Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-6233 100 North Michigan Street South Bend, IN 46601 (Address of principal executive offices) (Zip Code) (574) 23 ...

Group 1 - 1st Source reported quarterly earnings of $1.52 per share, exceeding the Zacks Consensus Estimate of $1.36 per share, and up from $1.19 per share a year ago, representing an earnings surprise of 11.76% [1] - The company posted revenues of $104.04 million for the quarter, surpassing the Zacks Consensus Estimate by 1.70%, and an increase from $94.07 million year-over-year [2] - 1st Source has consistently surpassed consensus EPS estimates over the last four quarters [2] Group 2 - The stock has lost approximately 2.5% since the beginning of the year, while the S&P 500 has declined by 8.6% [3] - The current consensus EPS estimate for the upcoming quarter is $1.50 on revenues of $105.5 million, and for the current fiscal year, it is $5.82 on revenues of $418.3 million [7] - The Zacks Industry Rank for Banks - Midwest is in the top 10% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] Group 3 - The estimate revisions trend for 1st Source is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions [5] - Another company in the same industry, Enterprise Financial Services, is expected to report quarterly earnings of $1.17 per share, reflecting a year-over-year change of +9.4% [9]

Financial Performance - Record quarterly net income of $37.52 million, up 19.35% from the previous quarter and up 27.38% year-over-year [2] - Diluted net income per common share was $1.52, reflecting a 19.69% increase from the previous quarter and a 27.73% increase from the same quarter last year [4] - Net income available to common shareholders for Q1 2025 was $37,520, a 27.4% increase from $29,455 in Q1 2024 [35] - Basic net income per common share increased to $1.52 in Q1 2025, up from $1.19 in Q1 2024, marking a growth of 27.8% [35] - Net income available to common shareholders reached $37,520 thousand for the first quarter of 2025, compared to $31,438 thousand in the previous quarter, representing a growth of 19.8% [38] Asset and Loan Growth - Average loans and leases grew by $122.53 million, or 1.84%, from the previous quarter, and increased by $294.88 million, or 4.53%, year-over-year [12] - Total loans and leases amounted to $6,863,393 thousand as of March 31, 2025, slightly up from $6,854,808 thousand at December 31, 2024, indicating a growth of 0.13% [37] - Total assets increased to $8,963,114 thousand as of March 31, 2025, compared to $8,931,938 thousand at December 31, 2024, reflecting a growth of 0.35% [37] - Total assets increased to $8,856,278 thousand as of March 31, 2025, compared to $8,824,464 thousand at December 31, 2024, reflecting a growth of 0.36% [39] Deposit Growth - Average deposits increased by $187.39 million, or 2.62%, from the previous quarter, and grew by $322.44 million, or 4.60%, compared to the same quarter last year [13] - Total deposits rose to $7,417,765 thousand as of March 31, 2025, compared to $7,230,035 thousand at December 31, 2024, reflecting an increase of 2.6% [37] Income and Revenue - Tax-equivalent net interest income was $81.09 million, up 1.97% from the previous quarter and up 12.52% year-over-year [14] - Net interest income for Q1 2025 was $80,938, up 12.5% from $71,915 in Q1 2024 [35] - Noninterest income for the first quarter was $23.10 million, up 25.00% from the previous quarter and up 4.27% year-over-year [16] - Noninterest income rose to $23,103 in Q1 2025, a 4.3% increase from $22,156 in Q1 2024 [35] - Noninterest income increased to $23,103 thousand for the first quarter of 2025, compared to $18,482 thousand in the previous quarter, a significant increase of 25.5% [38] Efficiency and Ratios - Common equity-to-assets ratio improved to 12.96%, compared to 12.44% at the end of the previous quarter and 11.65% a year ago [23] - The efficiency ratio improved to 51.01% in Q1 2025, down from 51.77% in Q1 2024, indicating better operational efficiency [35] - The efficiency ratio (GAAP-derived) improved to 51.01% for the first quarter of 2025, down from 55.40% in the previous quarter, indicating enhanced operational efficiency [41] Capital and Equity - Total equity at the end of Q1 2025 was $1,220,542, an increase from $1,081,549 in Q1 2024, reflecting a growth of 12.9% [35] - Total common shareholders' equity increased to $1,161,459 thousand as of March 31, 2025, compared to $1,111,068 thousand at December 31, 2024, reflecting a growth of 4.53% [41] - Book value per common share (GAAP-derived) rose to $47.29 as of March 31, 2025, up from $45.31 in the previous quarter, indicating an increase of 4.37% [41] Allowance and Asset Quality - The allowance for loan and lease losses increased to $157.47 million, or 2.29% of total loans and leases, reflecting increased economic uncertainty [21] - The allowance for loan and lease losses was $157,470 at the end of Q1 2025, compared to $148,024 in Q1 2024, indicating a proactive approach to asset quality [35] - Nonperforming assets increased to $43,072 in Q1 2025 from $22,431 in Q1 2024, highlighting potential challenges in asset quality [35] Operational Developments - The company opened a new banking center in Carmel, Indiana, expanding its market presence [10]

