Business Wire | Jul 22, 2021 04:00PM EDT

1st Source Corporation Reports Record Second Quarter Results, Cash Dividend Increased

Jul. 22, 2021

SOUTH BEND, Ind.--(BUSINESS WIRE)--Jul. 22, 2021--1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported record quarterly net income of $30.22 million for the second quarter of 2021, up 63.35% from the $18.50 million reported in the second quarter a year ago, bringing the 2021 year-to-date net income to $58.33 million compared to $34.92 million in 2020, an increase of 67.06%. Diluted net income per common share for the second quarter of 2021 was up 65.28% to $1.19 versus $0.72 in the second quarter of 2020. Diluted net income per common share for the first half of 2021 was $2.29 compared to $1.36 a year earlier, a 68.38% increase.

Year-to-date net income and earnings per share were positively impacted by providing $22.36 million less in the provision for credit losses compared to the provision for the prior year. This is a result of improved economic conditions this year compared to the extraordinarily uncertain circumstances presented by the pandemic a year ago.

At its July 2021 meeting, the Board of Directors approved a cash dividend of $0.31 per common share, up 10.71% from the $0.28 per common share declared a year ago. The cash dividend is payable to shareholders of record on August 3, 2021 and will be paid on August 13, 2021.

Christopher J. Murphy III, Chairman and Chief Executive Officer, commented, "We are pleased to have achieved record net income for the second consecutive quarter. Credit uncertainty continues to improve substantially which resulted in a reduction to our provision for credit losses. In addition, our clients continued to receive Paycheck Protection Program (PPP) loan forgiveness during the second quarter. Total PPP loans forgiven during 2021 were $291.32 million which provided $5.68 million in accelerated fee income. We are optimistic that continued vaccination adoption among the communities and businesses we serve will sustain the positive economic momentum we have seen over the last three months.

"Throughout the pandemic, our focus has remained on keeping our clients, our colleagues and families safe so we can deliver the highest level of service. Vaccination rates among our colleagues has grown steadily, and as an organization, we have reached a high level of inoculation. As mentioned last quarter, our lobbies are open, and once again our bankers are able to more freely meet with business and consumer clients (following CDC guidelines with masking and social distancing recommendations) than was the case in the last year. We're confident we are doing our best to ensure the safety and well-being of all those we serve and employ while also getting back to a sense of 'business as usual' for all our clients. As new variants of COVID develop, we will continue to review and analyze data from local health departments to make the best decisions possible for the health and safety of our team members, clients and communities.

"We were very pleased to learn during the second quarter that 1st Source had been named among the Keefe, Bruyette & Woods, Inc. (KBW) Bank Honor Roll for the third consecutive year. We are proud to be one of the 16 honorees to earn this recognition out of 365 banking institutions analyzed. To be considered, banks must be publicly traded institutions with more than $500 million in total assets and must have had 10 consecutive years of increased earnings per share. For the 2021 list, to account for the impact that the adoption of the current expected credit loss (CECL) accounting methodology had on 2020 earnings, KBW modified some inclusion criteria. Banks that met the annual earnings per share growth requirements for all years save 2020 were eligible for inclusion, if in 2020, they reported an annual profit and annual pre-tax, pre-provision net income per share growth. It is a focus on quality earnings, investing for the future, building a strong balance sheet, capital, and reserves that earned 1st Source this recognition and has allowed us to continue to meet the challenges that the pandemic has presented. Receiving this recognition for the third year in a row is a great honor, and it's a welcome confirmation, after a year of unprecedented challenges, that our focus on the long-term has been successful.

"Lastly, we announced the election of Tracy D. Graham, Managing Principal of Graham Allen Partners, LLC and Chief Executive Officer of Aunalytics, Inc., and Ronda Shrewsbury, President and Chief Executive Officer of RealAmerica, LLC to our Board of Directors. We are pleased our shareholders voted to add these strong leaders to our Board of Directors and we are certain they will help the Company deliver on its mission to help our clients achieve security, build wealth and realize their dreams by living our values and keeping our clients' best interest in mind for the long-term. Their backgrounds and experience blend well with our already strong Board, and their strategic guidance, and diversity of thought and perspective will add value to the future of our organization. Also, two current members, Melody Birmingham, who serves as Senior Vice President and Chief Administrative Officer of Duke Energy, and Mark D. Schwabero, retired Chairman, Chief Executive Officer and Director of Brunswick Corporation in 2018, were reelected to the Board of 1st Source Corporation. All four directors have been elected to terms that end April 2024 and will be subject to reelection at that time," Mr. Murphy concluded.

SECOND QUARTER 2021 FINANCIAL RESULTS

Loans

Average loans and leases of $5.52 billion decreased $49.77 million, or 0.89% in the second quarter of 2021 from the year ago quarter and were relatively flat from the previous quarter. Year-to-date average loans and leases of $5.51 billion increased $175.46 million, up 3.29% from the first six months of 2020. Loan runoff is primarily from SBA forgiveness of PPP loans offset by growth in the solar and aircraft portfolios when compared to the second quarter of 2020. During the second quarter 2021, SBA forgiveness totaled $158.41 million which was offset by PPP originations of $29.02 million. During the first six months of 2021, SBA forgiveness totaled $291.32 million which was offset by PPP originations of $261.46 million. PPP loans amounted to $315.09 million as of June 30, 2021.

Deposits

Average deposits of $6.28 billion grew $468.08 million for the quarter ended June 30, 2021, up 8.06% from the year ago quarter and increased $298.18 million, up 4.99% from the previous quarter. Average deposits for the first six months of 2021 were $6.13 billion, an increase of $588.91 million, up 10.63% from the same period a year ago. Deposit growth is primarily from PPP loan fundings, increased consumer deposit levels compared to 2020 and seasonal public fund activity.

Net Interest Income and Net Interest Margin

Second quarter 2021 tax-equivalent net interest income of $57.05 million increased $2.92 million, or 5.38% from the second quarter a year ago and decreased $0.48 million, or 0.83% from the first quarter of 2021. For the first six months of 2021, tax-equivalent net interest income was $114.59 million, an increase of $5.45 million, or 5.00% compared to the same period a year ago.

