Fintech

1st Source Corporation Reports Strong First Quarter Results, Cash Dividend Declared

Published

2 years ago

April 20, 2023

QUARTERLY HIGHLIGHTS

Net income was $31.12 million for the quarter, up $3.73 million or 13.63% from the first quarter of 2022. Diluted net income per common share was $1.25, up $0.15 or 13.64% from the prior year’s first quarter of $1.10.
Cash dividend of $0.32 per common share was approved, up 3.23% from the cash dividend declared a year ago.
Average loans and leases grew $195.61 million in the first quarter, up 3.35% (13.37% annualized growth) from the previous quarter and $711.86 million, up 13.37% from the first quarter of 2022.
Tax-equivalent net interest income was $69.79 million, down $1.88 million or 2.62% from fourth quarter 2022 and up $10.07 million, or 16.85% from the first quarter a year ago. Tax-equivalent net interest margin was 3.60%, down nine basis points from the previous quarter and up 42 basis points from the first quarter a year ago.
Non-recurring items during the quarter included a gain on sale of renewable energy tax equity investments of $1.11 million and a $1.08 million reduction to the legal fee reserve.

South Bend, Indiana–(Newsfile Corp. – April 20, 2023) – 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported quarterly net income of $31.12 million for the first quarter of 2023, up 13.63% from the $27.39 million reported in the first quarter a year ago. Diluted net income per common share for the first quarter of 2023 was $1.25, up 13.63% versus $1.10 in the first quarter of 2022.

At its April 2023 meeting, the Board of Directors approved a cash dividend of $0.32 per common share, up 3.23% from the $0.31 per common share declared a year ago. The cash dividend is payable to shareholders of record on May 2, 2023, and will be paid on May 12, 2023.

Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, “We are pleased we ended 2022 in a very strong position and have started 2023 in a similar manner. We are proud of the balanced way we manage the Bank in all of its aspects: capital, assets, liquidity, and credit. In the first quarter of 2023, average loans grew $195.61 million, up 3.35% while average deposits grew $110.55 million, up 1.64% from the previous quarter. Credit quality during the quarter remained steady as we had net recoveries of $0.19 million while nonperforming assets decreased to 0.30% of average loans and leases compared to 0.45% at December 31, 2022. Most importantly, our balance sheet remained strong during the quarter. Our liquidity position remained stable, our historically conservative capital position was maintained, and deposit balances decreased modestly at period end due to rate competition and expected seasonal trends. Our approach to balance sheet management gave us comfort during an unexpectedly turbulent environment in the financial services industry towards the end of the quarter.

“We were happy to learn during the first quarter that Forbes had named 1st Source among ‘America’s Best Midsize Employers’ for the third consecutive year. The list consists of 500 companies with 1,000 – 5,000 employees. This Forbes’ ranking was compiled via a survey in partnership with Statista. Forty-five 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. Throughout the years, it’s been an honor to witness the great work achieved by our talented 1st Source team, and I know my colleagues among the executive team and our Board feel the same. It has long been our goal to provide a values-based workplace and culture that makes every team member feel included and supported. We will do all we can to continue making this Company a special place with a client facing mission and a commitment to providing attractive career development opportunities for all our colleagues, leading to productive and rich lives,” Mr. Murphy concluded.

FIRST QUARTER 2023 FINANCIAL RESULTS

Loans

First quarter average loans and leases of $6.04 billion increased $195.61 million, up 3.35% from the previous quarter and increased $711.86 million, up 13.37% from the year ago quarter a year ago. Strong growth occurred primarily within our Auto and Light Truck and Construction Equipment portfolios.

We have traditionally maintained a conservative approach to commercial real estate loans and non-owner occupied properties. At March 31, 2023, 43% of our loans which are collateralized by commercial real estate are non-owner occupied. We have an immaterial amount of commercial real estate related to office buildings. All are performing as agreed and as expected.

Deposits

Average deposits of $6.87 billion, which include brokered deposits, grew $110.54 million, up 1.64% from the previous quarter and grew $252.14 million or 3.81% compared to the quarter ended March 31, 2022.

As shown in the Deposit Mix charts below, end of period deposits were $6.80 billion at March 31, 2023, compared to $6.93 billion at December 31, 2022. Balances were modestly lower primarily due to expected first quarter seasonal outflows which aligned with movements experienced in pre-pandemic years, greater utilization of excess funds by our business customers, drawdown of stimulus monies in consumer accounts, and a heightened rate sensitivity in our entire customer base given the overall level of market yields. Rate competition for deposits increased during the quarter from various areas including traditional bank and credit union competitors, money market funds, bond markets, and other non-bank alternatives.

Deposit Mix, Quarter-over-Quarter, End of Period:

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Liquidity

We maintain prudent strategies to support a strong liquidity position. The following table represents our expanded sources of liquidity as of March 31, 2023.

