1st Source Corporation · NASDAQ:SRCE
1st Source — Investor Presentation (May 2017)
37 slides from 1st Source's investor presentation, May 9, 2017
Slide 1: First Quarter 2017 Investor Presentation
Source. | i: Corporation FIRST QUARTER 2017 INVESTOR PRESENTATION Symbol: SRCE www. |stsource.com
Slide 2: Disclosures
DISCLOSURES Forward-Looking Statements Except for ite) (eat, the matters discussed may include “forward-looking statements.” Those state ubject to material risks and uncertainties. Ist Source cautions readers not to piace aera oan encanta looking statements, which speck only as of the date made. The
Slide 3: Corporate Overview
CORPORATE OVERVIEW $5.5 billion Community Bank with International Reach headquartered in South Bend, Indiana Community Banking: = Locations throughout Northern Indiana and Southwestern Michigan = Personal and business banking, payment services, lending, mortgage, and leasing a Investment management,
Slide 4: Mission and Vision
MISSION AND VISION Mission To help our clients achieve security, build wealth and realize their dreams by offering straight talk, sound advice and keeping their best interests in mind for the long-term. Vision Offer our clients the highest-quality service Support a proud family of colleagues who per
Slide 5: Market Area
MARKET AREA Community Bank Loans: $2.23 billion Fst pe! i PAGE 5 Corporation sta
Slide 6: Business Mix (Loans and Leases)
BUSINESS MIX (LOANS AND LEASES) Personal Community Banking 29% 51% Business Community Banking 71% Specialty Finance 49% iSource._ PAGE 6 Corporation
Slide 7: Community Banking
COMMUNITY BANKING m 82 Banking Centers m= 103 Twenty-four hour ATMs = 10 Ist Source Insurance offices a 8 Trust & Wealth Advisory locations with approximately $4.4 billion of assets under management In person Online Over the phone Mobile Source. __
Slide 8: Community Banking Market Area - County Market
COMMUNITY BANKING MARKET AREA 17 —- County Market Market 797 863 Households Client Households 102,353 al i eer Penetration 12.8% Higher Education Ul Businesses (approx) 74,600 Business Clients 14,963 Penetration 20.1% As of December 31, 2016 Regional Medical Hub Medical Devices Ln. | z Recreational
Slide 9: Specialty Finance Group Services
SPECIALTY FINANCE GROUP SERVICES ae Aircraft Division— $784M isi division provides financing primarily for new and used general aviation aircraft (including helicopters) for private and eae users, some for aircraft distributors and dealers, air charter operators, air cargo carriers, and other aircra
Slide 10: Experienced and Proven Team
EXPERIENCED AND PROVEN TEAM Executive Team = 5 executives with an average 35 years each of banking experience and 25 years with Ist Source Business Banking Officers m= 35 business banking officers with an average 20 years each of lending experience and 11 years with 1st Source Specialty Finance Grou
Slide 11: Performance - Client
PERFORMANCE - CLIENT #1 deposit share in our 15 contiguous county market #1 SBA Lender in our Indiana footprint #2 SBA Lender in State of Indiana = Best Branch Service in the Midwest — MSR Group, 2015 & 2016 a Indiana SBA Community Lender Award — 2013 - 2016 Michiana's Best Bank for Business — North
Slide 12: Financial Review
FINANCIAL REVIEW
Slide 13: Growing Loan Portfolio
