1st Source (SRCE) Q4 2022 earnings summary

Executive summary

• 2022 net income available to common shareholders rose to $120.51 million from $118.53 million; diluted EPS was $4.84 vs. $4.70. Higher net interest income offset higher credit provisions and lower noninterest income.

• Loans and leases grew 12.44% to $6.01 billion and deposits rose 3.73% to $6.93 billion; year-end assets reached $8.34 billion.

Financial highlights

• Net interest income increased 11.34% to $263.47 million; provision for credit losses was $13.25 million vs. a $4.30 million recovery in 2021.

• Noninterest income fell 8.82% to $91.26 million, mainly from lower mortgage banking and equipment rental income; noninterest expense declined 0.78% to $184.70 million.

• Interest income rose to $293.82 million from $254.77 million, while interest expense increased to $30.35 million from $18.13 million.

Outlook and guidance

• Solar loan and lease growth momentum was expected to continue into 2023.

• Credit-loss assumptions anticipated weak U.S. growth in 2023 and below-trend growth in 2024, with inflation gradually easing toward the Fed’s 2% target.

• Management expected to complete remaining LIBOR transition steps before the June 30, 2023 deadline.