(Dollars in thousands)	Total Available	Utilized	Net Available
Internal Sources
Free securities	$ 1,713,480	$ 284,671	$ 1,428,809
External Sources
FHLB advances⁽¹⁾	631,811	245,896	385,915
FRB borrowings⁽²⁾	401,312	–	401,312
Fed funds purchased⁽³⁾	245,000	–	245,000
Brokered deposits⁽⁴⁾	833,491	468,956	364,535
Listing services deposits⁽⁴⁾	416,745	24,197	392,548
Total liquidity	$ 4,241,839	$ 1,023,720	$ 3,218,119
% of Total deposits net brokered and listing services certificates of deposit.			51.01 %
(1) Availability contingent on the FHLB activity-based stock ownership requirement (2) Includes access to discount window and Bank Term Funding Program (3) Availability contingent on correspondent bank approvals at time of borrowing (4) Availability contingent on internal borrowing guidelines

External sources as listed in the table above were managed to approved guidelines by our Board of Directors. FHLB and FRB capacities were secured borrowings backed by pledged collateral primarily from our loan and lease portfolios. Total net available liquidity was $3.22 billion at March 31, 2023, which accounted for 51.01% of total deposits net of brokered and listing services certificates of deposit.

Our investment portfolio is managed with a prioritized focus on liquidity. Investment securities accounted for 20.57% of total assets at March 31, 2023, with the entirety of the portfolio classified as available-for-sale. We had no held-to- maturity securities therefore all market value adjustments resulting in unrealized gains and losses were reflected on our Consolidated Statements of Financial Condition. The sectors in our investment securities portfolio included U.S. Treasury and Federal agencies (57%), mortgage-backed securities (36%), highly rated municipals (6%), and highly rated corporates and foreign bonds (1%). Mortgage-backed securities only consisted of retail mortgage pools backed by a government-sponsored enterprise. There was no exposure to commercial real-estate in our investment portfolio. The modified duration of the total investment portfolio was calculated at 3.4 years. The ratio of accumulated other comprehensive loss to the fair value of the total investment portfolio improved to 6.78% at March 31, 2023, from 7.50% at December 31, 2022.

The following table shows the scheduled maturities and cash flows of securities available-for-sale at fair value as of March 31, 2023.

(Dollars in thousands)	Fair Value	% of Total
3 months or less	$ 16,606	0.97 %
Over 3 months through 12 months	80,596	4.70 %
Over 1 year through 3 years	597,315	34.86 %
Over 3 years through 5 years	367,195	21.43 %
Over 5 years through 15 years	398,346	23.25 %
Over 15 years	253,422	14.79 %
Total investment securities available-for-sale	$ 1,713,480	100.00 %

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, 19 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

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(charts attached)

1st SOURCE CORPORATION
1st QUARTER 2023 FINANCIAL HIGHLIGHTS
(Unaudited – Dollars in thousands, except per share data)

		Three Months Ended
		March 31,			December 31,		March 31,
		2023			2022		2022
AVERAGE BALANCES
Assets	$	8,323,431		$	8,171,095	$	8,008,738
Earning assets		7,864,595			7,707,769		7,620,248
Investments		1,768,621			1,795,200		1,887,055
Loans and leases		6,036,203			5,840,593		5,324,344
Deposits		6,869,006			6,758,465		6,616,869
Interest bearing liabilities		5,345,498			5,086,446		4,913,453
Common shareholders’ equity		890,294			846,449		910,793
Total equity		949,879			906,613		964,156
INCOME STATEMENT DATA
Net interest income	$	69,565		$	71,455	$	59,618
Net interest income – FTE⁽¹⁾		69,791			71,670		59,726
Provision for credit losses		3,049			5,342		2,233
Noninterest income		23,323			23,280		23,145
Noninterest expense		49,421			48,377		45,336
Net income		31,131			31,056		27,401
Net income available to common shareholders		31,124			31,068		27,390
PER SHARE DATA
Basic net income per common share	$	1.25		$	1.25	$	1.10
Diluted net income per common share		1.25			1.25		1.10
Common cash dividends declared		0.32			0.32		0.31
Book value per common share⁽²⁾		36.81			35.04		34.97
Tangible book value per common share⁽¹⁾		33.42			31.63		31.57
Market value – High		53.85			59.94		52.70
Market value – Low		42.50			46.40		45.78
Basic weighted average common shares outstanding		24,687,087			24,658,294		24,743,790
Diluted weighted average common shares outstanding		24,687,087			24,658,294		24,743,790
KEY RATIOS
Return on average assets		1.52 %			1.51 %		1.39 %
Return on average common shareholders’ equity		14.18			14.56		12.20
End of period long-term assets to total assets⁽³⁾		17.40			18.35		21.08
End of period loans to deposits		89.93			86.76		80.83
End of period available-for-sale securities to uninsured deposits		54.83			53.75		58.88
Average common shareholders’ equity to average assets		10.70			10.36		11.37
End of period tangible common equity to tangible assets⁽¹⁾		10.01			9.45		9.85
End of period tangible common equity (excluding accumulated other comprehensive losses) to tangible assets⁽¹⁾		11.55			11.24		10.87
End of period accumulated other comprehensive losses to investments		6.78			7.50		4.10
End of period accumulated other comprehensive losses to assets		1.53			1.77		1.32
End of period accumulated other comprehensive losses to tangible common equity		15.45			18.93		10.31
Risk-based capital – Common Equity Tier 1⁽⁴⁾		13.51			13.19		13.88
Risk-based capital – Tier 1⁽⁴⁾		15.15			14.84		15.67
Risk-based capital – Total⁽⁴⁾		16.41			16.10		16.93
Net interest margin		3.59			3.68		3.17
Net interest margin – FTE⁽¹⁾		3.60			3.69		3.18
Efficiency ratio: expense to revenue		53.20			51.07		54.78
Efficiency ratio: expense to revenue – adjusted⁽¹⁾		52.92			51.05		53.29
Net (recoveries) charge offs to average loans and leases		(0.01	)		0.12		(0.02
Loan and lease loss allowance to loans and leases		2.33			2.32		2.41
Nonperforming assets to loans and leases		0.30			0.45		0.66