5500 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 GROWING LOAN PORTFOLIO Total Average Loans & Leases ($MM) Loans & Leases Yield on Loans & Leases - FTE (%)* 29% Compound Annual Growl Rate: 6 4114 4187 3640 S837 3434 nid 4.42 4.39 4.28 4.35 o—___, 2 5 ~. ——— © 2013 2014 2015 2016 2017 YTD * See
Slide 14: Diversified Loan Portfolio
DIVERSIFIED LOAN PORTFOLIO Average Loans by Type é — Commercial ‘ommercial an: Real Estate Agricultural 17% Residential Real Estate 12% Aircraft ‘Consumer 19% 3% Medium and Heavy uty Tru Construction Equipment Auto and Light Truck 12% 10%
Slide 15: Aircraft Portfolio - Industries by NAICS
Aircraft Portfolio — Industries by NAICS Retail Trade Consieton 12% J Manufacturing 8% Ag, Forestry, Fishing & Hunting Services 6% 14% 4% Insurance and Real Estate Transportation & 16% Warehousing 22% *Other includes: Mining & Utilities, Information, & Public Administration Wholesale
Slide 16: Strong Credit Quality
STRONG CREDIT QUALITY % of Net Loans and Leases Stable Reserves Low Nonperforming Assets Limited Losses 2.38% 2.31% 2% om 23% 0.02% 0.06% (0.02%) (0.06%) 2013, 2014 «2015-2016 )-2017 2013 2014 «2015. 2016-2017 2013 2014 «2015 2016-2017 YID YID YID iSource._ PAGE 16 Corporation
Slide 17: Core Deposit Franchise
== Non-core Deposits 5500 CORE DEPOSIT FRANCHISE Total Average Deposits ($MM) = Core Deposits 2013 2014 und Ant nual Growth Rate: 47 2015 * Non-core deposits include CDs over $250,000 and brokered CDs. Beerporation =e Effective Rate on Deposits (%) 1.50% 1.30% 1.10% 0.90% 0.70% 0.50%
Slide 18: Attractive Core Deposit Franchise
ATTRACTIVE CORE DEPOSIT FRANCHISE Average Deposits By Type Noninterest Bearing Demand 22% Savings and Interest Bearing Demand 53% CD and IRA 25%
Slide 19: Deposit Market Share - County Contiguous Market
DEPOSIT MARKET SHARE - 15 COUNTY CONTIGUOUS MARKET* Leading Market Share in Community Banking Markets ($000) —® Ist Source «Chase Wells Fargo Fifth Third Data as of June 2016 - FDIC (via SNL Financial) ae __.* * June10 June11_ June 12. June 13. June 14 June 15 June 16 ‘includes Allen, Elkhart, Fulto
Slide 20: Net Income & Earnings Per Share
NET INCOME & EARNINGS PER SHARE 2013 2014 2015 2016 2016 2017 YTD YTD ==Net Income <@EPCS (Diluted) Source. : € Corporation PAGE 20
Slide 21: Net Interest Margin (FTE)
NET INTEREST MARGIN (FTE)* 162.2 2013 2014 2015 2016 2016 ==Net Interest Income ($MM) —«®=Net Interest Margin (%) as jliation of non-GAAP Financial Measures” in Appendix. Beerporation
Slide 22: Diverse Sources of Noninterest Income
DIVERSE SOURCES OF NONINTEREST INCOME Noninterest Income Composition YTD = $17.6MM* Equipment Mortgage Rental Banking Trust and Wealth Advisory 28% Insurance ‘Commissions 10% Service Charges on Deposit Accounts 13% Debit Card 16% 29% of Total Revenue* F F 7 of of non-GAAP Financial Measures" in Appe
Slide 23: Operating Expenses
OPERATING EXPENSES 2013 2014 2015 2016 2016 2017 YTD YTD “==Noninterest Expense ($MM)* ®=Efficiency - Adjusted (%)* : ; crea ae of non-GAAP Financial Measures” in Appendix. Beerporation
Slide 24: Strong Capital Position
STRONG CAPITAL POSITION 14.54% — V4S7% 13.457, 13.80% 13.88% 12.08% 12.16% 12.21% 12.11% 12.39% i Bb fs io Copitotzed ove | oo oe Copitotzed 2013-2014. 2015 IS. «-DOITYID.-S 2013-14 OS. O16. «2017 ID 18.86% 15.89% — 497%, 15.12% 15.18% 10.76% 11.15% 10.96% 10.89% WI swe | or oo Copitatzed 2013 2014
Slide 25: Tangible Book Value Per Common Share
TANGIBLE BOOK VALUE PER COMMON SHARE* Consistent Growth 2010 = 2011 2012. 2013, 2014, 2015, 2016~— 2017 YTD * See “Reconciliation of non-GAAP Financial Measures" in Appendix. Beerporation