Second quarter 2021 net interest margin was 3.14%, a decrease of nine basis points from the 3.23% for the same period in 2020 and a decrease of 21 basis points from the previous quarter. Second quarter 2021 net interest margin on a fully tax-equivalent basis was 3.15%, a decrease of nine basis points from the 3.24% for the same period in 2020 and was lower by 20 basis points compared to the previous quarter. The margin continues to experience pressure from the low interest rate environment and excess liquidity. PPP loans had a positive impact on the net interest margin of one basis point for the quarter due to accelerated PPP loan origination fee amortization as a result of SBA forgiveness compared to a negative impact of four basis points in the same period a year ago. We recognized $2.59 million in PPP loan fees during the second quarter of 2021. During the prior quarter, PPP loans had a positive impact on the net interest margin of 10 basis points and we recognized $3.98 million in PPP loan fees.

Net interest margin for the first six months of 2021 was 3.24%, a decrease of 15 basis points from the 3.39% for the same period in 2020. Net interest margin on a fully-taxable-equivalent basis for the first half of 2021 was 3.25%, a decrease of 15 basis points from the 3.40% for the first half of 2020. The margin continues to experience pressure from the low interest rate environment and excess liquidity. PPP loans had a positive impact on the net interest margin of five basis points for the first half of 2021 compared to a negative impact of five basis points during the first half of 2020.

Noninterest Income

Second quarter 2021 noninterest income of $24.90 million decreased $0.34 million, or 1.36% from the second quarter a year ago and decreased $0.97 million, or 3.75% from the first quarter of 2021. For the first six months of 2021, noninterest income was $50.77 million, an increase of $0.90 million, up 1.81% from the same period a year ago.

Noninterest income was lower compared to the second quarter a year ago mainly from less equipment rental income as demand for leases declined, realized losses on the sale of available-for-sale debt securities due to repositioning in the investment portfolio and reduced mortgage banking income resulting from a lower sales volume offset by increased debit card income as transaction levels improved, higher trust and wealth advisory fees as market values improved on assets under management, and a rise in service charges on deposit accounts.

The decrease in noninterest income from the prior quarter was mainly due to reduced mortgage banking income resulting from lower sales volume, realized losses on the sale of available-for-sale debt securities due to repositioning in the investment portfolio and fewer contingent insurance commissions offset by higher trust and wealth advisory fees as market values improved on assets under management and a rise in debit card income as transaction levels improved.

Additionally, we recognized $0.59 million in impairment recoveries on our mortgage servicing rights during 2021.

Noninterest Expense

Second quarter 2021 noninterest expense was relatively flat from the second quarter a year ago and increased $1.06 million, or 2.40% from the prior quarter. Excluding depreciation on leased equipment, noninterest expenses were up 4.95% from the second quarter a year ago and up 3.17% from the prior quarter. For the first six months of 2021, noninterest expense was $89.34 million, a decrease of $2.02 million, down 2.21% compared to the same period a year ago.

The increase in noninterest expense from the prior quarter was primarily the result of a higher valuation provision for interest rate swaps with customers, higher salaries and wages due to incentive awards and normal merit increases, and a rise in legal and consulting fees offset by a decrease in the provision for unfunded loan commitments and lower leased equipment depreciation as the average equipment rental portfolio continues to decline.

Credit

The allowance for loan and lease losses as of June 30, 2021 was 2.49% of total loans and leases compared to 2.53% at March 31, 2021 and 2.31% at June 30, 2020 (incurred loss method). The allowance calculation includes PPP loans which are guaranteed by the SBA. Excluding these loans from the calculation results in an allowance of 2.63% at June 30, 2021, compared to 2.74% at March 31, 2021 and 2.73% at December 31, 2020. Net charge-offs of $0.16 million were recorded for the second quarter of 2021 compared with net recoveries of $0.11 million in the same quarter a year ago and $3.50 million of net charge-offs in the prior quarter. The majority of charge-offs in 2021 were related to the bus division of the auto and light truck portfolio which continues to be impacted by the lingering impact the pandemic has had on events and tourism.

The provision for credit losses was a recovery of $3.03 million for the second quarter of 2021, a decrease of $13.40 million compared with the same period in 2020 and a decrease of $5.42 million from the first quarter of 2021. The ratio of nonperforming assets to loans and leases was 1.06% as of June 30, 2021, compared to 1.12% on March 31, 2021 and 1.20% on June 30, 2020. Excluding PPP loans, the ratio of non-performing assets to loans and leases was 1.13% at June 30, 2021, 1.22% at March 31, 2021 and 1.33% at June 30, 2020.

Capital

As of June 30, 2021, the common equity-to-assets ratio was 11.68%, compared to 11.87% at March 31, 2021 and 11.74% a year ago. The tangible common equity-to-tangible assets ratio was 10.70% at June 30, 2021 compared to 10.87% at March 31, 2021 and 10.73% a year earlier. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 13.62% at June 30, 2021 compared to 13.43% at March 31, 2021 and 12.76% a year ago. During the second quarter of 2021, 283,759 shares were repurchased for treasury reducing common shareholders' equity by $13.78 million. On July 22, 2021, the Board of Directors authorized the repurchase of 2,000,000 common shares under the Company's stock repurchase plan when favorable conditions exist on the open market.

ABOUT 1ST SOURCE CORPORATION

1st Source common stock is traded on the NASDAQ Global Select Market under "SRCE" and appears in the National Market System tables in many daily newspapers under the code name "1st Src." Since 1863, 1st Source has been committed to the success of its clients, individuals, businesses and the communities it serves. For more information, visit www.1stsource.com.

1st Source serves the northern half of Indiana and southwest Michigan and is the largest locally controlled financial institution headquartered in the area. While delivering a comprehensive range of consumer and commercial banking services through its community bank offices, 1st Source has distinguished itself with highly personalized services. 1st Source Bank also competes for business nationally by offering specialized financing services for new and used private and cargo aircraft, automobiles for leasing and rental agencies, medium and heavy duty trucks, and construction equipment. The Corporation includes 79 banking centers, 18 1st Source Bank Specialty Finance Group locations nationwide, nine Wealth Advisory Services locations and 10 1st Source Insurance offices.

