1st Source Corp Dossier - Source-backed chat

1st Source Corp

SRCENASDAQ

SectorFinancials

IndustryBanks - Regional

Beta (adjusted)0.72

Intrinsic Value $61.81median of 2 methodsbased on filings through 30 Jun 2026

Market Price $84.50Price as of 30 Sep 2026

OvervaluedIntrinsic value is 27% below the market price

−50% · IV below pricenear fair value ±15%IV above price · +50%

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Market Cap $2B

Enterprise Value $2.1B

Shares Outstanding 24.1M diluted

Next Earnings Date22 Oct 2026

Last ex-dividend4 Aug 2026

All prices and values are periodic snapshots, not live quotes. Source dates are shown for reference.

Thesis

Street consensus, scenarios, merits, risks, and invalidation triggers

AI-assisted

Thesis Summary

1st Source Corp (NASDAQ: SRCE) continues to demonstrate exceptional earnings power, robust capital levels, and superior asset returns, highlighted by a record Q1 2026 net income of $39.96 million and a strong Return on Average Assets (ROA) of 1.80%. The bank's specialized lending divisions, particularly in Renewable Energy Financing and Specialty Finance (aircraft, construction equipment, and fleet vehicles), provide a high-yield, diversified niche that insulates it from standard regional banking deposit pressures. While a sequential rise in nonperforming assets to $73.42 million warrants close monitoring, the bank's conservative credit culture, high allowance for loan and lease losses ($164.90 million), and strong capital position (common equity of $1.28 billion) provide a substantial buffer. Backed by a multi-year leadership succession plan successfully executed in late 2025 under CEO Andrea Short, 1st Source is well-positioned to deliver long-term shareholder value, supported by a consistent history of dividend increases and active share buybacks.

This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today.

Street view · analyst 12-month targets3 analysts · as of 18 Aug 2026

Low · most bearish analyst$82.00

Mean target$89.67

High · most bullish analyst$100.00

Street targets sit above today's price; our intrinsic value sits below it. Different horizons, different questions.

Our research · scenarios, merits, risks, and invalidation triggersResearch as of 18 Sep 2026

Scenarios · 12-month scenario targetsAnchored at research date

Bear CaseDownside scenario

The bear case models a broader economic slowdown that dampens commercial real estate and specialty equipment demand, leading to flat loan growth. Credit costs rise as charge-offs increase in the vehicle and construction portfolios, pushing NPAs above $90 million. NIM compresses to 3.90% due to aggressive deposit competition. Under this scenario, the target price is reduced to $74.00, valued at 10.5x compressed forward earnings.

Base CaseCentral scenario

The base case assumes moderate loan growth of 3-5% driven by the Renewable Energy and Specialty Finance segments. Net interest margin (NIM) is expected to stabilize around 4.15% to 4.25% as funding costs plateau. Credit quality is projected to normalize with nonperforming assets stabilizing below 1.00% of total assets. Under these conditions, 1st Source is expected to generate steady EPS growth, supporting a target price of $81.00 based on a forward P/E multiple of approximately 11.5x.

Scenarios are anchored to street consensus at the research date, with our probabilities and rationale.

Key Investment Merits

Niche Specialty Lending: Strong competitive advantage in specialized financing sectors (aircraft, construction, fleet vehicles, and solar energy) that yield higher margins than standard commercial loans.
Robust Profitability: Consistently delivers top-tier regional bank metrics, including an ROA of 1.80% and a Return on Equity (ROE) of 12.53% as of Q1 2026.
Strong Capital and Liquidity: High capital reserves with common shareholders' equity at $1.28 billion and a conservative funding profile backed by 72.62% core deposits.
Shareholder-Friendly Capital Allocation: Demonstrated commitment to returning value through a 13.16% year-over-year dividend increase to $0.43 per share and active share repurchases.

Key Investment Risks

Rising Nonperforming Assets: NPAs increased sequentially from $43.07 million at year-end 2025 to $73.42 million at March 31, 2026, indicating potential credit stress.
Deposit Competition: Intense competition for retail and commercial deposits could pressure funding costs and compress net interest margins.
Economic Sensitivity of Specialty Portfolios: Specialty finance sectors like construction and fleet vehicles are highly cyclical and sensitive to macroeconomic downturns.

Thesis Invalidation Triggers

Nonperforming assets rising above 1.25% of total assets, indicating systemic credit deterioration.
Net Interest Margin compressing below 3.85% due to rapid deposit outflow or aggressive rate competition.
A material decline in capital ratios that forces a suspension of share buybacks or a reduction in the dividend payout.

All scenarios are estimates and subject to change. Past performance is not indicative of future results.

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Explore this dossier

ValuationIntrinsic value, the six-method breakdown, peer medians, and your assumptions sandbox.Financial SnapshotRevenue, profitability, returns, balance sheet, dividends, and the filing-level detail.Qualitative AnalysisBusiness overview, strategic initiatives, and mergers, acquisitions & partnerships.Outlook & Key DatesForward estimates, reporting calendar, and the monitoring framework.