Loading...
Docoh

1st Source (SRCE)

Filed: 22 Jul 21, 4:03pm

Exhibit 99.1
For:Immediate ReleaseContact:Andrea Short
July 22, 2021574-235-2000
1st Source Corporation Reports Record Second Quarter Results,
Cash Dividend Increased
QUARTERLY HIGHLIGHTS
Net income was a record $30.22 million for the quarter, up 63.35% from the second quarter of 2020. Diluted net income per common share was also a record at $1.19, up from the prior year’s second quarter of $0.72.
Cash dividend of $0.31 per common share approved, up 10.71% from the $0.28 per common share declared a year ago.
Return on average assets of 1.58% and return on average common shareholders’ equity of 13.49% compared to 1.04% and 8.63%, respectively in the second quarter of 2020.
Excluding the Paycheck Protection Program (PPP) loans, average loans and leases increased slightly from the previous quarter and decreased slightly from the second quarter of 2020. With PPP loans, average loans and leases were relatively flat from the previous quarter and were down $49.77 million or 0.89% from the second quarter of 2020.
Average deposits increased $298.18 million, up 4.99% from the previous quarter and grew $468.08 million or 8.06% from the second quarter of 2020.
Net charge-offs were $0.16 million and nonperforming assets to loans and leases were 1.06% compared to $0.11 million of net recoveries and 1.20%, respectively in the second quarter of 2020.
Recovery of provision for credit losses of $3.03 million compared to a provision for credit losses of $10.38 million in the second quarter of 2020.
Net interest income increased $2.93 million, or 5.43% from the second quarter of 2020.
Noninterest income decreased $0.34 million, or 1.36% from the second quarter of 2020. Excluding leased equipment depreciation, noninterest income increased 6.21%.
Noninterest expenses increased $0.37 million, or 0.83% from the second quarter of 2020. Excluding leased equipment depreciation, noninterest expense increased 4.95%.
South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported record quarterly net income of $30.22 million for the second quarter of 2021, up 63.35% from the $18.50 million reported in the second quarter a year ago, bringing the 2021 year-to-date net income to $58.33 million compared to $34.92 million in 2020, an increase of 67.06%. Diluted net income per common share for the second quarter of 2021 was up 65.28% to $1.19 versus $0.72 in the second quarter of 2020. Diluted net income per common share for the first half of 2021 was $2.29 compared to $1.36 a year earlier, a 68.38% increase.
Year-to-date net income and earnings per share were positively impacted by providing $22.36 million less in the provision for credit losses compared to the provision for the prior year. This is a result of improved economic conditions this year compared to the extraordinarily uncertain circumstances presented by the pandemic a year ago.
At its July 2021 meeting, the Board of Directors approved a cash dividend of $0.31 per common share, up 10.71% from the $0.28 per common share declared a year ago. The cash dividend is payable to shareholders of record on August 3, 2021 and will be paid on August 13, 2021.
- 1 -


Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “We are pleased to have achieved record net income for the second consecutive quarter. Credit uncertainty continues to improve substantially which resulted in a reduction to our provision for credit losses. In addition, our clients continued to receive Paycheck Protection Program (PPP) loan forgiveness during the second quarter. Total PPP loans forgiven during 2021 were $291.32 million which provided $5.68 million in accelerated fee income. We are optimistic that continued vaccination adoption among the communities and businesses we serve will sustain the positive economic momentum we have seen over the last three months.
“Throughout the pandemic, our focus has remained on keeping our clients, our colleagues and families safe so we can deliver the highest level of service. Vaccination rates among our colleagues has grown steadily, and as an organization, we have reached a high level of inoculation. As mentioned last quarter, our lobbies are open, and once again our bankers are able to more freely meet with business and consumer clients (following CDC guidelines with masking and social distancing recommendations) than was the case in the last year. We’re confident we are doing our best to ensure the safety and well-being of all those we serve and employ while also getting back to a sense of ‘business as usual’ for all our clients. As new variants of COVID develop, we will continue to review and analyze data from local health departments to make the best decisions possible for the health and safety of our team members, clients and communities.
“We were very pleased to learn during the second quarter that 1st Source had been named among the Keefe, Bruyette & Woods, Inc. (KBW) Bank Honor Roll for the third consecutive year. We are proud to be one of the 16 honorees to earn this recognition out of 365 banking institutions analyzed. To be considered, banks must be publicly traded institutions with more than $500 million in total assets and must have had 10 consecutive years of increased earnings per share. For the 2021 list, to account for the impact that the adoption of the current expected credit loss (CECL) accounting methodology had on 2020 earnings, KBW modified some inclusion criteria. Banks that met the annual earnings per share growth requirements for all years save 2020 were eligible for inclusion, if in 2020, they reported an annual profit and annual pre-tax, pre-provision net income per share growth. It is a focus on quality earnings, investing for the future, building a strong balance sheet, capital, and reserves that earned 1st Source this recognition and has allowed us to continue to meet the challenges that the pandemic has presented. Receiving this recognition for the third year in a row is a great honor, and it’s a welcome confirmation, after a year of unprecedented challenges, that our focus on the long-term has been successful.
- 2 -


