1st Source Corporation Reports Record First Quarter Results,
Increased Cash Dividend Declared
QUARTERLY HIGHLIGHTS
•Net income was $39.96 million for the quarter, up $2.44 million or 6.49% from the first quarter of 2025 and down $1.19 million or 2.88% from the previous quarter. Diluted net income per common share was $1.63, up $0.11 or 7.24% from the prior year’s first quarter of $1.52 and down $0.04 or 2.40% from the previous quarter.
•Return on average assets was 1.80% for the current quarter, up from 1.72% in the first quarter of 2025 and unchanged from the previous quarter. Return on average common shareholders’ equity decreased to 12.53% compared to 13.33% in the first quarter of 2025 and 12.94% in the previous quarter.
•A cash dividend increase of three cents per share to $0.43 per common share for the quarter was approved, up five cents or 13.16% from the cash dividend declared a year ago.
•During the first quarter of 2026, 338,356 shares were repurchased for $23.35 million and placed into treasury.
•Average loans and leases grew $223.81 million, or 3.29% from the first quarter of 2025 and increased $69.67 million or 1.00% from the previous quarter.
•Average deposits decreased $141.97 million or 1.94% from the first quarter a year ago and decreased $229.44 million or 3.09% from the previous quarter. Average deposits, net of brokered deposits, increased $212.25 million or 3.16% from the first quarter of 2025 and decreased $106.42 million or 1.51% from the previous quarter.
•Tax-equivalent net interest income was $90.29 million, up $9.21 million, or 11.36% from the first quarter a year ago and down $3.16 million or 3.38% from the previous quarter. Tax-equivalent net interest margin was 4.25%, up 35 basis points from the first quarter of 2025 and down four basis points from the previous quarter. Higher yields on investment securities from portfolio repositioning trades during 2025 helped limit margin contraction partially offset by lower net interest recoveries compared to the previous quarter.
•Provision for credit losses of $7.27 million was recorded during the quarter compared to $3.27 million during the previous year’s first quarter and $0.71 million in the previous quarter. The allowance for loan and lease losses as a percentage of total loans and leases rose to 2.33% at March 31, 2026, up from 2.29% at March 31, 2025 and 2.30% at December 31, 2025.
South Bend, IN - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported quarterly net income of $39.96 million for the first quarter of 2026, up 6.49% compared to $37.52 million in the first quarter a year ago and down 2.88% compared to $41.14 million reported in the previous quarter. Diluted net income per common share for the first quarter of 2026 was $1.63, up 7.24% versus $1.52 in the first quarter of 2025 and down 2.40% compared to $1.67 in the previous quarter.
At its April 2026 meeting, the Board of Directors approved an increase in the cash dividend of three cents per share, raising the approved dividend for the quarter to $0.43 per common share, up five cents or 13.16% from the cash dividend declared a year ago. The cash dividend is payable to shareholders of record on May 5, 2026, and will be paid on May 15, 2026.
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Andrea G. Short, President and Chief Executive Officer, commented, “We are pleased to announce that 1st Source had a record first quarter. We ended 2025 and the first quarter of 2026 with a very strong and stable balance sheet and we will continue to focus on safety and soundness given the level of economic uncertainty currently impacting our clients and their businesses. During the first quarter of 2026, average loans and leases grew $69.67 million, up 1.00% from the previous quarter, our liquidity position remained solid, and our historically conservative capital position was maintained.
“We were happy to learn that 1st Source received several awards, further solidifying that our mission-first approach is the right way to do business. On a national scale, we were included in Forbes’ America’s Best Banks list for the third consecutive year and came in at #11 out of the top 100 named. This award is driven by 10 metrics measuring growth, credit quality, and profitability.
“Additionally, we learned that 1st Source was listed as #12 on Forbes’ America’s Best Midsize Employers list. This award is especially meaningful because it identifies companies that are rated most highly by their employees. Respondents ranked their employers on a range of criteria including salary, work environment, and opportunities to advance. We greatly value this feedback, and it aligns with our culture and core values of integrity, teamwork, superior quality, outstanding client service, and community leadership.
