1st Source (SRCE) - 2025 Q4 - Annual Results

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]