1St Source Corporation Reports Record First Quarter Results, Increased Cash Dividend Declared

2026-04-23 08:11:57

(MENAFN- Newsfile Corp) 1st Source Corporation Reports Record First Quarter Results, Increased Cash Dividend Declared

April 23, 2026 7:40 AM EDT | Source: 1st Source Corporation

QUARTERLY HIGHLIGHTS

Return on average assets was 1.80% for the current quarter, up from 1.72% in the first quarter of 2025 and unchanged from the previous quarter. Return on average common shareholders' equity decreased to 12.53% compared to 13.33% in the first quarter of 2025 and 12.94% in the previous quarter.

During the first quarter of 2026, 338,356 shares were repurchased for $23.35 million and placed into treasury.

Average deposits decreased $141.97 million or 1.94% from the first quarter a year ago and decreased $229.44 million or 3.09% from the previous quarter. Average deposits, net of brokered deposits, increased $212.25 million or 3.16% from the first quarter of 2025 and decreased $106.42 million or 1.51% from the previous quarter.

Provision for credit losses of $7.27 million was recorded during the quarter compared to $3.27 million during the previous year's first quarter and $0.71 million in the previous quarter. The allowance for loan and lease losses as a percentage of total loans and leases rose to 2.33% at March 31, 2026, up from 2.29% at March 31, 2025 and 2.30% at December 31, 2025.

South Bend, Indiana--(Newsfile Corp. - April 23, 2026) - 1st Source Corporation (NASDAQ: SRCE), parent company of 1st Source Bank, today reported quarterly net income of $39.96 million for the first quarter of 2026, up 6.49% compared to $37.52 million in the first quarter a year ago and down 2.88% compared to $41.14 million reported in the previous quarter. Diluted net income per common share for the first quarter of 2026 was $1.63, up 7.24% versus $1.52 in the first quarter of 2025 and down 2.40% compared to $1.67 in the previous quarter.

At its April 2026 meeting, the Board of Directors approved an increase in the cash dividend of three cents per share, raising the approved dividend for the quarter to $0.43 per common share, up five cents or 13.16% from the cash dividend declared a year ago. The cash dividend is payable to shareholders of record on May 5, 2026, and will be paid on May 15, 2026.

Andrea G. Short, President and Chief Executive Officer, commented, "We are pleased to announce that 1st Source had a record first quarter. We ended 2025 and the first quarter of 2026 with a very strong and stable balance sheet and we will continue to focus on safety and soundness given the level of economic uncertainty currently impacting our clients and their businesses. During the first quarter of 2026, average loans and leases grew $69.67 million, up 1.00% from the previous quarter, our liquidity position remained solid, and our historically conservative capital position was maintained.

"We were happy to learn that 1st Source received several awards, further solidifying that our mission-first approach is the right way to do business. On a national scale, we were included in Forbes' America's Best Banks list for the third consecutive year and came in at #11 out of the top 100 named. This award is driven by 10 metrics measuring growth, credit quality, and profitability.

"Additionally, we learned that 1st Source was listed as #12 on Forbes' America's Best Midsize Employers list. This award is especially meaningful because it identifies companies that are rated most highly by their employees. Respondents ranked their employers on a range of criteria including salary, work environment, and opportunities to advance. We greatly value this feedback, and it aligns with our culture and core values of integrity, teamwork, superior quality, outstanding client service, and community leadership.

"And finally, at the state level, 1st Source was recognized for our small business lending across Indiana for the 13th year in a row by the Indiana District Office of the U.S. Small Business Administration (SBA). We once again received the Community Bank Gold Level Award for delivering the greatest number of SBA loans in Indiana in 2025." Mrs. Short concluded.

FIRST QUARTER 2026 FINANCIAL RESULTS

Loans and Leases

First quarter average loans and leases were $7.02 billion, which was up $223.81 million or 3.29% from the first quarter of 2025 and increased $69.67 million or 1.00% from the previous quarter. Average loan growth in the first quarter of 2026 occurred mainly within the Renewable Energy, Commercial and Agricultural, and Commercial Real Estate portfolios.

Deposits

First quarter average deposits were $7.19 billion, which was down $141.97 million or 1.94% compared to the first quarter a year ago and decreased $229.44 million or 3.09%, from the previous quarter. Average deposit balances decreased from the previous quarter primarily due to lower brokered deposits, seasonal outflows of interest-bearing public fund deposits, and decreased noninterest-bearing demand deposits. Average brokered deposits were $259.29 million, a decrease of $354.23 million or 57.74% from the prior year first quarter and were $123.02 million or 32.18% lower than the previous quarter.

Net Interest Income and Net Interest Margin

First quarter 2026 tax-equivalent net interest income increased $9.21 million, or 11.36% from the first quarter a year ago and decreased $3.16 million to $90.29 million, down 3.38% from the previous quarter.

