1st Source Corporation · NASDAQ:SRCE
1st Source — Q4 2016 Earnings Presentation
36 slides from 1st Source's earnings presentation, Feb 8, 2017
Slide 1: Fourth Quarter 2016 Investor Presentation
Source. | i: Corporation FOURTH QUARTER 2016 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: $2.20 billion Fst pe! i PAGE 5 Corporation sta
Slide 6: Business Mix (Loans and Leases)
BUSINESS MIX (LOANS AND LEASES) Personal Community Banking 30% 51% Business Community Banking 70% Specialty Finance 49% iSource._ PAGE 6 Corporation
Slide 7: Community Banking
COMMUNITY BANKING a 81 Banking Centers m= 103 Twenty-four hour ATMs = 10 Ist Source Insurance offices a 8 Trust & Wealth Advisory locations with approximately $4.2 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— $802M isi division provides financing primarily for new and used general aviation aircraft (including helicopters) for private and eae users, some for aircraft distributors and dealers, air charter operators, air cargo carriers, and other aircra
Slide 10: Experienced and Proven Team
EXPERIENCED AND PROVEN TEAM Executive Team = 5 executives with an average 35 years each of banking experience and 25 years with Ist Source Business Banking Officers = 37 business banking officers with an average 20 years each of lending experience and 11 years with 1st Source Specialty Finance Group
Slide 11: Performance - Client
PERFORMANCE - CLIENT #1 deposit share in our 15 contiguous county market #1 SBA Lender in our Indiana footprint #2 SBA Lender in State of Indiana = Best Branch Service in the Midwest — MSR Group, 2015 & 2016 a Indiana SBA Community Lender Award — 2013 - 2016 Michiana's Best Bank for Business — North
Slide 12: Financial Review
FINANCIAL REVIEW
Slide 13: Growing Loan Portfolio
GROWING LOAN PORTFOLIO Total Average Loans & Leases ($MM) Loans & Leases @=Yield on Loans & Leases - FTE (%) 2012 2013 2014 2015 2016 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00%
Slide 14: Diversified Loan Portfolio
DIVERSIFIED LOAN PORTFOLIO Average Loans by Type a ond Commercial ommercial an: Real Estate Agricultural 17% Residential Real Estate 12% a Consumer 2 3% Medium and Heavy uty Tru Construction Equipment Auto and Light Truck 12% 10%
Slide 15: Strong Credit Quality
STRONG CREDIT QUALITY Loan & Lease Loss Reserve % of Net Loans and Leases Nonperforming Assets Net Charge-Offs / (Recoveries) Stable Reserves Low Nonperforming Assets Limited Losses 2.50% 2.35% 2.31% 221% 2.11% 1.25% 1.29% 1.13% 0.70% 0.50% py ory 9.06% 0.13% (0.02%) 2012 2013 2014 2015 2016 2012 20
Slide 16: Growing Core Deposit Franchise
GROWING CORE DEPOSIT FRANCHISE Total Average Deposits ($MM) == Non-core Deposits = Core Deposits =e Effective Rate on Deposits (%) 5500 2012 2013 2014 * Non-core deposits include CDs over $250,000 and brokered CDs. 1.50% 1.30% 1.10% 0.90% 0.70% 0.50% eS OUnCe) . PAGE 16 Corporation
Slide 17: Deposit Market Share - County Contiguous Market
DEPOSIT MARKET SHARE - 15 COUNTY CONTIGUOUS MARKET* Leading Market Share in Community Banking Markets ($000) —® Ist Source «Chase Wells Fargo Fifth Third Data as of June 2016 - FDIC (via SNL Financial) ae __.* * June10 June11_ June 12. June 13. June 14 June 15 June 16 ‘includes Allen, Elkhart, Fulto
Slide 18: Net Income & Earnings Per Share
NET INCOME & EARNINGS PER SHARE 2013 2015 ==Net Income <@EPCS (Diluted) Pigource. - PAee IS Corporation
Slide 19: Net Interest Margin (FTE)
NET INTEREST MARGIN (FTE) 2012 2013 2014 2015 2016 ==Net Interest Income ($MM) —«®=Net Interest Margin (%) Pigource. - BAGELS Corporation