FORWARD-LOOKING STATEMENTS

Except for historical information contained herein, the matters discussed in this document express "forward-looking statements." Generally, the words "believe," "contemplate," "seek," "plan," "possible," "assume," "expect," "intend," "targeted," "continue," "remain," "estimate," "anticipate," "project," "will," "should," "indicate," "would," "may" and similar expressions indicate forward-looking statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.

1st Source may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause 1st Source's actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors, among others, include changes in laws, regulations or accounting principles generally accepted in the United States; 1st Source's competitive position within its markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen downturns in the local, regional or national economies or in the industries in which 1st Source has credit concentrations; and other risks discussed in 1st Source's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which filings are available from the SEC. 1st Source undertakes no obligation to publicly update or revise any forward-looking statements.

NON-GAAP FINANCIAL MEASURES

The accounting and reporting policies of 1st Source conform to generally accepted accounting principles ("GAAP") in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures are used by management to evaluate and measure the Company's performance. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity-to-tangible assets ratio and tangible book value per common share. Management believes that these measures provide users of the Company's financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company's operating efficiency. Other financial holding companies may define or calculate these measures differently.

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

1st SOURCE CORPORATION

2nd QUARTER 2021 FINANCIAL HIGHLIGHTS

(Unaudited - Dollars in thousands, except per share data)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

AVERAGE BALANCES

Assets $ 7,657,276 $ 7,350,413 $ 7,185,406 $ 7,504,692 $ 6,898,264

Earning 7,264,886 6,960,551 6,727,011 7,113,559 6,454,403 assets

Investments 1,339,551 1,230,977 1,045,310 1,285,564 1,037,975

Loans and 5,515,387 5,499,009 5,565,160 5,507,243 5,331,779 leases

Deposits 6,278,654 5,980,471 5,810,578 6,130,386 5,541,477

Interestbearing 4,785,800 4,577,664 4,580,419 4,682,307 4,497,986 liabilities

Commonshareholders' 898,388 894,553 862,209 896,481 853,467 equity

Total equity 942,821 938,451 891,606 940,648 879,605

INCOMESTATEMENT DATA

Net interest $ 56,935 $ 57,412 $ 54,001 $ 114,347 $ 108,845 income

Net interestincome - FTE^ 57,053 57,533 54,138 114,586 109,133 (1)

(Recovery of)provision for (3,025) 2,398 10,375 (627) 21,728 credit losses

Noninterest 24,898 25,869 25,241 50,767 49,863 income

Noninterest 45,198 44,140 44,825 89,338 91,360 expense

Net income 30,235 28,106 18,526 58,341 34,944

Net incomeavailable to 30,223 28,105 18,502 58,328 34,915 commonshareholders

PER SHARE DATA

Basic netincome per $ 1.19 $ 1.10 $ 0.72 $ 2.29 $ 1.36 common share

Diluted netincome per 1.19 1.10 0.72 2.29 1.36 common share

Common cashdividends 0.30 0.29 0.28 0.59 0.57 declared

Book valueper common 36.05 35.27 33.85 36.05 33.85 share^(2)

Tangible bookvalue per 32.69 31.95 30.57 32.69 30.57 common share^(1)

Market value 51.02 50.38 38.70 51.02 52.16 - High

Market value 45.22 38.73 26.72 38.73 26.07 - Low

Basicweightedaverage 25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 common sharesoutstanding

Dilutedweightedaverage 25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 common sharesoutstanding

KEY RATIOS

Return onaverage 1.58 % 1.55 % 1.04 % 1.57 % 1.02 %assets

Return onaveragecommon 13.49 12.74 8.63 13.12 8.23 shareholders'equity

Averagecommonshareholders' 11.73 12.17 12.00 11.95 12.37 equity toaverageassets

End of periodtangiblecommon equity 10.70 10.87 10.73 10.70 10.73 to tangibleassets^(1)

Risk-basedcapital - 13.62 13.43 12.76 13.62 12.76 Common EquityTier 1^(3)

Risk-basedcapital - 15.32 15.12 14.32 15.32 14.32 Tier 1^(3)

Risk-basedcapital - 16.58 16.39 15.58 16.58 15.58 Total^(3)

Net interest 3.14 3.35 3.23 3.24 3.39 margin

Net interestmargin - FTE^ 3.15 3.35 3.24 3.25 3.40 (1)

Efficiencyratio: 55.23 53.00 56.57 54.11 57.56 expense torevenue

Efficiencyratio:expense to 52.89 50.99 53.63 51.94 54.71 revenue -adjusted^(1)

Net chargeoffs to 0.01 0.26 (0.01) 0.13 0.06 average loansand leases

Loan andlease lossallowance to 2.49 2.53 2.31 2.49 2.31 loans andleases

Nonperformingassets to 1.06 1.12 1.20 1.06 1.20 loans andleases



June 30, March 31, December 31, September 30, June 30,

2021 2021 2020 2020 2020

END OF PERIOD BALANCES

Assets $ 7,718,694 $ 7,511,931 $ 7,316,411 $ 7,290,949 $ 7,365,146

Loans and 5,483,045 5,523,085 5,489,301 5,627,036 5,692,322 leases

Deposits 6,345,410 6,131,341 5,946,028 5,896,855 5,993,456

Allowance forloan and 136,361 139,550 140,654 136,817 131,283 lease losses

Goodwill andintangible 83,937 83,942 83,948 83,953 83,959 assets

Commonshareholders' 901,226 891,295 886,845 877,754 864,995 equity

Total equity 945,457 935,759 930,670 915,015 901,653

ASSET QUALITY

Loans andleases past $ 44 $ 66 $ 115 $ 81 $ 256 due 90 daysor more

Nonaccrualloans and 55,864 58,513 60,388 70,595 62,800 leases

Other real - 369 359 303 303 estate

Repossessions 1,213 2,214 1,976 4,639 6,132

Equipmentowned under 1,728 1,647 1,695 136 57 operatingleases

Totalnonperforming $ 58,849 $ 62,809 $ 64,533 $ 75,754 $ 69,548 assets

(1) See "Reconciliation of Non-GAAP Financial Measures" for more information onthis performance measure/ratio.

