SRCE

1ST SOURCE CORP

Financial Services | Small Cap

$1.69

EPS Forecast

$111.7

Revenue Forecast

The company already released most recent quarter's earnings. We will publish our AI's next quarter's forecast around 2026-08-09

SRCE Signals Strength: 1st Source Corp. Delivers Record Q2 2026 Net Income, Lifts Dividend as EPS Hits $1.95

In a quarter where the regional-banking narrative has been dominated by rate moves and deposit shifts, SRCE — the ticker for 1st Source Corporation, parent of 1st Source Bank — posted a clear, earnings-led upgrade. Diluted EPS rose to $1.95 on a quarterly net income of $47.54 million, while the company bumped the quarterly cash dividend to $0.45 per share. A respectable feat that carries implications for peers and investors watching the sector’s slow-turning rate engine.

Overview: a quarter that carries its own weight

  • EPS (diluted): $1.95 for Q2 2026, up 19.6% from the prior quarter and up 29.1% from Q2 2025.
  • Net income: $47.54 million in Q2 2026, up 18.99% quarter-over-quarter and up 27.40% year-over-year.
  • Dividend: Cash dividend increased by two cents to $0.45 per share for the quarter.
  • Net interest income (tax-equivalent): $93.30 million, up 3.33% from the previous quarter and up 9.32% from Q2 2025.
  • Net interest margin: 4.24%, down one basis point from the prior quarter but up 23 basis points from Q2 2025.
  • Return metrics: ROA 2.06% and ROE 14.66% for the quarter.
  • Credit quality: provision for credit losses of $1.54 million in the quarter; allowance for loan and lease losses as a percentage of total loans and leases 2.30% (down from 2.33% at 3/31/2026; flat vs. 6/30/2025).

Dividend and Capital Allocation: a signal to the street

Beyond the headline earnings, the two-cent hike in the quarterly dividend to $0.45 per share marks another step in capital-management discipline. This is not a one-off mood ring move; it sits alongside the resilience in earnings and the growth in deposits and loans. For investors scanning for Yield, SRCE presents a more compelling cadence in a sector where capital allocation can swing with rate expectations and credit trends.

Margin and Growth: the NII engine stays on track

The tax-equivalent net interest income reached $93.30 million, keeping the bank’s NII engine well-fueled as asset growth continues. The net interest margin of 4.24% is a nuanced signal: it’s a touch softer vs. last quarter but sits comfortably above the prior year, illustrating that the revenue mix remains intact amid rate volatility. The quarterly loan and deposit dynamics were constructive, with average loans and leases up roughly 1.7% from the prior quarter and 2.5% year over year, while average deposits rose about 3.3% sequentially and 1.1% year over year.

Outlook: what a solid quarter might portend for SRCE and the Midwest peers

This release does not include a formal EPS consensus or revenue forecast, which leaves a gap for analysts trying to map SRCE’s trajectory against street expectations. Nevertheless, the combination of a rising EPS print, a dividend uptick, and a steady NII trajectory suggests the bank’s fundamentals remain supportive of continued earnings growth. For sector peers in the Midwest and regions with similar loan mixes, the message is plain: if you can maintain loan growth while managing credit quality, you can sustain earnings momentum even as rate episodes evolve.

Asset quality appears orderly, with loan-loss reserves at 2.30% of loans and leases, and coverage stable versus the prior quarter. If the deposit base can keep growing or at least hold steady, the margin could find a modest lift as balance sheet dynamics normalize post-peak rate cycles. In short, the quarter is less a one-off surprise and more a reminder that the SRCE playbook—controlled credit, steady NII, and a disciplined dividend — can translate into respectable EPS progression and shareholder yield, even if the broader banking landscape remains choppy.

Implications for SRCE’s Sector Peers

1st Source’s results could nudge regional peers to reaffirm their own dividend policies and capital returns. Banks with similar asset-quality trends and healthy NIMs may feel encouraged to lean into growth in loans and deposits while preserving or modestly increasing shareholder returns. The real test will come in the coming quarters as rate volatility, loan demand, and deposit competition interact. A durable EPS trajectory and a sustainable NII base are the levers to watch, and SRCE’s Q2 print shows those levers are not rusted—just polished enough to pass the next stress test from the market’s calendar.

Bottom Line: a quarterly print that keeps the engine running

SRCE has delivered a Q2 2026 where record net income, rising EPS, and a raised dividend align with a plausible path of steady earnings growth and shareholder value. While the absence of a published EPS consensus or revenue forecast leaves a gap for forward-looking estimates, the headline figures speak to a bank that has managed rate exposure and credit risk with discipline. If the current trajectory persists, SRCE could serve as a reference point for regional banks aiming to balance growth—via deposits and loans—with a prudent payout strategy to support valuation and investor confidence.