“And finally, at the state level, 1st Source was recognized for our small business lending across Indiana for the 13th year in a row by the Indiana District Office of the U.S. Small Business Administration (SBA). We once again received the Community Bank Gold Level Award for delivering the greatest number of SBA loans in Indiana in 2025.” Mrs. Short concluded.
FIRST QUARTER 2026 FINANCIAL RESULTS
Loans and Leases
First quarter average loans and leases were $7.02 billion, which was up $223.81 million or 3.29% from the first quarter of 2025 and increased $69.67 million or 1.00% from the previous quarter. Average loan growth in the first quarter of 2026 occurred mainly within the Renewable Energy, Commercial and Agricultural, and Commercial Real Estate portfolios.
Deposits
First quarter average deposits were $7.19 billion, which was down $141.97 million or 1.94% compared to the first quarter a year ago and decreased $229.44 million or 3.09%, from the previous quarter. Average deposit balances decreased from the previous quarter primarily due to lower brokered deposits, seasonal outflows of interest-bearing public fund deposits, and decreased noninterest-bearing demand deposits. Average brokered deposits were $259.29 million, a decrease of $354.23 million or 57.74% from the prior year first quarter and were $123.02 million or 32.18% lower than the previous quarter.
Net Interest Income and Net Interest Margin
First quarter 2026 tax-equivalent net interest income increased $9.21 million, or 11.36% from the first quarter a year ago and decreased $3.16 million to $90.29 million, down 3.38% from the previous quarter.
First quarter 2026 net interest margin was 4.24%, an increase of 35 basis points from the same period in 2025 and a decrease of four basis points from the 4.28% in the previous quarter. On a fully tax-equivalent basis, first quarter 2026 net interest margin was 4.25%, an increase of 35 basis points from the same period in 2025 and down four basis points compared to the 4.29% in the previous quarter. The increase from the first quarter of 2025 was primarily due to higher average loan and lease balances, improved yields on investments from portfolio repositioning trades made in 2025, and lower interest-bearing deposit costs. The decrease from the prior quarter was primarily due to lower yields on loans and leases and higher short-term borrowing costs offset by increased yields on investments from portfolio repositioning trades executed during 2025 and lower interest-bearing deposit costs. Net interest recoveries had a positive one basis point impact during the first quarter on the tax-equivalent net interest margin, compared to a positive seven basis points in the prior year first quarter and positive 14 basis points during the previous quarter.
Noninterest Income
First quarter 2026 noninterest income of $23.00 million was relatively flat compared to the first quarter a year ago and increased $5.46 million or 31.16% compared to the previous quarter.
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The increase from the previous quarter was mainly due to available-for-sale securities losses of $5.81 million realized in the prior quarter and increased insurance commissions, offset by lower brokerage fees and commissions, lower interest rate swap fees, a reduction in debit card income, and lower deposit account fees.
Noninterest Expense
First quarter 2026 noninterest expense of $54.52 million increased $1.44 million or 2.71% from the first quarter a year ago and decreased $2.04 million or 3.61% compared to the prior quarter.
The increase in noninterest expense compared to the first quarter of 2025 was the result of increased salaries and wages due to normal merit increases, higher occupancy expenses from snow removal, increased data processing charges and a rise in debit card losses. These increases were offset by lower leased equipment depreciation and a decrease in legal fees.
The decrease in noninterest expense compared to the prior quarter was the result of reduced incentive compensation and fewer group insurance claims, lower professional consulting costs, decreased furniture and equipment expense, lower intangible asset amortization, and fewer business development and marketing expenses.
Credit
The allowance for loan and lease losses increased to $164.90 million as of March 31, 2026, or 2.33% of total loans and leases. The 2.33% is an increase compared to 2.29% at March 31, 2025 and 2.30% at December 31, 2025 due to a weakened economic outlook with increased uncertainty. Net charge-offs of $3.96 million were recorded for the first quarter of 2026, compared with net charge-offs of $0.18 million in the same quarter a year ago and net charge-offs of $0.28 million in the prior quarter.
