UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-6233
1st Source Corporation
(Exact name of registrant as specified in its charter)
|
Indiana |
35-1068133 |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
100 North Michigan Street |
|
|
South Bend, IN |
46601 |
|
(Address of principal executive offices) |
(Zip Code) |
(574) 235-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
|
Common Stock - without par value |
SRCE |
The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
x |
Accelerated filer |
☐ |
|
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
- Yes x No
Number of shares of common stock outstanding as of April 19, 2024 - 24,489,694 shares
TABLE OF CONTENTS
Page
|
Consolidated Statements of Financial Condition - March 31, 2024 and December 31, 2023 |
||
|
Consolidated Statements of Income - three months ended March 31, 2024 and 2023 |
||
|
Consolidated Statements of Comprehensive Income (Loss) - three months ended March 31, 2024 and 2023 |
||
|
Consolidated Statements of Shareholders' Equity - three months ended March 31, 2024 and 2023 |
||
|
Consolidated Statements of Cash Flows - three months ended March 31, 2024 and 2023 |
||
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
31 |
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
40 |
|
Item 4. |
Controls and Procedures |
41 |
|
PART II. OTHER INFORMATION |
||
|
Item 1. |
Legal Proceedings |
41 |
|
Item 1A. |
Risk Factors |
41 |
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
41 |
|
Item 3. |
Defaults Upon Senior Securities |
41 |
|
Item 4. |
Mine Safety Disclosures |
41 |
|
Item 5. |
Other Information |
41 |
|
Item 6. |
Exhibits |
42 |
|
SIGNATURES |
43 |
2
|
1st SOURCE CORPORATION |
||||
|
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION |
||||
|
(Unaudited - Dollars in thousands) |
||||
|
March 31, |
December 31, |
|||
|
2024 |
2023 |
|||
|
ASSETS |
||||
|
Cash and due from banks |
$ |
41,533 |
$ |
77,474 |
|
Federal funds sold and interest bearing deposits with other banks |
39,381 |
52,194 |
||
|
Investment securities available-for-sale |
1,583,244 |
1,622,600 |
||
|
Other investments |
25,075 |
25,075 |
||
|
Mortgages held for sale |
2,881 |
1,442 |
||
|
Loans and leases, net of unearned discount: |
||||
|
Commercial and agricultural |
731,527 |
766,223 |
||
|
Renewable energy |
413,662 |
399,708 |
||
|
Auto and light truck |
997,465 |
966,912 |
||
|
Medium and heavy duty truck |
303,799 |
311,947 |
||
|
Aircraft |
1,104,058 |
1,078,172 |
||
|
Construction equipment |
1,092,585 |
1,084,752 |
||
|
Commercial real estate |
1,135,595 |
1,129,861 |
||
|
Residential real estate and home equity |
643,856 |
637,973 |
||
|
Consumer |
140,225 |
142,957 |
||
|
Total loans and leases |
6,562,772 |
6,518,505 |
||
|
Allowance for loan and lease losses |
(148,024) |
(147,552) |
||
|
Net loans and leases |
6,414,748 |
6,370,953 |
||
|
Equipment owned under operating leases, net |
16,691 |
20,366 |
||
|
Net premises and equipment |
45,689 |
46,159 |
||
|
Goodwill and intangible assets |
83,912 |
83,916 |
||
|
Accrued income and other assets |
414,683 |
427,779 |
||
|
Total assets |
$ |
8,667,837 |
$ |
8,727,958 |
|
LIABILITIES |
||||
|
Deposits: |
||||
|
Noninterest-bearing demand |
$ |
1,618,498 |
$ |
1,655,728 |
|
Interest-bearing deposits: |
||||
|
Interest-bearing demand |
2,364,751 |
2,430,833 |
||
|
Savings |
1,270,401 |
1,213,334 |
||
|
Time |
1,801,661 |
1,738,686 |
||
|
Total interest-bearing deposits |
5,436,813 |
5,382,853 |
||
|
Total deposits |
7,055,311 |
7,038,581 |
||
|
Short-term borrowings: |
||||
|
Federal funds purchased and securities sold under agreements to repurchase |
82,591 |
55,809 |
||
|
Other short-term borrowings |
166,989 |
256,550 |
||
|
Total short-term borrowings |
249,580 |
312,359 |
||
|
Long-term debt and mandatorily redeemable securities |
39,406 |
47,911 |
||
|
Subordinated notes |
58,764 |
58,764 |
||
|
Accrued expenses and other liabilities |
183,227 |
202,080 |
||
|
Total liabilities |
7,586,288 |
7,659,695 |
||
|
SHAREHOLDERS' EQUITY |
||||
|
Preferred stock; no par value |
||||
|
Authorized 10,000,000 shares; none issued or outstanding |
- |
- |
||
|
Common stock; no par value |
||||
|
Authorized 40,000,000 shares; issued 28,205,674 at March 31, 2024 and December 31, 2023 |
436,538 |
436,538 |
||
|
Retained earnings |
812,413 |
789,842 |
||
|
Cost of common stock in treasury (3,728,016 shares at March 31, 2024 and 3,771,070 shares at December 31, 2023) |
(129,790) |
(130,489) |
||
|
Accumulated other comprehensive loss |
(109,275) |
(106,323) |
||
|
Total shareholders' equity |
1,009,886 |
989,568 |
||
|
Noncontrolling interests |
71,663 |
78,695 |
||
|
Total equity |
1,081,549 |
1,068,263 |
||
|
Total liabilities and equity |
$ |
8,667,837 |
$ |
8,727,958 |
The accompanying notes are a part of the unaudited consolidated financial statements.
