1st Source reports record quarterly net income of $42.3 million

SOUTH BEND, Indiana - 1st Source Corporation (NASDAQ:SRCE), a regional bank with a market capitalization of $1.44 billion, reported record quarterly net income of $42.30 million for the third quarter of 2025, up 13.34% from the previous quarter and 21.06% higher than the same period last year. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period, suggesting continued momentum.

Diluted earnings per share reached $1.71, representing a 13.25% increase from the second quarter and a 21.28% rise from the third quarter of 2024. The bank’s board approved a quarterly cash dividend increase of two cents to $0.40 per share, up 11.11% from a year ago. This marks the bank’s 32nd consecutive year of dividend increases, with an impressive track record of maintaining dividend payments for 51 consecutive years. The stock currently offers a dividend yield of 2.62%.

The results included $1.88 million in pre-tax losses from the sale of approximately $73 million of available-for-sale securities and a $1.00 million charitable contribution to the 1st Source Foundation.

Return on average assets improved to 1.86% from 1.67% in the previous quarter and 1.59% a year earlier. Return on average common shareholders’ equity increased to 13.76% from 12.61% in the second quarter and 12.87% in the third quarter of 2024.

Average loans and leases grew $46.93 million in the third quarter, up 0.67% from the previous quarter and increased $409.71 million, up 6.20% from the third quarter of 2024. Average deposits increased $75.03 million, up 1.02% from the previous quarter and $289.69 million, up 4.06% from a year ago.

The bank’s tax-equivalent net interest margin was 4.09%, up eight basis points from the previous quarter and 45 basis points higher than the same period in 2024. The improvement was primarily attributed to higher rates on increased average loan and lease balances and lower short-term borrowing costs.

Nonperforming assets to loans and leases decreased to 0.91% as of September 30, 2025, down from 1.06% on June 30, 2025. The allowance for loan and lease losses as a percentage of total loans and leases was 2.32%, slightly higher than the 2.30% reported in the previous quarter.

The bank also announced leadership changes, with Christopher J. Murphy III stepping down as CEO effective October 1, 2025, to serve as Executive Chairman. Andrea G. Short assumed the role of CEO while retaining her position as President of 1st Source Corporation.

Based on a press release statement from the company. InvestingPro analysis indicates the stock is trading near its Fair Value, with a GOOD overall financial health score of 2.78 out of 5. Subscribers to InvestingPro can access additional insights, including 4 more exclusive ProTips and comprehensive financial metrics. Visit InvestingPro to unlock the full analysis and make more informed investment decisions.

In other recent news, 1st Source Corporation reported its second quarter 2025 financial results, highlighting a net income of $37.32 million. This figure represents a 1.43% increase compared to the same period last year, although it marks a slight decrease of 0.54% from the previous quarter. The company’s diluted earnings per share were $1.51, which surpassed the consensus estimate of $1.47 and DA Davidson’s forecast of $1.49. However, this quarter’s earnings included a $1 million pre-tax loss related to the sale of approximately $26 million in available-for-sale securities. In addition, DA Davidson adjusted its price target for 1st Source to $67 from $65, maintaining a Neutral rating. These developments follow the company’s recent financial performance and strategic decisions.

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