(2) Calculated as common shareholders' equity divided by common sharesoutstanding at the end of the period.

(3) Calculated under banking regulatory guidelines.

1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited - Dollars in thousands)

June 30,

March 31,

December 31,

June 30,

2021

2021

2020

2020

ASSETS

Cash and due from banks

$

69,101

$

69,683

$

74,186

$

67,591

Federal funds sold and interest bearing deposits with other banks

400,346

266,271

168,861

112,645

Investment securities available-for-sale

1,413,022

1,291,340

1,197,467

1,055,797

Other investments

27,429

27,429

27,429

30,619

Mortgages held for sale

6,453

9,351

12,885

36,508

Loans and leases, net of unearned discount:

Commercial and agricultural

1,125,965

1,238,708

1,186,118

1,469,839

Solar

305,250

296,124

292,604

240,873

Auto and light truck

595,326

552,676

542,369

563,606

Medium and heavy duty truck

256,169

268,636

279,172

284,432

Aircraft

883,559

873,770

861,460

782,160

Construction equipment

729,055

705,744

714,888

739,027

Commercial real estate

966,171

975,383

969,864

942,971

Residential real estate and home equity

492,552

486,156

511,379

531,972

Consumer

128,998

125,888

131,447

137,442

Total loans and leases

5,483,045

5,523,085

5,489,301

5,692,322

Allowance for loan and lease losses*

(136,361)

(139,550)

(140,654)

(131,283)

Net loans and leases

5,346,684

5,383,535

5,348,647

5,561,039

Equipment owned under operating leases, net

56,011

61,395

65,040

86,183

Net premises and equipment

47,617

48,288

49,373

51,486

Goodwill and intangible assets

83,937

83,942

83,948

83,959

Accrued income and other assets

268,094

270,697

288,575

279,319

Total assets

$

7,718,694

$

7,511,931

$

7,316,411

$

7,365,146

LIABILITIES

Deposits:

Noninterest-bearing demand

$

1,851,932

$

1,833,116

$

1,636,684

$

1,684,102

Interest-bearing deposits:

Interest-bearing demand

2,318,210

2,068,382

2,059,139

1,866,415

Savings

1,182,643

1,148,823

1,082,848

942,891

Time

992,625

1,081,020

1,167,357

1,500,048

Total interest-bearing deposits

4,493,478

4,298,225

4,309,344

4,309,354

Total deposits

6,345,410

6,131,341

5,946,028

5,993,456

Short-term borrowings:

Federal funds purchased and securities sold under agreements to repurchase

167,097

173,302

143,564

169,483

Other short-term borrowings

5,247

7,299

7,077

7,536

Total short-term borrowings

172,344

180,601

150,641

177,019

Long-term debt and mandatorily redeemable securities

81,330

81,722

81,864

81,760

Subordinated notes

58,764

58,764

58,764

58,764

Accrued expenses and other liabilities

115,389

123,744

148,444

152,494

Total liabilities

6,773,237

6,576,172

6,385,741

6,463,493

SHAREHOLDERS' EQUITY

Preferred stock; no par value

Authorized 10,000,000 shares; none issued or outstanding

-

-

-

-

Common stock; no par value

Authorized 40,000,000 shares; issued 28,205,674 shares at June 30, 2021, March 31, 2021, December 31, 2020, and June 30, 2020, respectively

436,538

436,538

436,538

436,538

Retained earnings

558,795

535,737

514,176

484,491

Cost of common stock in treasury (3,204,947, 2,936,987, 2,816,557, and 2,655,319 shares at June 30, 2021, March 31, 2021, December 31, 2020, and

June 30, 2020, respectively)

(101,711)

(88,223)

(82,240)

(75,922)

Accumulated other comprehensive income

7,604

7,243

18,371

19,888

Total shareholders' equity

901,226

891,295

886,845

864,995

Noncontrolling interests

44,231

44,464

43,825

36,658

Total equity

945,457

935,759

930,670

901,653

Total liabilities and equity

$

7,718,694

$

7,511,931

$

7,316,411

$

7,365,146

*ASU 2016-13 adopted during the fourth quarter of 2020 therefore June 30, 2020 allowance amount reflects the incurred loss method.

1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited - Dollars in thousands)

June 30, March 31, December 31, June 30,

2021 2021 2020 2020

ASSETS

Cash and due from $ 69,101 $ 69,683 $ 74,186 $ 67,591 banks

Federal funds soldand interest 400,346 266,271 168,861 112,645 bearing depositswith other banks

Investmentsecurities 1,413,022 1,291,340 1,197,467 1,055,797 available-for-sale

Other investments 27,429 27,429 27,429 30,619

Mortgages held for 6,453 9,351 12,885 36,508 sale

Loans and leases,net of unearned discount:

Commercial and 1,125,965 1,238,708 1,186,118 1,469,839 agricultural

Solar 305,250 296,124 292,604 240,873

Auto and light 595,326 552,676 542,369 563,606 truck

Medium and heavy 256,169 268,636 279,172 284,432 duty truck

Aircraft 883,559 873,770 861,460 782,160

Construction 729,055 705,744 714,888 739,027 equipment

Commercial real 966,171 975,383 969,864 942,971 estate

Residential realestate and home 492,552 486,156 511,379 531,972 equity

Consumer 128,998 125,888 131,447 137,442

Total loans and 5,483,045 5,523,085 5,489,301 5,692,322 leases

Allowance for loan (136,361) (139,550) (140,654) (131,283) and lease losses*

Net loans and 5,346,684 5,383,535 5,348,647 5,561,039 leases

Equipment ownedunder operating 56,011 61,395 65,040 86,183 leases, net

Net premises and 47,617 48,288 49,373 51,486 equipment

Goodwill and 83,937 83,942 83,948 83,959 intangible assets

Accrued income and 268,094 270,697 288,575 279,319 other assets

Total assets $ 7,718,694 $ 7,511,931 $ 7,316,411 $ 7,365,146

LIABILITIES

Deposits:

