1st Source (US:SRCE)2025-04-24 20:01Financial Performance - Net income available to common shareholders for Q1 2025 was $37.52 million, compared to $29.46 million for Q1 2024, with diluted net income per share increasing to $1.52 from $1.19 [178]. - Return on average common shareholders' equity improved to 13.33% for Q1 2025, up from 11.77% in Q1 2024 [178]. - Total noninterest income for Q1 2025 was $23.10 million, a 4.27% increase from $22.16 million in Q1 2024 [207]. - Trust and wealth advisory fees increased by 6.03% to $6.67 million in Q1 2025, driven by the number and size of client relationships [208]. - The provision for income taxes for Q1 2025 was $10.18 million, with an effective tax rate of 21.34%, down from 22.24% in Q1 2024 [222]. Asset and Liability Management - Total assets increased to $8.96 billion, up $31.18 million or 0.35% from December 31, 2024 [157]. - Total loans and leases rose to $6.86 billion, an increase of $8.59 million or 0.13% from December 31, 2024, driven by growth in renewable energy and real estate portfolios [158]. - Total deposits reached $7.42 billion, an increase of $187.73 million or 2.60% from the end of 2024, primarily due to higher savings and time deposits [160]. - Total shareholders' equity increased to $1.16 billion, up $50.39 million or 4.54% from December 31, 2024 [165]. - Cash and cash equivalents totaled $222.82 million, an increase from $124.83 million at December 31, 2024, primarily due to increased deposits [175]. - Total liquidity was $3.44 billion at March 31, 2025, accounting for approximately 50.41% of total deposits net of brokered and listing services certificates of deposit [174]. - The loan to asset ratio was 76.57% at March 31, 2025, compared to 76.74% at December 31, 2024 [175]. Interest Income and Margin - Taxable-equivalent net interest income for Q1 2025 was $81.09 million, a 12.52% increase from Q1 2024 [183]. - The net interest margin on a fully taxable-equivalent basis was 3.90% for Q1 2025, up from 3.54% in Q1 2024 [183]. - The yield on average earning assets increased by 21 basis points to 5.94% from 5.73% in Q1 2024 [184]. - Total interest-bearing liabilities decreased by 20 basis points to 2.90% from 3.10% due to lower rates on interest-bearing deposits [184]. Credit Quality - The provision for credit losses for Q1 2025 was $3.27 million, down from $7.48 million in Q1 2024 [193]. - Net charge-offs for Q1 2025 were $0.18 million, or 0.01% of average loans and leases, significantly lower than $6.12 million, or 0.38%, in Q1 2024 [193]. - Nonperforming assets increased to $43.07 million as of March 31, 2025, a 37.46% rise from $31.33 million at December 31, 2024, and a 92.02% increase from $22.43 million at March 31, 2024 [200]. - The allowance for loan and lease losses as a percentage of outstanding loans and leases was 2.29% at the end of Q1 2025, compared to 2.26% a year earlier [197]. - Nonaccrual loans and leases rose significantly, particularly in the auto and light truck portfolio, contributing to the overall increase in nonperforming assets [201]. - The provision for credit losses for Q1 2025 was influenced by a weakened economic outlook, with impairment reserves totaling $0.64 million for aircraft, construction equipment, and auto/light truck portfolios [194]. Operating Expenses - Salaries and employee benefits rose by 8.60% to $32.12 million in Q1 2025, attributed to merit increases and higher group insurance costs [215]. - Total noninterest expense increased by 8.98% to $53.08 million in Q1 2025, reflecting higher costs across various categories [215]. - Average interest-bearing deposits increased by $350.28 million, or 6.49%, primarily in time, savings, and interest-bearing demand deposits [186]. - Average short-term borrowings decreased by $205.96 million, or 72.87%, compared to Q1 2024 [187]. - Average earning assets increased by $252.63 million, or 3.09%, compared to the same period in 2024 [184].