“Lastly, we announced the election of Tracy D. Graham, Managing Principal of Graham Allen Partners, LLC and Chief Executive Officer of Aunalytics, Inc., and Ronda Shrewsbury, President and Chief Executive Officer of RealAmerica, LLC to our Board of Directors. We are pleased our shareholders voted to add these strong leaders to our Board of Directors and we are certain they will help the Company deliver on its mission to help our clients achieve security, build wealth and realize their dreams by living our values and keeping our clients’ best interest in mind for the long-term. Their backgrounds and experience blend well with our already strong Board, and their strategic guidance, and diversity of thought and perspective will add value to the future of our organization. Also, two current members, Melody Birmingham, who serves as Senior Vice President and Chief Administrative Officer of Duke Energy, and Mark D. Schwabero, retired Chairman, Chief Executive Officer and Director of Brunswick Corporation in 2018, were reelected to the Board of 1st Source Corporation. All four directors have been elected to terms that end April 2024 and will be subject to reelection at that time,” Mr. Murphy concluded.
SECOND QUARTER 2021 FINANCIAL RESULTS
Loans
Average loans and leases of $5.52 billion decreased $49.77 million, or 0.89% in the second quarter of 2021 from the year ago quarter and were relatively flat from the previous quarter. Year-to-date average loans and leases of $5.51 billion increased $175.46 million, up 3.29% from the first six months of 2020. Loan runoff is primarily from SBA forgiveness of PPP loans offset by growth in the solar and aircraft portfolios when compared to the second quarter of 2020. During the second quarter 2021, SBA forgiveness totaled $158.41 million which was offset by PPP originations of $29.02 million. During the first six months of 2021, SBA forgiveness totaled $291.32 million which was offset by PPP originations of $261.46 million. PPP loans amounted to $315.09 million as of June 30, 2021.
Deposits
Average deposits of $6.28 billion grew $468.08 million for the quarter ended June 30, 2021, up 8.06% from the year ago quarter and increased $298.18 million, up 4.99% from the previous quarter. Average deposits for the first six months of 2021 were $6.13 billion, an increase of $588.91 million, up 10.63% from the same period a year ago. Deposit growth is primarily from PPP loan fundings, increased consumer deposit levels compared to 2020 and seasonal public fund activity.
Net Interest Income and Net Interest Margin
Second quarter 2021 tax-equivalent net interest income of $57.05 million increased $2.92 million, or 5.38% from the second quarter a year ago and decreased $0.48 million, or 0.83% from the first quarter of 2021. For the first six months of 2021, tax-equivalent net interest income was $114.59 million, an increase of $5.45 million, or 5.00% compared to the same period a year ago.
- 3 -