Noninterest-bearing $ 1,851,932 $ 1,833,116 $ 1,636,684 $ 1,684,102 demand

Interest-bearing deposits:

Interest-bearing 2,318,210 2,068,382 2,059,139 1,866,415 demand

Savings 1,182,643 1,148,823 1,082,848 942,891

Time 992,625 1,081,020 1,167,357 1,500,048

Totalinterest-bearing 4,493,478 4,298,225 4,309,344 4,309,354 deposits

Total deposits 6,345,410 6,131,341 5,946,028 5,993,456

Short-term borrowings:

Federal fundspurchased andsecurities sold 167,097 173,302 143,564 169,483 under agreements torepurchase

Other short-term 5,247 7,299 7,077 7,536 borrowings

Total short-term 172,344 180,601 150,641 177,019 borrowings

Long-term debt andmandatorily 81,330 81,722 81,864 81,760 redeemablesecurities

Subordinated notes 58,764 58,764 58,764 58,764

Accrued expensesand other 115,389 123,744 148,444 152,494 liabilities

Total liabilities 6,773,237 6,576,172 6,385,741 6,463,493

SHAREHOLDERS' EQUITY

Preferred stock; nopar value

Authorized - - - - 10,000,000 shares;none issued oroutstanding

Common stock; nopar value

Authorized40,000,000 shares;issued 28,205,674 436,538 436,538 436,538 436,538 shares at June 30,2021, March 31,2021, December 31,2020, and June 30,2020, respectively

Retained earnings 558,795 535,737 514,176 484,491

Cost of commonstock in treasury(3,204,947,2,936,987,2,816,557, and2,655,319 shares atJune 30, 2021, (101,711) (88,223) (82,240) (75,922) March 31, 2021,December 31, 2020,and

June 30, 2020,respectively)

Accumulated othercomprehensive 7,604 7,243 18,371 19,888 income

Total shareholders' 901,226 891,295 886,845 864,995 equity

Noncontrolling 44,231 44,464 43,825 36,658 interests

Total equity 945,457 935,759 930,670 901,653

Total liabilities $ 7,718,694 $ 7,511,931 $ 7,316,411 $ 7,365,146 and equity

*ASU 2016-13 adopted during the fourth quarter of 2020 therefore June 30, 2020allowance amount reflects the incurred loss method.

1st SOURCE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited - Dollars in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Interest income:

Loans and leases

$

57,144

$

57,864

$

58,815

$

115,008

$

120,341

Investment securities, taxable

4,155

3,988

4,487

8,143

10,037

Investment securities, tax-exempt

154

174

232

328

496

Other

317

266

316

583

662

Total interest income

61,770

62,292

63,850

124,062

131,536

Interest expense:

Deposits

3,202

3,526

8,265

6,728

19,116

Short-term borrowings

29

36

90

65

344

Subordinated notes

814

818

835

1,632

1,719

Long-term debt and mandatorily redeemable securities

790

500

659

1,290

1,512

Total interest expense

4,835

4,880

9,849

9,715

22,691

Net interest income

56,935

57,412

54,001

114,347

108,845

(Recovery of) provision for credit losses*

(3,025)

2,398

10,375

(627)

21,728

Net interest income after provision for loan and lease losses

59,960

55,014

43,626

114,974

87,117

Noninterest income:

Trust and wealth advisory

6,466

5,481

5,589

11,947

10,437

Service charges on deposit accounts

2,508

2,447

1,910

4,955

4,515

Debit card

4,754

4,182

3,601

8,936

6,974

Mortgage banking

2,859

3,901

3,315

6,760

5,651

Insurance commissions

1,684

2,152

1,695

3,836

3,576

Equipment rental

4,255

4,629

5,990

8,884

12,620

(Losses) gains on investment securities available-for-sale

(680)

-

(1)

(680)

279

Other

3,052

3,077

3,142

6,129

5,811

Total noninterest income

24,898

25,869

25,241

50,767

49,863

Noninterest expense:

Salaries and employee benefits

25,510

25,196

23,999

50,706

48,400

Net occupancy

2,527

2,719

2,504

5,246

5,225

Furniture and equipment

6,337

6,458

6,258

12,795

12,665

Depreciation - leased equipment

3,550

3,773

5,142

7,323

10,569

Professional fees

2,146

1,613

1,258

3,759

2,700

Supplies and communication

1,430

1,475

1,390

2,905

3,024

FDIC and other insurance

772

665

599

1,437

887

Business development and marketing

1,351

997

1,121

2,348

2,480

Loan and lease collection and repossession

486

129

838

615

1,601

Other

1,089

1,115

1,716

2,204

3,809

Total noninterest expense

45,198

44,140

44,825

89,338

91,360

Income before income taxes

39,660

36,743

24,042

76,403

45,620

Income tax expense

9,425

8,637

5,516

18,062

10,676

Net income

30,235

28,106

18,526

58,341

34,944

Net (income) loss attributable to noncontrolling interests

(12)

(1)

(24)

(13)

(29)

Net income available to common shareholders

$

30,223

$

28,105

$

18,502

$

58,328

$

34,915

Per common share:

Basic net income per common share

$

1.19

$

1.10

$

0.72

$

2.29

$

1.36

Diluted net income per common share

$

1.19

$

1.10

$

0.72

$

2.29

$

1.36

Cash dividends

$

0.30

$

0.29

$

0.28

$

0.59

$

0.57

Basic weighted average common shares outstanding

25,143,712

25,320,930

25,540,855

25,231,789

25,532,105

Diluted weighted average common shares outstanding

25,143,712

25,320,930

25,540,855

25,231,789

25,532,105

*ASU 2016-13 adopted during the fourth quarter of 2020 therefore June 30, 2020 provision amount reflects the incurred loss method.

