The record earnings, margin expansion, and improving credit quality all point to sustained operational strength. With no share repurchases in Q3 and a strong CET1 ratio of 15.95%, the bank has ample capital for continued organic growth and potential M&A. Watch for further NIM expansion as the securities repositioning (selling 1.83% yield bonds for 5.10% yield replacements) continues to benefit income.
Price Chart
Executive Summary
1st Source Corporation reported record Q3 2026 net income of $49.54M, with diluted EPS of $2.03, up 18.71% YoY and 4.10% sequentially. Net interest margin expanded to 4.28% (up 19 bps YoY), credit quality improved (NPA ratio fell to 0.81% from 1.01% last quarter), and the dividend was raised 12.5% to $0.45/share. The strong beat vs consensus ($2.03 actual vs $1.82 estimate, +11.5%) and continued margin expansion signal robust operating momentum.
Key Financial Metrics
Key Facts
- Record quarterly net income of $49.54M, up 17.13% YoY
- Diluted EPS $2.03, up 18.71% YoY and 4.10% sequentially
- Net interest margin (FTE) expanded to 4.28%, up 19 bps YoY and 4 bps QoQ
- Provision for credit losses fell to $0.90M from $1.54M last quarter
- Nonperforming assets ratio improved to 0.81% from 1.01% QoQ
- Cash dividend raised to $0.45/share, up 12.5% YoY
- Average loans and leases grew 1.58% QoQ and 3.42% YoY
- Efficiency ratio improved to 45.91% from 49.50% a year ago
- CET1 ratio strengthened to 15.95% from 15.18% a year ago
- Results included $3.82M pre-tax loss from AFS securities repositioning and $1.00M charitable contribution
Financial Impact
EPS of $2.03 beat consensus of $1.82 by 11.5%; net income up 17.1% YoY to $49.54M; NIM expanded 19 bps YoY
Risk Factors
- Net interest recoveries had zero impact in Q3 vs positive 3 bps in prior periods, suggesting normalization
- Average deposits grew only 0.22% QoQ; brokered deposits increased 6.47% QoQ, indicating potential funding cost pressure
- Accumulated other comprehensive loss widened to $(76.1M) from $(34.8M) at year-end due to higher rates
- Noninterest income declined 1.29% QoQ due to securities repositioning losses
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0000034782-26-000054 |
| Document: source-20261022.htm | 0000034782-26-000054 |
| Document: 0000034782-26-000054-index-headers.html | 0000034782-26-000054 |
| Document: 0000034782-26-000054-index.html | 0000034782-26-000054 |
| Document: 0000034782-26-000054.txt | 0000034782-26-000054 |
| 8-K Data (Synthetic) | 0000034782-26-000054 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 22, 2026 4d ago | 8-K | $87.29 $87.86 | ▲ +0.65% | ▼ −0.06% | $87.86 (+0.65%) |
Aug 17, 2026 10w ago | Institutional Cluster | $87.73 $85.71 | ▼ −2.30% | ▼ −2.51% | $87.86 (+0.15%) |
Aug 5, 2026 11w ago | 8-K | $89.99 $89.34 | ▼ −0.72% | ▼ −0.56% | $87.86 (−2.37%) |
May 1, 2026 25w ago | 8-K | $73.43 $73.06 | ▼ −0.50% | ▼ −0.16% | $87.86 (+19.66%) |
Apr 24, 2026 26w ago | 8-K | $73.37 $74.38 | ▲ +1.38% | ▲ +1.87% | $87.86 (+19.76%) |
Apr 23, 2026 26w ago | 8-K | $73.47 $73.11 | ▼ −0.48% | ▼ −1.27% | $87.86 (+19.59%) |
US Market Status
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