Key Highlights

  • Diluted earnings per share were USD 2.03, against USD 1.71 a year ago.
  • Tax-equivalent net interest income rose 7.69% to USD 95.74 million.
  • Nonperforming Assets fell 23.18% since year end to USD 59.44 million.
  • Trust and Wealth advisory fees rose 15.27% to USD 7.87 million.

Earnings

1st Source (NASDAQ:SRCE) filed its third-quarter 2026 report on Thursday. Net Income available to common shareholders was USD 49.54 million, or USD 2.03 per diluted share, against USD 42.30 million, or USD 1.71. Nine-month net income was USD 137.04 million, or USD 5.62 per diluted share, against USD 117.14 million, or USD 4.74. Return on average common Equity was 14.01% for the nine months against 13.24%, and return on average assets was 1.99% against 1.75%.

Income before income taxes was USD 64.16 million against USD 54.98 million, and income tax expense was USD 14.61 million against USD 12.71 million.

Net Interest Income and Fees

Tax-equivalent net interest income was USD 95.74 million, up 7.69% from a year earlier. The tax-equivalent Margin was 4.28%, against 4.24% in the second quarter and 4.09% a year earlier. Average earning assets rose USD 240.95 million, or 2.79%, while average interest-bearing liabilities rose USD 108.38 million, or 1.81%.

The Yield on average earning assets fell 6 basis points to 5.97%. The Loan and Lease yield fell 28 basis points, which the company attributed to Federal Reserve rate cuts in the second half of 2025, partly offset by better Investment yields from portfolio repositioning in 2025. The cost of interest-bearing liabilities fell 34 basis points to 2.45% from 2.79%.

Noninterest income was USD 24.70 million, up 12.74% from USD 21.91 million. Trust and wealth advisory fees rose USD 1.04 million, or 15.27%, to USD 7.87 million. Service charges on deposit accounts rose 9.98% to USD 3.78 million, and debit card income rose 4.55% to USD 4.74 million. Mortgage banking income was USD 1.01 million, down 1.65%.

Noninterest expense was USD 55.22 million, up 0.82%. Salaries and employee benefits were USD 32.75 million, up 1.66% on merit increases and incentive compensation, and professional fees rose 17.96% to USD 2.08 million. Expenses were about 46% of net interest income plus noninterest income.

Loans, Deposits and Credit

Total loans and leases were USD 7.34 billion, up USD 294.42 million, or 4.18%, from Dec. 31. Growth came from renewable energy, construction equipment, commercial and agricultural, commercial real estate, medium and heavy duty truck, residential real estate and home equity, and aircraft portfolios, while auto and light truck and consumer portfolios declined. Average loans rose USD 240.08 million, or 3.42%, from a year earlier.

Total deposits were USD 7.47 billion, up USD 243.64 million, or 3.37%, since year end, with the company noting continued rate competition from banks, Credit unions, Money Market funds and bond markets. Short-term borrowings were USD 233.65 million.

Nonperforming assets were USD 59.44 million, or 0.81% of loans and leases, against USD 77.38 million, or 1.10%, at Dec. 31 and USD 63.19 million, or 0.91%, a year earlier. The company tied the decline mainly to lower nonaccrual loans and leases.

Capital and Dividends

Shareholders' equity was USD 1.32 billion, up USD 44.66 million since year end, or 14.13% of assets. In the first nine months the company repurchased USD 23.35 million of common stock and paid USD 31.07 million of dividends. Accumulated other comprehensive loss rose to USD 76.11 million from USD 34.78 million on changes in interest rates and spreads. Book Value per common share rose to USD 54.79 from USD 52.32. The common Dividend was USD 0.45 per share in the quarter, against USD 0.38 a year earlier.

Figures to Follow

Earnings per share rose 19% while net interest income rose 7.69% and noninterest income rose 12.74%, on expenses that rose 0.82%. Reference points include the margin at 4.28%, trust and wealth advisory fees, nonperforming assets at 0.81% of loans, and the accumulated other comprehensive loss of USD 76.11 million.