1st SOURCE CORPORATION

CONSOLIDATEDSTATEMENTS OF INCOME

(Unaudited - Dollars inthousands, except per share amounts)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2021 2021 2020 2021 2020

Interest income:

Loans and leases $ 57,144 $ 57,864 $ 58,815 $ 115,008 $ 120,341

Investmentsecurities, 4,155 3,988 4,487 8,143 10,037 taxable

Investmentsecurities, 154 174 232 328 496 tax-exempt

Other 317 266 316 583 662

Total interest 61,770 62,292 63,850 124,062 131,536 income

Interest expense:

Deposits 3,202 3,526 8,265 6,728 19,116

Short-term 29 36 90 65 344 borrowings

Subordinated notes 814 818 835 1,632 1,719

Long-term debt andmandatorily 790 500 659 1,290 1,512 redeemablesecurities

Total interest 4,835 4,880 9,849 9,715 22,691 expense

Net interest 56,935 57,412 54,001 114,347 108,845 income

(Recovery of)provision for (3,025) 2,398 10,375 (627) 21,728 credit losses*

Net interestincome after 59,960 55,014 43,626 114,974 87,117 provision for loanand lease losses

Noninterest income:

Trust and wealth 6,466 5,481 5,589 11,947 10,437 advisory

Service charges on 2,508 2,447 1,910 4,955 4,515 deposit accounts

Debit card 4,754 4,182 3,601 8,936 6,974

Mortgage banking 2,859 3,901 3,315 6,760 5,651

Insurance 1,684 2,152 1,695 3,836 3,576 commissions

Equipment rental 4,255 4,629 5,990 8,884 12,620

(Losses) gains oninvestment (680) - (1) (680) 279 securitiesavailable-for-sale

Other 3,052 3,077 3,142 6,129 5,811

Total noninterest 24,898 25,869 25,241 50,767 49,863 income

Noninterest expense:

Salaries and 25,510 25,196 23,999 50,706 48,400 employee benefits

Net occupancy 2,527 2,719 2,504 5,246 5,225

Furniture and 6,337 6,458 6,258 12,795 12,665 equipment

Depreciation - 3,550 3,773 5,142 7,323 10,569 leased equipment

Professional fees 2,146 1,613 1,258 3,759 2,700

Supplies and 1,430 1,475 1,390 2,905 3,024 communication

FDIC and other 772 665 599 1,437 887 insurance

Businessdevelopment and 1,351 997 1,121 2,348 2,480 marketing

Loan and leasecollection and 486 129 838 615 1,601 repossession

Other 1,089 1,115 1,716 2,204 3,809

Total noninterest 45,198 44,140 44,825 89,338 91,360 expense

Income before 39,660 36,743 24,042 76,403 45,620 income taxes

Income tax expense 9,425 8,637 5,516 18,062 10,676

Net income 30,235 28,106 18,526 58,341 34,944

Net (income) lossattributable to (12) (1) (24) (13) (29) noncontrollinginterests

Net incomeavailable to $ 30,223 $ 28,105 $ 18,502 $ 58,328 $ 34,915 commonshareholders

Per common share:

Basic net income $ 1.19 $ 1.10 $ 0.72 $ 2.29 $ 1.36 per common share

Diluted net income $ 1.19 $ 1.10 $ 0.72 $ 2.29 $ 1.36 per common share

Cash dividends $ 0.30 $ 0.29 $ 0.28 $ 0.59 $ 0.57

Basic weightedaverage common 25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 shares outstanding

Diluted weightedaverage common 25,143,712 25,320,930 25,540,855 25,231,789 25,532,105 shares outstanding

*ASU 2016-13 adopted during the fourth quarter of 2020 therefore June 30, 2020provision amount reflects the incurred loss method.

1st SOURCE CORPORATION

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY

INTEREST RATES AND INTEREST DIFFERENTIAL

(Unaudited - Dollars in thousands)

Three Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

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

$

1,305,988

$

4,156

1.28

%

$

1,193,583

$

3,987

1.35

%

$

995,776

$

4,487

1.81

%

Tax exempt(1)

33,563

192

2.29

%

37,394

214

2.32

%

49,534

286

2.32

%

Mortgages held for sale

7,208

54

3.00

%

14,285

86

2.44

%

27,016

198

2.95

%

Loans and leases, net of unearned discount(1)

5,515,387

57,169

4.16

%

5,499,009

57,860

4.27

%

5,565,160

58,700

4.24

%

Other investments

402,740

317

0.32

%

216,280

266

0.50

%

89,525

316

1.42

%

Total earning assets(1)

7,264,886

61,888

3.42

%

6,960,551

62,413

3.64

%

6,727,011

63,987

3.83

%

Cash and due from banks

76,198

75,178

73,523

Allowance for loan and lease losses

(142,056)

(143,206)

(124,186)

Other assets

458,248

457,890

509,058

Total assets

$

7,657,276

$

7,350,413

$

7,185,406

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

$

4,458,915

$

3,202

0.29

%

$

4,261,207

$

3,526

0.34

%

$

4,248,478

$

8,265

0.78

%

Short-term borrowings

186,605

29

0.06

%

176,726

36

0.08

%

191,411

90

0.19

%

Subordinated notes

58,764

814

5.56

%

58,764

818

5.65

%

58,764

835

5.71

%

Long-term debt and mandatorily redeemable securities

81,516

790

3.89

%

80,967

500

2.50

%

81,766

659

3.24

%

Total interest-bearing liabilities

4,785,800

4,835

0.41

%

4,577,664

4,880

0.43

%

4,580,419

9,849

0.86

%

Noninterest-bearing deposits

1,819,739

1,719,264

1,562,100

Other liabilities

108,916

115,034

151,281

Shareholders' equity

898,388

894,553

862,209

Noncontrolling interests

44,433

43,898

29,397

Total liabilities and equity

$

7,657,276

$

7,350,413

$

7,185,406

Less: Fully tax-equivalent adjustments

(118)

(121)

(137)

Net interest income/margin (GAAP-derived)(1)

$

56,935

3.14

%

$

57,412

3.35

%

$

54,001

3.23

%

Fully tax-equivalent adjustments

118

121

137

Net interest income/margin - FTE(1)

$

57,053

3.15

%

$

57,533

3.35

%

$

54,138

3.24

%

(1) See "Reconciliation of Non-GAAP Financial Measures" for more information on this performance measure/ratio.

