019   2018   2018   2018

Cash and due from banks $ 64,619 $ 94,907 $ 68,362 $ 29,404
Federal funds sold and interest bearing deposits with other banks 3,062 4,172 45,514 21,748
Investment securities available-for-sale 1,002,809 990,129 972,172 942,076
Other investments 28,404 28,404 28,159 27,265
Mortgages held for sale 9,210 11,290 11,149 8,626
Loans and leases, net of unearned discount:
Commercial and agricultural 1,146,031 1,073,205 1,062,907 1,011,700
Auto and light truck 554,078 559,987 562,546 511,051
Medium and heavy duty truck 285,631 283,544 271,601 280,010
Aircraft 830,437 803,111 836,458 868,419
Construction equipment 641,035 645,239 654,605 619,219
Commercial real estate 818,459 809,886 781,093 748,926
Residential real estate and home equity 514,719 523,855 523,391 518,130
Consumer   135,797     136,637     132,952     133,642  
Total loans and leases 4,926,187 4,835,464 4,825,553 4,691,097
Reserve for loan and lease losses   (101,852 )   (100,469 )   (98,300 )   (98,331 )
Net loans and leases 4,824,335 4,734,995 4,727,253 4,592,766
Equipment owned under operating leases, net 131,594 134,440 137,492 144,129
Net premises and equipment 51,357 52,139 53,479 54,841
Goodwill and intangible assets 83,992 83,998 84,097 84,124
Accrued income and other assets   179,704     159,271     165,492     146,484  
Total assets   $ 6,379,086     $ 6,293,745     $ 6,293,169     $ 6,051,463  
 

Deposits:
Noninterest-bearing demand $ 1,146,647 $ 1,217,120 $ 1,151,573 $ 1,030,902
Interest-bearing deposits:
Interest-bearing demand 1,560,840 1,614,959 1,606,462 1,514,299
Savings 851,564 822,477 822,246 855,729
Time   1,565,040     1,467,766     1,481,696     1,380,395  
Total interest-bearing deposits   3,977,444     3,905,202     3,910,404     3,750,423  
Total deposits   5,124,091     5,122,322     5,061,977     4,781,325  
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase 149,172 113,627 124,630 143,913
Other short-term borrowings   106,216     85,717     166,077     212,051  
Total short-term borrowings   255,388     199,344     290,707     355,964  
Long-term debt and mandatorily redeemable securities 71,439 71,123 70,919 71,335
Subordinated notes 58,764 58,764 58,764 58,764
Accrued expenses and other liabilities   88,303     78,602     60,365     58,466  
Total liabilities   5,597,985     5,530,155     5,542,732     5,325,854  
 

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, 2019, December 31, 2018, September 30, 2018, and March 31, 2018, respectively 436,538 436,538 436,538 436,538
Retained earnings 414,428 398,980 383,943 354,608
Cost of common stock in treasury (2,537,741, 2,421,946, 2,239,928, and 2,250,503 shares at March 31,2019, December 31, 2018, September 30, 2018, and March 31, 2018, respectively) (69,136 ) (62,760 ) (54,369 ) (54,602 )
Accumulated other comprehensive loss   (3,408 )   (10,676 )   (15,675 )   (10,935 )
Total shareholders’ equity 778,422 762,082 750,437 725,609
Noncontrolling interests   2,679     1,508          
Total equity   781,101     763,590     750,437     725,609  
Total liabilities and equity   $ 6,379,086     $ 6,293,745     $ 6,293,169     $ 6,051,463  
 
