Shares of 1st Source (SRCE) have been strong performers lately, with the stock up 8% over the past month. The stock hit a new 52-week high of $69.57 in the previous session. 1st Source has gained 9.9% since the start of the year compared to the 1.4% gain for the Zacks Finance sector and the 8.9% return for the Zacks Banks - Midwest industry.What's Driving the Outperformance?The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last fo ...

Investors might want to bet on 1st Source (SRCE) , as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power of ...

Financial Performance - Record net income of $158.28 million for 2025, up 19.34% from 2024, with fourth quarter net income of $41.14 million, up 30.87% year-over-year [2] - Diluted net income per common share reached $6.41 for 2025, a 19.59% increase from 2024, and $1.67 for the fourth quarter, up 31.50% from the previous year [5] - Net income for the full year 2025 was $158,259, an increase of 19.4% from $132,618 in 2024 [38] - Net income available to common shareholders for Q4 2025 was $41,142,000, compared to $31,438,000 in Q4 2024, representing a 31% increase [41] Asset and Liability Management - Total assets as of December 31, 2025, were $9,070,471, an increase from $8,824,464 in Q4 2024, representing a year-over-year growth of approximately 2.8% [38] - Total liabilities decreased to $7,737,180 as of December 31, 2025, compared to $7,765,260 on September 30, 2025, showing a reduction of about 0.4% [40] - Total shareholders' equity rose to $1,274,971 as of December 31, 2025, up from $1,236,472 on September 30, 2025, reflecting an increase of approximately 3.1% [40] Income and Expense Analysis - Noninterest income for 2025 was $85.60 million, down 0.82% from 2024, primarily due to realized losses from repositioning available-for-sale investment securities [17] - Noninterest expense for 2025 was $216.84 million, an increase of 6.50% compared to 2024, driven by higher salaries and benefits [20] - Total noninterest expense for Q4 2025 was $56,557,000, an increase from $54,208,000 in Q4 2024 [41] Loan and Deposit Growth - Average loans and leases grew by $336.29 million, up 5.10% to $6.93 billion in 2025, while average deposits increased by $263.33 million, up 3.70% to $7.38 billion [5] - Net loans and leases increased to $6,884,823 as of December 31, 2025, compared to $6,803,024 on September 30, 2025, reflecting a growth of approximately 1.2% [40] - Total deposits decreased to $7,225,575 as of December 31, 2025, down from $7,409,819 on September 30, 2025, representing a decline of about 2.5% [40] Efficiency and Ratios - Return on average assets increased to 1.76% and return on average common shareholders' equity increased to 13.16% for the full year 2025, compared to 1.52% and 12.54% in 2024, respectively [3] - The efficiency ratio for Q4 2025 was 51.03%, an increase from 55.40% in Q4 2024, indicating improved operational efficiency [38] - The efficiency ratio (GAAP-derived) was 49.99% for the twelve months ended December 31, 2025, compared to 52.59% in 2024, indicating improved operational efficiency [46] Shareholder Returns - Cash dividend of $0.40 per common share approved, reflecting an 11.11% increase from the previous year [4] - Common shareholders' equity at the end of Q4 2025 was $1,261,725, up from $1,115,473 in Q4 2024, reflecting a year-over-year increase of 13.1% [38] Interest Income and Margins - Tax-equivalent net interest margin improved to 4.07% for 2025, up 43 basis points from 2024, with fourth quarter margin at 4.29%, up 51 basis points year-over-year [5] - Net interest income for Q4 2025 was $93,295, up from $79,366 in Q4 2024, reflecting a year-over-year increase of 17.6% [38] - Total interest income for Q4 2025 was $132,986,000, an increase of 7.9% from $123,150,000 in Q4 2024 [41] Nonperforming Assets - Total nonperforming assets increased to $77,378 in Q4 2025 from $63,192 in Q4 2024, representing a rise of 22.5% [39]

