DEF 14A of 1ST Source Corp, Mar 14, 2025

DEF 14A of 1ST Source Corp

Filed Mar 14, 2025 · FY20240000034782-25-000038

Open on EDGAR

  1. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    PROPOSAL NUMBER 1: ELECTION OF DIRECTORS The Board of Directors is divided into three (3) groups of directors whose terms expire at different times. At the 2025 Annual Meeting, four directors are to be elected for terms expiring in 2028 or until the qualification and election of a successor. In accordance with the Indiana Business Corporation Law, directors will be elected by a plurality of the votes cast, which means that the director nominees who receive the highest number of votes “for” their election are elected. Instructions to withhold authority will result in a nominee receiving fewer votes but will not count as votes “against” the nominee. Abstentions and shares not voted by brokers are not considered “votes cast.” Our bylaws provide that a nominee for reelection who fails to receive a majority of the votes cast shall tender his or her resignation for the Board’s consideration. The Board of Directors, in its sole discretion, will then decide whether or not it is appropriate to accept the resignation. The following information is submitted for each nominee as well as each director and each non-director executive officer continuing in office. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF EACH NOMINEE. The four director nominees named herein are incumbent directors and the Board has determined that the continued service of the incumbent nominees and of the remaining incumbent directors whose terms expire in later years is in the best interests of the Company. The Board has also determined that all directors have demonstrated the ability and willingness to participate in and contribute to the Board and its committee activities. Each is actively involved in civic, community and business affairs. Such involvement is noted below with a representative sample of the boards or organizations with which they are involved.

  2. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    | DIRECTOR NOMINEES | | | | Terms Expiring in April, 2025 (April, 2028 if reelected) | | | | | | Name: John F. Affleck-Graves Age: 74 Principal Occupation(1): Professor Emeritus, University of Notre Dame; prior thereto, Chaired Professor of Finance and Executive Vice President and Chief Financial Officer, University of Notre Dame; former director, Hi-Crush, Inc. Year In Which Directorship Assumed: 2019 Beneficial Ownership of Equity Securities(2) Common Stock: 17,736 % of Class: • | | ● | Mr. Affleck-Graves served as Executive Vice President and Chief Financial Officer of the University of Notre Dame from 2004 to June 2019. Prior to that he had served as Vice President and Associate Provost for the University and served on the Notre Dame faculty from 1986 to 2000 (the final three years as Chairman of the Department of Finance and Business Economics). He spent one year at Florida State University as the Patty Hill Eminent Scholar in Finance and returned to Notre Dame in 2001. | | | ● | Also serves as a director of Aunalytics, Inc., a provider of managed data center, data analysis, cloud and other technology related services. | | | ● | Author of over 50 finance research articles including several in the leading finance and accounting academic journals. | | | ● | Contributes expertise in financial analysis, statistical analysis and Economic Value Added analysis. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Former chair of the Regional Development Authority for the north central region of Indiana. | | | ● | Bachelor’s and Master’s degrees in finance and Doctoral degree in mathematical statistics from the University of Cape Town. | | | | | Name: Daniel B. Fitzpatrick Age: 67 Principal Occupation(1): Chairman, President and Chief Executive Officer, Quality Dining, Inc. (quick service and casual dining restaurant operator) Year In Which Directorship Assumed: 1995 Beneficial Ownership of Equity Securities(2) Common Stock: 48,792 % of Class: • | | ● | 43 years of business experience as the founder, Chairman, President and Chief Executive Officer of Quality Dining, Inc. As head of a locally headquartered, multi-concept restaurant company with operations located in three states, Mr. Fitzpatrick contributes long-term perspective, current knowledge, and extensive contacts in communities in which the Company does business. | | | ● | Expertise in the restaurant industry and general knowledge of food services retailing. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Serves as Lead Director. | | | ● | Serves as Past Chairman of the Holy Cross College Board of Trustees and is a board member for St. Joseph the Protector Foundation, both in South Bend. Mr. Fitzpatrick has served with nearly two dozen other community organizations. | | | ● | B.A. in Business Administration from the University of Toledo. | |

  3. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    | | | Name: Christopher J. Murphy IV(4) Age: 55 Principal Occupation(1): Owner and Chief Executive Officer, Catharsis Productions, LLC (training programs) Year In Which Directorship Assumed: 2011 Beneficial Ownership of Equity Securities(2) Common Stock: 148,324 % of Class: • | | ● | 25 years of business experience as co-founder, owner and Chief Executive Officer of Catharsis Productions, LLC. | | | ● | Contributes general business knowledge, long-term perspective and expertise in entrepreneurship, government contracting and creative marketing and development expertise. | | | ● | Although not eligible to serve on the Audit Committee, meets the criteria to be an audit committee financial expert under SEC guidelines. | | | ● | Served as co-chairperson of MEN (Men Endorsing Non-Violence) Illinois state subcommittee and served as board member for Interaction (non-profit organization.) | | | ● | B.A. in Liberal Studies, Communications and Theatre and an M.B.A. from the University of Notre Dame. | | | | | Name: Isaac P. Torres Age: 57 Principal Occupation(1): President and Chief Executive Officer, InterCambio Express, Inc. (Internet-based money transfer service) Year In Which Directorship Assumed: 2022 Beneficial Ownership of Equity Securities(2) Common Stock: 8,490 % of Class: • | | ● | Over 25 years of experience in an Internet-based industry as founder, President and Chief Executive Officer of InterCambio Express, Inc. InterCambio Express has its USA headquarters in Elkhart, Indiana and a Mexican subsidiary located in Puebla, Mexico. Prior to founding InterCambio Express, Inc., Mr. Torres served as Chief Financial Officer of the German transnational company Hoechst AG (now Sanofi-Aventis) and as a senior auditor for Price Waterhouse Coopers. Mr. Torres contributes long-term perspective, current knowledge and extensive contacts in the state in which the Company is located as well as internationally. | | | ● | Expertise in Internet-based industries and international payments systems as well as extensive skills in finance, accounting and international business. | | | ● | Attained CAMS (Certified Anti-Money Laundering Specialist) certification. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Active in the community serving on boards including the Indiana University Board of Trustees, Community Foundation of Elkhart County, Women’s Care Center, and RISE-Moxie. | | | ● | Bachelor’s degree in Accounting from The National Autonomous University of Mexico - UNAM (Universidad Nacional Autónoma de Mexico) and an M.B.A. from Indiana University. | |

  4. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    | OTHER INCUMBENT DIRECTORS | | | | Terms Expiring in April, 2026 | | | | | | Name: Christopher J. Murphy III Age: 78 Principal Occupation(1): Chairman of the Board and Chief Executive Officer, 1st Source Corporation (since 2024); prior thereto, Chairman of the Board, President, and Chief Executive Officer. Also, Chairman of the Board, 1st Source Bank (since 2022); prior thereto, Chairman of the Board, President, and Chief Executive Officer. Year In Which Directorship Assumed: 1972 Beneficial Ownership of Equity Securities(2)(3) Common Stock: 4,353,315 % of Class: 17.22% | | ● | Over 52 years of banking and business experience, including serving as a Director and/or President and Chief Executive Officer of both 1st Source Corporation or 1st Source Bank for 52 years. Mr. Murphy contributes long-term perspective, current knowledge, and extensive contacts in all communities in which the Company does business. Prior to 1st Source, Mr. Murphy worked at Citibank, and while in college, for the Office of the Comptroller of the Currency, U.S. Department of the Treasury. | | | ● | Extensive knowledge of 1st Source and 1st Source Bank and general knowledge in the finance/banking industry, investments, insurance, venture capital, and real estate investments. | | | ● | Serves as a director of Aunalytics, Inc., representing 1st Source’s investment in this provider of managed data center, data analysis, cloud and other technology related services. | | | ● | Serves or has served on numerous local, regional and national for profit and not-for-profit boards including those of the Federal Reserve Bank of Chicago, the Medical Education Foundation (serves as the citizen’s advisory board of Indiana University Medical School at Notre Dame), and the Indiana State Chamber of Commerce (emeritus). Previously served on the Board and Audit Committee of Beacon Health System, as Chairman of the Board of Regents of the Indiana Academy, and on the board of the Indiana Commission for Higher Education. | | | ● | B.A. in Government from the University of Notre Dame, a J.D. from the University of Virginia Law School and an M.B.A. from the Harvard University School of Business. | | | | | Name: Timothy K. Ozark Age: 75 Principal Occupation(1): Chairman, TKO Finance Corporation (lender to financial services and manufacturing companies); formerly Chairman and Chief Executive Officer, Aim Financial Corporation (mezzanine funding and leasing) Year In Which Directorship Assumed: 1999 Beneficial Ownership of Equity Securities(2) Common Stock: 47,705 % of Class: • | | ● | 45 years of financial experience, including 33 years as founder, Chairman and Chief Executive Officer of Aim Financial Corporation, a mezzanine lender to privately held companies. Mr. Ozark also is President and CEO of TKO Finance Corporation, a lender to financial services and manufacturing companies. Mr. Ozark is also Lead Director of White Lodging Corporation, one of America’s leading hotel developers. From 1980 to 1983, Mr. Ozark served as Executive Vice President of Great American Management Services, Inc. a wholly owned subsidiary of American Financial Corporation of Cincinnati, Ohio which specialized in equipment leasing and lending. From 1984 to 1992, Mr. Ozark served as CEO and President of Meridian Leasing Corporation, one of North America’s largest privately held leasing companies. | | | ● | Expertise in mezzanine funding, lending-leasing and general knowledge of business, finance, and real estate investing. Contributes long-term perspective in all of these areas. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Serves as a member of the Visiting Committee to the Division of Biological Sciences and the Pritzker School of Medicine for The University of Chicago and on the board of directors for a number of privately held companies. | | | ● | B.S. in Business Administration from the University of Minnesota and an M.B.A. from St. Cloud State University. | | | ● | Served as an officer in the United States Marine Corps from 1968-1974. | |