Slide 26: Common Dividends Per Share
COMMON DIVIDENDS PER SHARE 29 YEARS OF CONSECUTIVE DIVIDEND GROWTH $0.900 $0.800 $0.700 $0.600 0.536 0.509 «0-527 $0.500 $0.400 0.370 $0.300 $0.200 $0.100 $0.000 2007 «2008 )=—- 2009S 2010. 2011-2 2012) «2013 2014. 2015. 2016 = 2017 YTD
Slide 27: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS Value of $100 Invested in 1st Source since 1971 Inception with Dividends Reinvested vs. Total Return of Stock Indices —Ist Source —S&P 500 Wilshire 5000 —Russell 2000 —-NASDAQ $25,000 $20,000 $15,000 $10,000 $5,000 $0 Beerporation
Slide 28: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS December 31, 2007 - April 30, 2017 — Ist Source Corp —KBW NASDAQ Bank —NASDAQ Bank —S&P 500 Bank —SNL U.S. Bank —KBW NASDAQ Regional Bank & @ D c se] pes 16) o 2 a (50.00) (100.00) 2008 2009 2011 2012 2013 2014 2015 2016 Beerporation
Slide 29: Ownership Summary
Ownership Summary Shareholder Type Shares _% of Total Ist Source ESOP Insiders 10,598,931 40.9% at a 47% Institutional 10,398,910 40.1% taeineste Retail/Other 3,709,358 14.3% 40.1% Ist Source ESOP 1,216,431 4T% Total Shares Outstanding 25,923,630 100.0% Rank Institution (Top 10 Institutions) Shares
Slide 30: Performance - Financial
PERFORMANCE - FINANCIAL = #10 of 102 banks between $5 billion and $50 billion in assets — Bank Performance Scorecard by Bank Director Magazine = Top 15th Percentile of Community Banks — Seifried & Brew a 5 Star “Superior” Rating — Bauer Financial a 29 years of consecutive dividend growth Source. eeo
Slide 31: Investment Considerations
INVESTMENT CONSIDERATIONS Consistent and superior financial performance with a focus on long-term earnings per share and tangible book value growth Experienced and proven team with significant investment in bank Diversification of product mix and geography with asset generation capability Leading ma
Slide 32: Contact Information
CONTACT INFORMATION Christopher J. Murphy Ill Chairman of the Board and CEO (574) 235-2711 [email protected] Andrea G. Short CFO and Treasurer (574) 235-2348 [email protected] PAGE 32
Slide 33: Appendix
APPENDIX
Slide 34: Present Initiatives
PRESENT INITIATIVES Banking Centers a Rebuild Calumet North = Opening in Sarasota, Florida = Consolidation of banking centers Expanding Product Lines a Solar = Bus/Motor Coach Leadership m New Auto and Light Truck Division Head m= New Technology Leadership PAGE 34
Slide 35: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Calculation cH Ae on Loans and Leases \d leases (GAAP) (A*E]/D Yield on loans ond leases -FIE (C*E)/D Calculation of Net Interest Margin {Dollars in thousan (A) Interest income ( (8)_Plus: fully tox- aul! adusmants (C) Interest wees (0) Interest expe (E)
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Noninterest Expense {Dolio in thousands) (A) No loo ies agin cen ) (8) L jation - leased equip Ronee vadjusted ie 2) Calculation of Efficiency Ratio {oir in thousands (A) N RHE income (GAAP) (8) _Netinterest income {C) Plus: noninterest income (GAAP) (D)
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (Dolo in thousands (A) Total comme ‘equity (GAAP) Total tangible common shareholders’ (ot Total assets (GAAP) Total tangible assets (D- Common equity-to-assets: a (GAAP-derived) AD Mise Calculation of Tangible Book Value per Common Shai 2010 A) Total com