1st SOURCE CORPORATION
1st QUARTER 2023 FINANCIAL HIGHLIGHTS – CONTINUED
(Unaudited – Dollars in thousands, except per share data)

		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
END OF PERIOD BALANCES
Assets	$	8,329,803	$	8,339,416	$	8,097,486	$	8,029,359	$	8,012,463
Loans and leases		6,116,716		6,011,162		5,762,078		5,551,216		5,394,003
Deposits		6,801,464		6,928,265		6,621,231		6,744,896		6,673,092
Allowance for loan and lease losses		142,511		139,268		135,736		132,865		129,959
Goodwill and intangible assets		83,901		83,907		83,911		83,916		83,921
Common shareholders’ equity		909,159		864,068		826,059		856,251		864,850
Total equity		968,444		923,766		886,360		910,667		919,470
ASSET QUALITY
Loans and leases past due 90 days or more	$	24	$	54	$	165	$	50	$	274
Nonaccrual loans and leases		18,062		26,420		27,813		33,490		35,435
Other real estate		117		104		–		–		–
Repossessions		445		327		26		102		73
Equipment owned under operating leases		–		22		1		43		343
Total nonperforming assets	$	18,648	$	26,927	$	28,005	$	33,685	$	36,125

(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 as the sum of available-for-sale securities and loan and leases that mature or reprice in over 5 years as a percent of total assets.
(4) 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,
		2023		2022		2022		2022
ASSETS
Cash and due from banks	$	66,866	$	84,703	$	86,952	$	69,195
Federal funds sold and interest bearing deposits with other banks		27,171		38,094		30,652		347,697
Investment securities available-for-sale		1,713,480		1,775,128		1,801,194		1,857,431
Other investments		25,293		25,293		25,538		25,538
Mortgages held for sale		2,068		3,914		3,058		4,757
Loans and leases, net of unearned discount:
Commercial and agricultural		795,429		812,031		835,762		869,093
Solar		375,330		381,163		358,635		337,485
Auto and light truck		875,564		808,117		743,324		629,780
Medium and heavy duty truck		326,588		313,862		293,068		255,277
Aircraft		1,056,829		1,077,722		997,995		957,040
Construction equipment		991,412		938,503		878,692		775,972
Commercial real estate		954,221		943,745		937,423		920,807
Residential real estate and home equity		594,618		584,737		568,602		510,537
Consumer		146,725		151,282		148,577		138,012
Total loans and leases		6,116,716		6,011,162		5,762,078		5,394,003
Allowance for loan and lease losses		(142,511)		(139,268)		(135,736)		(129,959)
Net loans and leases		5,974,205		5,871,894		5,626,342		5,264,044
Equipment owned under operating leases, net		30,083		31,700		32,964		41,792
Net premises and equipment		44,034		44,773		44,837		45,960
Goodwill and intangible assets		83,901		83,907		83,911		83,921
Accrued income and other assets		362,702		380,010		362,038		272,128
Total assets	$	8,329,803	$	8,339,416	$	8,097,486	$	8,012,463
LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,815,123	$	1,998,151	$	2,047,328	$	2,061,111
Interest-bearing deposits:
Interest-bearing demand		2,403,818		2,591,464		2,527,461		2,430,979
Savings		1,171,418		1,198,191		1,267,531		1,328,981
Time		1,411,105		1,140,459		778,911		852,021
Total interest-bearing deposits		4,986,341		4,930,114		4,573,903		4,611,981
Total deposits		6,801,464		6,928,265		6,621,231		6,673,092
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase		73,396		141,432		145,192		193,798
Other short-term borrowings		229,640		74,097		195,270		5,360
Total short-term borrowings		303,036		215,529		340,462		199,158
Long-term debt and mandatorily redeemable securities		46,714		46,555		47,587		69,563
Subordinated notes		58,764		58,764		58,764		58,764
Accrued expenses and other liabilities		151,381		166,537		143,082		92,416
Total liabilities		7,361,359		7,415,650		7,211,126		7,092,993
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, 2023, December 31, 2022, September 30, 2022, and March 31, 2022, respectively		436,538		436,538		436,538		436,538
Retained earnings		719,495		694,862		671,541		624,503
Cost of common stock in treasury (3,510,122, 3,543,388, 3,548,496, and 3,473,139 shares at March 31, 2023, December 31, 2022, September 30, 2022, and March 31, 2022, respectively)		(119,409)		(119,642)		(119,743)		(115,654)
Accumulated other comprehensive loss		(127,465)		(147,690)		(162,277)		(80,537)
Total shareholders’ equity		909,159		864,068		826,059		864,850
Noncontrolling interests		59,285		59,698		60,301		54,620
Total equity		968,444		923,766		886,360		919,470
Total liabilities and equity	$	8,329,803	$	8,339,416	$	8,097,486	$	8,012,463