  5. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    | | | Name: Todd F. Schurz Age: 64 Principal Occupation(1): Senior Advisor and former President and Chief Executive Officer, Schurz Communications, Inc. (communications, broadband and cloud services) Year In Which Directorship Assumed: 2020 Beneficial Ownership of Equity Securities(2) Common Stock: 11,890 % of Class: • | | ● | 33 years of financial experience, including 15 years as President and Chief Executive Officer and 3 years as President and Chief Operating Officer of Schurz Communications, Inc. (SCI), a diversified, privately-owned communications company, with six broadband companies and managed cloud services companies. SCI has a presence in 13 states, including Indiana and Michigan, as well as Great Britain and Romania. Prior to joining SCI, Mr. Schurz was President and Editor of Associated Desert Shoppers in Palm Desert, California from 1991 to 1995. From 1995 to 2000, he was President, Editor and Publisher of the South Bend Tribune. He then served as SCI’s Vice President of Technology from 2000 to 2005 and as President and General Manager of WSBT Television from 2002 to 2005 before becoming President and Chief Operating Officer of SCI in 2005. | | | ● | Serves as an independent director of Herschend Enterprises, a themed entertainment company. Mr. Schurz is also an independent board advisor to EBSCO Industries and serves on the University of Notre Dame College of Arts & Letters Advisory Council. | | | ● | Previously served on the boards of Mutual Insurance Company Limited, News Media Alliance, American Press Institute (API), and the CBS Television Network Affiliates Association. Mr. Schurz is also a former Chair of the Memorial Hospital Board, Beacon Health Foundation, the Chamber of Commerce of St. Joseph County, Hoosier State Press Association Foundation, the Poynter Institute’s National Advisory Board, and the coordinating committee for the Regional Approach to Progress. | | | ● | Expertise in media, marketing and communications and general knowledge of business and finance. Contributes long-term perspective in all of these areas. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | B.A. in History and Economics from Brown University and an M.B.A. from the Wharton School at the University of Pennsylvania. | | | | | Name: Andrea G. Short Age: 62 Principal Occupation(1): President, 1st Source Corporation (since 2024); prior thereto, Executive Vice President (since 2022); and Executive Vice President, Treasurer and Chief Financial Officer (since 2013). Also, President and Chief Executive Officer, 1st Source Bank (since 2022); President (since 2021); and Executive Vice President, Treasurer and Chief Financial Officer (since 2013) Year in Which Directorship Assumed: 2023 Beneficial Ownership of Equity Securities(2) Common Stock: 81,241 % of Class: • | | ● | Over 40 years of banking and business experience, including serving as a Director of 1st Source Corporation and 1st Source Bank and/or President and Chief Executive Officer of 1st Source Bank, President, Treasurer and Chief Financial Officer of both 1st Source Corporation or 1st Source Bank and other positions for 26 years. Ms. Short contributes long-term perspective, current knowledge, and contacts in all communities in which the Company does business. Prior to 1st Source, Ms. Short worked at Crowe LLP and First of America Bank (now PNC). | | | ● | Extensive knowledge of 1st Source and 1st Source Bank and general knowledge in the finance/banking industry. | | | ● | Serves on numerous boards including those of the Medical Education Foundation and the South Bend Elkhart Regional Partnership. | | | ● | B.A. in Business from Alma College and a graduate of the Harvard University, Graduate School of Business Administration, Advanced Management Program, the Northwestern University Business School's Senior Marketing Program and the University of Chicago’s Booth School of Business Chicago Management Program. | |

  6. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    | Terms Expiring in April, 2027 | | | | | | Name: Melody Birmingham Age: 53 Principal Occupation(1): Executive Vice President and Group President, NiSource Utilities (natural gas and electric distribution); prior thereto, Executive Vice President, Chief Innovation Officer, NiSource Inc.; Senior Vice President, Chief Administrative Officer, Duke Energy; and Senior Vice President, Chief Procurement Officer, Duke Energy. Year In Which Directorship Assumed: 2018 Beneficial Ownership of Equity Securities(2) Common Stock: 7,734 % of Class: • | | ● | Over 31 years of management and executive experience in the electric, natural gas and automotive manufacturing industries. As EVP NiSource Inc., and Group President, NiSource Utilities. Ms. Birmingham leads NiSource’s electric generation fleet and is driving the long-term sustainability of its gas segment. Additionally, Ms. Birmingham leads the profit and loss, strategy, planning, operations, maintenance, emergency response, regulatory, legislative and public affairs areas for the six NiSource Operating companies. | | | ● | Expertise in managing field and plant operations, customer experience, design engineering, work management, supply chain operations, project management, information technology, data and analytics, enterprise security, real estate, facilities as well as managing rates and regulatory affairs, legislative affairs and public relations. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Member of the Executive Leadership Council, an organization committed to increasing the number of global Black executives. Serves on the board of directors for the United Way of Central Ohio and also on the board of directors for Columbus Symphony and Orchestra. Ms. Birmingham had previously served on the board of trustees for Marian University, and also the board of directors for American Association of Blacks in Energy, Indiana Electric Association, Indiana Chamber of Commerce, Special Olympics Indiana, Central Indiana Corporate Partnership and United Way of Indiana. | | | ● | B.S. in Organizational Leadership and Supervision from Purdue University, an M.B.A. from Strayer University, an Honorary Doctorate in Humane Letters from Saint Mary of the Woods College and successful completion of the Advanced Management Program at Harvard University. | | | | | Name: Tracy D. Graham Age: 51 Principal Occupation(1): Managing Principal of Graham-Allen Partners, LLC, a private investment company focused on building enterprise data and technology businesses, and Chief Executive Officer of Aunalytics, Inc, (a provider of enterprise cloud, analytics, and other technology related services); Director and Chairman of the Board of Directors, LCI Industries Year In Which Directorship Assumed: 2021 Beneficial Ownership of Equity Securities(2) Common Stock: 11,678 % of Class: • | | ● | 29 years of experience in the information technology industry as entrepreneur and executive. Mr. Graham is the Founder and Managing Principal of Graham-Allen Partners, a private equity firm that specializes in investing in, and building, technology and technology-enabled companies. He leverages his long history of successfully acquiring and operating businesses to provide strategic and operational support to a growing portfolio of small and middle-market companies. He is currently focused on leveraging analytics and artificial intelligence to help companies evolve via digital transformation. Prior to Graham-Allen Partners, Mr. Graham co-founded GramTel, Inc. (a managed data center provider). Prior to founding GramTel, he founded Internet Services Management Group, where he led the company to become the second largest privately held Internet service provider in the United States (acquiring and integrating 23 companies). Mr. Graham contributes long-term perspective, current knowledge and extensive contacts in the state in which the Company is located. | | | ● | Unique expertise in enterprise technology, cyber security, cloud, data center and Internet services and data analytics and artificial intelligence. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Member of 1st Source Bank Board of Directors since 2012. Member of 1st Source Corporation Board of Directors from 2012 to 2014. | | | ● | Currently serves on the board of LCI Industries, and is a member of the Board of Trustees of the University of Notre Dame. | | | ● | Bachelor of Arts in Sociology from the University of Notre Dame and attended the Indiana University Graduate School of Education. | |