Second quarter 2021 net interest margin was 3.14%, a decrease of nine basis points from the 3.23% for the same period in 2020 and a decrease of 21 basis points from the previous quarter. Second quarter 2021 net interest margin on a fully tax-equivalent basis was 3.15%, a decrease of nine basis points from the 3.24% for the same period in 2020 and was lower by 20 basis points compared to the previous quarter. The margin continues to experience pressure from the low interest rate environment and excess liquidity. PPP loans had a positive impact on the net interest margin of one basis point for the quarter due to accelerated PPP loan origination fee amortization as a result of SBA forgiveness compared to a negative impact of four basis points in the same period a year ago. We recognized $2.59 million in PPP loan fees during the second quarter of 2021. During the prior quarter, PPP loans had a positive impact on the net interest margin of 10 basis points and we recognized $3.98 million in PPP loan fees.
Net interest margin for the first six months of 2021 was 3.24%, a decrease of 15 basis points from the 3.39% for the same period in 2020. Net interest margin on a fully-taxable-equivalent basis for the first half of 2021 was 3.25%, a decrease of 15 basis points from the 3.40% for the first half of 2020. The margin continues to experience pressure from the low interest rate environment and excess liquidity. PPP loans had a positive impact on the net interest margin of five basis points for the first half of 2021 compared to a negative impact of five basis points during the first half of 2020.
Noninterest Income
Second quarter 2021 noninterest income of $24.90 million decreased $0.34 million, or 1.36% from the second quarter a year ago and decreased $0.97 million, or 3.75% from the first quarter of 2021. For the first six months of 2021, noninterest income was $50.77 million, an increase of $0.90 million, up 1.81% from the same period a year ago.
Noninterest income was lower compared to the second quarter a year ago mainly from less equipment rental income as demand for leases declined, realized losses on the sale of available-for-sale debt securities due to repositioning in the investment portfolio and reduced mortgage banking income resulting from a lower sales volume offset by increased debit card income as transaction levels improved, higher trust and wealth advisory fees as market values improved on assets under management, and a rise in service charges on deposit accounts.
The decrease in noninterest income from the prior quarter was mainly due to reduced mortgage banking income resulting from lower sales volume, realized losses on the sale of available-for-sale debt securities due to repositioning in the investment portfolio and fewer contingent insurance commissions offset by higher trust and wealth advisory fees as market values improved on assets under management and a rise in debit card income as transaction levels improved.
Additionally, we recognized $0.59 million in impairment recoveries on our mortgage servicing rights during 2021.
Noninterest Expense
Second quarter 2021 noninterest expense was relatively flat from the second quarter a year ago and increased $1.06 million, or 2.40% from the prior quarter. Excluding depreciation on leased equipment, noninterest expenses were up 4.95% from the second quarter a year ago and up 3.17% from the prior quarter. For the first six months of 2021, noninterest expense was $89.34 million, a decrease of $2.02 million, down 2.21% compared to the same period a year ago.
- 4 -


The increase in noninterest expense from the prior quarter was primarily the result of a higher valuation provision for interest rate swaps with customers, higher salaries and wages due to incentive awards and normal merit increases, and a rise in legal and consulting fees offset by a decrease in the provision for unfunded loan commitments and lower leased equipment depreciation as the average equipment rental portfolio continues to decline.
Credit
The allowance for loan and lease losses as of June 30, 2021 was 2.49% of total loans and leases compared to 2.53% at March 31, 2021 and 2.31% at June 30, 2020 (incurred loss method). The allowance calculation includes PPP loans which are guaranteed by the SBA. Excluding these loans from the calculation results in an allowance of 2.63% at June 30, 2021, compared to 2.74% at March 31, 2021 and 2.73% at December 31, 2020. Net charge-offs of $0.16 million were recorded for the second quarter of 2021 compared with net recoveries of $0.11 million in the same quarter a year ago and $3.50 million of net charge-offs in the prior quarter. The majority of charge-offs in 2021 were related to the bus division of the auto and light truck portfolio which continues to be impacted by the lingering impact the pandemic has had on events and tourism.
The provision for credit losses was a recovery of $3.03 million for the second quarter of 2021, a decrease of $13.40 million compared with the same period in 2020 and a decrease of $5.42 million from the first quarter of 2021. The ratio of nonperforming assets to loans and leases was 1.06% as of June 30, 2021, compared to 1.12% on March 31, 2021 and 1.20% on June 30, 2020. Excluding PPP loans, the ratio of non-performing assets to loans and leases was 1.13% at June 30, 2021, 1.22% at March 31, 2021 and 1.33% at June 30, 2020.
Capital
As of June 30, 2021, the common equity-to-assets ratio was 11.68%, compared to 11.87% at March 31, 2021 and 11.74% a year ago. The tangible common equity-to-tangible assets ratio was 10.70% at June 30, 2021 compared to 10.87% at March 31, 2021 and 10.73% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 13.62% at June 30, 2021 compared to 13.43% at March 31, 2021 and 12.76% a year ago. During the second quarter of 2021, 283,759 shares were repurchased for treasury reducing common shareholders’ equity by $13.78 million. On July 22, 2021, the Board of Directors authorized the repurchase of 2,000,000 common shares under the Company’s stock repurchase plan when favorable conditions exist on the open market.
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.
- 5 -


