On July 25, 2024, 1st Source Corp (SRCE, Financial) released its 8-K filing reporting record second-quarter results. The company, which offers a range of banking services including commercial, agricultural, and real estate loans, as well as consumer banking, trust and wealth advisory, and insurance services, demonstrated robust financial performance.
Quarterly Financial Highlights
1st Source Corp reported a net income of $36.79 million for Q2 2024, marking a 13.44% increase from the same quarter last year. This translates to a diluted net income per common share of $1.49, surpassing the analyst estimate of $1.22. The company's revenue for the quarter was $97.41 million, exceeding the estimated $94.84 million.
Key Financial Metrics
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income ($ million) | 36.79 | 29.46 | 32.44 |
| Diluted EPS ($) | 1.49 | 1.19 | 1.30 |
| Net Interest Income ($ million) | 74.19 | 72.06 | 68.70 |
| Net Interest Margin (%) | 3.59 | 3.54 | 3.48 |
| Average Loans and Leases ($ billion) | 6.61 | 6.50 | 6.14 |
| Average Deposits ($ billion) | 7.18 | 7.01 | 6.94 |
Performance Analysis
The company's performance was bolstered by a 1.57% increase in average loans and leases from the previous quarter, reaching $6.61 billion. This growth was primarily driven by the Construction Equipment, Renewable Energy, and Auto and Light Truck portfolios. Additionally, average deposits grew by 2.46% to $7.18 billion, reflecting strong customer confidence and seasonal public fund deposit inflows.
Net interest income for the quarter was $74.19 million, up 2.96% from Q1 2024 and 8.00% from Q2 2023. The net interest margin improved to 3.59%, up five basis points from the previous quarter, indicating effective loan and lease pricing strategies amidst competitive deposit rates.
Noninterest Income and Expense
Noninterest income for Q2 2024 was $23.22 million, a 4.81% increase from the previous quarter, driven by higher trust and wealth advisory income, increased debit card income, and a rise in mortgage banking income. Noninterest expense remained relatively flat at $49.49 million, with slight increases in salaries and wages, data processing costs, and business development expenses.
Credit Quality and Capital Position
The allowance for loan and lease losses stood at $150.07 million, representing 2.26% of total loans and leases, unchanged from the previous quarter. Net recoveries of $1.99 million were recorded, a significant improvement from the $6.12 million in net charge-offs in Q1 2024. The ratio of nonperforming assets to loans and leases decreased to 0.31% from 0.34% in the previous quarter.
The company's capital position remained strong, with a common equity-to-assets ratio of 11.75% and a Common Equity Tier 1 ratio of 13.74%, reflecting robust retained earnings growth and reduced unrealized losses in the investment portfolio.
"We are very pleased to have achieved record quarterly earnings during the second quarter. Average loans and leases grew $102.14 million, up 1.57%, and average deposits increased $172.53 million, or 2.46% compared to the previous quarter. Disciplined loan and lease pricing led to an improvement in our net interest margin of five basis points from the prior quarter," commented Christopher J. Murphy III, Chairman and Chief Executive Officer.
Conclusion
1st Source Corp's strong Q2 2024 performance, characterized by record net income, improved net interest margin, and robust loan and deposit growth, underscores the company's effective financial management and strategic focus. These results not only exceed analyst expectations but also position the company well for sustained growth in the competitive banking sector.
Explore the complete 8-K earnings release (here) from 1st Source Corp for further details.