  7. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    | | | Name: Mark D. Schwabero Age: 72 Principal Occupation(1): Retired Chairman, Chief Executive Officer and Director, Brunswick Corporation (2018); Director and Chairman of the Board of Directors, Methode Electronics, Inc. Year In Which Directorship Assumed: 2004 Beneficial Ownership of Equity Securities(2) Common Stock: 26,873 % of Class: • | | ● | Nearly 43 years of total experience in the automotive, marine and commercial vehicle/manufacturing industries, the last 33 of which as a senior executive. Mr. Schwabero had been with Brunswick Corporation for the 15 years preceding his retirement in 2018. He became Chairman and Chief Executive Officer in February 2016 after having served as President and Chief Operating Officer of Brunswick Corporation and prior thereto as President of Mercury Marine. | | | ● | Detailed knowledge of the transportation, recreational and marine industries as well as long-term perspective in manufacturing and general management expertise. Public company experience. | | | ● | Named by CEO Today Magazine as one of the top 100 CEOs in America for U.S. based companies for 2018. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Former director of National Exchange Bank & Trust. | | | ● | Serves on the Advisory Committee of The Ohio State University Center for Automotive Research. | | | ● | Past Chairman of the National Marine Manufacturers Association. | | | ● | B.S. and M.S. in Industrial and Systems Engineering from The Ohio State University. | | | | | Name: Ronda Shrewsbury Age: 59 Principal Occupation(1): President and Chief Executive Officer, RealAmerica, LLC (real estate development and property management) Year In Which Directorship Assumed: 2021 Beneficial Ownership of Equity Securities(2) Common Stock: 10,378 % of Class: • | | ● | Over 33 years of experience in multifamily, commercial, land and office development serving as President of RealAmerica Companies for 30 years. As the primary owner and founder, Ms. Shrewsbury provides strategic direction and vision for four Women Business Enterprise-certified, vertically integrated companies. She holds an active Indiana Principal Brokers License and seeks opportunities to live out her passion of providing quality, supportive housing. Ms. Shrewsbury contributes long-term perspective, current knowledge and extensive contacts in the state in which the Company is located. | | | ● | Extensive knowledge of real estate development, design, construction, and management of affordable, market-rate, commercial, senior living, and self-storage properties. Expertise in tax credit financing, historic tax credits, HUD and other financing products for new construction, adaptive reuse, historic rehab and preservation developments. | | | ● | Qualifies as an audit committee financial expert under SEC guidelines. | | | ● | Founder of Legacy25, a non-profit organization dedicated to providing support and services for affordable housing communities. Serves as Past President and founding member of the Indiana Affordable Housing Council and Chair of the Governmental Affairs Committee. | | | ● | Serves as immediate Past Chair of the Board of the Indianapolis Zoo, and other philanthropic boards. Her past service includes multiple leadership roles in the Young Presidents Organization including as Chapter Chair in Indiana and Illinois, Central U.S. Regional Board and International Forum Committee and on the board of the Near North Development Corporation. | | | ● | B.S. in Finance/Real Estate from Indiana University School of Business. | |

  8. PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

    | | | | Beneficial Ownership of Equity Securities(2) | | | Name | Age | Title | Common Stock | % of Class | | Executive Officers of the Company (Non-Directors) | | | | | | Brett A. Bauer | 53 | Senior Vice President, Treasurer and Chief Financial Officer, 1st Source Corporation and 1st Source Bank (since 2021); prior thereto, Vice President and Chief Investment Officer of the Funds Management Division of 1st Source Bank (since 2012) | 23,735 | • | | Jeffrey L. Buhr | 65 | Executive Vice President and Chief Credit Officer, 1st Source Bank (since 2014) | 72,820 | • | | John B. Griffith | 67 | Executive Vice President, Chief Risk Officer, General Counsel and Secretary, 1st Source Corporation and 1st Source Bank (since 2011) | 73,353 | • | | All Directors and Executive Officers as a Group (15 persons) | | | 4,944,064 | 19.55% | | • Represents holdings of less than 1%. | | | | | | (1)The principal occupation represents the employment for the last five years for each of the named directors and executive officers. Directorships presently held or held within the last five years in other corporations with publicly registered securities are also disclosed. | | | | | | (2)Based on information furnished by the directors and executive officers as of February 13, 2025. | | | | | | (3)See footnote (2) to the Voting Securities and Principal Holders Thereof table above. | | | | | | (4)Mr. Murphy IV is Mr. and Mrs. Murphy III’s son. | | | | |

  9. Company Performance

    Company Performance The Committee evaluated the Company’s 2024 performance during early 2025. The Company met many of its quantitative and qualitative objectives for 2024 despite a variety of economic challenges and volatility. Highlights included: •The Company achieved net income of $132.6 million in 2024. This was a 6.2% increase from 2023 and was the highest achieved in the Company’s history. •The Company earned $5.36 per share which was a 6.6% increase from 2023. •The Company continued 37 years of dividend increases. •The Company achieved a return on average assets of 1.52%. This placed it in the top 10% of all publicly-traded $3 to $10 billion peer companies as of the date of its annual review period. •The Company grew its average loans outstanding to $6.60 billion, a 6.4% growth over the prior year. •The Company had net loan losses of 0.09% of average net loans and leases outstanding. •The Company ended the year with a nonperforming assets ratio of 0.46% and a reserve for loan and lease losses of 2.27%. •The Company continued to exceed the minimum regulatory requirements for Well Capitalized banks. •The Company was one of 18 banks to be included in the Keefe, Bruyette & Woods, Inc. (KBW) Bank Honor Roll, which consists of banking institutions that have had 10 consecutive years of increased earnings per share. •The U.S. Small Business Administration (SBA), Indiana District recognized the Company with a Gold Level Award in the Community Lender category for the twelfth consecutive year. The award honors 1st Source Bank for delivering the greatest number of SBA loans in Indiana in 2024 among Community Banks with less than $10 billion in assets. •Monitor Magazine, serving the equipment financing industry, listed the Company as one of the “Best Companies in Equipment Financing” for 2023-2024. It ranked the Company as #35 among the Top 100 Largest Equipment Finance/Leasing companies in the U.S. and as #20 among the Top 50 Banks in Equipment Finance. •The Company was named by Forbes’ as one of America’s Best Banks, ranking #14 in the country and the only bank in Indiana to be in the top 15. Bank Director Magazine ranked the Company #26 of 123 banks between $5 billion and $50 billion in assets on their Bank Performance Scorecard. •The Company was named to the Forbes’ Best in State Banks and Best Employers for New Graduates lists and the US News & World Report’s “Best Company to Work For in the Midwest” 2024 list. •The Company maintained its #1 deposit share in its 16 contiguous county market. •The Company continued development of succession management in a variety of positions. •The Company achieved 14.65% of diverse exempt colleagues as a % of total exempt colleagues as of year-end. •All of the Company’s current employees have completed a required series of facilitated training sessions on unconscious bias. •The Company opened a branch in Niles, Michigan. To understand the Company’s performance in relative terms the Committee compared it to a number of other peer groups variously reflecting the Company’s geographic markets, its business line focus, and its size and complexity. These include:

  10. Company Performance

    The Committee compared the Company’s performance for the first three quarters of 2024 to its selected peer groups using ratios including those shown below. The Company continued to show consistent financial performance equal to or superior to most peers while maintaining stable credit quality and a strongly reserved position. Peer group amounts shown are the median in the peer group and the Company’s ranking in the group is set forth below the peer group metric, with a 1 ranking indicating the best result:

  11. Company Performance

    | | Midwest Peer Group (17 members) Sept 2024 YTD Median | National Commercial & Industrial Concentration Peer Group (18 members) Sept 2024 YTD Median | National $3 to $10 Billion Assets Peer Group (190 members) Sept 2024 YTD Median(1) | 1st Source Sept 2024 YTD | 1st Source Dec 2024 YTD | | Return on average total assets | 1.25% 3 | 1.07% 2 | 0.91% 23 | 1.55% | 1.52% | | Return on average common equity | 11.07% 3 | 10.78% 5 | 9.61% 43 | 13.02% | 12.54% | | Net income growth | –4.91% 7 | –2.01% 3 | –6.29% 59 | 4.86% | 6.16% | | EPS Growth | –5.45% 6 of 17 | –2.92% 2 of 18 | –7.34% 27 of 103 | 5.68% | 6.56% | | Net interest margin on a tax-equivalent basis | 3.44% 7 | 3.37% 4 | 3.12% 51 | 3.59% | 3.64% | | Net charge-offs to average net loans and leases outstanding | 0.13% 7 | 0.14% 8 | 0.06% 111 | 0.10% | 0.09% | | Nonaccrual loans and leases, restructured loans and other real estate to loans and leases and other real estate(2) | 0.82% 14 | 0.63% 18 | 0.61% 147 | 1.12% | 1.15% | | Allowance for loan and lease losses to net loans and leases outstanding | 1.25% 1 | 1.24% 1 | 1.16% 5 | 2.30% | 2.27% | | Noninterest income to average assets (3) | 0.87% 7 | 0.87% 7 | 0.72% 50 | 0.95% | 0.95% | | Noninterest expense to average assets (3) | 2.27% 7 | 2.41% 4 | 2.31% 78 | 2.24% | 2.28% | | Efficiency ratio (3) | 55.24% 5 | 59.88% 1 | 64.42% 20 | 51.51% | 51.90% | | (1) Computed based on the companies included in the September 2024 Bank Holding Company Performance Report. | | | | | | | (2) This is a ratio shown on the Bank Holding Company Performance Report selected to facilitate peer comparisons and different from the nonperforming assets ratio mentioned in the bullet points at the beginning of this section. | | | | | | | (3) Noninterest income and expense computed net of leased equipment depreciation. | | | | | |

  12. Company Performance

    The Committee also compared the Company’s total return over the past five years with the total return of the publicly-traded members of the Midwest and National Commercial & Industrial Concentration Peer Groups as well as the group of publicly-traded banking companies in Illinois, Indiana, Michigan, Ohio, and Wisconsin and all NASDAQ traded companies shown in the Annual Report: * Assumes $100 invested on December 31, 2019, in 1st Source Corporation common stock, NASDAQ market index, banking companies in Illinois, Indiana, Michigan, Ohio, and Wisconsin, and the In-Market, Midwest, and National Commercial & Industrial Concentration peer group. ** The Morningstar Weighted NASDAQ Index Return is calculated using all companies which trade on the NASDAQ Stock Market. It includes both domestic and foreign companies. The index is weighted by the then current shares outstanding and assumes dividends reinvested. The return is calculated on a monthly basis. *** The peer group is a market-capitalization-weighted stock index of 33 banking companies in Illinois, Indiana, Michigan, Ohio, and Wisconsin. NOTE: Total return assumes reinvestment of dividends.