3
1st SOURCE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited - Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
|
2024 |
2023 |
|||
|
Interest income: |
||||
|
Loans and leases |
$ |
109,202 |
$ |
86,689 |
|
Investment securities, taxable |
6,079 |
6,648 |
||
|
Investment securities, tax-exempt |
260 |
482 |
||
|
Other |
927 |
637 |
||
|
Total interest income |
116,468 |
94,456 |
||
|
Interest expense: |
||||
|
Deposits |
39,744 |
21,263 |
||
|
Short-term borrowings |
3,102 |
1,393 |
||
|
Subordinated notes |
1,061 |
1,020 |
||
|
Long-term debt and mandatorily redeemable securities |
646 |
1,215 |
||
|
Total interest expense |
44,553 |
24,891 |
||
|
Net interest income |
71,915 |
69,565 |
||
|
Provision for credit losses |
6,595 |
3,049 |
||
|
Net interest income after provision for credit losses |
65,320 |
66,516 |
||
|
Noninterest income: |
||||
|
Trust and wealth advisory |
6,287 |
5,679 |
||
|
Service charges on deposit accounts |
3,070 |
3,003 |
||
|
Debit card |
4,201 |
4,507 |
||
|
Mortgage banking |
950 |
802 |
||
|
Insurance commissions |
1,776 |
2,029 |
||
|
Equipment rental |
1,671 |
2,503 |
||
|
Losses on investment securities available-for-sale |
- |
(44) |
||
|
Other |
4,201 |
4,844 |
||
|
Total noninterest income |
22,156 |
23,323 |
||
|
Noninterest expense: |
||||
|
Salaries and employee benefits |
29,572 |
28,597 |
||
|
Net occupancy |
2,996 |
2,622 |
||
|
Furniture and equipment |
1,149 |
1,307 |
||
|
Data processing |
6,500 |
6,157 |
||
|
Depreciation - leased equipment |
1,288 |
2,022 |
||
|
Professional fees |
1,345 |
682 |
||
|
FDIC and other insurance |
1,657 |
1,360 |
||
|
Business development and marketing |
1,744 |
1,972 |
||
|
Other |
3,335 |
4,702 |
||
|
Total noninterest expense |
49,586 |
49,421 |
||
|
Income before income taxes |
37,890 |
40,418 |
||
|
Income tax expense |
8,428 |
9,287 |
||
|
Net income |
29,462 |
31,131 |
||
|
Net (income) loss attributable to noncontrolling interests |
(7) |
(7) |
||
|
Net income available to common shareholders |
$ |
29,455 |
$ |
31,124 |
|
Per common share: |
||||
|
Basic net income per common share |
$ |
1.19 |
$ |
1.25 |
|
Diluted net income per common share |
$ |
1.19 |
$ |
1.25 |
|
Cash dividends |
$ |
0.34 |
$ |
0.32 |
|
Basic weighted average common shares outstanding |
24,459,088 |
24,687,087 |
||
|
Diluted weighted average common shares outstanding |
24,459,088 |
24,687,087 |
||
The accompanying notes are a part of the unaudited consolidated financial statements.
4
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited - Dollars in thousands)
Three Months Ended
March 31,
|
2024 |
2023 |
|||
|
Net income |
$ |
29,462 |
$ |
31,131 |
|
Other comprehensive income (loss): |
||||
|
Unrealized (depreciation) appreciation of available-for-sale securities |
(3,791) |
26,476 |
||
|
Reclassification adjustment for realized losses included in net income |
- |
44 |
||
|
Income tax effect |
839 |
(6,295) |
||
|
Other comprehensive (loss) income, net of tax |
(2,952) |
20,225 |
||
|
Comprehensive income (loss) |
26,510 |
51,356 |
||
|
Comprehensive (income) loss attributable to noncontrolling interests |
(7) |
(7) |
||
|
Comprehensive income (loss) available to common shareholders |
$ |
26,503 |
$ |
51,349 |
The accompanying notes are a part of the unaudited consolidated financial statements.