1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited – Dollars in thousands, except per share amounts)
		Three Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022
Interest income:
Loans and leases	$	86,689	$	79,244	$	55,208
Investment securities, taxable		6,648		6,970		6,344
Investment securities, tax-exempt		482		419		134
Other		637		627		363
Total interest income		94,456		87,260		62,049
Interest expense:
Deposits		21,263		12,746		2,376
Short-term borrowings		1,393		1,070		24
Subordinated notes		1,020		972		823
Long-term debt and mandatorily redeemable securities		1,215		1,017		(792)
Total interest expense		24,891		15,805		2,431
Net interest income		69,565		71,455		59,618
Provision for credit losses		3,049		5,342		2,233
Net interest income after provision for credit losses		66,516		66,113		57,385
Noninterest income:
Trust and wealth advisory		5,679		5,608		5,914
Service charges on deposit accounts		3,003		3,172		2,792
Debit card		4,507		4,669		4,194
Mortgage banking		802		819		1,377
Insurance commissions		2,029		1,535		1,905
Equipment rental		2,503		2,556		3,662
Losses on investment securities available-for-sale		(44)		(184)		–
Other		4,844		5,105		3,301
Total noninterest income		23,323		23,280		23,145
Noninterest expense:
Salaries and employee benefits		28,597		27,695		25,467
Net occupancy		2,622		2,811		2,811
Furniture and equipment		1,307		1,397		1,295
Data processing		6,157		5,963		5,208
Depreciation – leased equipment		2,022		2,111		3,015
Professional fees		682		2,039		1,608
FDIC and other insurance		1,360		943		850
Business development and marketing		1,972		1,471		1,268
Other		4,702		3,947		3,814
Total noninterest expense		49,421		48,377		45,336
Income before income taxes		40,418		41,016		35,194
Income tax expense		9,287		9,960		7,793
Net income		31,131		31,056		27,401
Net (income) loss attributable to noncontrolling interests		(7)		12		(11)
Net income available to common shareholders	$	31,124	$	31,068	$	27,390
Per common share:
Basic net income per common share	$	1.25	$	1.25	$	1.10
Diluted net income per common share	$	1.25	$	1.25	$	1.10
Cash dividends	$	0.32	$	0.32	$	0.31
Basic weighted average common shares outstanding		24,687,087		24,658,294		24,743,790
Diluted weighted average common shares outstanding		24,687,087		24,658,294		24,743,790

1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
|INTEREST RATES AND INTEREST DIFFERENTIAL

(Unaudited – Dollars in thousands)

						Three Months Ended
		March 31, 2023				December 31, 2022				March 31, 2022
		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	$	1,711,177	$ 6,648	1.58%	$	1,742,567	$ 6,970	1.59%	$	1,857,557	$ 6,344	1.39%
Tax exempt⁽¹⁾		57,444	605	4.27%		52,633	525	3.96%		29,498	165	2.27%
Mortgages held for sale		2,410	32	5.38%		2,834	40	5.60%		8,791	67	3.09%
Loans and leases, net of unearned discount⁽¹⁾		6,036,203	86,760	5.83%		5,840,593	79,313	5.39%		5,324,344	55,218	4.21%
Other investments		57,361	637	4.50%		69,142	627	3.60%		400,058	363	0.37%
Total earning assets⁽¹⁾		7,864,595	94,682	4.88%		7,707,769	87,475	4.50%		7,620,248	62,157	3.31%
Cash and due from banks		71,921				76,843				77,063
Allowance for loan and lease losses		(141,054)				(137,350)				(128,647)
Other assets		527,969				523,833				440,074
Total assets	$	8,323,431			$	8,171,095			$	8,008,738

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits	$	4,988,093	$ 21,263	1.73%	$	4,718,303	$ 12,746	1.07%	$	4,587,242	$ 2,376	0.21%
Short-term borrowings:
Securities sold under agreements to repurchase		134,501	40	0.12%		137,248	18	0.05%		192,108	23	0.05%
Other short-term borrowings		118,760	1,353	4.62%		125,078	1,052	3.34%		5,372	1	0.08%
Subordinated notes		58,764	1,020	7.04%		58,764	972	6.56%		58,764	823	5.68%
Long-term debt and mandatorily redeemable securities		45,380	1,215	10.86%		47,053	1,017	8.58%		69,967	(792)	(4.59)%
Total interest-bearing liabilities		5,345,498	24,891	1.89 %		5,086,446	15,805	1.23%		4,913,453	2,431	0.20%
Noninterest-bearing deposits		1,880,913				2,040,162				2,029,627
Other liabilities		147,141				137,874				101,502
Shareholders’ equity		890,294				846,449				910,793
Noncontrolling interests		59,585				60,164				53,363
Total liabilities and equity	$	8,323,431			$	8,171,095			$	8,008,738
Less: Fully tax-equivalent adjustments			(226)				(215)				(108)
Net interest income/margin (GAAP-derived)⁽¹⁾			$ 69,565	3.59%			$ 71,455	3.68%			$ 59,618	3.17%
Fully tax-equivalent adjustments			226				215				108
Net interest income/margin – FTE⁽¹⁾			$ 69,791	3.60%			$ 71,670	3.69%			$ 59,726	3.18%

