Table of Contents As discussed in Note 12, the capital securities held by the Capital Trusts qualify as Tier 1 capital under Federal Reserve Board guidelines. The following table shows the actual and required capital amounts and ratios for 1st Source Corporation and 1st Source Bank as of December 31, 2020 and 2019. The Bank was not required to maintain noninterest bearing cash balances with the Federal Reserve Bank as of December 31, 2020 and 2019. Dividends that may be paid by a subsidiary bank to the parent company are subject to certain legal and regulatory limitations and also may be affected by capital needs, as well as other factors. Due to the Company’s mortgage activities, 1st Source Bank is required to maintain minimum net worth capital requirements established by various governmental agencies. 1st Source Bank’s net worth requirements are governed by the Department of Housing and Urban Development and GNMA. As of December 31, 2020, 1st Source Bank met its minimum net worth capital requirements. The Company determines the fair values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of quoted prices and observable inputs and to minimize the use of unobservable inputs when measuring fair value. The Company elected fair value accounting for mortgages held for sale and for its best-efforts forward sales commitments. The Company economically hedges its mortgages held for sale at the time the interest rate locks are issued to the customers. The Company believes the election for mortgages held for sale will reduce certain timing differences and better match changes in the value of these assets with changes in the value of the derivatives or best-efforts forward sales commitments. At December 31, 2020 and 2019, all mortgages held for sale are carried at fair value. 80 Note 21 — Fair Value Measurements Actual Minimum Capital Adequacy Minimum Capital Adequacy with Capital Buffer To Be Well Capitalized Under Prompt Corrective Action Provisions (Dollars in thousands)  Amount Ratio Amount Ratio Amount Ratio Amount Ratio 2020 Total Capital (to Risk-Weighted Assets): 1st Source Corporation $ 966,092 15.99 % $ 483,350 8.00 % $ 634,397 10.50 % $ 604,188 10.00 % 1st Source Bank 881,983 14.59 483,637 8.00 634,774 10.50 604,546 10.00 Tier 1 Capital (to Risk-Weighted Assets): 1st Source Corporation 889,709 14.73 362,513 6.00 513,560 8.50 483,350 8.00 1st Source Bank 805,556 13.32 362,728 6.00 513,864 8.50 483,637 8.00 Common Equity Tier 1 Capital (to Risk- Weighted Assets): 1st Source Corporation 788,884 13.06 271,884 4.50 422,931 7.00 392,722 6.50 1st Source Bank 761,731 12.60 272,046 4.50 423,182 7.00 392,955 6.50 Tier 1 Capital (to Average Assets): 1st Source Corporation 889,709 12.15 292,977 4.00 N/A N/A 366,221 5.00 1st Source Bank 805,556 11.00 292,959 4.00 N/A N/A 366,199 5.00 2019 Total Capital (to Risk-Weighted Assets): 1st Source Corporation $ 882,453  14.90  % $ 473,782  8.00  % $ 621,839  10.50  % $ 592,227  10.00  % 1st Source Bank 804,131  13.57  474,189  8.00  622,373  10.50  592,736  10.00  Tier 1 Capital (to Risk-Weighted Assets): 1st Source Corporation 807,926  13.64  355,336  6.00  503,393  8.50  473,782  8.00  1st Source Bank 729,541  12.31  355,642  6.00  503,826  8.50  474,189  8.00  Common Equity Tier 1 Capital (to Risk- Weighted Assets): 1st Source Corporation 743,467  12.55  266,502  4.50  414,559  7.00  384,948  6.50  1st Source Bank 722,082  12.18  266,731  4.50  414,915  7.00  385,279  6.50  Tier 1 Capital (to Average Assets): 1st Source Corporation 807,926  12.19  265,122  4.00  N/A N/A 331,402  5.00  1st Source Bank 729,541  11.03  264,500  4.00  N/A N/A 330,625  5.00 