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].

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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].

Financial Performance - Record quarterly net income of $42.30 million for Q3 2025, up 13.34% from the previous quarter and up 21.06% year-over-year [2] - Diluted net income per common share for Q3 2025 was $1.71, an increase of 13.25% from the previous quarter and 21.28% from Q3 2024 [4] - Net income available to common shareholders reached $42,296,000 in Q3 2025, a 5.2% increase from $37,319,000 in Q2 2025 and a 21.0% increase from $34,937,000 in Q3 2024 [38] - Net income for Q3 2025 was $42,279,000, representing a 21.0% increase from $34,914,000 in Q3 2024 [41] - Basic net income per common share for Q3 2025 was $1.71, up from $1.41 in Q3 2024, reflecting a 21.3% increase [41] Asset and Equity Growth - Total assets increased to $9,033,539,000 in Q3 2025 from $8,962,134,000 in Q2 2025, representing a growth of 1.2% [38] - Total assets as of September 30, 2025, amounted to $9,056,691, a slight decrease from $9,087,162 as of June 30, 2025 [40] - Total equity increased to $1,291,431,000 at the end of Q3 2025, compared to $1,257,424,000 at the end of Q2 2025 [38] - Total shareholders' equity rose to $1,236,472, compared to $1,198,589 in the previous quarter, marking an increase of about 3.2% [40] - Total common shareholders' equity increased to $1,236,472, up from $1,104,253, reflecting a growth of 12% year-over-year [47] Loan and Deposit Trends - Average loans and leases grew by $46.93 million in Q3 2025, up 0.67% from the previous quarter and $409.71 million, or 6.20%, from Q3 2024 [12] - Average deposits increased by $75.03 million in Q3 2025, up 1.02% from the previous quarter and $289.69 million, or 4.06%, from Q3 2024 [13] - Loans and leases at the end of Q3 2025 were $6,964,454,000, a decrease from $7,097,969,000 in Q2 2025 [38] - Net loans and leases decreased to $6,803,024 from $6,934,485 in the previous quarter, reflecting a decline of approximately 1.9% [40] - Total deposits were reported at $7,409,819, down from $7,442,669 in the prior quarter, indicating a decrease of about 0.4% [40] Income and Expense Analysis - Tax-equivalent net interest income for Q3 2025 was $88.90 million, up 4.17% from the previous quarter and 17.55% year-over-year [14] - Net interest income for Q3 2025 was $88,750,000, up 4.3% from $85,192,000 in Q2 2025 and 17.5% from $75,486,000 in Q3 2024 [38] - Noninterest income for Q3 2025 was $21,906,000, down from $23,057,000 in Q2 2025, indicating a decline of 5.0% [38] - Total noninterest expense for Q3 2025 was $54,776,000, an increase of 7.8% from $50,828,000 in Q3 2024 [41] - Noninterest expense for Q3 2025 was $54.78 million, an increase of 4.47% from the prior quarter and 7.77% from Q3 2024 [21] Efficiency and Ratios - The efficiency ratio improved to 49.50% in Q3 2025 from 48.43% in Q2 2025, indicating better cost management [38] - Return on average assets increased to 1.86% in Q3 2025, up from 1.67% in Q2 2025 and 1.59% in Q3 2024 [38] - The net interest margin improved to 4.08% in Q3 2025, compared to 4.00% in Q2 2025 and 3.63% in Q3 2024 [38] - The tangible common equity-to-tangible assets ratio was 12.85% as of September 30, 2025, compared to 11.76% a year earlier [46] - The efficiency ratio (GAAP-derived) improved to 49.63% for the nine months ended September 30, 2025, down from 51.64% in the same period last year [46] Credit Quality - Provision for credit losses was $0.90 million in Q3 2025, a decrease of $6.79 million from the previous quarter [25] - The allowance for loan and lease losses was 2.32% of total loans and leases as of September 30, 2025, up from 2.30% at June 30, 2025 [24] - The provision for credit losses totaled $896,000 in Q3 2025, a decrease from $1,723,000 in Q3 2024, indicating improved credit quality [41]