     
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
Three Months Ended
March 31, December 31, March 31,
    2019   2018   2018
Interest income:
Loans and leases $ 62,683 $ 62,283 $ 53,691
Investment securities, taxable 5,515 5,363 4,608
Investment securities, tax-exempt 385 419 531
Other   438     452     408  
Total interest income   69,021     68,517     59,238  
Interest expense:
Deposits 11,470 10,345 6,562
Short-term borrowings 931 718 776
Subordinated notes 928 916 883
Long-term debt and mandatorily redeemable securities   744     695     485  
Total interest expense   14,073     12,674     8,706  
Net interest income 54,948 55,843 50,532
Provision for loan and lease losses   4,918     4,702     3,786  
Net interest income after provision for loan and lease losses   50,030     51,141     46,746  
Noninterest income:
Trust and wealth advisory 4,858 4,974 5,188
Service charges on deposit accounts 2,498 2,778 2,484
Debit card 3,220 3,462 3,103
Mortgage banking 936 962 884
Insurance commissions 2,174 1,477 1,958
Equipment rental 7,982 7,957 7,755
Losses on investment securities available-for-sale (345 )
Other   2,456     2,550     2,780  
Total noninterest income   24,124     24,160     23,807  
Noninterest expense:
Salaries and employee benefits 23,495 24,466 22,531
Net occupancy 2,772 2,537 2,866
Furniture and equipment 6,024 6,491 5,455
Depreciation – leased equipment 6,524 6,556 6,428
Professional fees 1,598 2,052 2,017
Supplies and communication 1,493 1,633 1,553
FDIC and other insurance 645 656 698
Business development and marketing 949 1,191 1,533
Loan and lease collection and repossession 1,361 296 951
Other   343     1,813     1,525  
Total noninterest expense   45,204     47,691     45,557  
Income before income taxes 28,950 27,610 24,996
Income tax expense   6,754     6,164     5,880  
Net income 22,196 21,446 19,116
Net (income) loss attributable to noncontrolling interests            
Net income available to common shareholders   $ 22,196     $ 21,446     $ 19,116  
Per common share:
Basic net income per common share   $ 0.86     $ 0.82     $ 0.73  
Diluted net income per common share   $ 0.86     $ 0.82     $ 0.73  
Cash dividends   $ 0.27     $ 0.25     $ 0.22  
Basic weighted average common shares outstanding   25,759,186     25,876,687     25,950,386  
Diluted weighted average common shares outstanding   25,759,186     25,876,687     25,950,386  
 
                 
1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
    Three Months Ended    
March 31, 2019 December 31, 2018 March 31, 2018
Interest Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
    Balance   Expense   Rate   Balance   Expense   Rate   Balance   Expense   Rate

Investment securities available-for-sale:
Taxable $ 909,422 $ 5,515 2.46 % $ 895,204 $ 5,363 2.38 % $ 813,144 $ 4,608 2.30 %
Tax exempt(1) 78,171 472 2.45 % 81,652 516 2.51 % 103,835 655 2.56 %
Mortgages held for sale 8,826 101 4.64 % 9,018 107 4.71 % 7,719 80 4.20 %
Loans and leases, net of unearned discount(1) 4,858,183 62,677 5.23 % 4,835,995 62,270 5.11 % 4,588,782 53,699 4.75 %
Other investments   42,095     438     4.22 %   51,607     452     3.47 %   39,299     408     4.21 %
Total earning assets(1) 5,896,697 69,203 4.76 % 5,873,476 68,708 4.64 % 5,552,779 59,450 4.34 %
Cash and due from banks 63,886 67,437 61,395
Reserve for loan and lease losses (101,697 ) (99,182 ) (95,707 )
Other assets   431,500             428,813             421,107          
Total assets   $ 6,290,386             $ 6,270,544             $ 5,939,574          
 

Interest-bearing deposits $ 3,934,921 $ 11,470 1.18 % $ 3,932,453 $ 10,345 1.04 % $ 3,702,882 $ 6,562 0.72 %
Short-term borrowings 251,379 931 1.50 % 241,979 718 1.18 % 322,257 776 0.98 %
Subordinated notes 58,764 928 6.40 % 58,764 916 6.18 % 58,764 883 6.09 %
Long-term debt and mandatorily redeemable securities   70,481     744     4.28 %   70,871     695     3.89 %   70,311     485     2.80 %
Total interest-bearing liabilities 4,315,545 14,073 1.32 % 4,304,067 12,674 1.17 % 4,154,214 8,706 0.85 %
Noninterest-bearing deposits 1,124,441 1,155,495 1,005,557
Other liabilities 73,183 51,762 53,561
Shareholders’ equity 775,657 758,450 726,242
Noncontrolling interests   1,560             770                      
Total liabilities and equity   $ 6,290,386             $ 6,270,544             $ 5,939,574          
Less: Fully tax-equivalent adjustments (182 ) (191 ) (212 )
Net interest income/margin (GAAP-derived)(1)       $ 54,948     3.78 %       $ 55,843     3.77 %       $ 50,532     3.69 %
Fully tax-equivalent adjustments 182 191 212
Net interest income/margin - FTE(1)       $ 55,130     3.79 %       $ 56,034     3.78 %       $ 50,744     3.71 %
(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,
      2019   2018   2018