The provision for credit losses was $7.27 million for the first quarter of 2026, an increase of $4.01 million compared with the same period in 2025 and an increase of $6.56 million from the previous quarter. Higher net charge-offs during the quarter, the majority of which were from two unique Auto and Light Truck accounts who provide special trailer units serving the film industry, were the primary reason for the increase in the provision for credit losses. The ratio of nonperforming assets to loans and leases was 1.03% as of March 31, 2026, compared to 0.63% on March 31, 2025 and 1.10% on December 31, 2025. The decrease in nonperforming assets during the quarter was primarily from lower nonaccrual loans and leases partially offset by an increase in repossessed assets.
Capital
As of March 31, 2026, the common equity-to-assets ratio was 14.02%, compared to 12.96% a year ago and 14.08% at December 31, 2025. The tangible common equity-to-tangible assets ratio was 13.22% at March 31, 2026, compared to 12.14% a year earlier and 13.28% at December 31, 2025. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 15.30% at March 31, 2026, compared to 14.71% a year ago and 15.52% at December 31, 2025.
During the first quarter of 2026, 338,356 shares were repurchased for treasury reducing common shareholders’ equity by $23.35 million.
ABOUT 1ST SOURCE CORPORATION
1st Source common stock is traded on the NASDAQ Global Select Market under “SRCE” and appears in the National Market System tables in many daily newspapers under the code name “1st Src.” Since 1863, 1st Source has been committed to the success of its clients, individuals, businesses and the communities it serves. For more information, visit www.1stsource.com.
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1st Source serves the northern half of Indiana and southwest Michigan and is the largest locally controlled financial institution headquartered in the area. While delivering a comprehensive range of consumer and commercial banking services through its community bank offices, 1st Source has distinguished itself with highly personalized services. 1st Source Bank also competes for business nationally by offering specialized financing services for new and used private and cargo aircraft, automobiles for leasing and rental agencies, medium and heavy-duty trucks, and construction equipment. The Corporation includes 78 banking centers, 16 1st Source Bank Specialty Finance Group locations nationwide, nine Wealth Advisory Services locations, 13 1st Source Insurance offices, and three loan production offices.
FORWARD LOOKING STATEMENTS
Except for historical information contained herein, the matters discussed in this document express “forward-looking statements.” Generally, the words “believe,” “contemplate,” “seek,” “plan,” “possible,” “assume,” “hope,” “expect,” “intend,” “targeted,” “continue,” “remain,” “estimate,” “anticipate,” “project,” “will,” “should,” “indicate,” “would,” “may” and similar expressions indicate forward-looking statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.
1st Source may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause 1st Source’s actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors, among others, include changes in laws, regulations or accounting principles generally accepted in the United States; 1st Source’s competitive position within its markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen downturns in the local, regional or national economies or in the industries in which 1st Source has credit concentrations; and other risks discussed in 1st Source’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which filings are available from the SEC. 1st Source undertakes no obligation to publicly update or revise any forward-looking statements.
NON-GAAP FINANCIAL MEASURES
The accounting and reporting policies of 1st Source conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures are used by management to evaluate and measure the Company’s performance. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity-to-tangible assets ratio and tangible book value per common share. Management believes that these measures provide users of the Company’s financial information with a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses and lease depreciation), measures how much it costs to produce one dollar of revenue. Securities gains or losses and lease depreciation are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity-to-tangible assets ratio and tangible book value per common share as useful measurements of the Company’s equity.
See the table marked “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of certain non-GAAP financial measures used by the Company with their most closely related GAAP measures.