Core Insights - John Griffith, Executive Vice President and Chief Risk Officer of 1st Source Corporation and 1st Source Bank, will retire effective December 31, 2025, after nearly 25 years with the organization [1][2] - Griffith's tenure has been marked by his commitment to the company's mission and values, which have established a strong foundation for managing legal and regulatory risks [2] - 1st Source Corporation, the parent company of 1st Source Bank, has assets totaling $9.1 billion and operates numerous banking and financial service locations across the northern Indiana-southwestern Michigan area [4] Company Overview - 1st Source Corporation is the largest locally controlled financial institution in its region, with 78 banking centers and various specialized finance and advisory service locations [4] - The company has been dedicated to helping clients achieve security and build wealth for over 160 years [4] - Griffith holds degrees in Accounting and Law, bringing over 40 years of business and legal expertise to his role, including 15 years as a banking and financial restructuring lawyer [2]

Core Points - 1st Source Bank has announced the promotion of John Bedient to Chief Operating Officer and Dan Lifferth to Chief Administrative Officer as part of recent leadership changes [1][2][3] - The promotions are aimed at aligning responsibilities and ensuring long-term success for the bank and its parent company, 1st Source Corporation [2][3] Leadership Changes - John Bedient has been with 1st Source Bank since 1991 and has held various key roles, including overseeing strategic projects and the implementation of advanced banking technologies [3][4] - Dan Lifferth has served as Senior Vice President of Human Resources since 2015, focusing on employee engagement and leadership development initiatives [4][5] Company Overview - 1st Source Corporation, the parent company of 1st Source Bank, has assets totaling $9.1 billion and operates 78 banking centers, 18 Specialty Finance Group locations, and various other financial service offices [9] - The corporation has a long-standing commitment to helping clients achieve financial security and build wealth, with over 160 years of service in the financial industry [9]

Core Viewpoint - The article emphasizes the importance of value investing and highlights 1st Source (SRCE) as a strong candidate for value investors due to its favorable financial metrics and Zacks Rank [2][3][6] Company Analysis - 1st Source (SRCE) holds a Zacks Rank of 2 (Buy) and has received an "A" grade in the Value category, indicating it is among the strongest value stocks currently available [3] - The company's price-to-book (P/B) ratio is 1.24, which is lower than the industry average of 1.91, suggesting that SRCE is undervalued compared to its peers [4] - SRCE's P/CF ratio stands at 10.31, significantly lower than the industry average of 13.99, further indicating its potential undervaluation [5] - Over the past year, SRCE's P/B has fluctuated between 1.07 and 1.40, with a median of 1.24, while its P/CF has ranged from 8.55 to 11.36, with a median of 10.06 [4][5] Investment Outlook - The combination of SRCE's strong earnings outlook and its attractive valuation metrics positions it as a compelling value stock for investors at this time [6]

Core Viewpoint - 1st Source (SRCE) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3][5]. - Institutional investors rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Company Performance and Outlook - The upgrade reflects an improvement in 1st Source's underlying business, suggesting that investors may respond positively by driving the stock price higher [4]. - The Zacks Consensus Estimate for 1st Source is projected at $6.43 per share for the fiscal year ending December 2025, with a 3.5% increase in estimates over the past three months [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [6]. - The upgrade to Zacks Rank 2 places 1st Source in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].

Group 1 - The article discusses the importance of enabling Javascript and cookies in browsers to prevent access issues [1] - It highlights that users with ad-blockers may face restrictions when trying to access content [1]