1st SOURCE CORPORATION

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY

INTEREST RATES AND INTEREST DIFFERENTIAL

(Unaudited - Dollars in thousands)

Three Months Ended

June 30, 2021 March 31, 2021 June 30, 2020

Average Interest Yield/ Average Interest Yield/ Average Interest Yield/ Income/ Income/ Income/ Balance Expense Rate Balance Expense Rate Balance Expense Rate

ASSETS

Investmentsecurities available-for-sale:

Taxable $ 1,305,988 $ 4,156 1.28 % $ 1,193,583 $ 3,987 1.35 % $ 995,776 $ 4,487 1.81 %

Tax exempt^(1) 33,563 192 2.29 % 37,394 214 2.32 % 49,534 286 2.32 %

Mortgages held for 7,208 54 3.00 % 14,285 86 2.44 % 27,016 198 2.95 %sale

Loans and leases,net of unearned 5,515,387 57,169 4.16 % 5,499,009 57,860 4.27 % 5,565,160 58,700 4.24 %discount^(1)

Other investments 402,740 317 0.32 % 216,280 266 0.50 % 89,525 316 1.42 %

Total earning 7,264,886 61,888 3.42 % 6,960,551 62,413 3.64 % 6,727,011 63,987 3.83 %assets^(1)

Cash and due from 76,198 75,178 73,523 banks

Allowance for loan (142,056) (143,206) (124,186) and lease losses

Other assets 458,248 457,890 509,058

Total assets $ 7,657,276 $ 7,350,413 $ 7,185,406



LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing $ 4,458,915 $ 3,202 0.29 % $ 4,261,207 $ 3,526 0.34 % $ 4,248,478 $ 8,265 0.78 %deposits

Short-term 186,605 29 0.06 % 176,726 36 0.08 % 191,411 90 0.19 %borrowings

Subordinated notes 58,764 814 5.56 % 58,764 818 5.65 % 58,764 835 5.71 %

Long-term debt andmandatorily 81,516 790 3.89 % 80,967 500 2.50 % 81,766 659 3.24 %redeemablesecurities

Totalinterest-bearing 4,785,800 4,835 0.41 % 4,577,664 4,880 0.43 % 4,580,419 9,849 0.86 %liabilities

Noninterest-bearing 1,819,739 1,719,264 1,562,100 deposits

Other liabilities 108,916 115,034 151,281

Shareholders' 898,388 894,553 862,209 equity

Noncontrolling 44,433 43,898 29,397 interests

Total liabilities $ 7,657,276 $ 7,350,413 $ 7,185,406 and equity

Less: Fullytax-equivalent (118) (121) (137) adjustments

Net interest income/margin $ 56,935 3.14 % $ 57,412 3.35 % $ 54,001 3.23 %(GAAP-derived)^(1)

Fullytax-equivalent 118 121 137 adjustments

Net interest income $ 57,053 3.15 % $ 57,533 3.35 % $ 54,138 3.24 %/margin - FTE^(1)

(1) See "Reconciliation of Non-GAAP Financial Measures" for more information onthis performance measure/ratio.

1st SOURCE CORPORATION

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY

INTEREST RATES AND INTEREST DIFFERENTIAL

(Unaudited - Dollars in thousands)

Six Months Ended

June 30, 2021

June 30, 2020

Average

Balance

Interest Income/Expense

Yield/

Rate

Average

Balance

Interest Income/Expense

Yield/

Rate

ASSETS

Investment securities available-for-sale:

Taxable

$

1,250,096

$

8,143

1.31

%

$

984,598

$

10,037

2.05

%

Tax exempt(1)

35,468

406

2.31

%

53,377

611

2.30

%

Mortgages held for sale

10,727

140

2.63

%

19,155

294

3.09

%

Loans and leases, net of unearned discount(1)

5,507,243

115,029

4.21

%

5,331,779

120,220

4.53

%

Other investments

310,025

583

0.38

%

65,494

662

2.03

%

Total earning assets(1)

7,113,559

124,301

3.52

%

6,454,403

131,824

4.11

%

Cash and due from banks

75,691

69,465

Allowance for loan and lease losses

(142,628)

(118,212)

Other assets

458,070

492,608

Total assets

$

7,504,692

$

6,898,264

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

4,360,607

6,728

0.31

%

4,162,374

19,116

0.92

%

Short-term borrowings

181,693

65

0.07

%

196,978

344

0.35

%

Subordinated notes

58,764

1,632

5.60

%

58,764

1,719

5.88

%

Long-term debt and mandatorily redeemable securities

81,243

1,290

3.20

%

79,870

1,512

3.81

%

Total interest-bearing liabilities

4,682,307

9,715

0.42

%

4,497,986

22,691

1.01

%

Noninterest-bearing deposits

1,769,779

1,379,103

Other liabilities

111,958

141,570

Shareholders' equity

896,481

853,467

Noncontrolling interests

44,167

26,138

Total liabilities and equity

$

7,504,692

$

6,898,264

Less: Fully tax-equivalent adjustments

(239)

(288)

Net interest income/margin (GAAP-derived)(1)

$

114,347

3.24

%

$

108,845

3.39

%

Fully tax-equivalent adjustments

239

288

Net interest income/margin - FTE(1)

$

114,586

3.25

%

$

109,133

3.40

%

(1) See "Reconciliation of Non-GAAP Financial Measures" for more information on this performance measure/ratio.