  13. Compensation Consultants

    Compensation Consultants As noted above, the Committee engaged Blanchard Consulting Group in late 2021. A senior management committee interviewed a number of compensation consulting firms and then reviewed the results of those interviews with the Chairman of the Committee. The Chairman then discussed these results with the entire Committee, which approved the Chairman engaging Blanchard on its behalf. The scope of Blanchard’s engagement was to evaluate the Committee’s processes and information, provide advice concerning the competitiveness of the Company’s compensation for NEOs and other members of senior management and recommend improvements in compensation practices. In this regard, Blanchard performed the following: •Validated the process and information the Committee uses to evaluate base compensation and short and long-term cash and equity incentives of the CEO and CFO as to their competitiveness and appropriateness. •Similarly collected and validated comparative data for the then next four highest paid officers. •Constructed the following peer comparison groups that in some cases included similar or the same companies that 1st Source traditionally includes in its peer groups: ◦A regional peer group of 20 banking companies with assets between $4.5 and $15 billion as of December 31, 2020, and headquartered in Iowa, Illinois, Indiana, Kentucky, Missouri, Ohio, Pennsylvania, or Tennessee; ◦Blanchard’s internal database of publicly traded banking companies with assets between $4.5 billion and $15 billion as of year-end 2020; ◦The publicly traded members of the “National Commercial & Industrial Concentration Peer Group” used by the Committee for assessing relative performance of the Company as noted in the tables above under “Company Performance”; and ◦Summarized data from other published banking and financial industry surveys, some of which currently are being used by 1st Source. 1st Source Bank purchased McLagan’s Equipment & Finance Compensation Survey in 2019. The survey included 75 banks, captives and independent leasing companies and benchmarked the Bank’s Specialty Finance Group’s officers’ pay levels including salary, incentives, and total compensation against comparable market roles in 2021. The Bank also engaged McLagan to run an additional cut of the survey with a refined peer group selected by the Bank. The Committee has determined that McLagan is independent after considering the independence factors for compensation consultants outlined in the NASDAQ listing rules.

  14. Base Salaries

    Base Salaries •Why we pay this component. Annual base salaries are designed to provide 1st Source executives with a basic level of cash compensation that is competitive in view of their qualifications, responsibilities and performance. Executive salaries are administered under the 1st Source Salary Administration Program applicable to all exempt employees. Through this program, each exempt job is graded under direction of the Human Resources Division and placed in a salary range with a midpoint targeted for the 50th percentile of the market range. Management monitors and re-calibrates the job grades and salary ranges by regularly evaluating market pay for particular positions as openings occur, as jobs change or as managers raise questions about the competitiveness of the pay for certain jobs. In addition, management periodically studies the competitiveness of its salary structure (ranges and job grades) by reference to market and industry information from a variety of sources, including Pearl Meyer, Compdata Surveys, Salaries.com, Blanchard, Crowe, ABA and McLagan (now Aon Consulting, Inc.). As noted, in late 2021, the Committee sought validation and advice from Blanchard Consulting Group concerning management’s processes and information for base salaries as well as total compensation. For the NEOs, the Executive Compensation and Human Resources Committee annually evaluates base salaries and total compensation by reference to the same sources used for the Company’s Salary Administration Program. It also reviews the public information available from proxy statements on compensation paid to NEOs of peer organizations. The Committee reviews information for the CEO, CFO and, to the extent peer information is available, other NEOs compared to its Midwest peer group (see list above under Company Performance), a nationwide peer group of banking companies with a concentration of commercial and industrial loans (see list above under Company Performance), a nationwide peer group of banking companies with $3 billion to $10 billion in assets, and a nationwide peer group of publicly traded banking companies of all sizes. The Committee uses the peer group data as a point of reference and one of several factors in setting base salaries and other components of compensation for the NEOs. If any component of compensation for the NEOs varies significantly from the median of those in our peer group, then the Committee considers the circumstances (e.g. tenure, experience, historical performance) and whether an adjustment to one or more components of compensation is warranted. The Committee continued to reference the Blanchard peer groups as well as the peer groups traditionally used by 1st Source as it determined base compensation changes in 2024 and awarded incentive compensation for 2024 for the named executive officers. Increases to base salaries are considered annually. Management evaluates market conditions and proposes a salary performance grid that provides the range of authorized merit increases for each level of performance rating in each quadrant of the applicable salary ranges. The Executive Compensation and Human Resources Committee reviews, adjusts and approves the proposed grid each year. All of the NEOs, including the Chief Executive Officer, are eligible to receive annual salary increases approved under the Salary Administration Program. An exempt employee’s base salary will increase based on his or her position in the salary range and individual performance rating determined through the annual performance review process. Performance ratings are based on a scale of 1 to 5 with a 3 rating representing performance that meets expectations. The Committee applies the salary performance grid used for all exempt employees when determining base salary increases for Mr. Murphy and the other NEOs. The Committee evaluates Mr. Murphy’s performance each year looking at, among other factors, the Company’s return on assets, return on equity, its absolute earnings, and the overall performance of the Company relative to its annual budget plan and long-term strategic plan approved by the Board of Directors. His responsibilities also include representing the Company to its various constituencies, ensuring the Company’s ongoing community engagement, and ensuring the development of a culture of client service, long-term financial performance, teamwork, corporate integrity, and long-term success. Based on Mr. Murphy’s 2024 performance and the Company’s performance against its annual profit plan and using the salary performance grid approved by the Committee for 2025, the Committee would have granted Mr. Murphy an increase of $40,000 in base salary but acceded to his request to have his salary increase limited to $20,000 or 2.38%. Mr. Murphy evaluates the performance of the other NEOs and makes recommendations for their annual increases to the Committee. Ms. Short also contributes to the evaluation of the other NEOs besides herself. The progression of increases in base salary for each of the NEOs is shown in the Summary Compensation Table below.

  15. Annual Incentive Awards Under the Executive Incentive Plan (EIP)

    Annual Incentive Awards Under the Executive Incentive Plan (EIP) •Why we pay this component. The EIP is designed to reward the NEOs and other participants for performance with a long-term emphasis. Annual incentive awards achieve this balance with payments of both cash and stock. The annual cash awards provide participants with immediate recognition of achieving annual performance criteria. The Committee regularly approves a matching award equal to the full value of, or a portion of, the value of the cash award to be paid in the form of book value shares or market value shares so that participants become long-term investors in the Company. “Book value shares” refers to shares of common stock awarded under the EIP that may not be transferred and may only be sold to the Company at book value. The Committee has generally made annual matching awards of 50% to 100% in book value stock to provide participants with the opportunity to build and increase the value of their ownership of 1st Source during the course of a long career with the Company. The value of this stock only grows if the Company continues to perform. Also, a long-term holding requirement for those shares further establishes alignment between the long-term benefit to the participants and the interests of our shareholders. The Company has chosen book value stock as the primary form of incentive stock because book value is the one value that members of management and sales and service personnel directly affect by their individual and collective actions. Earnings of the Company are either added to the book value per share or paid out as dividends on all outstanding shares (including book value shares whether or not still subject to forfeiture). In this way, book value more closely reflects the real economic value of the Company and is not subject to fluctuations in the stock market that are unrelated to the long-term performance of the Company. Inappropriate risk-taking is discouraged through the five year forfeiture period of book value share awards because imprudent short-term risk taking would be likely to impair the long-term value of awards. Inappropriate risk-taking is further discouraged through restrictions on the sale of book value shares that, with limited exceptions, require recipients to hold the shares until retirement and then sell them back to the Company at the then book value, with the purchase price payable in installments over a five year period. The limited exceptions allow executives, subject to the Committee’s approval, to sell back to the Company up to 50% of those book value shares for which the risk of forfeiture has been lapsed for seven or more years and only for the purchase of a personal residence or second home, college education tuition or financial hardship. The Company believes that equity-based compensation using book value stock under the EIP ties participants’ economic incentives directly to the long-term, substantive and sustainable economic performance of the Company. It encourages them to make sound business decisions that will grow the Company carefully over time and strengthen its financial position and should discourage decisions designed only for short-term personal gain. This decision-making for the long-term is reinforced as these stock awards can become a significant portion of a participant’s net worth over time. •How we determine the amount. Awards under the EIP are determined annually following the close of the fiscal year based on performance against a series of metrics selected and weighted for each participant at the beginning of the year. The EIP offers participants the potential for an annual cash award and a long-term stock award. ▪Annual Cash Awards: Each management participant under the EIP is assigned a “partnership level” percentage that is the starting point for determining his or her annual cash award. Partnership level percentages range from 4.25% to 15% of the salary range midpoint assigned by the Committee for purposes of computing the EIP award or the base salary of a participant. For 2024, the partnership level percentage of the NEOs was 15% of base salary for Mr. Murphy and 10% of base salary for Ms. Short and Messrs. Bauer, Buhr and Griffith. The “base bonus” for each NEO participant is equal to the participant’s base salary multiplied by the relevant partnership share percentage. That dollar amount is further adjusted up or down by the “Company Performance Factor.” Beginning in 2023, the Committee decided to use a Company Performance Factor based on the Company’s return on assets performance compared to the performance of its $3 to $10 billion peer group. The Company Performance Factor is set at 100% at the 50% percentile and then is increased by 1% for each percentile above 50% to a maximum Company Performance Factor of 125% at the 75th percentile level or above. The Company Performance Factor is reduced by 2.5% for each percentile below 50% to a minimum of 75% at the 40th percentile level. As all year-end peer group results were not available at the time the Committee made its annual awards in February 2025, the Committee used the year-to-date results as of September 30, 2024 but reserved the right to subsequently adjust the awards based on the final year-end results if it deems necessary. For September 2024 year-to-date, the Company’s reported return on assets of 1.55% resulted in the Company performing at the 91st percentile level compared to its $3 to $10 billion peer group. This translated to a positive adjustment of 25% for the Company Performance Factor. Thus, the Company Performance Factor for 2024 was 125%. The Committee is authorized to make adjustments to reported net income and return on assets for purposes of determining the Corporate Performance Factor and other EIP performance metrics. Historically, the Committee has done so when, in the Committee’s judgment, the reported net income included unusual or one-time items that distorted the true substantive or normalized earnings of the Company. The Committee chose to use the Company’s reported net income of $132.6 million as the starting metric. The Committee chose to exclude the Company’s fourth quarter losses of $3.9 million from the sale of available-for-sale securities for repositioning of the investment securities portfolio (net of $132 thousand in incremental interest income earned from these transactions and related income tax effects), which the Committee had pre-approved. These adjustments were used as noted in the corporate-level performance goals below. For each individual, the base bonus after adjustment for the Company Performance Factor is further adjusted up or down between 0% and 300% based upon the participant’s performance against a set of corporate, group and individual performance goals established at the beginning of the fiscal year. Target amounts are scored at 150% of weighting for staff management personnel while they are scored at 200% for sales, credit and line management personnel. For example, if the Company achieves a corporate-level goal exactly at target and the goal is weighted for the individual at 10%, a staff person’s result is scored as 15% of their base salary or salary range midpoint assigned for EIP purposes while a sales, credit or line person’s result is scored as 20% of their base salary or salary range midpoint assigned for EIP purposes. The total of the annual cash and stock awards to a single participant may not exceed $1 million. The corporate-level financial performance goals for each of the NEOs in 2024 included a combination of the following depending upon the NEO’s role and responsibilities:

  16. Annual Incentive Awards Under the Executive Incentive Plan (EIP)

    | Objective | Minimum | Target | Maximum | Actual | | Net income (000’s)(1) | $126,897 | $129,185 | $135,644 | $135,406 | | Return on assets(1) | 1.34% | 1.46% | 1.71% | 1.55% | | Exceed median ROA results for $3 to $10 billion peers(2) | 59 of 108 | 54 of 108 | 37 of 108 | 10 of 110 | | Return on common equity(1) (3) | 11.12% | 11.33% | 12.24% | 11.71% | | Revenue growth | 4.75% | 6.33% | 11.08% | 7.01% | | Expense to revenue ratio(1)(4) | 54.45% | 53.38% | 49.38% | 51.62% | | Loan growth | 4.28% | 5.71% | 8.56% | 6.36% | | Core deposit growth(5) | 1.50% | 3.10% | 4.65% | 1.30% | | Year-end nonperforming assets | 1.05% | 0.75% | 0.26% | 0.46% | | Net charge offs and other credit-related losses to average loans, leases, repossessed assets and other real estate | 0.30% | 0.12% | 0.06% | 0.08% | | Percent of diverse exempt colleagues of total exempt colleagues at year-end(6) | 13.22% | 14.00% | 14.78% | 14.65% | | Net new primary relationships | 90% of Target | Target | 130% of Target | 39% of Target | | (1) Actual amounts computed using adjustments described above. | | | | | | (2) Computed as of September 30, 2024 for reasons discussed above. | | | | | | (3) Computed based on common equity excluding accumulated other comprehensive loss. | | | | | | (4) Computed before 2024 year-end reclassification of the liability for credit losses on commitments to originate loans and standby letters of credit to the provision for credit losses. | | | | | | (5) Core deposits are defined as total deposits excluding brokered deposits and time deposits over $250,000. | | | | | | (6) Total Company result. | | | | |

  17. Annual Incentive Awards Under the Executive Incentive Plan (EIP)

    The corporate financial performance goals assigned to each of the NEOs and the weightings of corporate, group and individual performance goals for each of the NEOs were as follows:

  18. Annual Incentive Awards Under the Executive Incentive Plan (EIP)

    | Objective | Mr. Murphy | Ms. Short | Mr. Bauer | Mr. Griffith | Mr. Buhr | | Corporate Financial Performance Goals | | | | | | | Net income | 14.25% | 9.50% | 9.50% | 9.50% | 4.75% | | Return on assets | 9.50% | 4.75% | 9.50% | 4.75% | 9.50% | | Exceed median ROA results for $3 to $10 billion peers | 14.25% | 9.50% | 9.50% | 9.50% | 9.50% | | Return on common equity | 9.50% | 4.75% | 4.75% | — | — | | Expense to revenue ratio | 14.25% | 4.75% | 23.75% | 14.25% | — | | Revenue growth | 4.75% | 9.50% | 9.50% | 4.75% | 4.75% | | Loan growth | — | 9.50% | — | 4.75% | 4.75% | | Core deposit growth | — | 14.25% | 9.50% | 9.50% | — | | Year-end nonperforming assets | 9.50% | 9.50% | — | — | 14.25% | | Net charge offs and other credit-related losses to average loans, leases, repossessed assets and other real estate | 9.50% | 4.75% | — | — | 14.25% | | Percent of diverse exempt colleagues of total exempt colleagues at year-end(1) | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | | Net new primary relationships | 9.50% | 14.25% | 9.50% | 4.75% | 4.75% | | Group financial performance goals | — | — | 9.50% | 19.00% | 28.50% | | Enhance enterprise risk management | — | — | — | 14.25% | — | | Total weighting | 100% | 100% | 100% | 100% | 100% | | Target amount scoring | 200% | 200% | 150% | 150% | 200% | | (1) Score based on total Company for Mr. Murphy and Ms. Short and on their respective reporting units for Mr. Bauer, Mr Griffith, and Mr. Buhr. | | | | | |

  19. Annual Incentive Awards Under the Executive Incentive Plan (EIP)

    In assessing performance against these performance goals, the Committee considers quantitative and qualitative factors, and ultimately uses its judgment when determining the amount and terms of individual awards. The qualitative factors the Committee considers to adjust awards include: •The recommendations of Mr. Murphy with respect to the achievement of group and individual performance goals of the other NEOs and all other participants in the EIP. •An analysis of competitive marketplace compensation data as described above; •An analysis of the Company’s performance compared to its peer groups as described above; •An analysis of the Company’s performance compared to its overall quantitative and qualitative goals; •The executive’s level of responsibility and ability to influence the Company’s performance; •The executive’s level of experience, skills and knowledge; •The need to retain and motivate highly talented executives; •Corporate governance considerations related to executive compensation; and •The Company’s current business environment, objectives and strategy. For 2024, Mr. Murphy received the award as computed based upon quantitative factors. Mr. Murphy, Ms. Short and Mr. Buhr were scored as part of sales, credit and line management personnel. Mr. Bauer and Mr. Griffith were scored as part of staff management personnel. ▪Annual cash awards: These are paid following the Committee’s approval of the awards. For the NEOs, the Committee approved cash awards for 2024 performance as follows:

  20. Annual Incentive Awards Under the Executive Incentive Plan (EIP)

    | Mr. Murphy | $376,450 | Mr. Griffith | $79,400 | | Ms. Short | $120,500 | Mr. Buhr | $103,200 | | Mr. Bauer | $70,550 | | |

  21. Annual Incentive Awards Under the Executive Incentive Plan (EIP)

    These amounts are shown on the 2024 lines of the “Non-Equity Incentive Compensation Plan” column of the Summary Compensation Table below. ▪Annual Book Value Stock Awards: The amount of the annual cash award under the EIP is matched with an equal amount of book value stock that is subject to forfeiture ratably over a five-year period in the event the Company fails to achieve designated annual performance hurdles or the participant’s employment terminates. For 2024, the Committee chose a 3% EPS growth requirement or a 1.20% annual return on assets. The Committee believes that this combination of requirements collectively represents a reasonable hurdle for participants to motivate future performance based on, among other factors, the peer group performance documented above. The Committee also has the authority under the EIP to evaluate whether forfeiture of book value shares is inappropriate if the Company’s performance results are in the top quartile of its peer groups notwithstanding failure of the Company to achieve the performance hurdles. This additional authority gives the Committee flexibility to respond to external events or market conditions. Mr. Murphy’s annual cash award is matched with an equivalent value in book value stock subject to the same performance hurdles as with all employees under the EIP. As the risk of forfeiture lapses over the five year period based on achievement of performance hurdles, he is paid the value of book value stock in cash. His book value stock awards ultimately paid in cash are shown in the “Stock Awards” column of the Summary Compensation Table in the year the awards are made, consistent with the presentation for the other NEOs. The Committee believes Mr. Murphy’s ownership interest in the Company is already significant and sufficiently aligned with shareholder interests that the book value share awards under the EIP can be denominated and paid in cash as the forfeiture risk lapses without impairing the objectives of the EIP. The annual stock awards for 2024 performance were made in calendar year 2025. As required by SEC rules, the 2024 stock award amounts for the NEOs will be shown in next year’s proxy statement on the 2025 lines under the Stock Awards column of the Summary Compensation Table. The annual book value stock awards for 2023 (made in 2024) are shown on the 2024 lines of the “Stock Awards” column of the Summary Compensation Table below as required by SEC rules.

