Fintech

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

Published

1 year 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:

To view an enhanced version of this graphic, please visit:

To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/9536/163051_figure2.jpg

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

# # #

(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

How to identify authenticity in crypto influencer channels

Published

1 day ago

April 19, 2024

Vlad Poptamas

Modern brands stake on influencer marketing, with 76% of users making a purchase after seeing a product on social media.The cryptocurrency industry is no exception to this trend. However, promoting crypto products through influencer marketing can be particularly challenging. Crypto influencers pose a significant risk to a brand’s reputation and ROI due to rampant scams. Approximately 80% of channels provide fake statistics, including followers counts and engagement metrics. Additionally, this niche is characterized by high CPMs, which can increase the risk of financial loss for brands.

In this article Nadia Bubennnikova, Head of agency Famesters, will explore the most important things to look for in crypto channels to find the perfect match for influencer marketing collaborations.

Comments

There are several levels related to this point.

LEVEL 1

Analyze approximately 10 of the channel’s latest videos, looking through the comments to ensure they are not purchased from dubious sources. For example, such comments as “Yes sir, great video!”; “Thanks!”; “Love you man!”; “Quality content”, and others most certainly are bot-generated and should be avoided.

Just to compare:

LEVEL 2

Don’t rush to conclude that you’ve discovered the perfect crypto channel just because you’ve come across some logical comments that align with the video’s topic. This may seem controversial, but it’s important to dive deeper. When you encounter a channel with logical comments, ensure that they are unique and not duplicated under the description box. Some creators are smarter than just buying comments from the first link that Google shows you when you search “buy YouTube comments”. They generate topics, provide multiple examples, or upload lists of examples, all produced by AI. You can either manually review the comments or use a script to parse all the YouTube comments into an Excel file. Then, add a formula to highlight any duplicates.

LEVEL 3

It is also a must to check the names of the profiles that leave the comments: most of the bot-generated comments are easy to track: they will all have the usernames made of random symbols and numbers, random first and last name combinations, “Habibi”, etc. No profile pictures on all comments is also a red flag.

LEVEL 4

Another important factor to consider when assessing comment authenticity is the posting date. If all the comments were posted on the same day, it’s likely that the traffic was purchased.

2. Average views number per video

This is indeed one of the key metrics to consider when selecting an influencer for collaboration, regardless of the product type. What specific factors should we focus on?

First & foremost: the views dynamics on the channel. The most desirable type of YouTube channel in terms of views is one that maintains stable viewership across all of its videos. This stability serves as proof of an active and loyal audience genuinely interested in the creator’s content, unlike channels where views vary significantly from one video to another.

Many unauthentic crypto channels not only buy YouTube comments but also invest in increasing video views to create the impression of stability. So, what exactly should we look at in terms of views? Firstly, calculate the average number of views based on the ten latest videos. Then, compare this figure to the views of the most recent videos posted within the past week. If you notice that these new videos have nearly the same number of views as those posted a month or two ago, it’s a clear red flag. Typically, a YouTube channel experiences lower views on new videos, with the number increasing organically each day as the audience engages with the content. If you see a video posted just three days ago already garnering 30k views, matching the total views of older videos, it’s a sign of fraudulent traffic purchased to create the illusion of view stability.

3. Influencer’s channel statistics

The primary statistics of interest are region and demographic split, and sometimes the device types of the viewers.

LEVEL 1

When reviewing the shared statistics, the first step is to request a video screencast instead of a simple screenshot. This is because it takes more time to organically edit a video than a screenshot, making it harder to manipulate the statistics. If the creator refuses, step two (if only screenshots are provided) is to download them and check the file’s properties on your computer. Look for details such as whether it was created with Adobe Photoshop or the color profile, typically Adobe RGB, to determine if the screenshot has been edited.

LEVEL 2

After confirming the authenticity of the stats screenshot, it’s crucial to analyze the data. For instance, if you’re examining a channel conducted in Spanish with all videos filmed in the same language, it would raise concerns to find a significant audience from countries like India or Turkey. This discrepancy, where the audience doesn’t align with regions known for speaking the language, is a red flag.

If we’re considering an English-language crypto channel, it typically suggests an international audience, as English’s global use for quality educational content on niche topics like crypto. However, certain considerations apply. For instance, if an English-speaking channel shows a significant percentage of Polish viewers (15% to 30%) without any mention of the Polish language, it could indicate fake followers and views. However, if the channel’s creator is Polish, occasionally posts videos in Polish alongside English, and receives Polish comments, it’s important not to rush to conclusions.