1st SOURCE CORPORATION

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY

INTEREST RATES AND INTEREST DIFFERENTIAL

(Unaudited -Dollars in thousands)

Six Months Ended

June 30, 2021 June 30, 2020

Average Interest Yield/ Average Interest Yield/ Income/ Income/ Balance Expense Rate Balance Expense Rate

ASSETS

Investmentsecurities available-for-sale:

Taxable $ 1,250,096 $ 8,143 1.31 % $ 984,598 $ 10,037 2.05 %

Tax exempt^(1) 35,468 406 2.31 % 53,377 611 2.30 %

Mortgages held for 10,727 140 2.63 % 19,155 294 3.09 %sale

Loans and leases,net of unearned 5,507,243 115,029 4.21 % 5,331,779 120,220 4.53 %discount^(1)

Other investments 310,025 583 0.38 % 65,494 662 2.03 %

Total earning 7,113,559 124,301 3.52 % 6,454,403 131,824 4.11 %assets^(1)

Cash and due from 75,691 69,465 banks

Allowance for loan (142,628) (118,212) and lease losses

Other assets 458,070 492,608

Total assets $ 7,504,692 $ 6,898,264



LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing 4,360,607 6,728 0.31 % 4,162,374 19,116 0.92 %deposits

Short-term 181,693 65 0.07 % 196,978 344 0.35 %borrowings

Subordinated notes 58,764 1,632 5.60 % 58,764 1,719 5.88 %

Long-term debt andmandatorily 81,243 1,290 3.20 % 79,870 1,512 3.81 %redeemablesecurities

Totalinterest-bearing 4,682,307 9,715 0.42 % 4,497,986 22,691 1.01 %liabilities

Noninterest-bearing 1,769,779 1,379,103 deposits

Other liabilities 111,958 141,570

Shareholders' 896,481 853,467 equity

Noncontrolling 44,167 26,138 interests

Total liabilities $ 7,504,692 $ 6,898,264 and equity

Less: Fullytax-equivalent (239) (288) adjustments

Net interest income/margin $ 114,347 3.24 % $ 108,845 3.39 %(GAAP-derived)^(1)

Fullytax-equivalent 239 288 adjustments

Net interest income $ 114,586 3.25 % $ 109,133 3.40 %/margin - FTE^(1)

(1) See "Reconciliation of Non-GAAP Financial Measures" for more information onthis performance measure/ratio.

1st SOURCE CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited - Dollars in thousands, except per share data)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

2021

2021

2020

2021

2020

Calculation of Net Interest Margin

(A)

Interest income (GAAP)

$

61,770

$

62,292

$

63,850

$

124,062

$

131,536

Fully tax-equivalent adjustments:

(B)

- Loans and leases

80

81

83

161

173

(C)

- Tax exempt investment securities

38

40

54

78

115

(D)

Interest income - FTE (A+B+C)

61,888

62,413

63,987

124,301

131,824

(E)

Interest expense (GAAP)

4,835

4,880

9,849

9,715

22,691

(F)

Net interest income (GAAP) (A-E)

56,935

57,412

54,001

114,347

108,845

(G)

Net interest income - FTE (D-E)

57,053

57,533

54,138

114,586

109,133

(H)

Annualization factor

4.011

4.056

4.022

2.017

2.011

(I)

Total earning assets

$

7,264,886

$

6,960,551

$

6,727,011

$

7,113,559

$

6,454,403

Net interest margin (GAAP-derived) (F*H)/I

3.14

%

3.35

%

3.23

%

3.24

%

3.39

%

Net interest margin - FTE (G*H)/I

3.15

%

3.35

%

3.24

%

3.25

%

3.40

%

Calculation of Efficiency Ratio

(F)

Net interest income (GAAP)

$

56,935

$

57,412

$

54,001

$

114,347

$

108,845

(G)

Net interest income - FTE

57,053

57,533

54,138

114,586

109,133

(J)

Plus: noninterest income (GAAP)

24,898

25,869

25,241

50,767

49,863

(K)

Less: gains/losses on investment securities and partnership investments

348

(460)

(248)

(112)

(761)

(L)

Less: depreciation - leased equipment

(3,550)

(3,773)

(5,142)

(7,323)

(10,569)

(M)

Total net revenue (GAAP) (F+J)

81,833

83,281

79,242

165,114

158,708

(N)

Total net revenue - adjusted (G+J-K-L)

78,749

79,169

73,989

157,918

147,666

(O)

Noninterest expense (GAAP)

45,198

44,140

44,825

89,338

91,360

(L)

Less:depreciation - leased equipment

(3,550)

(3,773)

(5,142)

(7,323)

(10,569)

(P)

Noninterest expense - adjusted (O-L)

41,648

40,367

39,683

82,015

80,791

Efficiency ratio (GAAP-derived) (O/M)

55.23

%

53.00

%

56.57

%

54.11

%

57.56

%

Efficiency ratio - adjusted (P/N)

52.89

%

50.99

%

53.63

%

51.94

%

54.71

%

End of Period

June 30,

March 31,

June 30,

2021

2021

2020

Calculation of Tangible Common Equity-to-Tangible Assets Ratio

(Q)

Total common shareholders' equity (GAAP)

$

901,226

$

891,295

$

864,995

(R)

Less: goodwill and intangible assets

(83,937)

(83,942)

(83,959)

(S)

Total tangible common shareholders' equity (Q-R)

$

817,289

$

807,353

$

781,036

(T)

Total assets (GAAP)

7,718,694

7,511,931

7,365,146

(R)

Less: goodwill and intangible assets

(83,937)

(83,942)

(83,959)

(U)

Total tangible assets (T-R)

$

7,634,757

$

7,427,989

$

7,281,187

Common equity-to-assets ratio (GAAP-derived) (Q/T)

11.68

%

11.87

%

11.74

%

Tangible common equity-to-tangible assets ratio (S/U)

10.70

%

10.87

%

10.73

%

Calculation of Tangible Book Value per Common Share

(Q)

Total common shareholders' equity (GAAP)

$

901,226

$

891,295

$

864,995

(V)

Actual common shares outstanding

25,000,727

25,268,687

25,550,355

Book value per common share (GAAP-derived) (Q/V)*1000

$

36.05

$

35.27

$

33.85

Tangible common book value per share (S/V)*1000

$

32.69

$

31.95

$

30.57

The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3)

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