# # #
(charts attached)
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1st SOURCE CORPORATION
1st QUARTER 2026 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)
Three Months Ended
March 31,
December 31,
March 31,
2026
2025
2025
AVERAGE BALANCES
Assets
$
9,020,305
$
9,070,471
$
8,856,278
Earning assets
8,618,611
8,651,605
8,434,790
Investments
1,527,070
1,519,175
1,519,177
Loans and leases
7,022,759
6,953,090
6,798,952
Deposits
7,191,569
7,421,006
7,333,542
Interest bearing liabilities
5,930,767
5,956,902
5,920,255
Common shareholders’ equity
1,292,902
1,261,725
1,141,922
Total equity
1,335,986
1,306,954
1,208,236
INCOME STATEMENT DATA
Net interest income
$
90,138
$
93,295
$
80,938
Net interest income - FTE(1)
90,293
93,453
81,085
Provision for credit losses
7,272
711
3,265
Noninterest income
23,001
17,537
23,103
Noninterest expense
54,517
56,557
53,076
Net income
39,961
41,131
37,523
Net income available to common shareholders
39,956
41,142
37,520
PER SHARE DATA
Basic net income per common share
$
1.63
$
1.67
$
1.52
Diluted net income per common share
1.63
1.67
1.52
Common cash dividends declared
0.40
0.40
0.36
Book value per common share(2)
53.10
52.32
47.29
Tangible book value per common share(1)
49.61
48.88
43.87
Market value - High
71.98
67.39
67.77
Market value - Low
60.30
56.89
53.23
Basic weighted average common shares outstanding
24,276,666
24,391,070
24,546,819
Diluted weighted average common shares outstanding
24,276,666
24,391,070
24,546,819
KEY RATIOS
Return on average assets
1.80
%
1.80
%
1.72
%
Return on average common shareholders’ equity
12.53
12.94
13.33
Average common shareholders’ equity to average assets
14.33
13.91
12.89
End of period tangible common equity to tangible assets(1)
13.22
13.28
12.14
Risk-based capital - Common Equity Tier 1(3)
15.30
15.52
14.71
Risk-based capital - Tier 1(3)
16.54
16.79
16.20
Risk-based capital - Total(3)
17.80
18.05
17.46
Net interest margin
4.24
4.28
3.89
Net interest margin - FTE(1)
4.25
4.29
3.90
Efficiency ratio: expense to revenue
48.19
51.03
51.01
Efficiency ratio: expense to revenue - adjusted(1)
48.16
48.56
51.31
Net charge-offs to average loans and leases
0.23
0.02
0.01
Loan and lease loss allowance to loans and leases
2.33
2.30
2.29
Nonperforming assets to loans and leases
1.03
1.10
0.63
March 31,
December 31,
September 30,
June 30,
March 31,
2026
2025
2025
2025
2025
END OF PERIOD BALANCES
Assets
$
9,113,429
$
9,055,270
$
9,056,691
$
9,087,162
$
8,963,114
Loans and leases
7,083,528
7,046,669
6,964,454
7,097,969
6,863,393
Deposits
7,227,596
7,225,575
7,409,819
7,442,669
7,417,765
Allowance for loan and lease losses
164,898
161,846
161,430
163,484
157,470
Goodwill and intangible assets
83,895
83,895
83,895
83,895
83,895
Common shareholders’ equity
1,277,956
1,274,971
1,236,472
1,198,589
1,161,459
Total equity
1,320,838
1,318,090
1,291,431
1,257,424
1,220,542
ASSET QUALITY
Loans and leases past due 90 days or more
$
398
$
460
$
317
$
198
$
122
Nonaccrual loans and leases
71,652
76,602
62,264
71,732
40,540
Other real estate
—
—
120
—
—
Repossessions
1,319
267
435
3,549
2,410
Equipment owned under operating leases
46
49
56
62
—
Total nonperforming assets
$
73,415
$
77,378
$
63,192
$
75,541
$
43,072
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
(2) Calculated as common shareholders’ equity divided by common shares outstanding at the end of the period.
(3) Calculated under banking regulatory guidelines.