  22. Long-Term Plan Awards Under the EIP

    Long-Term Plan Awards Under the EIP

  23. •Why we pay this component

    •Why we pay this component In addition to the annual incentive award of cash and book value stock, the EIP also offers management participants an additional periodic award of cash and stock in the event the Company achieves longer-term performance goals. These performance goals are established periodically (usually every 3 years) as part of the Company’s ongoing long-term strategic planning process. These awards are also designed to reward consistent individual performance over the long-term as individual performance is calculated based on the participant’s average annual incentive awards under the EIP over the three-year period. These awards further reinforce alignment with the interests of our shareholders by encouraging a long-term view with sound strategic planning and risk management and providing participants with an opportunity for additional ownership of the Company but with the same market risk to which shareholders of the Company are exposed. •How we determine the amount. ▪Calculation of Amount of the Long-Term Plan Awards: The most recent 3-year performance goal period ended in 2022 with targets set in early 2020 and awards being determined and paid in early 2023. The 2020-2022 targets, results and cash payments to the NEO’s were reported in our 2023 proxy statement. The goals for the 2023-2025 period include the following:

  24. •Why we pay this component

    Company performance is scored at 50% for minimum, 100% for target and 200% for maximum. The three-year awards then are calculated based upon a pre-determined mathematical formula that multiplies the Company’s weighted performance relative to its long-term goals by an assigned percentage and then by the participant’s average annual incentive award under the EIP over the three-year period. The participant may earn from 0% to 200% of his/her average annual incentive awards over the three-year period. The total of the annual cash and stock awards to a single participant may not exceed $1 million. For the 2023-2025 period, the assigned percentages of the NEOs for purposes of the three year long-term awards are as follows:

  25. Annual Incentive Awards Under the Strategic Deployment Incentive Plan (SDIP)

    Annual Incentive Awards Under the Strategic Deployment Incentive Plan (SDIP) NEOs have an additional incentive compensation plan available to them which is designed to encourage execution of the Company’s strategic objectives on an annual and a long-term basis. NEOs and other members of senior management are eligible to participate. Mr. Murphy, Ms. Short and Messrs. Buhr, Griffith and Bauer were participants in the SDIP for 2024. Any awards (“Awards”) made to participants under the SDIP are performance-based compensation with three dimensions. First, the SDIP is designed to encourage the participants to focus on initiatives that support the Company’s long-term strategic objectives but not at the expense of failing to meet our annual performance goals approved by the Board. Thus, there will be no Awards unless the Company achieves its minimum net income goal. Second, the amount of the Awards is calculated as a percentage of the Company’s annual net income. Sharing a modest portion of net income with the participants who successfully lead and execute the initiatives designed to meet the Company’s long-term strategic objectives directly aligns their performance on these initiatives with the long-term interests of shareholders. The Committee sets a range for each of the participants reflected by a minimum, target and maximum percentage of net income. In setting the percentages, the Committee considers the roles and responsibilities of each participant with respect to the Company’s long-term strategic objectives. Third, the Committee determines the final percentage of net income within the respective pre-established ranges by reference to pre-established shared and/or individual goals for the participants that support the Company’s long-term strategic objectives (“Annual Strategic Goals”). The Committee assigns Annual Strategic Goals to each of the participants at the beginning of each calendar year using objective performance targets or criteria and weightings among the Annual Strategic Goals. The Committee then uses the results achieved during the calendar year (individually or in aggregate) to determine the Award for each participant within the applicable range of percentages of net income. See “How we determine the amount” below for calculation and the payment of awards. All determinations of eligibility, Annual Strategic Goals, financial metrics and formulas for calculation of Awards for a calendar year are established by the Committee in writing. No Award to any single participant can exceed $1 million in one calendar year. No performance measures for a participant’s Annual Strategic Goals will allow for any discretion by the Committee to increase an Award over the maximum percentage of net income determined by the Committee at the beginning of the calendar year, but the Committee does have discretion to reduce an Award below the maximum percentage of net income to any amount it believes is justified based on the actual results achieved related to the Annual Strategic Goals. The payment of any Award under the SDIP to a participant with respect to a relevant calendar year is contingent upon certification by the Committee prior to any such payment that the applicable performance measure(s) or criteria for the participant’s Annual Strategic Goals have been satisfied. All awards under the SDIP are subject to potential forfeiture and/or recovery by the Company in the event they are based upon financial results that are subsequently determined to have been overstated. •How we determine the amount. Under this program, awards for participants are based on the net income of the Company. The Committee set the range from 0.00% to 1.50% of net income for the total program with a target of 0.75% for 2024. All awards are subject to the Company achieving a minimum net income of $122.7 million (95% of budgeted net income). Consistent with its calculation of the EIP Corporate Performance Factor and related EIP metrics as described above, the Committee chose to use a net income amount of $135.406 million for its 2024 SDIP calculations. This amount excludes the Company’s fourth quarter losses of $3.9 million from the sale of available-for-sale securities for repositioning of the investment securities portfolio (net of $132 thousand in incremental interest income earned from these transactions and related income tax effects), which the Committee had pre-approved. The Committee set the following individual award levels as a percentage of the Company’s adjusted net income:

  26. Annual Incentive Awards Under the Strategic Deployment Incentive Plan (SDIP)

    | | Minimum | Target | Maximum | | Mr. Murphy | 0% | 0.21% | 0.42% | | Ms. Short | 0% | 0.13% | 0.26% | | Mr. Griffith | 0% | 0.10% | 0.20% | | Mr. Buhr | 0% | 0.10% | 0.20% | | Mr. Bauer | 0% | 0.11% | 0.22% |

  27. Annual Incentive Awards Under the Strategic Deployment Incentive Plan (SDIP)

    For 2024, the goals and weightings were as follows:

  28. Annual Incentive Awards Under the Strategic Deployment Incentive Plan (SDIP)

    | | Weight | Min | Target | Max | Result | | 1. Deposit Goals | 30% | | | | 20% of maximum | | Goals included collecting granular deposit information and determining loyalty relationship metric to determine future strategic goals; develop new and/or refreshed set of consumer deposit products; and activate small business mobile/online solution. A preliminary analysis was done on granular deposit information. Significant work was done in 2024 on a new set of consumer deposit products but details and rollout plan are yet to be finalized. The small business treasury application for online and mobile use was introduced to friends and family by the end of 2024. | | | | | | | 2. $10 Billion threshold | 25% | | | | 100% of Maximum | | Establish a formal team with responsibility for developing a report to the Board on estimated financial and regulatory impact of crossing $10 billion threshold and potential steps to mitigate the impact. Plan developed, presented to the full Board in October and approved by the Executive Committee prior to year-end. | | | | | | | 3. Digital Transformation | 25% | | | | 48% of Maximum | | Minimum goal to implement simplified account opening process in branches parallel to mobile process by September 30 was achieved. Target and max goals to develop and put in place overall digital omnichannel platform and a full functioning data governance process were not achieved. | | | | | | | 4. Percentage of our exempt population that is diverse as of December 31, 2024. | 5% | 13.00% | 14.00% | 15.50% | 14.65% | | 5. Focus on Colleagues | 10% | | | | 45% of Maximum | | Achieved minimum goal to develop and launch Engaging Manager Program by September 1. Target and max goals to complete the pilot program by year-end and achieve 2% or 4% increase in 180 degree assessment results were not achieved. | | | | | | | 6. Mastery | 5% | | | | 90% of Maximum | | Achieved minimum goal of conducting mastery skills assessment with top colleagues with over 20 years seniority and 90% of maximum goal of 10 colleagues achieving mastery criteria. | | | | | | | 7. Qualitative goal to be judgmentally used by the Committee to adjust downward the awards under the above metrics either for the group or for each NEO individually. | | | | | |

  29. Annual Incentive Awards Under the Strategic Deployment Incentive Plan (SDIP)

    The Committee assesses performance against these goals and each individual’s contributions to the achievement of the goals including the quality of teamwork exhibited and the individual’s contribution to the team. In assessing performance against these performance goals, the Committee considers quantitative factors first and may adjust downward for qualitative factors, and ultimately uses its judgment when determining the amount and terms of individual awards. The Committee did not make an adjustment for qualitative factors in 2024. The Committee chose to pay the entire bonus amounts in cash. The annual cash awards are paid following the Committee’s approval of the awards. For the 2024 participants, the Committee approved cash awards for 2024 performance as follows:

  30. Annual Incentive Awards Under the Strategic Deployment Incentive Plan (SDIP)

    | | 2024 Award | | Mr. Murphy | $311,400 | | Ms. Short | $189,600 | | Mr. Griffith | $148,900 | | Mr. Buhr | $148,900 | | Mr. Bauer | $162,500 |

  31. Awards Under the 1982 Restricted Stock Award Plan

    Awards Under the 1982 Restricted Stock Award Plan •Why we pay this component. The Restricted Stock Award Plan provides for the grant of restricted shares to selected executives and other key employees of the Company as a means of inducing continued future employment and performance of such key employees. The Restricted Stock Award Plan provides that the shares shall vest over a period of time if the participant continues to serve as an employee. Additionally, the Committee may set additional vesting requirements at the time of grant based on the individual participant’s performance, the Company’s financial performance or both. If the participant does not meet or exceed his or her individual performance goal(s) for a given year, all shares so restricted with respect to that year will be forfeited. If 1st Source does not meet the financial requirements by the end of the vesting period, the shares so restricted are forfeited. The Committee retains discretion to make periodic stock awards from time to time in the future to maximize the usefulness of the Restricted Stock Award Plan in attracting, retaining and motivating key employees. No named executive officers received awards under the Restricted Stock Award Plan in 2022, 2023 or 2024.