Core Insights - 1st Source (SRCE) reported quarterly earnings of $1.71 per share, exceeding the Zacks Consensus Estimate of $1.59 per share, and up from $1.41 per share a year ago, representing an earnings surprise of +7.55% [1] - The company achieved revenues of $110.66 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.69%, and an increase from $97.93 million year-over-year [2] - 1st Source has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.60 on revenues of $111.7 million, and for the current fiscal year, it is $6.22 on revenues of $435 million [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Banks - Midwest industry, to which 1st Source belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net income available to common shareholders for the nine months ended September 30, 2025, was $117.14 million, compared to $101.19 million for the same period in 2024, reflecting an increase in net interest income and noninterest income [186]. - Diluted net income per common share increased to $4.74 for the nine months ended September 30, 2025, compared to $4.09 for the same period in 2024 [186]. - Taxable-equivalent net interest income for Q3 2025 was $88.90 million, an increase of 17.55% compared to Q3 2024 [191]. - Taxable-equivalent net interest income for the nine months ended September 30, 2025, was $255.33 million, an increase of 15.07% compared to the same period in 2024 [198]. - The net interest margin on a fully taxable-equivalent basis improved to 4.00% for the nine months ended September 30, 2025, compared to 3.59% for the same period in 2024 [198]. Asset and Liability Management - Total assets increased to $9.06 billion, up $124.75 million or 1.40% from December 31, 2024 [166]. - Total loans and leases rose to $6.96 billion, an increase of $109.65 million or 1.60% from December 31, 2024, driven by growth in renewable energy and residential real estate portfolios [167]. - Total deposits reached $7.41 billion, an increase of $179.78 million or 2.49% from the end of 2024, primarily due to higher savings and time deposits [169]. - Cash and cash equivalents totaled $214.26 million, an increase from $124.83 million at December 31, 2024, primarily due to increased deposits [183]. - The loan to asset ratio was 76.90% at September 30, 2025, compared to 76.74% at December 31, 2024 [183]. Shareholder Equity - Total shareholders' equity was $1.24 billion, up $125.40 million or 11.29% from December 31, 2024, with a shareholders' equity-to-assets ratio of 13.65% [174]. - The accumulated other comprehensive loss component of shareholders' equity decreased to $45.86 million at September 30, 2025, from $87.23 million at December 31, 2024 [174]. - The dividend payout ratio for the trailing four quarters was 24.63%, with cash dividends per common share of $0.38 declared during the third quarter of 2025 [175]. Interest Income and Expenses - Average earning assets increased by $352.52 million, or 4.26%, over the same period in 2024 [192]. - The yield on average earning assets rose to 6.03%, up 10 basis points from 5.93% in Q3 2024 [192]. - Total cost of average interest-bearing liabilities decreased by 48 basis points to 2.79% from 3.27% [192]. - Net interest margin on a fully taxable-equivalent basis was 4.09% for Q3 2025, compared to 3.64% for Q3 2024 [191]. Noninterest Income and Expenses - Total noninterest income for the three months ended September 30, 2025, was $21.906 million, a decrease of 2.41% compared to $22.448 million in 2024 [223]. - Trust and wealth advisory fees increased by 4.61% to $6.825 million for the three months ended September 30, 2025, compared to $6.524 million in 2024 [223]. - Insurance commissions rose by 12.43% to $1.845 million for the three months ended September 30, 2025, compared to $1.641 million in 2024 [223]. - Total noninterest expense increased by 7.77% to $54.776 million for the three months ended September 30, 2025, compared to $50.828 million in 2024 [234]. - Salaries and employee benefits rose by 3.02% to $32.217 million for the three months ended September 30, 2025, compared to $31.274 million in 2024 [234]. - Business development and marketing expenses surged by 70.32% to $2.846 million for the three months ended September 30, 2025, compared to $1.671 million in 2024 [234]. Credit Quality - The provision for credit losses for the nine months ended September 30, 2025, was $11.85 million, compared to $8.89 million for the same period in 2024 [207]. - Nonperforming assets totaled $63.19 million at September 30, 2025, an increase of 101.67% from $31.33 million reported at December 31, 2024 [215]. - The allowance for loan and lease losses as a percentage of loans and leases outstanding was 2.32% at September 30, 2025, compared to 2.30% one year ago [211]. - Net charge-offs for the first nine months of 2025 were $3.93 million or 0.08% of average loans and leases, compared to $4.99 million or 0.10% for the same period in 2024 [207]. Market and Taxation - The market value of trust assets under management increased to $6.07 billion as of September 30, 2025, from $6.03 billion a year ago [224]. - The provision for income taxes for the three months ended September 30, 2025, was $12.71 million, compared to $10.47 million for the same period in 2024 [242]. - The effective tax rate for the quarter ended September 30, 2025, was 23.11%, compared to 23.07% for the same quarter in 2024 [242].