Core Viewpoint - 1st Source Corporation's loan growth and earnings are at risk due to the resumption of tariffs on automobiles, which could impact its Specialty Finance division significantly [1]. Group 1: Company Overview - 1st Source Corporation operates a Specialty Finance division that lends for the purchase and lease of trucks, aircraft, and construction equipment, which constitutes more than half of the company's total operations [1].

Company Overview - 1st Source (SRCE) is based in South Bend and operates in the Finance sector, with a year-to-date share price change of 11% [3] - The company currently pays a dividend of $0.36 per share, resulting in a dividend yield of 2.22%, which is lower than the Banks - Midwest industry's yield of 2.99% and the S&P 500's yield of 1.55% [3] Dividend Performance - The current annualized dividend of 1st Source is $1.44, reflecting a 2.9% increase from the previous year [4] - Over the last 5 years, 1st Source has increased its dividend 4 times year-over-year, achieving an average annual increase of 5.14% [4] - The company's payout ratio stands at 26%, indicating that it paid out 26% of its trailing 12-month EPS as dividends [4] Earnings Growth - 1st Source is expected to see earnings growth this fiscal year, with the Zacks Consensus Estimate for 2025 projected at $5.82 per share, representing a year-over-year growth rate of 6.01% [5] Investment Appeal - Dividends are favored by investors as they enhance stock investing profits, reduce overall portfolio risk, and offer tax advantages [6] - Established firms with secure profits are typically viewed as the best dividend options, while high-growth businesses and tech start-ups rarely offer dividends [7] - 1st Source is recognized as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 2 (Buy) [7]

Core Points - 1st Source Bank has been recognized as one of America's Best Banks, ranking 26th out of 100 in the latest Forbes list [1][2] - The evaluation was based on 10 financial metrics assessing growth, credit quality, and profitability for the 12 months ending September 30, 2024, along with stock performance for the 12 months ending January 10, 2025 [1][2] - 1st Source Bank is one of only three banks in Indiana to be included in this year's list [1] Company Overview - 1st Source Corporation, the parent company of 1st Source Bank, has total assets of $8.9 billion, making it the largest locally controlled financial institution in the northern Indiana-southwestern Michigan area [3] - The corporation operates 77 banking centers, 18 specialty finance group locations, nine trust and wealth advisory services locations, 10 insurance offices, and three loan production offices [3] - 1st Source has a history of over 160 years dedicated to helping clients achieve security, build wealth, and realize their dreams [3]