  32. Employment Agreements Severance Provisions

    Employment Agreements Severance Provisions Among the NEOs, the Company has entered into employment agreements with Mr. Murphy, Ms. Short, Mr. Griffith, Mr. Buhr, and Mr. Bauer. The agreements provide for severance payments in the event of the executive’s termination of employment by the Company without cause or by the executive because of good reason, including a material adverse change in his or her status such as a material diminution of responsibility or relocation. In such event, the executive would continue to receive only his or her base salary for a period of time after his or her termination. Mr. Murphy would receive the equivalent of 36 months of base salary with the first six months payable in a lump sum. Ms. Short, Mr. Griffith, Mr. Buhr, and Mr. Bauer would receive the equivalent of twelve months of base salary with the first six months payable in a lump sum. The Committee believes that providing severance payments to certain executives in the event the executives terminate employment because of a material adverse change in status is necessary and fair given the critical nature of the roles of the executives. As of December 31, 2024, Mr. Murphy, Ms. Short, Mr. Griffith, Mr. Buhr, and Mr. Bauer would receive $2.52 million, $510,000, $432,000, $395,000, and $310,000, respectively under the agreements. The employment agreements also provide for severance payments in the event Mr. Murphy, Ms. Short, Mr. Griffith, Mr. Buhr, or Mr. Bauer terminates his or her employment for good reason within one year of a change in control transaction. Under these circumstances, the executive would receive severance pay in cash equal to 2.99 times his or her “Annualized Includable Compensation for the Base Period” (as defined under the Internal Revenue Code of 1986, as amended) without a gross-up provision. The Committee reaffirmed its long-standing view that such a “two-trigger” change in control provision for key executives is consistent with the interests of shareholders and fair protection to the executives.

  33. SUMMARY COMPENSATION TABLE

    SUMMARY COMPENSATION TABLE The following table provides information regarding compensation earned by the Company’s Chief Executive Officer, Chief Financial Officer, and the three other executive officers employed at the end of 2024 who were the most highly compensated in 2024 among the major policy-making executives of the Company.

  34. SUMMARY COMPENSATION TABLE

    | Name and Principal Position | | Year | Salary($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation($) | All Other Compensation($)(2) | Total(6) | | Christopher J. Murphy III | | 2024 | $836,538 | $326,430 | $687,850 | $184,830 | $2,035,648 | | Chairman of the Board and Chief | | 2023 | 821,495 | 1,158,576 | 607,800 | 180,729 | 2,768,600 | | Executive Officer, 1st Source Corporation | | 2022 | 810,000 | 449,554 | 947,750 | 157,592 | 2,364,896 | | and Chairman of the Board, 1st Source Bank | | | | | | | | | Andrea G. Short | | 2024 | 498,461 | 116,357 | 310,100 | 133,639 | 1,058,557 | | President, 1st Source | | 2023 | 465,392 | 378,734 | 282,650 | 131,178 | 1,257,954 | | Corporation and President and Chief Executive | | 2022 | 417,348 | 133,122 | 393,800 | 119,868 | 1,064,138 | | Officer, 1st Source Bank | | | | | | | | | John B. Griffith | | 2024 | 428,077 | 82,013 | 228,300 | 53,603 | 791,993 | | Executive Vice President, Chief Administrative | | 2023 | 411,539 | 273,432 | 209,900 | 51,919 | 946,790 | | Officer, General Counsel and Secretary | | 2022 | 397,692 | 132,862 | 312,913 | 47,222 | 890,689 | | Jeffrey L. Buhr | | 2024 | 391,154 | 91,490 | 252,100 | 55,474 | 790,218 | | Executive Vice President and Chief Credit | | 2023 | 372,115 | 301,313 | 219,350 | 50,280 | 943,058 | | Officer, 1st Source Bank | | 2022 | 357,692 | 114,305 | 341,850 | 43,021 | 856,868 | | Brett A. Bauer(5) | | 2024 | 305,385 | 55,526 | 233,050 | 44,059 | 638,020 | | Senior Vice President, Treasurer and | | 2023 | 287,115 | 160,122 | 196,200 | 43,004 | 686,441 | | Chief Financial Officer | | 2022 | 265,385 | 53,930 | 266,200 | 38,160 | 623,675 | | (1) | Amounts included in Stock Awards represent the aggregate grant date fair value of all awards computed in accordance with FASB ASC Topic 718 granted during the year. These amounts generally relate to the prior year’s performance and are subject to forfeiture over the succeeding five (5) years. | | | | | | |

  35. SUMMARY COMPENSATION TABLE

    | (2) | Amounts included in All Other Compensation for the most recent fiscal year are as follows: | | | | | | | | | Company Contributions to Defined Contribution Retirement Plans | Dividends on Stock Awards | Directors’ Fees | Perquisites(3)(4) | Value of Life Insurance Benefits | Other | Total | | Mr. Murphy | $31,129 | $63,316 | $72,620 | $13,439 | $4,326 | $— | $184,830 | | Ms. Short | 31,129 | 24,346 | 72,620 | • | 5,544 | — | 133,639 | | Mr. Griffith | 31,129 | 15,806 | — | • | 6,668 | — | 53,603 | | Mr. Buhr | 31,129 | 16,139 | — | • | 8,206 | — | 55,474 | | Mr. Bauer | 31,129 | 11,549 | — | • | 1,381 | — | 44,059 | | • | Not included - total of perquisites and benefits is less than $10,000 | | | | | | | | (3) | Mr. Murphy’s perquisites included annual medical exam and personal usage of the company plane. These are values at the incremental cost to the Company. For personal use of the company plane, the incremental cost is the SIFL (Standard Industrial Fare Level) cost. | | | | | | | | (4) | Mr. Murphy reimbursed the Company $2,000 in 2024, $2,500 in 2023 and $1,000 in 2022 for miscellaneous incalculable personal benefits. This amount has not been deducted in computing the disclosable perquisites above. | | | | | | | | (5) | There were no bonus awards, option awards or changes in pension value and non-qualified deferred compensation earnings for the named executive officers in 2024, 2023 or 2022. | | | | | | |

  36. 2024 Grants Of Plan-Based Awards

    2024 Grants Of Plan-Based Awards

  37. 2024 Grants Of Plan-Based Awards

    | Estimated Future Payouts Under Equity Incentive Plan | | | | | | | | | | Book Value Awards (#Shares) | | | | | | Name | | Grant Date | Threshold | Target | Maximum | Grant Date Fair Value of Stock Awards | | Christopher J. Murphy III | | 2/5/24(1) | — | 8,060 | — | $40.50 | | Andrea G. Short | | 2/5/24(1) | — | 2,873 | — | 40.50 | | John B. Griffith | | 2/5/24(1) | — | 2,025 | — | 40.50 | | Jeffrey L. Buhr | | 2/5/24(1) | — | 2,259 | — | 40.50 | | Brett A. Bauer | | 2/5/24(1) | — | 1,371 | — | 40.50 | | Note: There were no non-equity incentive plan awards with future payouts made during 2024. Also, there were no other stock awards or option awards made during 2024. | | | | | | | | (1) | Annual Executive Incentive Plan award for 2023 subject to forfeiture over a five-year period based on the executive remaining with the Company and the Company achieving annual financial performance hurdles as discussed above under “Annual Incentive Awards Under the EIP.” | | | | | |

