1st Source (SRCE) Q4 2021 earnings summary

Executive summary

• Record 2021 net income available to common shareholders was $118.53 million, up from $81.44 million in 2020; diluted EPS rose to $4.70 from $3.17.

• PPP fees, loan forgiveness and government stimulus supported earnings and credit quality; the provision for credit losses was a $4.30 million recovery versus $36.00 million expense in 2020.

Financial highlights

• Net interest income rose 4.79% to $236.64 million; noninterest income fell 3.65% to $100.09 million and noninterest expense declined 0.65% to $186.15 million.

• Assets grew 10.66% to $8.10 billion and deposits rose 12.33% to $6.68 billion; loans and leases declined 2.61% to $5.35 billion at year-end.

• PPP fees were $16.84 million in 2021 versus $12.06 million in 2020; $543.59 million of $858.91 million in PPP originations were forgiven or paid during 2021.

Outlook and guidance

• Loan demand is expected to increase as clients deploy excess PPP-related deposits and the economy improves; solar financing momentum is expected to continue into 2022.

• Credit forecasts assumed slower growth in 2022–23 and inflation above the Federal Reserve’s 2% target, with potential adverse effects on loan and lease portfolios.