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited - Dollars in thousands, except per share amounts)
|
Three Months Ended |
||||||||||||||||
|
Cost of |
Accumulated |
|||||||||||||||
|
Other |
Total |
|||||||||||||||
|
Preferred |
Common |
Retained |
Common |
Comprehensive |
Noncontrolling |
Total |
||||||||||
|
Stock |
Income (Loss), |
Shareholders' |
||||||||||||||
|
Stock |
Stock |
Earnings |
in Treasury |
Net |
Equity |
Interests |
Equity |
|||||||||
|
Balance at January 1, 2023 |
$ |
- |
$ |
436,538 |
$ |
694,862 |
$ |
(119,642) |
$ |
(147,690) |
$ |
864,068 |
$ |
59,698 |
$ |
923,766 |
|
Net income |
- |
- |
31,124 |
- |
- |
31,124 |
7 |
31,131 |
||||||||
|
Other comprehensive income |
- |
- |
- |
- |
20,225 |
20,225 |
- |
20,225 |
||||||||
|
Issuance of 49,625 common shares under |
- |
- |
1,426 |
999 |
- |
2,425 |
- |
2,425 |
||||||||
|
stock based compensation awards |
||||||||||||||||
|
Cost of 16,359 shares of common stock |
- |
- |
- |
(766) |
- |
(766) |
- |
(766) |
||||||||
|
acquired for treasury |
||||||||||||||||
|
Common stock dividend ($0.32 per share) |
- |
- |
(7,917) |
- |
- |
(7,917) |
- |
(7,917) |
||||||||
|
Distributions to noncontrolling interests |
- |
- |
- |
- |
- |
- |
(420) |
(420) |
||||||||
|
Balance at March 31, 2023 |
$ |
- |
$ |
436,538 |
$ |
719,495 |
$ |
(119,409) |
$ |
(127,465) |
$ |
909,159 |
$ |
59,285 |
968,444 |
|
|
Balance at January 1, 2024 |
$ |
- |
$ |
436,538 |
$ |
789,842 |
$ |
(130,489) |
$ |
(106,323) |
$ |
989,568 |
$ |
78,695 |
$ |
1,068,263 |
|
Net income |
- |
- |
29,455 |
- |
- |
29,455 |
7 |
29,462 |
||||||||
|
Other comprehensive loss |
- |
- |
- |
- |
(2,952) |
(2,952) |
- |
(2,952) |
||||||||
|
Issuance of 43,054 common shares under |
- |
- |
1,462 |
699 |
- |
2,161 |
- |
2,161 |
||||||||
|
stock based compensation awards |
||||||||||||||||
|
Common stock dividend ($0.34 per share) |
- |
- |
(8,346) |
- |
- |
(8,346) |
- |
(8,346) |
||||||||
|
Distributions to noncontrolling interests |
- |
- |
- |
- |
- |
- |
(1,119) |
(1,119) |
||||||||
|
Liquidation of noncontrolling interests |
- |
- |
- |
- |
- |
- |
(5,920) |
(5,920) |
||||||||
|
Balance at March 31, 2024 |
$ |
- |
$ |
436,538 |
$ |
812,413 |
$ |
(129,790) |
$ |
(109,275) |
$ |
1,009,886 |
$ |
71,663 |
$ |
1,081,549 |
The accompanying notes are a part of the unaudited consolidated financial statements.