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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)
March 31,
December 31,
September 30,
March 31,
2026
2025
2025
2025
ASSETS
Cash and due from banks
$
67,670
$
69,249
$
75,316
$
87,816
Federal funds sold and interest bearing deposits with other banks
51,136
50,608
138,942
135,003
Investment securities available-for-sale, at fair value
(amortized cost of $1,583,272, $1,568,429, $1,555,564, and $1,591,072 at March 31, 2026, December 31, 2025, September 30, 2025, and March 31, 2025, respectively)
1,529,593
1,522,486
1,495,117
1,501,877
Other investments
22,140
22,140
22,140
23,855
Mortgages held for sale
3,142
4,866
7,110
2,305
Loans and leases, net of unearned discount:
Commercial and agricultural
821,818
797,592
759,167
775,118
Renewable energy
713,110
652,799
603,715
505,413
Auto and light truck
831,365
887,876
924,992
955,945
Medium and heavy duty truck
264,165
269,749
280,302
289,837
Aircraft
1,073,282
1,086,821
1,095,423
1,118,099
Construction equipment
1,210,493
1,221,135
1,207,446
1,171,934
Commercial real estate
1,319,361
1,269,765
1,244,306
1,230,760
Residential real estate and home equity
735,743
740,777
726,585
689,101
Consumer
114,191
120,155
122,518
127,186
Total loans and leases
7,083,528
7,046,669
6,964,454
6,863,393
Allowance for loan and lease losses
(164,898)
(161,846)
(161,430)
(157,470)
Net loans and leases
6,918,630
6,884,823
6,803,024
6,705,923
Equipment owned under operating leases, net
6,603
6,964
7,649
9,864
Premises and equipment, net
57,973
58,318
57,852
54,778
Goodwill and intangible assets
83,895
83,895
83,895
83,895
Accrued income and other assets
372,647
351,921
365,646
357,798
Total assets
$
9,113,429
$
9,055,270
$
9,056,691
$
8,963,114
LIABILITIES
Deposits:
Noninterest-bearing demand
$
1,655,736
$
1,600,495
$
1,633,786
$
1,651,479
Interest-bearing deposits:
Interest-bearing demand
2,487,201
2,592,202
2,512,205
2,451,169
Savings
1,466,564
1,446,278
1,396,931
1,392,391
Time
1,618,095
1,586,600
1,866,897
1,922,726
Total interest-bearing deposits
5,571,860
5,625,080
5,776,033
5,766,286
Total deposits
7,227,596
7,225,575
7,409,819
7,417,765
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase
153,391
112,470
72,190
60,025
Other short-term borrowings
135,789
126,151
1,384
1,152
Total short-term borrowings
289,180
238,621
73,574
61,177
Long-term debt and mandatorily redeemable securities
35,508
43,330
42,234
41,210
Subordinated notes
58,764
58,764
58,764
58,764
Accrued expenses and other liabilities
181,543
170,890
180,869
163,656
Total liabilities
7,792,591
7,737,180
7,765,260
7,742,572
SHAREHOLDERS’ EQUITY
Preferred stock; no par value
Authorized 10,000,000 shares; none issued or outstanding
—
—
—
—
Common stock; no par value
Authorized 40,000,000 shares; issued 28,205,674 shares at March 31, 2026, December 31, 2025, September 30, 2025, and March 31, 2025
436,538
436,538
436,538
436,538
Retained earnings
1,047,027
1,015,160
983,615
921,717
Cost of common stock in treasury (4,136,793, 3,836,656, 3,771,570, and 3,643,063 shares at March 31, 2026, December 31, 2025, September 30, 2025, and
March 31, 2025, respectively)
(164,709)
(141,950)
(137,818)
(128,912)
Accumulated other comprehensive loss
(40,900)
(34,777)
(45,863)
(67,884)
Total shareholders’ equity
1,277,956
1,274,971
1,236,472
1,161,459
Noncontrolling interests
42,882
43,119
54,959
59,083
Total equity
1,320,838
1,318,090
1,291,431
1,220,542
Total liabilities and equity
$
9,113,429
$
9,055,270
$
9,056,691
$
8,963,114
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1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)
Three Months Ended
March 31,
December 31,
March 31,
2026
2025
2025
Interest income:
Loans and leases
$
113,423
$
119,981
$
113,560
Investment securities, taxable
11,704
10,802
8,153
Investment securities, tax-exempt
307
316
277
Other
699
1,887
1,314
Total interest income
126,133
132,986
123,304
Interest expense:
Deposits
32,578
37,308
39,846
Short-term borrowings
1,720
234
232
Subordinated notes
995
1,002
1,014
Long-term debt and mandatorily redeemable securities
702
1,147
1,274
Total interest expense
