Kevin C. Murphy
About Kevin C. Murphy
Kevin C. Murphy is Executive Vice President of 1st Source Corporation and President of 1st Source Bank (effective October 1, 2025). He joined 1st Source in 2006 and previously served as Chief Digital Officer and EVP (2022), Group Head of IT/Electronic Banking/Marketing/Digital Strategy (2020), CIO (2019), and Regional President (2017). He holds an Executive MBA from the University of Notre Dame and degrees from Wittenberg University and DeVry University in Political Science and Information Technology; year of birth: 1975 .
Company performance context tied to incentive design: net income increased from $120.5M (2022) to $132.6M (2024), and the Company’s pay-versus-performance TSR index (value of a fixed $100 investment) rose from $80 (2020) to $129 (2024); ROA remained ~1.5% over 2021–2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| 1st Source Bank | President | 2025–present | Leads bank operations post-succession; continuity in digital strategy and client experience . |
| 1st Source Corporation/Bank | Executive Vice President & Chief Digital Officer | 2022–2025 | Drove digital strategy, IT, electronic banking, marketing; modernization of client-facing and internal digital processes . |
| 1st Source Corporation/Bank | Group Head IT, Electronic Banking, Marketing, Digital Strategy | 2020–2022 | Oversaw Electronic Banking, Virtual Bank, IT, InSight CRM, loan processing digitization, and Marketing . |
| 1st Source Bank | Chief Information Officer | 2019–2020 | Technology leadership and infrastructure modernization . |
| 1st Source Bank | Regional President (Central Region) | 2017–2019 | Growth and client relationship leadership across regional banking centers . |
| 1st Source Bank | Various roles (IT, Consumer/Electronic Banking, Treasury Services, Banking Centers) | 2006–2017 | Broad foundation across technology and client-facing functions . |
| Merrill Lynch; Murph Solutions, LLC | Analyst; Founder/Owner | Pre-2006 | Financial and technology experience prior to 1st Source . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Center for Hospice Care | Board service | n/a | Community engagement; governance contributions . |
| Holy Cross College | Board service | n/a | Education sector engagement . |
| Northern Indiana Historical Society Foundation | Board service | n/a | Regional cultural stewardship . |
Fixed Compensation
| Component | Amount/Rate | Effective Date | Notes |
|---|---|---|---|
| Base Salary | $450,000 per annum | Jan 1, 2026 | Set in employment agreement executed Sep 23, 2025 . |
| Executive Incentive Plan (EIP) – Annual Cash | Minimum “partnership” rate 20% of Base Salary | Jan 1, 2026 | Subject to Company Performance Factor and individual performance; adjustable by Comp Committee . |
| Strategic Deployment Incentive Program | 0.13% of audited annual net income (initial rate) | Jan 1, 2026 | Subject to plan terms, Comp Committee discretion . |
| Life Insurance Benefit | Employer pays employee portion of term life coverage (tax on value >$50,000 borne by executive) | Agreement term | Group policy; standard exec treatment . |
| Vacation | 4 weeks; non-carryover | Agreement term | Use by year-end or forfeit . |
| Perquisites | Club memberships (initiation, monthly dues, business expenses paid) | Agreement term | At least one country club and one downtown dinner club; taxes borne by executive . |
Performance Compensation
| Metric | Weighting | Target | Actual (latest disclosed) | Payout Impact | Vesting |
|---|---|---|---|---|---|
| Company Performance Factor (EIP Annual) | Applies to base bonus | 100% at 50th percentile ROA vs $3–$10B peer group; max 125% at ≥75th percentile; min 75% at 40th percentile | For 2024, ROA 1.55% at 91st percentile → 125% Company Performance Factor | Positive adjustment to annual bonus (then 0–300% scaled by individual goals) | Cash and book value stock awards per EIP rules . |
| Long-Term EIP (2023–2025 cycle) | Multiple measures (see table below) | Company-scored 50% min /100% target /200% max | Ongoing (cycle ends 2025) | 0–200% of average annual EIP over 3 years; senior leaders take higher stock portion | Stock portion forfeitable over 5 years if not employed/profitable . |
| Restricted Stock Award (RSA) – Performance Condition | n/a | Average ROA each year at or above comparable $3–$10B bank holding companies | If missed in a year, forfeiture remains; lapses next year if criteria met | Shares vest only if employment and performance conditions satisfied | 20% vests and is free of forfeiture Jan 1, 2026; remainder lapses ratably Mar 31, 2027–Mar 31, 2031 . |
Long-Term EIP (2023–2025) Goals and Weightings:
| Metric | Weighting | Minimum | Target | Maximum |
|---|---|---|---|---|
| Return on assets | 19% | 89% of Target | Target | 111% of Target |
| Expense-to-revenue ratio | 10% | 110% of Target | Target | 90% of Target |
| Average total assets | 14% | 95% of Target | Target | 105% of Target |
| Net charge-offs & credit-related losses/avg loans, leases, repossessed assets & OREO | 9% | 150% of Target | Target | 50% of Target |
| Period-end nonperforming assets | 9% | 200% of Target | Target | 75% of Target |
| Growth in net new primary relationships | 19% | 75% of Target | Target | 150% of Target |
| Community Bank loans to total loans | 15% | 96% of Target | Target | 106% of Target |
| Percent of diverse exempt colleagues | 5% | 96% of Target | Target | 108% of Target |
Restricted Stock Award Grant Details:
| Grant Date | Shares | Type | Initial Vest | Remaining Vest Schedule | Performance Condition |
|---|---|---|---|---|---|
| Jan 1, 2026 | 12,500 | Market-value restricted stock | 20% vests Jan 1, 2026 (free of forfeiture) | Lapse ratably Mar 31, 2027–Mar 31, 2031 | Annual average ROA ≥ comparable $3–$10B bank holding companies; missed year remains forfeited until criteria met . |
Equity Ownership & Alignment
| Policy/Item | Disclosure |
|---|---|
| Executive Stock Ownership Guidelines | CEO: 5x salary; other NEOs: 3x salary; all NEOs currently in compliance (Kevin not disclosed as NEO in 2024 proxy) . |
| Hedging/Pledging Policy | Prohibits pledging on margin, derivatives, short sales, and hedging; shares in excess of guideline may be used as collateral with prior approval by Governance & Nominating Committee . |
| Beneficial Ownership (Kevin C. Murphy) | Not disclosed in 2025 proxy tables; group total disclosed (15 persons: 4,944,064 shares, 19.55%) . |
Employment Terms
| Term/Provision | Key Terms |
|---|---|
| Agreement Term | Effective Oct 1, 2025 to Dec 31, 2028; auto-renews for one-year terms each Jan 1 starting 2027 unless non-renewal notice by Sep 30 of current term; if non-renewed, term ends Dec 31 of the third year following the notice year . |
| Reporting/Scope | EVP of Employer and President of Bank; full management responsibility for specified units/divisions; reports to CEO/Executive Chairman/Boards . |
| Severance – Without Cause (or unjustified With Cause) | Lump sum equal to 6× monthly base salary within 30 days after effective release; plus 30 monthly installments equal to monthly base salary, starting month 7; total 36 months of base salary . |
| Severance – Good Reason (no Change in Control) | Same schedule as “Without Cause”: 6× monthly base salary lump sum plus 30 monthly installments; release required . |
| Severance – Disability | 6× monthly base salary lump sum plus 6 monthly installments equal to monthly base salary; participates in disability programs . |
| Change-in-Control (CoC) Severance | If termination “Without Cause” or for “Good Reason” within 1 year after CoC: cash equal to 2.99× annual base pay + target annual bonus; excludes value from accelerated equity/options; 280G/4999 excise tax cutback to avoid excess parachute under Section 280G (Reduced Amount) . |
| Restrictive Covenants | Confidentiality; 24-month non-compete and non-solicit within the geographic regions where retail full-service branches are located; limited passive ownership up to 5% of voting securities of public competitors . |
| Clawback/Forfeiture on Breach | Immediate forfeiture of all equity awards and severance upon breach of restrictive covenants; repayment within 10 days of severance/equity benefits paid or shares issued within 12 months of breach; injunctive relief available . |
| Section 409A Treatment | Six-month delay of deferred compensation payments if “key employee” under 409A; release timing and payment commencement rules addressed . |
Performance & Company Context
Company Pay-Versus-Performance (PEO/NEOs) – TSR, Net Income, ROA:
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Value of $100 Investment – Company TSR | $80 | $101 | $111 | $118 | $129 |
| Net Income ($USD Thousands) | $81,437 | $118,534 | $120,509 | $124,927 | $132,623 |
| Company Selected Measure: ROA (%) | 1.14% | 1.53% | 1.49% | 1.48% | 1.52% |
Company Financials (Annual):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Net Income - (IS) ($USD) | $120,509,000 | $124,927,000 | $132,622,999 |
| Revenues ($USD) | $91,262,000 | $90,623,000* | $86,307,000* |
*Values retrieved from S&P Global.
Governance & Policy References
- Executive Compensation & Human Resources Committee sets and administers EIP, long-term awards, performance factor based on ROA vs $3–$10B peer peers .
- Stock ownership guidelines and hedging/pledging prohibitions for senior executives .
- Related party transactions oversight by Audit, Finance & Risk Committee; Aunalytics relationship (board representation by C.J. Murphy III; services paid by bank) .
Investment Implications
- Compensation alignment: Base pay ($450k) is modest with at-risk components via EIP (20% minimum partnership rate) and Strategic Deployment (0.13% of net income), both linked to ROA-based peer-relative performance and individual KPIs; strong linkage to ROA percentile (Company Performance Factor capped at 125%) supports pay-for-performance discipline .
- Equity/performance conditioning: The 12,500-share RSA requires annual average ROA at/above comparable peers and features multi-year vesting through 2031, promoting retention and performance alignment; forfeiture/repayment provisions on covenant breach further strengthen alignment and reduce moral hazard .
- Retention and severance risk: Robust severance (36 months base for non-CoC terminations; 2.99× base+target bonus on CoC) mitigates turnover risk during succession but introduces payout risk under adverse events; 280G cutback reduces parachute tax exposure .
- Non-compete/Non-solicit protections: 24-month restrictions across operating geographies protect franchise value; combined with confidentiality and clawback terms, they deter competitive exits .
- Performance backdrop: Net income growth and TSR improvement over 2020–2024 and ROA stability around ~1.5% underpin the ROA-centered incentive design and suggest incentives may pay above target when peer-relative performance is strong (as in 2024 at the 91st percentile) .
Sources: Company filings and investor materials as cited above.