Market Overview - Wall Street is currently in a risk-off mode as investors are selling off various assets, including Bitcoin, Constellation Energy, and Tesla, in anticipation of Nvidia's earnings release [1] - This selloff is affecting major momentum stocks and is contributing to a cooling of an overheated market [1] Investment Opportunities - Despite the market downturn, there are still strong stocks available that are trading near their highs, indicating potential investment opportunities [2] - Zacks Rank 1 (Strong Buy) stocks have historically outperformed the market, making them a focus for investors [3] Screening Criteria - The screening process for identifying Zacks Rank 1 stocks includes three main parameters: 1. Zacks Rank equal to 1, which has an average annual return of approximately 24.4% since 1988 [5] 2. Positive percentage change in Q1 earnings estimates over the last four weeks [6] 3. Top 5 stocks with the best average broker rating changes over the last four weeks [7] Featured Stock: 1st Source (SRCE) - 1st Source is highlighted as a strong investment opportunity, being the largest locally controlled financial institution in its region [7] - The company has consistently topped EPS estimates for six consecutive quarters, with FY25 EPS estimates increasing by 8% in the last month and FY26 estimates rising by 10% [8] - 1st Source has achieved record net income for four consecutive years and has expanded its dividend for 37 years [9] - Projected EPS growth for 2025 is 6%, with sales expansion of 7%, and for 2026, EPS growth is projected at 3% with sales expansion of 3% [9] - Over the past decade, SRCE stock has increased by 130%, outperforming the Finance sector's 85% growth [10] - Despite its strong performance, SRCE trades at a 43% discount to its highs and 35% below its sector average, with a forward P/E ratio of 11X [13]

Company Overview - 1st Source (SRCE) is headquartered in South Bend and has experienced a price change of 14.44% this year [3] - The company currently pays a dividend of $0.36 per share, resulting in a dividend yield of 2.16%, which is lower than the Banks - Midwest industry's yield of 2.9% and the S&P 500's yield of 1.54% [3] Dividend Performance - The annualized dividend of 1st Source is $1.44, reflecting a 2.9% increase from the previous year [4] - Over the past five years, the company has increased its dividend four times, achieving an average annual increase of 5.14% [4] - The current payout ratio is 26%, indicating that the company paid out 26% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for 1st Source's earnings per share for 2025 is $5.82, representing a year-over-year growth rate of 6.01% [5] Investment Appeal - 1st Source is considered an attractive dividend play and a compelling investment opportunity, currently holding a Zacks Rank of 1 (Strong Buy) [7]

Core Viewpoint - 1st Source Bank has joined the U.S. Faster Payments Council (FPC) to enhance its leadership in the instant payment sector and contribute to the development of the U.S. national payment system [1][3]. Company Overview - 1st Source Corporation, the parent company of 1st Source Bank, has total assets of $8.9 billion and is the largest locally controlled financial institution in the northern Indiana-southwestern Michigan area [4]. - The corporation operates 77 banking centers, 18 specialty finance group locations, nine trust and wealth advisory services locations, 10 insurance offices, and three loan production offices [4]. Industry Participation - The FPC is an industry-led organization aimed at improving the safety, security, and adoption of faster payments in the U.S. [1]. - 1st Source Bank was an early adopter of the FedNow Service, which allows for instant payment services, and has been utilizing the Real-time Payments (RTP®) platform since March 2023 [2]. Leadership and Commitment - The leadership of 1st Source Bank emphasizes its commitment to innovation and collaboration in the instant payment space, aligning with the FPC's mission [3]. - The bank's participation in the FPC is expected to provide valuable insights and enhance its position in the evolving landscape of faster payment technologies [2][3].

Company Overview - 1st Source (SRCE) is based in South Bend and operates in the Finance sector, with a year-to-date share price change of 5.88% [3] - The company currently pays a dividend of $0.36 per share, resulting in a dividend yield of 2.33%, which is lower than the Banks - Midwest industry's yield of 2.82% and higher than the S&P 500's yield of 1.48% [3] Dividend Performance - The current annualized dividend of 1st Source is $1.44, reflecting a 2.9% increase from the previous year [4] - Over the past five years, the company has increased its dividend four times, achieving an average annual increase of 5.14% [4] - The company's payout ratio stands at 26%, indicating that it distributes 26% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - Earnings growth for 1st Source appears solid, with the Zacks Consensus Estimate for 2025 projected at $5.82 per share, representing a year-over-year growth rate of 6.01% [5] Investment Appeal - Dividends are favored by investors as they enhance stock investing profits, reduce overall portfolio risk, and offer tax advantages [6] - 1st Source is characterized as an attractive dividend play and a compelling investment opportunity, currently holding a Zacks Rank of 1 (Strong Buy) [7]