Slide 20: Diverse Sources of Noninterest Income
DIVERSE SOURCES OF NONINTEREST INCOME Noninterest Income Composition YTD = $67.3MM* Equipment Rental 6% Trust and Wealth Advisory 29% Insurance ‘Commissions 8% Service Charges on Deposit Accounts 13% Debit Card 16% 28% of Total Revenue* PAGE 20
Slide 21: Operating Expenses
OPERATING EXPENSES 136.3 2012 2013 2014 2015 2016 “==Noninterest Expense ($MM)* =®=Efficiency - Adjusted (%) of pr Beerporation
Slide 22: Strong Capital Position
STRONG CAPITAL POSITION 14.26% 14.54% == AS7% 13 bee 13.80%, 11a7% 12.08% 12.16% = 12.21% «12.11% 8% Well Capitalized 5% Well Copitalized 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 15.57% 15.86% 15.89% gory ig 19% 10.56% 10.76% 11-15% 10.96% ~—-10.89% 10% Well Copitalized
Slide 23: Tangible Book Value Per Common Share
TANGIBLE BOOK VALUE PER COMMON SHARE Consistent Growth 2009 2010 2011 2012 2013 2014 2015 = =2016 Beerporation
Slide 24: Common Dividends Per Share
COMMON DIVIDENDS PER SHARE 29 YEARS OF CONSECUTIVE DIVIDEND GROWTH $0.900 $0.800 $0.700 $0.600 0.536 0.527 0.500 - 0482 980? $0.400 $0.300 $0.200 $0.100 $0.000 2006 = =2007 +2008 9892009 982010 2011 2012 2013 2014 2015 2016
Slide 25: 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 26: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS December 31, 2007 - January 31, 2017 —Ist Source Corp — KBW NASDAG Bank ——NASDAG Bank S&P 500 Bank — SNL U.S. Bank —KBW NASDAQ Regional Bank 200.00 150.00 & © D c 5 < O ® 2 a 2010 2011 2012 2013 Beerporation
Slide 27: 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.
Slide 28: 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 29: 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 29
Slide 30: Appendix
APPENDIX
Slide 31: Ownership Summary
Ownership Summary Shareholder Type Shares —__% of Total Tatscurce ESOP Institutional 10,183,804 39.4% bys Retail/Other Insiders 9,277,454 35.9% i Instttohonell Retail/Other 5,162,090 19.9% SOLES Ist Source ESOP 1,252,417 48% Total Shares Outstanding”) 25,875,765 100.0% Rank Institution (Top 10 Insti
Slide 32: Aircraft Portfolio - Industries by NAICS
Aircraft Portfolio — Industries by NAICS Construction Retail Trade 1% Manufacturing 12% %% Ag, Forestry, Fishing & Hunting 6% Sonmces Wholesale 4% Other* 7% Finance & Insurance and Real Transportation & Warehousing 15% oe *Other includes: Mining & Utilities, Information, & Public Administration
Slide 33: Attractive Core Deposit Franchise
ATTRACTIVE CORE DEPOSIT FRANCHISE Average Deposits By Type Noninterest Savings and Interest Bearing Demand 22% Bearing Demand 51% CD and IRA 27% Source
Slide 34: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Calculation of Yield on Loans and Leases {Dollars in thousands a) Loans and leases interest income (GAAP) 8) (C) Loans and leases fies teas FIE (A+B) (Nineties jeld on loans and oe (GAAP) (A/D) Yield on loans and leases - FTE (C/D) Calculation of Net Int
Slide 35: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Noninterest Ser {Dolls in thousands raNoninierest eeperce rex aD (8) Less. dey reciation - leased equipment joninterest expense - Seo (a8) Calculation of Tae) Ratio (Dollars in thousands) (a) xa rere income (GAAP) (8) est income - FTE AA (©) Less: gains/
Slide 36: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Calculation of Total common shareholders’ equity (GAAP) 2013 585,378 (86,343) Total assets (GAAP) 499.0: 4722826 (86,343) eed and nina anaes oaV A <ing (85,371) 4,636,483 $4,744,587 12. 127% 10.56% 10.76% 11.15% _ 3.255) _(67.675]_(87 802 2|__ (86343) 3