5
1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - Dollars in thousands)
|
Three Months Ended March 31, |
||||
|
2024 |
2023 |
|||
|
Operating activities: |
||||
|
Net income |
$ |
29,462 |
$ |
31,131 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||
|
Provision for credit losses |
6,595 |
3,049 |
||
|
Depreciation of premises and equipment |
1,032 |
1,146 |
||
|
Depreciation of equipment owned and leased to others |
1,288 |
2,022 |
||
|
Stock-based compensation |
1,310 |
1,121 |
||
|
Amortization of investment securities premiums and accretion of discounts, net |
767 |
855 |
||
|
Amortization of mortgage servicing rights |
184 |
221 |
||
|
Amortization of right of use assets |
759 |
778 |
||
|
Deferred income taxes |
2,379 |
(993) |
||
|
Losses on investment securities available-for-sale |
- |
44 |
||
|
Originations of loans held for sale, net of principal collected |
(10,727) |
(8,862) |
||
|
Proceeds from the sales of loans held for sale |
9,652 |
10,934 |
||
|
Net gain on sale of loans held for sale |
(364) |
(226) |
||
|
Net gain on sale of other real estate and repossessions |
(96) |
(39) |
||
|
Change in interest receivable |
(453) |
(125) |
||
|
Change in interest payable |
2,695 |
7,599 |
||
|
Change in other assets |
(1,725) |
(5,422) |
||
|
Change in other liabilities |
(399) |
3,987 |
||
|
Other |
(399) |
(367) |
||
|
Net change in operating activities |
41,960 |
46,853 |
||
|
Investing activities: |
||||
|
Proceeds from sales of investment securities available-for-sale |
- |
64,928 |
||
|
Proceeds from maturities and paydowns of investment securities available-for-sale |
55,723 |
25,341 |
||
|
Purchases of investment securities available-for-sale |
(20,925) |
(3,000) |
||
|
Net change in partnership investments |
(10,259) |
(5,274) |
||
|
Loans sold or participated to others |
22,276 |
16,026 |
||
|
Proceeds from principal payments on direct finance leases |
17,810 |
13,043 |
||
|
Net change in loans and leases |
(91,045) |
(134,913) |
||
|
Net change in equipment owned under operating leases |
2,387 |
(405) |
||
|
Purchases of premises and equipment |
(575) |
(408) |
||
|
Proceeds from disposal of premises and equipment |
13 |
2 |
||
|
Proceeds from sales of other real estate and repossessions |
905 |
391 |
||
|
Net change in investing activities |
(23,690) |
(24,269) |
6
|
Financing activities: |
||||
|
Net change in demand deposits and savings accounts |
(46,245) |
(397,447) |
||
|
Net change in time deposits |
62,975 |
270,646 |
||
|
Net change in short-term borrowings |
(62,779) |
87,507 |
||
|
Payments on long-term debt |
(11,264) |
(2,727) |
||
|
Acquisition of treasury stock |
- |
(766) |
||
|
Net (distributions to) contributions from noncontrolling interests |
(1,119) |
(420) |
||
|
Cash dividends paid on common stock |
(8,592) |
(8,137) |
||
|
Net change in financing activities |
(67,024) |
(51,344) |
||
|
Net change in cash and cash equivalents |
(48,754) |
(28,760) |
||
|
Cash and cash equivalents, beginning of year |
129,668 |
122,797 |
||
|
Cash and cash equivalents, end of period |
$ |
80,914 |
$ |
94,037 |
|
Supplemental Information: |
||||
|
Non-cash transactions: |
||||
|
Loans transferred to other real estate and repossessed assets |
$ |
412 |
$ |
484 |
|
Common stock matching contribution to Employee Stock Ownership and Profit Sharing Plan |
1,153 |
1,753 |
||
|
Right of use assets obtained in exchange for lease obligations |
535 |
2,495 |
||
|
Liquidation of noncontrolling interests |
5,920 |
- |
||
|
The accompanying notes are a part of the unaudited consolidated financial statements. |
7
1ST SOURCE CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Accounting Policies
1st Source Corporation is a bank holding company headquartered in South Bend, Indiana that provides, through its subsidiaries (collectively referred to as "1st Source" or "the Company"), a broad array of financial products and services.
Basis of Presentation - The accompanying unaudited consolidated financial statements reflect all adjustments (all of which are normal and recurring in nature) which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income (loss), changes in shareholders' equity, and cash flows for the periods presented. These unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been omitted.
The Notes to the Consolidated Financial Statements appearing in 1st Source Corporation's Annual Report on Form 10-K(2023 Annual Report), which include descriptions of significant accounting policies, should be read in conjunction with these interim financial statements. The Consolidated Statement of Financial Condition at December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation.
Use of Estimates in the Preparation of Financial Statements - Financial statements prepared in accordance with GAAP require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates.
Loans and Leases - Loans are stated at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. Interest income is accrued as earned based on unpaid principal balances. Origination fees and direct loan and lease origination costs are deferred, and the net amount amortized to interest income over the estimated life of the related loan or lease. Loan commitment fees are deferred and amortized into other income over the commitment period.
Direct financing leases are carried at the aggregate of lease payments plus estimated residual value of the leased property, net of unamortized deferred lease origination fees and costs and unearned income. Only those costs incurred as a direct result of closing a lease transaction are capitalized and all other initial direct costs are expensed immediately. Interest income on direct financing leases is recognized over the term of the lease to achieve a constant periodic rate of return on the outstanding investment.