(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,
			2023		2022		2022
Calculation of Net Interest Margin
(A)	Interest income (GAAP)	$	94,456	$	87,260	$	62,049
	Fully tax-equivalent adjustments:
(B)	– Loans and leases		103		109		77
(C)	– Tax exempt investment securities		123		106		31
(D)	Interest income – FTE (A+B+C)		94,682		87,475		62,157
(E)	Interest expense (GAAP)		24,891		15,805		2,431
(F)	Net interest income (GAAP) (A-E)		69,565		71,455		59,618
(G)	Net interest income – FTE (D-E)		69,791		71,670		59,726
(H)	Annualization factor		4.056		3.967		4.056
(I)	Total earning assets	$	7,864,595	$	7,707,769	$	7,620,248
	Net interest margin (GAAP-derived) (F*H)/I		3.59 %		3.68 %		3.17 %
	Net interest margin – FTE (G*H)/I		3.60 %		3.69 %		3.18 %

Calculation of Efficiency Ratio
(F)	Net interest income (GAAP)	$	69,565	$	71,455	$	59,618
(G)	Net interest income – FTE		69,791		71,670		59,726
(J)	Plus: noninterest income (GAAP)		23,323		23,280		23,145
(K)	Less: gains/losses on investment securities and partnership investments		(1,522)		(2,216)		(444)
(L)	Less: depreciation – leased equipment		(2,022)		(2,111)		(3,015)
(M)	Total net revenue (GAAP) (F+J)		92,888		94,735		82,763
(N)	Total net revenue – adjusted (G+J–K–L)		89,570		90,623		79,412
(O)	Noninterest expense (GAAP)		49,421		48,377		45,336
(L)	Less:depreciation – leased equipment		(2,022)		(2,111)		(3,015)
(P)	Noninterest expense – adjusted (O–L)		47,399		46,266		42,321
	Efficiency ratio (GAAP-derived) (O/M)		53.20 %		51.07 %		54.78 %
	Efficiency ratio – adjusted (P/N)		52.92 %		51.05 %		53.29 %

1st SOURCE CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – CONTINUED
(Unaudited – Dollars in thousands, except per share data)
					End of Period
			March 31,		December 31,		March 31,
			2023		2022		2022
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q) Total common shareholders’ equity (GAAP)		$	909,159	$	864,068	$	864,850
(R) Less: goodwill and intangible assets			(83,901)		(83,907)		(83,921)
(S) Total tangible common shareholders’ equity (Q-R)		$	825,258	$	780,161	$	780,929
(T) Total assets (GAAP)			8,329,803		8,339,416		8,012,463
(R) Less: goodwill and intangible assets			(83,901)		(83,907)		(83,921)
(U) Total tangible assets (T-R)		$	8,245,902	$	8,255,509	$	7,928,542
Common equity-to-assets ratio (GAAP-derived) (Q/T)			10.91 %		10.36 %		10.79 %
Tangible common equity-to-tangible assets ratio (S/U)			10.01 %		9.45 %		9.85 %

Calculation of Tangible Common Equity (excluding Accumulated Other Comprehensive Losses)-to-Tangible Assets
(Q)	Total common shareholders’ equity (GAAP)	$	909,159	$	864,068	$	864,850
(R)	Less: goodwill and intangible assets		(83,901)		(83,907)		(83,921)
(V)	Less: accumulated other comprehensive losses		(127,465)		(147,690)		(80,537)
(W)	Total tangible common shareholders’ equity (excluding accumulated other comprehensive losses) (Q-R-V)		952,723		927,851		861,466
(T)	Total assets (GAAP)		8,329,803		8,339,416		8,012,463
(R)	Less: goodwill and intangible assets		(83,901)		(83,907)		(83,921)
(U)	Total tangible assets (T-R)		8,245,902		8,255,509		7,928,542
	Common equity-to-assets ratio (GAAP-derived) (Q/T)		10.91 %		10.36 %		10.79 %
	Tangible common equity (excluding accumulated other comprehensive losses)- to-tangible assets ratio (W/U)		11.55 %		11.24 %		10.87 %

Calculation of Tangible Book Value per Common Share
(Q) Total common shareholders’ equity (GAAP)	$	909,159	$	864,068	$	864,850
(X) Actual common shares outstanding		24,695,552		24,662,286		24,732,535
Book value per common share (GAAP-derived) (Q/X)*1000	$	36.81	$	35.04	$	34.97
Tangible common book value per share (S/X)*1000	$	33.42	$	31.63	$	31.57