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,” “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.
- 6 -


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)
- 7 -


1st SOURCE CORPORATION
2nd QUARTER 2021 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20212021202020212020
AVERAGE BALANCES
Assets$7,657,276 $7,350,413 $7,185,406 $7,504,692 $6,898,264 
Earning assets7,264,886 6,960,551 6,727,011 7,113,559 6,454,403 
Investments1,339,551 1,230,977 1,045,310 1,285,564 1,037,975 
Loans and leases5,515,387 5,499,009 5,565,160 5,507,243 5,331,779 
Deposits6,278,654 5,980,471 5,810,578 6,130,386 5,541,477 
Interest bearing liabilities4,785,800 4,577,664 4,580,419 4,682,307 4,497,986 
Common shareholders’ equity898,388 894,553 862,209 896,481 853,467 
   Total equity942,821 938,451 891,606 940,648 879,605 
INCOME STATEMENT DATA
Net interest income$56,935 $57,412 $54,001 $114,347 $108,845 
Net interest income - FTE(1)
57,053 57,533 54,138 114,586 109,133 
(Recovery of) provision for credit losses(3,025)2,398 10,375 (627)21,728 
Noninterest income24,898 25,869 25,241 50,767 49,863 
Noninterest expense45,198 44,140 44,825 89,338 91,360 
Net income30,235 28,106 18,526 58,341 34,944 
Net income available to common shareholders30,223 28,105 18,502 58,328 34,915 
PER SHARE DATA
Basic net income per common share$1.19 $1.10 $0.72 $2.29 $1.36 
Diluted net income per common share1.19 1.10 0.72 2.29 1.36 
Common cash dividends declared0.30 0.29 0.28 0.59 0.57 
Book value per common share(2)
36.05 35.27 33.85 36.05 33.85 
Tangible book value per common share(1)
32.69 31.95 30.57 32.69 30.57 
Market value - High51.02 50.38 38.70 51.02 52.16 
Market value - Low45.22 38.73 26.72 38.73 26.07 
Basic weighted average common shares outstanding25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 
Diluted weighted average common shares outstanding25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 
KEY RATIOS
Return on average assets1.58 %1.55 %1.04 %1.57 %1.02 %
Return on average common shareholders’ equity13.49 12.74 8.63 13.12 8.23 
Average common shareholders’ equity to average assets11.73 12.17 12.00 11.95 12.37 
End of period tangible common equity to tangible assets(1)
10.70 10.87 10.73 10.70 10.73 
Risk-based capital - Common Equity Tier 1(3)
13.62 13.43 12.76 13.62 12.76 
Risk-based capital - Tier 1(3)
15.32 15.12 14.32 15.32 14.32 
Risk-based capital - Total(3)
16.58 16.39 15.58 16.58 15.58 
Net interest margin3.14 3.35 3.23 3.24 3.39 
Net interest margin - FTE(1)
3.15 3.35 3.24 3.25 3.40 
Efficiency ratio: expense to revenue55.23 53.00 56.57 54.11 57.56 
Efficiency ratio: expense to revenue - adjusted(1)
52.89 50.99 53.63 51.94 54.71 
Net charge offs to average loans and leases0.01 0.26 (0.01)0.13 0.06 
Loan and lease loss allowance to loans and leases2.49 2.53 2.31 2.49 2.31 
Nonperforming assets to loans and leases1.06 1.12 1.20 1.06 1.20 
June 30,March 31,December 31,September 30,June 30,
20212021202020202020
END OF PERIOD BALANCES
Assets$7,718,694 $7,511,931 $7,316,411 $7,290,949 $7,365,146 
Loans and leases5,483,045 5,523,085 5,489,301 5,627,036 5,692,322 
Deposits6,345,410 6,131,341 5,946,028 5,896,855 5,993,456 
Allowance for loan and lease losses136,361 139,550 140,654 136,817 131,283 
Goodwill and intangible assets83,937 83,942 83,948 83,953 83,959 
Common shareholders’ equity901,226 891,295 886,845 877,754 864,995 
   Total equity945,457 935,759 930,670 915,015 901,653 
ASSET QUALITY
Loans and leases past due 90 days or more$44 $66 $115 $81 $256 
Nonaccrual loans and leases55,864 58,513 60,388 70,595 62,800 
Other real estate— 369 359 303 303 
Repossessions1,213 2,214 1,976 4,639 6,132 
Equipment owned under operating leases1,728 1,647 1,695 136 57 
Total nonperforming assets$58,849 $62,809 $64,533 $75,754 $69,548 
(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.
- 8 -