Accrued interest is included in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses. The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower's credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection. Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure. When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the allowance for loan and lease losses. However, in some cases, the Company may elect to continue the accrual of interest when the net realizable value of collateral is sufficient to cover the principal and accrued interest. When a loan or lease is classified as nonaccrual and the future collectability of the recorded loan or lease balance is doubtful, collections on interest and principal are applied as a reduction to principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, which is typically evidenced by a sustained repayment performance of at least six months.
Occasionally, the Company modifies loans and leases to borrowers in financial distress (typically denoted by internal credit quality graded "substandard" or worse) by providing term extensions, other-than-insignificant payment delays, or interest rate reductions. In some cases, a combination of modifications are made to the same loan or lease. These modifications typically result from the Company's loss mitigation activities. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance for loan and lease losses estimate or a charge-off to the allowance for loan and lease losses.
8
Note 2 - Recent Accounting Pronouncements
Investments-EquityMethod and Joint Ventures:In March 2023, the Financial Accounting Standards Board (FASB) issued
Accounting Standards (ASU) No. 2023-02"Investments Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This guidance is effective for public business entities for fiscal years including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted in any interim period. The Company adopted ASU 2023-02 on January 1, 2024, and it had no impact on its accounting and disclosures.
Fair Value Measurements:In June 2022, the FASB issued ASU No. 2022-03"Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This guidance is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. The Company adopted ASU 2022-03 on January 1, 2024, and it had no impact on its accounting and disclosures.
Income Taxes:In December 2023, the FASB issued ASU No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." Among other things, these amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate.) The amendments also require that all entities disclose on an annual basis the following information about income taxes paid: (1) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and (2) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received.) This guidance is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company is continuing to assess ASU 2023-09 and its impact on its accounting and disclosures.
Segment Reporting: In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all periods presented in the financial statements. The Company is continuing to assess ASU 2023-07 and its impact on its accounting and disclosures.
9
Note 3 - Investment Securities Available-For-Sale
The following table shows investment securities available-for-sale.
|
Amortized Cost |
Gross |
Gross |
Fair Value |
|||||
|
(Dollars in thousands) |
Unrealized Gains |
Unrealized Losses |
||||||
|
March 31, 2024 |
||||||||
|
U.S. Treasury and Federal agencies securities |
$ |
958,300 |
$ |
13 |
$ |
(55,428) |
$ |
902,885 |
|
U.S. States and political subdivisions securities |
92,875 |
223 |
(5,449) |
87,649 |
||||
|
Mortgage-backed securities - Federal agencies |
667,973 |
64 |
(82,900) |
585,137 |
||||
|
Corporate debt securities |
7,044 |
- |
(64) |
6,980 |
||||
|
Foreign government and other securities |
600 |
- |
(7) |
593 |
||||
|
Total debt securities available-for-sale |
$ |
1,726,792 |
$ |
300 |
$ |
(143,848) |
$ |
1,583,244 |
|
December 31, 2023 |
||||||||
|
U.S. Treasury and Federal agencies securities |
$ |
979,530 |
$ |
178 |
$ |
(56,842) |
$ |
922,866 |
|
U.S. States and political subdivisions securities |
97,522 |
508 |
(5,466) |
92,564 |
||||
|
Mortgage-backed securities - Federal agencies |
676,257 |
476 |
(78,481) |
598,252 |
||||
|
Corporate debt securities |
8,448 |
- |
(119) |
8,329 |
||||
|
Foreign government and other securities |
600 |
- |
(11) |
589 |
||||
|
Total debt securities available-for-sale |
$ |
1,762,357 |
$ |
1,162 |
$ |
(140,919) |
$ |
1,622,600 |
Amortized cost excludes accrued interest receivable which is included in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition. At March 31, 2024 and December 31, 2023, accrued interest receivable on investment securities available-for-sale was $4.50 million and $4.60 million, respectively.
At March 31, 2024 and December 31, 2023, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs).
The following table shows the contractual maturities of investments in debt securities available-for-sale at March 31, 2024. Expected maturities will differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|
(Dollars in thousands) |
Amortized Cost |
Fair Value |
||
|
Due in one year or less |
$ |
298,957 |
$ |
292,127 |
|
Due after one year through five years |
727,883 |
674,372 |
||
|
Due after five years through ten years |
13,151 |
12,729 |
||
|
Due after ten years |
18,828 |
18,879 |
||
|
Mortgage-backed securities |
667,973 |
585,137 |
||
|
Total debt securities available-for-sale |
$ |
1,726,792 |
$ |
1,583,244 |
10
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1st Source Corporation published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 13:29:23 UTC.