The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3) Please contact us at [email protected]

Brett Bauer
574-235-2000

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/163051

Fintech

Fintech Pulse: Daily Industry Brief – A Dive into Today’s Emerging Trends and Innovations

Published

2 days ago

November 21, 2024

Peter Tolan

fintech-pulse:-daily-industry-brief-–-a-dive-into-today’s-emerging-trends-and-innovations

The fintech landscape continues to redefine itself, driven by innovation, partnerships, and groundbreaking strategies. Today’s roundup focuses on the latest digital wallet offerings, evolving payment trends, strategic collaborations, and notable funding achievements. This editorial explores the broader implications of these developments, casting light on how they shape the future of fintech and beyond.

Beacon’s Digital Wallet for Immigrants: A Gateway to Financial Inclusion

Beacon Financial, a leading player in financial technology, recently launched a digital wallet tailored to meet the unique needs of immigrants moving to Canada. This offering bridges a critical gap, enabling seamless financial integration for newcomers navigating a foreign system.

By combining intuitive technology with user-centric features, Beacon aims to empower immigrants with tools for payments, savings, and remittances. This aligns with the growing demand for tailored financial products that resonate with specific demographics.

Op-Ed Insight:
Financial inclusion is more than just a buzzword; it’s a moral imperative in the fintech space. Products like Beacon’s digital wallet highlight the industry’s potential to create tangible change. As global migration trends increase, such offerings could inspire similar initiatives worldwide.

Source: Fintech Futures.

Juniper Research Highlights 2025’s Payment Trends

Juniper Research’s latest report unveils pivotal payment trends poised to dominate in 2025. Central themes include the adoption of instant payment networks, a surge in embedded finance solutions, and the rise of crypto-backed financial products.

The research underscores the rapid adoption of real-time payment systems, fueled by increasing consumer demand for speed and efficiency. Meanwhile, embedded finance promises to blur the lines between traditional banking and non-financial services, delivering personalized and context-specific solutions.

Op-Ed Insight:
As the lines between financial services and technology continue to blur, these trends emphasize the industry’s shift toward convenience and personalization. The growing role of crypto-based solutions reflects an evolving consumer mindset, where decentralization and digital-first experiences gain precedence.

Source: Juniper Research.

MeaWallet and Integrated Finance Partner to Revolutionize Digital Wallets

MeaWallet, a prominent fintech solutions provider, has partnered with Integrated Finance to advance digital wallet capabilities and secure card data access for fintech companies. This collaboration focuses on empowering fintechs to deliver better, safer digital payment experiences.

MeaWallet’s role as a technology enabler aligns seamlessly with Integrated Finance’s goal of simplifying complex financial infrastructures. Together, they aim to create scalable, robust platforms for secure payment solutions.

Op-Ed Insight:
Partnerships like this underscore the importance of collaboration in driving innovation. As security concerns grow in tandem with digital payment adoption, solutions addressing these challenges are essential for maintaining consumer trust. The fintech ecosystem thrives when synergy and innovation coalesce.

Source: MeaWallet News.

Nucleus Security Among Deloitte’s Fastest-Growing Companies

Nucleus Security has achieved a remarkable milestone, ranking 85th on Deloitte’s 2024 Technology Fast 500 list. This achievement is attributed to its robust cybersecurity solutions, which cater to the increasingly digital fintech environment.

With cyberattacks becoming more sophisticated, fintech companies are under immense pressure to safeguard their platforms. Nucleus Security’s growth reflects the rising demand for comprehensive, scalable security solutions that protect sensitive financial data.

Op-Ed Insight:
In a digital-first world, robust cybersecurity isn’t optional—it’s fundamental. The recognition of companies like Nucleus Security signals the growing importance of protecting fintech infrastructure as the industry scales globally.

Source: PR Newswire.

OpenYield Secures Funding to Transform the Bond Market

OpenYield has announced a successful funding round, aiming to revolutionize the bond market through innovative technology. The platform promises greater transparency, efficiency, and accessibility in fixed-income investments.

This funding underscores the growing appetite for digitizing traditionally opaque financial markets. By leveraging cutting-edge technology, OpenYield seeks to democratize bond investments, making them accessible to a broader audience.

Op-Ed Insight:
The bond market, long viewed as complex and inaccessible, is ripe for disruption. OpenYield’s efforts to modernize this space highlight fintech’s transformative potential to democratize finance and empower individual investors.

Source: PR Newswire.

Key Takeaways: Shaping the Future of Fintech

Today’s developments underscore several critical themes in the fintech landscape:

Personalization and Inclusion: Products like Beacon’s wallet highlight the importance of understanding and addressing specific user needs.
Collaborative Ecosystems: Partnerships, like that of MeaWallet and Integrated Finance, emphasize the power of collaboration in solving industry challenges.
Emerging Technologies: Juniper Research’s predictions affirm the continued influence of blockchain, embedded finance, and instant payment networks.
Security at the Core: The recognition of Nucleus Security underscores the essential role of cybersecurity in fintech.
Market Transformation: OpenYield’s funding signifies the ongoing disruption of traditional financial markets, paving the way for broader accessibility.