1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
June 30,March 31,December 31,June 30,
2021202120202020
ASSETS
Cash and due from banks$69,101 $69,683 $74,186 $67,591 
Federal funds sold and interest bearing deposits with other banks400,346 266,271 168,861 112,645 
Investment securities available-for-sale1,413,022 1,291,340 1,197,467 1,055,797 
Other investments27,429 27,429 27,429 30,619 
Mortgages held for sale6,453 9,351 12,885 36,508 
Loans and leases, net of unearned discount:
Commercial and agricultural1,125,965 1,238,708 1,186,118 1,469,839 
Solar305,250 296,124 292,604 240,873 
Auto and light truck595,326 552,676 542,369 563,606 
Medium and heavy duty truck256,169 268,636 279,172 284,432 
Aircraft883,559 873,770 861,460 782,160 
Construction equipment729,055 705,744 714,888 739,027 
Commercial real estate966,171 975,383 969,864 942,971 
Residential real estate and home equity492,552 486,156 511,379 531,972 
Consumer128,998 125,888 131,447 137,442 
Total loans and leases5,483,045 5,523,085 5,489,301 5,692,322 
Allowance for loan and lease losses*(136,361)(139,550)(140,654)(131,283)
Net loans and leases5,346,684 5,383,535 5,348,647 5,561,039 
Equipment owned under operating leases, net56,011 61,395 65,040 86,183 
Net premises and equipment47,617 48,288 49,373 51,486 
Goodwill and intangible assets83,937 83,942 83,948 83,959 
Accrued income and other assets268,094 270,697 288,575 279,319 
Total assets$7,718,694 $7,511,931 $7,316,411 $7,365,146 
LIABILITIES
Deposits:
Noninterest-bearing demand$1,851,932 $1,833,116 $1,636,684 $1,684,102 
Interest-bearing deposits:
Interest-bearing demand2,318,210 2,068,382 2,059,139 1,866,415 
Savings1,182,643 1,148,823 1,082,848 942,891 
Time992,625 1,081,020 1,167,357 1,500,048 
Total interest-bearing deposits4,493,478 4,298,225 4,309,344 4,309,354 
Total deposits6,345,410 6,131,341 5,946,028 5,993,456 
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase167,097 173,302 143,564 169,483 
Other short-term borrowings5,247 7,299 7,077 7,536 
Total short-term borrowings172,344 180,601 150,641 177,019 
Long-term debt and mandatorily redeemable securities81,330 81,722 81,864 81,760 
Subordinated notes58,764 58,764 58,764 58,764 
Accrued expenses and other liabilities115,389 123,744 148,444 152,494 
Total liabilities6,773,237 6,576,172 6,385,741 6,463,493 
SHAREHOLDERS’ EQUITY
Preferred stock; no par value
Authorized 10,000,000 shares; none issued or outstanding
— — — — 
Common stock; no par value
Authorized 40,000,000 shares; issued 28,205,674 shares at June 30, 2021, March 31, 2021, December 31, 2020, and June 30, 2020, respectively
436,538 436,538 436,538 436,538 
Retained earnings558,795 535,737 514,176 484,491 
Cost of common stock in treasury (3,204,947, 2,936,987, 2,816,557, and 2,655,319 shares at June 30, 2021, March 31, 2021, December 31, 2020, and
 June 30, 2020, respectively)
(101,711)(88,223)(82,240)(75,922)
Accumulated other comprehensive income7,604 7,243 18,371 19,888 
Total shareholders’ equity901,226 891,295 886,845 864,995 
Noncontrolling interests44,231 44,464 43,825 36,658 
Total equity945,457 935,759 930,670 901,653 
Total liabilities and equity$7,718,694 $7,511,931 $7,316,411 $7,365,146 
*ASU 2016-13 adopted during the fourth quarter of 2020 therefore June 30, 2020 allowance amount reflects the incurred loss method.
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20212021202020212020
Interest income:
Loans and leases$57,144 $57,864 $58,815 $115,008 $120,341 
Investment securities, taxable4,155 3,988 4,487 8,143 10,037 
Investment securities, tax-exempt154 174 232 328 496 
Other317 266 316 583 662 
Total interest income61,770 62,292 63,850 124,062 131,536 
Interest expense:
Deposits3,202 3,526 8,265 6,728 19,116 
Short-term borrowings29 36 90 65 344 
Subordinated notes814 818 835 1,632 1,719 
Long-term debt and mandatorily redeemable securities790 500 659 1,290 1,512 
Total interest expense4,835 4,880 9,849 9,715 22,691 
Net interest income56,935 57,412 54,001 114,347 108,845 
(Recovery of) provision for credit losses*(3,025)2,398 10,375 (627)21,728 
Net interest income after provision for loan and lease losses59,960 55,014 43,626 114,974 87,117 
Noninterest income:
Trust and wealth advisory6,466 5,481 5,589 11,947 10,437 
Service charges on deposit accounts2,508 2,447 1,910 4,955 4,515 
Debit card4,754 4,182 3,601 8,936 6,974 
Mortgage banking2,859 3,901 3,315 6,760 5,651 
Insurance commissions1,684 2,152 1,695 3,836 3,576 
Equipment rental4,255 4,629 5,990 8,884 12,620 
(Losses) gains on investment securities available-for-sale(680)— (1)(680)279 
Other3,052 3,077 3,142 6,129 5,811 
Total noninterest income24,898 25,869 25,241 50,767 49,863 
Noninterest expense:
Salaries and employee benefits25,510 25,196 23,999 50,706 48,400 
Net occupancy2,527 2,719 2,504 5,246 5,225 
Furniture and equipment6,337 6,458 6,258 12,795 12,665 
Depreciation – leased equipment3,550 3,773 5,142 7,323 10,569 
Professional fees2,146 1,613 1,258 3,759 2,700 
Supplies and communication1,430 1,475 1,390 2,905 3,024 
FDIC and other insurance772 665 599 1,437 887 
Business development and marketing1,351 997 1,121 2,348 2,480 
Loan and lease collection and repossession486 129 838 615 1,601 
Other1,089 1,115 1,716 2,204 3,809 
Total noninterest expense45,198 44,140 44,825 89,338 91,360 
Income before income taxes39,660 36,743 24,042 76,403 45,620 
Income tax expense9,425 8,637 5,516 18,062 10,676 
Net income30,235 28,106 18,526 58,341 34,944 
Net (income) loss attributable to noncontrolling interests(12)(1)(24)(13)(29)
Net income available to common shareholders$30,223 $28,105 $18,502 $58,328 $34,915 
Per common share:
Basic net income per common share$1.19 $1.10 $0.72 $2.29 $1.36 
Diluted net income per common share$1.19 $1.10 $0.72 $2.29 $1.36 
Cash dividends$0.30 $0.29 $0.28 $0.59 $0.57 
Basic weighted average common shares outstanding25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 
Diluted weighted average common shares outstanding25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 
*ASU 2016-13 adopted during the fourth quarter of 2020 therefore June 30, 2020 provision amount reflects the incurred loss method.
- 9 -