35,995
39,691
42,366
Net interest income
90,138
93,295
80,938
Provision for credit losses:
Provision for credit losses — loans and leases
7,010
695
2,112
Provision for credit losses — unfunded loan commitments
262
16
1,153
Total provision for credit losses
7,272
711
3,265
Net interest income after provision for credit losses
82,866
92,584
77,673
Noninterest income:
Trust and wealth advisory
7,018
7,110
6,666
Service charges on deposit accounts
3,354
3,487
3,071
Debit card
4,380
4,528
4,149
Mortgage banking
1,011
1,103
853
Insurance commissions
2,511
1,730
2,440
Equipment rental
589
650
899
Losses on investment securities available-for-sale
—
(5,805)
—
Other
4,138
4,734
5,025
Total noninterest income
23,001
17,537
23,103
Noninterest expense:
Salaries and employee benefits
32,821
33,432
32,115
Net occupancy
3,548
3,380
3,224
Furniture and equipment
1,462
1,857
1,347
Data processing
7,573
7,565
7,291
Depreciation – leased equipment
454
521
718
Professional fees
1,575
2,183
1,668
FDIC and other insurance
1,449
1,461
1,440
Business development and marketing
1,903
2,200
1,925
Other
3,732
3,958
3,348
Total noninterest expense
54,517
56,557
53,076
Income before income taxes
51,350
53,564
47,700
Income tax expense
11,389
12,433
10,177
Net income
39,961
41,131
37,523
Net (income) loss attributable to noncontrolling interests
(5)
11
(3)
Net income available to common shareholders
$
39,956
$
41,142
$
37,520
Per common share:
Basic net income per common share
$
1.63
$
1.67
$
1.52
Diluted net income per common share
$
1.63
$
1.67
$
1.52
Basic weighted average common shares outstanding
24,276,666
24,391,070
24,546,819
Diluted weighted average common shares outstanding
24,276,666
24,391,070
24,546,819
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1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)
Three Months Ended
March 31, 2026
December 31, 2025
March 31, 2025
Average Balance
Interest Income/Expense
Yield/ Rate
Average Balance
Interest Income/Expense
Yield/ Rate
Average Balance
Interest Income/Expense
Yield/ Rate
ASSETS
Investment securities available-for-sale:
Taxable
$
1,493,065
$
11,704
3.18
%
$
1,483,960
$
10,802
2.89
%
$
1,488,005
$
8,153
2.22
%
Tax exempt(1)
34,005
387
4.62
%
35,215
398
4.48
%
31,172
349
4.54
%
Mortgages held for sale
4,930
75
6.17
%
5,228
78
5.92
%
2,409
39
6.57
%
Loans and leases, net of unearned discount(1)
7,022,759
113,423
6.55
%
6,953,090
119,979
6.85
%
6,798,952
113,596
6.78
%
Other investments
63,852
699
4.44
%
174,112
1,887
4.30
%
114,252
1,314
4.66
%
Total earning assets(1)
8,618,611
126,288
5.94
%
8,651,605
133,144
6.11
%
8,434,790
123,451
5.94
%
Cash and due from banks
57,339
75,004
64,009
Allowance for loan and lease losses
(163,666)
(162,941)
(157,318)
Other assets
508,021
506,803
514,797
Total assets
$
9,020,305
$
9,070,471
$
8,856,278
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits
$
5,605,444
$
32,578
2.36
%
$
5,783,353
$
37,308
2.56
%
$
5,745,134
$
39,846
2.81
%
Short-term borrowings:
Securities sold under agreements to repurchase
53,514
91
0.69
%
59,330
121
0.81
%
58,232
104
0.72
%
Other short-term borrowings
173,524
1,629
3.81
%
13,028
113
3.44
%
18,450
128
2.81
%
Subordinated notes
58,764
995
6.87
%
58,764
1,002
6.76
%
58,764
1,014
7.00
%
Long-term debt and mandatorily redeemable securities
39,521
702
7.20
%
42,427
1,147
10.73
%
39,675
1,274
13.02
%
Total interest-bearing liabilities
5,930,767
35,995
2.46
%
5,956,902
39,691
2.64
%
5,920,255
42,366
2.90
%
Noninterest-bearing deposits
1,586,125
1,637,653
1,588,408
Other liabilities
167,427
168,962
139,379
Shareholders’ equity
1,292,902
1,261,725
1,141,922
Noncontrolling interests
43,084
45,229
66,314
Total liabilities and equity
$
9,020,305
$
9,070,471
$
8,856,278
Less: Fully tax-equivalent adjustments
(155)
(158)
(147)
Net interest income/margin (GAAP-derived)(1)
$
90,138
4.24
%
$
93,295
4.28
%
$
80,938
3.89
%
Fully tax-equivalent adjustments
155
158
147
Net interest income/margin - FTE(1)
$
90,293
4.25
%
$
93,453
4.29
%
$
81,085
3.90
%
(1) See “Reconciliation of Non-GAAP Financial Measures” for more information on this performance measure/ratio.