(A) Interest income (GAAP) $ 69,021 $ 68,517 $ 59,238
Fully tax-equivalent adjustments:
(B) – Loans and leases 95 94 88
(C) – Tax exempt investment securities   87     97     124  
(D) Interest income – FTE (A+B+C) 69,203 68,708 59,450
(E) Interest expense (GAAP) 14,073 12,674 8,706
(F) Net interest income (GAAP) (A-E)   54,948     55,843     50,532  
(G) Net interest income - FTE (D-E)   55,130     56,034     50,744  
(H) Annualization factor 4.056 3.967 4.056
(I) Total earning assets $ 5,896,697 $ 5,873,476 $ 5,552,779
Net interest margin (GAAP-derived) (F*H)/I 3.78 % 3.77 % 3.69 %
Net interest margin – FTE (G*H)/I 3.79 % 3.78 % 3.71 %
 

(F) Net interest income (GAAP) $ 54,948 $ 55,843 $ 50,532
(G) Net interest income – FTE 55,130 56,034 50,744
(J) Plus: noninterest income (GAAP) 24,124 24,160 23,807
(K) Less: gains/losses on investment securities and partnership investments (17 ) (57 ) (32 )
(L) Less: depreciation – leased equipment   (6,524 )   (6,556 )   (6,428 )

(M)

Total net revenue (GAAP) (F+J)   79,072     80,003     74,339  
(N) Total net revenue – adjusted (G+J–K–L)   72,713     73,581     68,091  
(O) Noninterest expense (GAAP) 45,204 47,691 45,557
(L) Less:depreciation – leased equipment (6,524 ) (6,556 ) (6,428 )
(Q) Noninterest expense – adjusted (O–L) 38,680 41,135 39,129
Efficiency ratio (GAAP-derived) (O/M) 57.17 % 59.61 % 61.28 %
Efficiency ratio – adjusted (Q/N) 53.20 % 55.90 % 57.47 %
 
End of Period
March 31, December 31, March 31,
      2019   2018   2018

(R) Total common shareholders’ equity (GAAP) $ 778,422 $ 762,082 $ 725,609
(S) Less: goodwill and intangible assets   (83,992 )   (83,998 )   (84,124 )
(T) Total tangible common shareholders’ equity (R–S)   $ 694,430     $ 678,084     $ 641,485  
(U) Total assets (GAAP) 6,379,086 6,293,745 6,051,463
(S) Less: goodwill and intangible assets   (83,992 )   (83,998 )   (84,124 )
(V) Total tangible assets (U–S)   $ 6,295,094     $ 6,209,747     $ 5,967,339  
Common equity-to-assets ratio (GAAP-derived) (R/U) 12.20 % 12.11 % 11.99 %
Tangible common equity-to-tangible assets ratio (T/V) 11.03 % 10.92 % 10.75 %
 

(R) Total common shareholders’ equity (GAAP) $ 778,422 $ 762,082 $ 725,609
(W) Actual common shares outstanding   25,667,933     25,783,728     25,955,171  
Book value per common share (GAAP-derived) (R/W)*1000 $ 30.33 $ 29.56 $ 27.96
Tangible common book value per share (T/W)*1000 $ 27.05 $ 26.30 $ 24.72

The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com

Andrea Short
574-235-2000

Source: 1st Source Corporation



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