1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
Three Months Ended
June 30, 2021March 31, 2021June 30, 2020
Average
Balance
Interest Income/ExpenseYield/
Rate
Average
Balance
Interest Income/ExpenseYield/
Rate
Average
Balance
Interest Income/ExpenseYield/
Rate
ASSETS
Investment securities available-for-sale:
Taxable$1,305,988 $4,156 1.28 %$1,193,583 $3,987 1.35 %$995,776 $4,487 1.81 %
Tax exempt(1)
33,563 192 2.29 %37,394 214 2.32 %49,534 286 2.32 %
Mortgages held for sale7,208 54 3.00 %14,285 86 2.44 %27,016 198 2.95 %
Loans and leases, net of unearned discount(1)
5,515,387 57,169 4.16 %5,499,009 57,860 4.27 %5,565,160 58,700 4.24 %
Other investments402,740 317 0.32 %216,280 266 0.50 %89,525 316 1.42 %
Total earning assets(1)
7,264,886 61,888 3.42 %6,960,551 62,413 3.64 %6,727,011 63,987 3.83 %
Cash and due from banks76,198 75,178  73,523   
Allowance for loan and lease losses(142,056)(143,206) (124,186)  
Other assets458,248 457,890  509,058   
Total assets$7,657,276 $7,350,413  $7,185,406   
LIABILITIES AND SHAREHOLDERS’ EQUITY     
Interest-bearing deposits$4,458,915 $3,202 0.29 %$4,261,207 $3,526 0.34 %$4,248,478 $8,265 0.78 %
Short-term borrowings186,605 29 0.06 %176,726 36 0.08 %191,411 90 0.19 %
Subordinated notes58,764 814 5.56 %58,764 818 5.65 %58,764 835 5.71 %
Long-term debt and mandatorily redeemable securities81,516 790 3.89 %80,967 500 2.50 %81,766 659 3.24 %
Total interest-bearing liabilities4,785,800 4,835 0.41 %4,577,664 4,880 0.43 %4,580,419 9,849 0.86 %
Noninterest-bearing deposits1,819,739   1,719,264   1,562,100   
Other liabilities108,916   115,034   151,281   
Shareholders’ equity898,388   894,553   862,209   
   Noncontrolling interests44,433 43,898 29,397 
Total liabilities and equity$7,657,276   $7,350,413   $7,185,406   
Less: Fully tax-equivalent adjustments(118)(121)(137)
Net interest income/margin (GAAP-derived)(1)
 $56,935 3.14 % $57,412 3.35 % $54,001 3.23 %
Fully tax-equivalent adjustments118 121 137 
Net interest income/margin - FTE(1)
 $57,053 3.15 % $57,533 3.35 % $54,138 3.24 %
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.