The post Fintech Pulse: Daily Industry Brief – A Dive into Today’s Emerging Trends and Innovations appeared first on News, Events, Advertising Options.

Fintech

Fintech Pulse: Industry Updates, Innovations, and Strategic Moves

Published

3 days ago

November 20, 2024

Peter Tolan

fintech-pulse:-industry-updates,-innovations,-and-strategic-moves

As fintech continues to reshape the global financial landscape, today’s briefing highlights pivotal developments, strategic expansions, and innovative launches across the industry. This op-ed explores the latest advancements with commentary on their potential impacts and challenges.

Finastra Data Breach: A Wake-Up Call for Fintech Security

Source: KrebsOnSecurity

The cybersecurity landscape is buzzing after Finastra, one of the largest financial technology providers globally, confirmed an investigation into a potential data breach. Reports suggest unauthorized access to its systems, raising concerns about data security across its client base, which includes thousands of banks and financial institutions worldwide.

Implications and Challenges

While the details of the breach remain sparse, this incident underscores a glaring vulnerability in the fintech sector—cybersecurity. As financial services increasingly rely on interconnected ecosystems, breaches like these threaten not only individual institutions but also the trust customers place in fintech platforms.

The key takeaway for the fintech industry is clear: proactive cybersecurity strategies must go beyond compliance. Real-time threat detection, robust encryption standards, and regular audits are no longer optional but essential for maintaining operational integrity.

Future Considerations

This breach could trigger a domino effect, prompting regulators to tighten security standards and requiring fintech companies to double down on investments in data protection. Startups and mid-tier players, often lacking extensive cybersecurity budgets, may face significant pressure to keep pace.

PayPal Resurrects Money Pooling Feature

Source: TechCrunch

In a bid to stay ahead of the competition, PayPal is reintroducing its Money Pooling feature, a popular tool that was discontinued in 2021. The feature allows users to pool funds collectively, catering to families, small businesses, and social groups.

Strategic Revival

This move reflects PayPal’s commitment to customer-centric innovation. By reinstating a feature beloved by its user base, the company seeks to reclaim market share lost to emerging competitors offering similar functionalities.

Broader Industry Impacts

Money pooling represents a broader trend in fintech—customized solutions that cater to niche needs. This reintroduction may inspire competitors like Venmo and CashApp to refine their collaborative payment offerings.

While this move strengthens PayPal’s ecosystem, its success will depend on seamless integration with existing services and robust fraud prevention mechanisms to avoid abuse of the feature.

Santander Expands Fintech Reach in Mexico

Source: Yahoo Finance

Santander is making waves in the Latin American fintech space with the launch of a dedicated fintech unit in Mexico. The initiative aims to capitalize on Mexico’s growing fintech adoption and digital payments market, valued at billions of dollars annually.

Strategic Significance

Santander’s expansion into Mexico highlights the region’s untapped potential. Latin America is a burgeoning market for fintech, driven by increasing smartphone penetration, a youthful demographic, and demand for accessible financial services.

Challenges on the Horizon

While Mexico offers immense opportunities, regulatory complexities and market competition from local players like Clip and Konfío pose significant challenges. Santander will need to blend its global expertise with local adaptability to succeed in this dynamic market.

2024 Global Fintech Awards: Spotlighting Excellence

Source: PRNewswire

Benzinga has announced the winners of the 2024 Global Fintech Awards, honoring companies and individuals driving innovation in financial technology. This year’s winners spanned categories like blockchain, artificial intelligence, and payment solutions.

Recognizing Industry Leaders

Awards like these highlight the collaborative spirit and entrepreneurial drive fueling fintech growth. Recognizing trailblazers not only motivates incumbents but also inspires startups to push the boundaries of innovation.

What It Means for the Ecosystem

The awards also bring attention to emerging technologies. Categories such as blockchain and AI signal the industry’s continued focus on leveraging cutting-edge tech for efficiency and scalability.

Commonwealth Central Credit Union Partners with Jack Henry

Source: FinTech Futures

Commonwealth Central Credit Union (CCCU) has announced a partnership with Jack Henry, a leading financial technology provider, for a comprehensive tech upgrade. The collaboration focuses on enhancing member experience through improved digital services.

Modernizing Member Experiences

Credit unions have often lagged behind major banks in adopting advanced digital solutions. By partnering with Jack Henry, CCCU aims to bridge this gap, offering members streamlined services such as mobile banking, automated lending, and personalized financial tools.

A Growing Trend

This partnership reflects a broader trend in the financial industry—credit unions and smaller banks embracing fintech to remain competitive. As customer expectations evolve, partnerships like this may become the norm rather than the exception.