Core Insights - 1st Source Corporation reported record quarterly net income of $42.30 million for Q3 2025, representing a 13.34% increase from the previous quarter and a 21.06% increase year-over-year [2][7] - The company declared a cash dividend increase of two cents per share, raising it to $0.40, which is an 11.11% increase from the previous year [3][7] - The financial results were driven by growth in net interest income and improved credit quality, despite some realized losses from strategic repositioning in the investment portfolio [2][4][7] Financial Performance - Net income for Q3 2025 was $42.30 million, up $4.98 million or 13.34% from Q2 2025 and up $7.36 million or 21.06% from Q3 2024 [2][7] - Diluted net income per common share for Q3 2025 was $1.71, an increase of 13.25% from the previous quarter and 21.28% from the same quarter last year [2][7] - Year-to-date net income for 2025 reached $117.14 million, a 15.76% increase compared to the same period in 2024 [2] Balance Sheet and Capital - The common equity-to-assets ratio improved to 13.65% as of September 30, 2025, compared to 13.19% at June 30, 2025 [27] - The tangible common equity-to-tangible assets ratio was 12.85% at the end of Q3 2025, up from 12.38% in the previous quarter [27] - The Common Equity Tier 1 ratio was 15.18% as of September 30, 2025, compared to 14.60% at June 30, 2025 [27] Loans and Deposits - Average loans and leases for Q3 2025 were $7.02 billion, an increase of $46.93 million or 0.67% from the previous quarter and up $409.71 million or 6.20% year-over-year [12] - Average deposits increased to $7.42 billion in Q3 2025, up $75.03 million or 1.02% from the previous quarter and up $289.69 million or 4.06% from the same quarter last year [13] Net Interest Income and Margin - Tax-equivalent net interest income for Q3 2025 was $88.90 million, up $3.56 million or 4.17% from the previous quarter and up $13.27 million or 17.55% year-over-year [14] - The net interest margin for Q3 2025 was 4.09%, an increase of eight basis points from the previous quarter and 45 basis points from the same period in 2024 [15] Noninterest Income and Expense - Noninterest income for Q3 2025 was $21.91 million, a decrease of $1.15 million or 4.99% from the previous quarter and a decrease of $0.54 million or 2.41% year-over-year [17] - Noninterest expense increased to $54.78 million in Q3 2025, up $2.35 million or 4.47% from the prior quarter and up $3.95 million or 7.77% from the same quarter last year [22] Leadership Transition - Christopher J. Murphy III stepped down as CEO effective October 1, 2025, transitioning to Executive Chairman, while Andrea G. Short took over as CEO [8][9] - The leadership transition is part of a long-term strategy to ensure continuity and stability within the organization [8][10]

Group 1: Smithfield Foods, Inc. - Smithfield Foods, Inc. is a pork producer and food-processing company with a Zacks Rank 1 (Strong Buy) [1] - The Zacks Consensus Estimate for its current year earnings has increased by 3% over the last 60 days [1] - The company has a price-to-earnings ratio (P/E) of 9.97, compared to the industry average of 10.80, and possesses a Value Score of A [1] Group 2: VEON - VEON is engaged in telecommunication and digital services and also carries a Zacks Rank 1 [2] - The Zacks Consensus Estimate for its next year earnings has increased by 15.2% over the last 60 days [2] - The company has a price-to-earnings ratio (P/E) of 5.21, significantly lower than the industry average of 17.60, and possesses a Value Score of A [2] Group 3: 1st Source - 1st Source is a bank holding company offering a broad range of commercial banking, personal banking, and trust services, with a Zacks Rank 1 [3] - The Zacks Consensus Estimate for its current year earnings has increased by 4.2% over the last 60 days [3] - The company has a price-to-earnings ratio (P/E) of 10.07, compared to the industry average of 11, and possesses a Value Score of B [3]

Company Overview - 1st Source Corporation (SRCE) is currently experiencing significant attention in the options market, particularly with the Sep 19, 2025 $40 Call showing high implied volatility, indicating potential for a major price movement [1] - The company holds a Zacks Rank 1 (Strong Buy) in the Banks - Midwest industry, which is in the top 17% of the Zacks Industry Rank [3] Analyst Insights - Over the past 30 days, one analyst has raised the earnings estimate for the current quarter from $1.45 per share to $1.59, with no downward revisions from other analysts [3] - The high implied volatility suggests that options traders are anticipating a significant price movement for 1st Source shares, which could indicate an upcoming event that may lead to a rally or sell-off [2][4] Trading Strategy - Options traders often seek out options with high implied volatility to sell premium, a strategy that captures decay and benefits if the underlying stock does not move as much as expected by expiration [4]

Core Insights - 1st Source reported Q2 2025 earnings per share (GAAP) of $1.51, exceeding analyst expectations of $1.47, while provisions for credit losses increased due to higher net charge-offs in auto and truck portfolios [1][2][7] Financial Performance - Q2 2025 revenue (GAAP) reached $108.25 million, an 11.3% increase from $97.27 million in Q2 2024 [2] - Net interest income (GAAP) rose to $85.19 million, a 15.0% increase year-over-year, driven by higher loan balances and improved net interest margin of 4.01% [2][5] - Average loans and leases grew to $6.97 billion, up 5.48% year-over-year, with significant growth in Commercial and Agricultural, Renewable Energy, and Construction Equipment portfolios [5] - Noninterest income (GAAP) was relatively flat at $23.06 million compared to Q2 2024, impacted by lower insurance commissions and equipment rental income [6] Asset Quality and Risk Management - Provisions for credit losses (GAAP) more than doubled to $7.69 million from $3.27 million in Q1 2025, with net charge-offs rising to $1.87 million [7] - Nonperforming assets as a share of loans and leases increased to 1.06%, primarily due to issues in the auto and light truck segment [7] - The allowance for loan and lease losses rose to $163.48 million, representing 2.30% of total loans and leases [7] Capital and Deposits - Average deposits increased by 2.3% to $7.35 billion, although noninterest-bearing deposits declined [8] - The bank's Common Equity Tier 1 ratio stood at 14.60%, indicating a strong capital base [8] - Tangible book value per share increased to $45.44 from $39.16 in Q2 2024 [8] Dividend and Outlook - The quarterly dividend was raised by 5.6% to $0.38 per share [10] - Management expressed confidence in the bank's balance sheet and liquidity, while acknowledging ongoing economic uncertainty and the need to monitor asset quality [10][11]