- 10 -


1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
Six Months Ended
June 30, 2021June 30, 2020
Average
Balance
Interest Income/ExpenseYield/
Rate
Average
Balance
Interest Income/ExpenseYield/
Rate
ASSETS
Investment securities available-for-sale:
Taxable$1,250,096 $8,143 1.31 %$984,598 $10,037 2.05 %
Tax exempt(1)
35,468 406 2.31 %53,377 611 2.30 %
Mortgages held for sale10,727 140 2.63 %19,155 294 3.09 %
Loans and leases, net of unearned discount(1)
5,507,243 115,029 4.21 %5,331,779 120,220 4.53 %
Other investments310,025 583 0.38 %65,494 662 2.03 %
Total earning assets(1)
7,113,559 124,301 3.52 %6,454,403 131,824 4.11 %
Cash and due from banks75,691 69,465   
Allowance for loan and lease losses(142,628)(118,212)  
Other assets458,070 492,608   
Total assets$7,504,692 $6,898,264   
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Interest-bearing deposits4,360,607 6,728 0.31 %4,162,374 19,116 0.92 %
Short-term borrowings181,693 65 0.07 %196,978 344 0.35 %
Subordinated notes58,764 1,632 5.60 %58,764 1,719 5.88 %
Long-term debt and mandatorily redeemable securities81,243 1,290 3.20 %79,870 1,512 3.81 %
Total interest-bearing liabilities4,682,307 9,715 0.42 %4,497,986 22,691 1.01 %
Noninterest-bearing deposits1,769,779   1,379,103   
Other liabilities111,958   141,570   
Shareholders’ equity896,481   853,467   
   Noncontrolling interests44,167 26,138 
Total liabilities and equity$7,504,692   $6,898,264   
Less: Fully tax-equivalent adjustments(239)(288)
Net interest income/margin (GAAP-derived)(1)
 $114,347 3.24 % $108,845 3.39 %
Fully tax-equivalent adjustments239 288 
Net interest income/margin - FTE(1)
 $114,586 3.25 % $109,133 3.40 %
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
- 11 -