Key Takeaways for the Fintech Industry

Cybersecurity is Critical: The Finastra breach underscores the need for robust security measures.
Innovation Drives Loyalty: PayPal’s revival of its Money Pooling feature highlights the importance of listening to customers.
Regional Opportunities: Santander’s expansion into Mexico showcases the untapped potential of emerging markets.
Recognition Matters: Awards like Benzinga’s provide valuable visibility for companies and individuals shaping the industry.
Partnerships Foster Growth: Collaborations between credit unions and fintech companies signify a trend towards modernized financial solutions.

The post Fintech Pulse: Industry Updates, Innovations, and Strategic Moves appeared first on News, Events, Advertising Options.

Fintech

Fintech Pulse: Milestones, Partnerships, and Transformations in Fintech

Published

4 days ago

November 19, 2024

Peter Tolan

fintech-pulse:-milestones,-partnerships,-and-transformations-in-fintech

The fintech sector continues its relentless drive toward innovation and market dominance. Today’s highlights include a record-breaking customer milestone for Revolut, groundbreaking fintech solutions for women in the EU, open entries for the PayTech Awards 2025, implications of political shifts on funding, and notable recognition at the US FinTech Awards.

Revolut Hits 50 Million Customers: A Global Fintech Giant’s Milestone

Source: Revolut

Revolut, the UK-based financial super app, has achieved a monumental feat: surpassing 50 million customers worldwide. This milestone underscores its position as a leader in the global fintech landscape, furthering its ambition to create the world’s first truly global bank.

Key to this success has been Revolut’s strategy of expanding its offerings, from banking to travel and crypto services, all within a seamless user experience. The company’s recent ventures into emerging markets such as Latin America and Asia demonstrate its intent to bridge financial services gaps while retaining competitive differentiation through technology.

This milestone is not just a triumph for Revolut but a signal of fintech’s capacity to redefine traditional banking. It reinforces the narrative that digital-first strategies, customer-centric innovation, and international scalability can challenge long-standing financial institutions.

PayTech Awards 2025: Celebrating Excellence in Innovation

Source: FinTech Futures

The PayTech Awards 2025 are officially open for entries, promising to spotlight the brightest minds and most innovative projects in the payment technology sector. These awards are a testament to the industry’s commitment to advancing secure, seamless, and scalable payment systems.

This year, the focus is on emerging technologies that redefine how businesses and consumers interact financially. Categories will recognize achievements across multiple domains, including sustainability in payments, AI-driven solutions, and partnerships that push boundaries.

As fintech companies prepare their entries, the awards provide a timely reminder of the sector’s ongoing evolution and the collaborative efforts required to achieve meaningful breakthroughs.

U.S. Politics and the Fintech Sector: A New Era of Funding?

Source: American Banker

The U.S. fintech sector might witness an infusion of optimism as speculation about a second Trump presidency gains momentum. The Trump-era policies of deregulation and venture capital encouragement are remembered as catalysts for unprecedented fintech growth during his first term.

While it remains uncertain how regulatory landscapes will shift, the possibility of a more relaxed approach toward fintech compliance could rejuvenate funding inflows. Investors and startups alike are watching closely, weighing the potential benefits against long-term risks tied to reduced oversight.

A politically charged backdrop often spells volatility, but for fintech, it may also spell opportunity. Preparing to adapt quickly will be crucial for startups and established players in the face of any regulatory pivot.

Klara AI and Unlimit: Addressing the €1.3 Trillion Female Economy

Source: FF News

Klara AI has teamed up with Unlimit to launch a fintech solution aimed at empowering women across the EU. This collaboration targets the €1.3 trillion female economy by addressing the unique financial needs of women entrepreneurs and consumers.

The solution promises to integrate AI-powered tools with streamlined financial management services, enabling users to access credit, manage investments, and scale businesses effectively. By tailoring services to the underserved female demographic, the partnership hopes to drive financial inclusion and support economic growth.

This initiative stands as a blueprint for fintechs exploring niche markets, proving that innovation tailored to specific segments can yield transformative results.

Autire: Accounting Tech of the Year at US FinTech Awards

Source: Business Wire

Autire, a rising star in financial technology, has been crowned ‘Accounting Tech of the Year’ at the US FinTech Awards 2024. The award recognizes Autire’s ability to blend cutting-edge AI with intuitive user interfaces, delivering unparalleled accounting solutions for businesses of all sizes.

Autire’s platform has gained traction for automating complex accounting tasks, ensuring compliance, and delivering actionable insights through real-time analytics. Its emphasis on reducing administrative burdens for SMEs has been particularly impactful, enabling entrepreneurs to focus on growth rather than bookkeeping.

The recognition not only cements Autire’s reputation but also highlights the role of AI-driven accounting solutions in reshaping business operations globally.

Final Thoughts: A Fintech Revolution in Full Swing

From customer milestones to policy-driven opportunities, the fintech ecosystem is in constant evolution. Revolut’s ascent to 50 million users signals growing consumer trust in digital platforms. The PayTech Awards continue to inspire innovation, while political shifts could redefine the regulatory landscape. Initiatives like Klara AI and Unlimit emphasize the power of targeted solutions, and companies like Autire show how niche technologies can achieve broad impact.

The next phase of fintech growth will likely hinge on inclusivity, adaptability, and innovation—pillars that today’s news stories exemplify.

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