Example of statistics

Wrapping up

These are the main factors to consider when selecting an influencer to promote your crypto product. Once you’ve launched the campaign, there are also some markers to show which creators did bring the authentic traffic and which used some tools to create the illusion of an active and engaged audience. While this may seem obvious, it’s still worth mentioning. After the video is posted, allow 5-7 days for it to accumulate a basic number of views, then check performance metrics such as views, clicks, click-through rate (CTR), signups, and conversion rate (CR) from clicks to signups.

If you overlooked some red flags when selecting crypto channels for your launch, you might find the following outcomes: channels with high views numbers and high CTRs, demonstrating the real interest of the audience, yet with remarkably low conversion rates. In the worst-case scenario, you might witness thousands of clicks resulting in zero to just a few signups. While this might suggest technical issues in other industries, in crypto campaigns it indicates that the creator engaged in the campaign not only bought fake views and comments but also link clicks. And this happens more often than you may realize.

Summing up, choosing the right crypto creator to promote your product is indeed a tricky job that requires a lot of resources to be put into the search process.

Author Nadia Bubennikova, Head of agency at Famesters

Author

Nadia Bubennikova, Head of agency at Famesters

Fintech

Central banks and the FinTech sector unite to change global payments space

Published

2 weeks ago

April 4, 2024

Peter Tolan

central-banks-and-the-fintech-sector-unite-to-change-global-payments-space

The BIS, along with seven leading central banks and a cohort of private financial firms, has embarked on an ambitious venture known as Project Agorá.

Named after the Greek word for “marketplace,” this initiative stands at the forefront of exploring the potential of tokenisation to significantly enhance the operational efficiency of the monetary system worldwide.

Central to this pioneering project are the Bank of France (on behalf of the Eurosystem), the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England, and the Federal Reserve Bank of New York. These institutions have joined forces under the banner of Project Agorá, in partnership with an extensive assembly of private financial entities convened by the Institute of International Finance (IIF).

At the heart of Project Agorá is the pursuit of integrating tokenised commercial bank deposits with tokenised wholesale central bank money within a unified, public-private programmable financial platform. By harnessing the advanced capabilities of smart contracts and programmability, the project aspires to unlock new transactional possibilities that were previously infeasible or impractical, thereby fostering novel opportunities that could benefit businesses and consumers alike.

The collaborative effort seeks to address and surmount a variety of structural inefficiencies that currently plague cross-border payments. These challenges include disparate legal, regulatory, and technical standards; varying operating hours and time zones; and the heightened complexity associated with conducting financial integrity checks (such as anti-money laundering and customer verification procedures), which are often redundantly executed across multiple stages of a single transaction due to the involvement of several intermediaries.

As a beacon of experimental and exploratory projects, the BIS Innovation Hub is committed to delivering public goods to the global central banking community through initiatives like Project Agorá. In line with this mission, the BIS will soon issue a call for expressions of interest from private financial institutions eager to contribute to this ground-breaking project. The IIF will facilitate the involvement of private sector participants, extending an invitation to regulated financial institutions representing each of the seven aforementioned currencies to partake in this transformative endeavour.

Source: fintech.globa

The post Central banks and the FinTech sector unite to change global payments space appeared first on HIPTHER Alerts.

Fintech

TD Bank inks multi-year strategic partnership with Google Cloud

Published

2 weeks ago

April 4, 2024

Peter Tolan

td-bank-inks-multi-year-strategic-partnership-with-google-cloud

TD Bank has inked a multi-year deal with Google Cloud as it looks to streamline the development and deployment of new products and services.

The deal will see the Canadian banking group integrate the vendor’s cloud services into a wider portion of its technology solutions portfolio, a move which TD expects will enable it “to respond quickly to changing customer expectations by rolling out new features, updates, or entirely new financial products at an accelerated pace”.

This marks an expansion of the already established relationship between TD Bank and Google Cloud after the group previously adopted the vendor’s Google Kubernetes Engine (GKE) for TD Securities Automated Trading (TDSAT), the Chicago-based subsidiary of its investment banking unit, TD Securities.

TDSAT uses GKE for process automation and quantitative modelling across fixed income markets, resulting in the development of a “data-driven research platform” capable of processing large research workloads in trading.

Dan Bosman, SVP and CIO of TD Securities, claims the infrastructure has so far supported TDSAT with “compute-intensive quantitative analysis” while expanding the subsidiary’s “trading volumes and portfolio size”.

TD’s new partnership with Google Cloud will see the group attempt to replicate the same level of success across its entire portfolio.

Source: fintechfutures.com

The post TD Bank inks multi-year strategic partnership with Google Cloud appeared first on HIPTHER Alerts.