  38. Narrative Disclosure To Summary Compensation Table And Grants Of Plan-Based Awards Table

    Narrative Disclosure To Summary Compensation Table And Grants Of Plan-Based Awards Table Employment Agreements: Messrs. Murphy and Griffith each entered into an employment agreement effective January 1, 2008. Ms. Short entered into an employment agreement effective January 1, 2013. Mr. Buhr entered into an employment agreement effective May 23, 2017. Mr. Bauer entered into an employment agreement effective August 1, 2021. Mr. Murphy’s agreement provides for a $840,000 base salary at January 1, 2025, with annual increases as the Committee may deem appropriate each year, and bonus payments (paid in cash or stock at Mr. Murphy’s election) under the Executive Incentive Plan and the Strategic Deployment Incentive Plan. Under the other four agreements, Ms. Short, Mr. Griffith, Mr. Buhr, and Mr. Bauer receive base salaries of $510,000, $432,000, $395,000, and $310,000 respectively, at January 1, 2025, with increases thereafter as may be determined by 1st Source, and cash and stock bonuses determined under the Executive Incentive Plan and the Strategic Deployment Incentive Plan. Mr. Murphy’s agreement expires on December 31, 2028. Ms. Short’s, Mr. Griffith’s, Mr. Buhr’s, and Mr. Bauer’s agreements expire on December 31, 2025. Each will continue to be extended from year-to-year unless either party gives a notice of non-renewal to the other. The term of Mr. Murphy’s agreement will end on December 31 of the third year following the year in which any notice of non-renewal is given. The term of the agreements with Ms. Short, Mr. Griffith, Mr. Buhr, and Mr. Bauer will end on December 31 of the same year in which any non-renewal notice is given. In the event of an executive’s death, the executive’s beneficiaries would receive a payment in the amount of twice the executive’s current base salary (reduced to 65%, 45% and 30% of this amount at ages 65, 70 and 75, respectively) up to a maximum of $750,000 under a group term life insurance policy provided by the Company. The employment agreements also include restrictive covenants which require, among other things, that the executives not compete with 1st Source in bank or bank-related services within the geographic region in which full-service retail branches of 1st Source Bank or any affiliate are located for a period of 24 months following termination of employment. The agreements also prohibit the executives from ever divulging confidential information or trade secrets after termination of employment. In the event an executive’s employment is terminated because of disability and in addition to other disability programs in effect for all officers of 1st Source, the executive will receive twelve months of base salary, with the first six months payable in a lump sum and the balance paid in monthly installments beginning on the first day of the seventh month following the date of termination. See Compensation Discussion & Analysis above for discussion of certain severance benefits provided for under the employment agreements. Bonus Plan: See discussion above in the Compensation Discussion & Analysis The amounts shown in the Stock Awards column of the Summary Compensation Table represent the aggregate grant date fair value of all awards granted during the fiscal year computed in accordance with FASB ASC Topic 718. The amounts shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table represent the annual and long-term cash awards under the EIP and the SDIP Plan. Estimated future payout amounts for 2024 stock awards and the corresponding grant date fair values are shown in the Grants of Plan-Based Awards Table. Recipients of unvested book value and market value shares granted under the EIP and the SDIP Plan receive dividends at the same time and in the same amount as all other holders of 1st Source common stock. The relative amounts of salary and bonus are discussed above under “Components of Compensation and 2024 Compensation Decisions.”

  39. Narrative Disclosure To Summary Compensation Table And Grants Of Plan-Based Awards Table

    | Outstanding Equity Awards At Fiscal Year-End 2024 | | | | | | | Stock Awards(4) | | | | | Name | Number of Shares of Stock That Have Not Vested(1)(2) | Market Value of Shares of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested(1)(2) | Equity Incentive Plan Awards: Payout or Market Value of Unearned Shares That Have Not Vested(1)(3) | | Christopher J. Murphy III | | | | | | Book Value Shares | | | 29,082 | $1,317,705 | | Market Value Shares | 14,470 | $844,759 | | | | Andrea G. Short | | | | | | Book Value Shares | | | 9,271 | 420,069 | | Market Value Shares | 6,703 | 391,321 | | | | John B. Griffith | | | | | | Book Value Shares | | | 7,411 | 335,792 | | Market Value Shares | 3,476 | 202,929 | | | | Jeffrey L. Buhr | | | | | | Book Value Shares | | | 7,867 | 356,454 | | Market Value Shares | 3,343 | 195,164 | | | | Brett A. Bauer | | | | | | Book Value Shares | | | 4,333 | 196,328 | | Market Value Shares | 2,743 | 160,136 | | | | (1) | Shares vested for purposes of this table and the following table are awarded shares which are no longer subject to forfeiture under the terms of the Executive Incentive Plan or the Restricted Stock Award Plan. | | | | | (2) | Vesting dates for these awards are as follows: | | | |

  40. Narrative Disclosure To Summary Compensation Table And Grants Of Plan-Based Awards Table

    | | Book Value Shares | Market Value Shares | | Mr. Murphy | 12/2024 - 12/2028 | 12/2024 - 12/2027 | | Ms. Short | 12/2024 - 12/2028 | 12/2024 - 12/2027 | | Mr. Griffith | 12/2024 - 12/2028 | 12/2024 - 12/2027 | | Mr. Buhr | 12/2024 - 12/2028 | 12/2024 - 12/2027 | | Mr. Bauer | 12/2024 - 12/2028 | 12/2024 - 12/2027 | | Note: Shares vesting based on calendar year results (e.g., 12/2024 above is based on 2024 results) are not released until audited financial results are publicly announced early in the following year. | | |

  41. Narrative Disclosure To Summary Compensation Table And Grants Of Plan-Based Awards Table

    | (3) The values shown in respect of Book Value Shares are based on the book value of our Common Stock because that is the value that NEOs can ultimately realize from Book Value Shares absent extraordinary circumstances. | | (4) The named executive officers have no outstanding stock option awards at December 31, 2024. |

  42. Narrative Disclosure To Summary Compensation Table And Grants Of Plan-Based Awards Table

    | Option Exercises And Stock Vested — 2024 | | | | | | Stock Awards(1) | | | | Name | Number of Book Value Shares Acquired on Vesting | Number of Market Value Shares Acquired on Vesting | Value Realized on Full Vesting(2) | | Christopher J. Murphy III | 9,414 | 5,536 | $685,470 | | Andrea G. Short | 2,759 | 3,743 | 314,183 | | John B. Griffith | 2,416 | 1,268 | 167,525 | | Jeffrey L. Buhr | 2,391 | 1,175 | 161,402 | | Brett A. Bauer | 1,176 | 1,688 | 144,260 |

  43. Narrative Disclosure To Summary Compensation Table And Grants Of Plan-Based Awards Table

    | (1) The named executive officers did not exercise any stock option awards during 2024. | | (2) The values shown in respect of Book Value Shares are based on the book value of our Common Stock because that is the value that NEOs can ultimately realize from Book Value Shares absent extraordinary circumstances. |

  44. CEO Pay Ratio Disclosure

    CEO Pay Ratio Disclosure The 2024 compensation disclosure ratio of the annual total compensation of the Company’s Chief Executive Officer and the median annual total compensation of all other Company employees is as follows:

  45. CEO Pay Ratio Disclosure

    | Annual total compensation of Christopher J. Murphy III, Chairman of the Board and Chief Executive Officer(1) (A) | $2,035,648 | | Median annual total compensation of all employees (excluding Mr. Murphy)(2) (B) | $64,967 | | Ratio of (A) to (B) | 31.3 to 1 | | (1) From Summary Compensation Table | | | (2) Median employee selected from all employees as of December 31, 2024, on the basis of annual total compensation reported for tax purposes. Compensation was annualized for all employees not employed for the full year of 2024. Annual total compensation for the median employee was computed in the same manner as that of NEOs included in the Summary Compensation Table. | |

  46. PAY VERSUS PERFORMANCE (PVP)

    PAY VERSUS PERFORMANCE (PVP)

  47. 4.CAP versus Company-Selected Measure (CSM)

    | DIRECTOR COMPENSATION – 2024 | | | | | | | Name | Total | Fees Earned or Paid in Cash(1) | Fees Received in Stock(1) | | | | | | | Amount | Shares | Grant Date Fair Value | | John F. Affleck-Graves(1) | $127,620 | $82 | $127,538 | 2,405 | $53.03 | | Melody Birmingham(1) | 152,620 | 140,000 | 12,620 | 250 | 50.48 | | Daniel B. Fitzpatrick(1) | 165,620 | 153,000 | 12,620 | 250 | 50.48 | | Tracy D. Graham(1) | 123,620 | 60,134 | 63,486 | 1,130 | 56.18 | | Andrea G. Short(3) | See Summary Compensation Table | | — | — | — | | Christopher J. Murphy III(3) | See Summary Compensation Table | | — | — | — | | Christopher J. Murphy IV(1) | 123,120 | 110,500 | 12,620 | 250 | 50.48 | | Timothy K. Ozark(1) | 148,620 | 152 | 148,468 | 2,745 | 54.09 | | Todd F. Schurz(1) | 135,620 | 144 | 135,476 | 2,557 | 52.98 | | Mark D. Schwabero(1) | 128,620 | 112 | 128,508 | 2,406 | 53.41 | | Ronda Shrewsbury(1) | 150,620 | 179 | 150,441 | 2,815 | 53.44 | | Isaac P. Torres(1) | 166,620 | 196 | 166,424 | 3,088 | 53.89 | | (1) These directors received a portion of their annual fees in the form of shares of stock rather than cash at their election. These shares had the weighted grant date fair values shown in accordance with FASB ASC Topic 718. | | | | | | | (2) There were no stock awards, option awards, non-equity incentive plan compensation, pension or other deferred compensation earnings or other compensation paid to non-employee directors in 2024. | | | | | | | (3) Mr. Murphy and Ms. Short received all their fees in cash. | | | | | |