- 8 -
1st SOURCE CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited - Dollars in thousands, except per share data)
Three Months Ended
March 31,
December 31,
March 31,
2026
2025
2025
Calculation of Net Interest Margin
(A)
Interest income (GAAP)
$
126,133
$
132,986
$
123,304
Fully tax-equivalent adjustments:
(B)
– Loans and leases
75
76
75
(C)
– Tax exempt investment securities
80
82
72
(D)
Interest income – FTE (A+B+C)
126,288
133,144
123,451
(E)
Interest expense (GAAP)
35,995
39,691
42,366
(F)
Net interest income (GAAP) (A-E)
90,138
93,295
80,938
(G)
Net interest income - FTE (D-E)
90,293
93,453
81,085
(H)
Annualization factor
4.056
3.967
4.056
(I)
Total earning assets
$
8,618,611
$
8,651,605
$
8,434,790
Net interest margin (GAAP-derived) (F*H)/I
4.24
%
4.28
%
3.89
%
Net interest margin – FTE (G*H)/I
4.25
%
4.29
%
3.90
%
Calculation of Efficiency Ratio
(F)
Net interest income (GAAP)
$
90,138
$
93,295
$
80,938
(G)
Net interest income – FTE
90,293
93,453
81,085
(J)
Plus: noninterest income (GAAP)
23,001
17,537
23,103
(K)
Less: gains/losses on investment securities and partnership investments
(586)
4,919
(1,427)
(L)
Less: depreciation – leased equipment
(454)
(521)
(718)
(M)
Total net revenue (GAAP) (F+J)
113,139
110,832
104,041
(N)
Total net revenue – adjusted (G+J–K–L)
112,254
115,388
102,043
(O)
Noninterest expense (GAAP)
54,517
56,557
53,076
(L)
Less:depreciation – leased equipment
(454)
(521)
(718)
(P)
Noninterest expense – adjusted (O–L)
54,063
56,036
52,358
Efficiency ratio (GAAP-derived) (O/M)
48.19
%
51.03
%
51.01
%
Efficiency ratio – adjusted (P/N)
48.16
%
48.56
%
51.31
%
End of Period
March 31,
December 31,
March 31,
2026
2025
2025
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)
Total common shareholders’ equity (GAAP)
$
1,277,956
$
1,274,971
$
1,161,459
(R)
Less: goodwill and intangible assets
(83,895)
(83,895)
(83,895)
(S)
Total tangible common shareholders’ equity (Q–R)
$
1,194,061
$
1,191,076
$
1,077,564
(T)
Total assets (GAAP)
9,113,429
9,055,270
8,963,114
(R)
Less: goodwill and intangible assets
(83,895)
(83,895)
(83,895)
(U)
Total tangible assets (T–R)
$
9,029,534
$
8,971,375
$
8,879,219
Common equity-to-assets ratio (GAAP-derived) (Q/T)
14.02
%
14.08
%
12.96
%
Tangible common equity-to-tangible assets ratio (S/U)
13.22
%
13.28
%
12.14
%
Calculation of Tangible Book Value per Common Share
(Q)
Total common shareholders’ equity (GAAP)
$
1,277,956
$
1,274,971
$
1,161,459
(V)
Actual common shares outstanding
24,068,881
24,369,018
24,562,611
Book value per common share (GAAP-derived) (Q/V)*1000
$
53.10
$
52.32
$
47.29
Tangible common book value per share (S/V)*1000
$
49.61
$
48.88
$
43.87
The NASDAQ Stock Market National Market Symbol: “SRCE” (CUSIP #336901 10 3)