1st SOURCE CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited - Dollars in thousands, except per share data)
Three Months EndedSix Months Ended
June 30,March 31,June 30,June 30,June 30,
20212021202020212020
Calculation of Net Interest Margin
(A)Interest income (GAAP)$61,770 $62,292 $63,850 $124,062 $131,536 
Fully tax-equivalent adjustments:
(B) – Loans and leases80 81 83 161 173 
(C) – Tax exempt investment securities38 40 54 78 115 
(D)Interest income – FTE (A+B+C)61,888 62,413 63,987 124,301 131,824 
(E)Interest expense (GAAP)4,835 4,880 9,849 9,715 22,691 
(F)Net interest income (GAAP) (A-E)56,935 57,412 54,001 114,347 108,845 
(G)Net interest income - FTE (D-E)57,053 57,533 54,138 114,586 109,133 
(H)Annualization factor4.011 4.056 4.022 2.017 2.011 
(I)Total earning assets$7,264,886 $6,960,551 $6,727,011 $7,113,559 $6,454,403 
Net interest margin (GAAP-derived) (F*H)/I3.14 %3.35 %3.23 %3.24 %3.39 %
Net interest margin – FTE (G*H)/I3.15 %3.35 %3.24 %3.25 %3.40 %
Calculation of Efficiency Ratio
(F)Net interest income (GAAP)$56,935 $57,412 $54,001 $114,347 $108,845 
(G)Net interest income – FTE57,053 57,533 54,138 114,586 109,133 
(J)Plus: noninterest income (GAAP)24,898 25,869 25,241 50,767 49,863 
(K)Less: gains/losses on investment securities and partnership investments348 (460)(248)(112)(761)
(L)Less: depreciation – leased equipment(3,550)(3,773)(5,142)(7,323)(10,569)
(M)Total net revenue (GAAP) (F+J)81,833 83,281 79,242 165,114 158,708 
(N)Total net revenue – adjusted (G+J–K–L)78,749 79,169 73,989 157,918 147,666 
(O)Noninterest expense (GAAP)45,198 44,140 44,825 89,338 91,360 
(L)Less:depreciation – leased equipment(3,550)(3,773)(5,142)(7,323)(10,569)
(P)Noninterest expense – adjusted (O–L)41,648 40,367 39,683 82,015 80,791 
Efficiency ratio (GAAP-derived) (O/M)55.23 %53.00 %56.57 %54.11 %57.56 %
Efficiency ratio – adjusted (P/N)52.89 %50.99 %53.63 %51.94 %54.71 %
End of Period
June 30,March 31,June 30,
202120212020
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)Total common shareholders’ equity (GAAP)$901,226 $891,295 $864,995 
(R)Less: goodwill and intangible assets(83,937)(83,942)(83,959)
(S)Total tangible common shareholders’ equity (Q–R)$817,289 $807,353 $781,036 
(T)Total assets (GAAP)7,718,694 7,511,931 7,365,146 
(R)Less: goodwill and intangible assets(83,937)(83,942)(83,959)
(U)Total tangible assets (T–R)$7,634,757 $7,427,989 $7,281,187 
Common equity-to-assets ratio (GAAP-derived) (Q/T)11.68 %11.87 %11.74 %
Tangible common equity-to-tangible assets ratio (S/U)10.70 %10.87 %10.73 %
Calculation of Tangible Book Value per Common Share
(Q)Total common shareholders’ equity (GAAP)$901,226 $891,295 $864,995 
(V)Actual common shares outstanding25,000,727 25,268,687 25,550,355 
Book value per common share (GAAP-derived) (Q/V)*1000$36.05 $35.27 $33.85 
Tangible common book value per share (S/V)*1000$32.69 $31.95 $30.57 

The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3)
Please contact us at shareholder@1stsource.com
- 12 -