First quarter 2026 net interest margin was 4.24%, an increase of 35 basis points from the same period in 2025 and a decrease of four basis points from the 4.28% in the previous quarter. On a fully tax-equivalent basis, first quarter 2026 net interest margin was 4.25%, an increase of 35 basis points from the same period in 2025 and down four basis points compared to the 4.29% in the previous quarter. The increase from the first quarter of 2025 was primarily due to higher average loan and lease balances, improved yields on investments from portfolio repositioning trades made in 2025, and lower interest-bearing deposit costs. The decrease from the prior quarter was primarily due to lower yields on loans and leases and higher short-term borrowing costs offset by increased yields on investments from portfolio repositioning trades executed during 2025 and lower interest-bearing deposit costs. Net interest recoveries had a positive one basis point impact during the first quarter on the tax-equivalent net interest margin, compared to a positive seven basis points in the prior year first quarter and positive 14 basis points during the previous quarter.

Noninterest Income

First quarter 2026 noninterest income of $23.00 million was relatively flat compared to the first quarter a year ago and increased $5.46 million or 31.16% compared to the previous quarter.

The increase from the previous quarter was mainly due to available-for-sale securities losses of $5.81 million realized in the prior quarter and increased insurance commissions, offset by lower brokerage fees and commissions, lower interest rate swap fees, a reduction in debit card income, and lower deposit account fees.

Noninterest Expense

First quarter 2026 noninterest expense of $54.52 million increased $1.44 million or 2.71% from the first quarter a year ago and decreased $2.04 million or 3.61% compared to the prior quarter.

The increase in noninterest expense compared to the first quarter of 2025 was the result of increased salaries and wages due to normal merit increases, higher occupancy expenses from snow removal, increased data processing charges and a rise in debit card losses. These increases were offset by lower leased equipment depreciation and a decrease in legal fees.

The decrease in noninterest expense compared to the prior quarter was the result of reduced incentive compensation and fewer group insurance claims, lower professional consulting costs, decreased furniture and equipment expense, lower intangible asset amortization, and fewer business development and marketing expenses.

Credit

The allowance for loan and lease losses increased to $164.90 million as of March 31, 2026, or 2.33% of total loans and leases. The 2.33% is an increase compared to 2.29% at March 31, 2025 and 2.30% at December 31, 2025 due to a weakened economic outlook with increased uncertainty. Net charge-offs of $3.96 million were recorded for the first quarter of 2026, compared with net charge-offs of $0.18 million in the same quarter a year ago and net charge-offs of $0.28 million in the prior quarter.

The provision for credit losses was $7.27 million for the first quarter of 2026, an increase of $4.01 million compared with the same period in 2025 and an increase of $6.56 million from the previous quarter. Higher net charge-offs during the quarter, the majority of which were from two unique Auto and Light Truck accounts who provide special trailer units serving the film industry, were the primary reason for the increase in the provision for credit losses. The ratio of nonperforming assets to loans and leases was 1.03% as of March 31, 2026, compared to 0.63% on March 31, 2025 and 1.10% on December 31, 2025. The decrease in nonperforming assets during the quarter was primarily from lower nonaccrual loans and leases partially offset by an increase in repossessed assets.

Capital

As of March 31, 2026, the common equity-to-assets ratio was 14.02%, compared to 12.96% a year ago and 14.08% at December 31, 2025. The tangible common equity-to-tangible assets ratio was 13.22% at March 31, 2026, compared to 12.14% a year earlier and 13.28% at December 31, 2025. The Common Equity Tier 1 ratio, calculated under banking regulatory guidelines, was 15.30% at March 31, 2026, compared to 14.71% a year ago and 15.52% at December 31, 2025.

During the first quarter of 2026, 338,356 shares were repurchased for treasury reducing common shareholders' equity by $23.35 million.

ABOUT 1ST SOURCE CORPORATION

1st Source common stock is traded on the NASDAQ Global Select Market under "SRCE" and appears in the National Market System tables in many daily newspapers under the code name "1st Src." Since 1863, 1st Source has been committed to the success of its clients, individuals, businesses and the communities it serves. For more information, visit .

1st Source serves the northern half of Indiana and southwest Michigan and is the largest locally controlled financial institution headquartered in the area. While delivering a comprehensive range of consumer and commercial banking services through its community bank offices, 1st Source has distinguished itself with highly personalized services. 1st Source Bank also competes for business nationally by offering specialized financing services for new and used private and cargo aircraft, automobiles for leasing and rental agencies, medium and heavy-duty trucks, and construction equipment. The Corporation includes 78 banking centers, 16 1st Source Bank Specialty Finance Group locations nationwide, nine Wealth Advisory Services locations, 13 1st Source Insurance offices, and three loan production offices.

FORWARD LOOKING STATEMENTS

Except for historical information contained herein, the matters discussed in this document express "forward-looking statements." Generally, the words "believe," "contemplate," "seek," "plan," "possible," "assume," "hope," "expect," "intend," "targeted," "continue," "remain," "estimate," "anticipate," "project," "will," "should," "indicate," "would," "may" and similar expressions indicate forward-looking statements. Those statements, including statements, projections, estimates or assumptions concerning future events or performance, and other statements that are other than statements of historical fact, are subject to material risks and uncertainties. 1st Source cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made.

1st Source may make other written or oral forward-looking statements from time to time. Readers are advised that various important factors could cause 1st Source's actual results or circumstances for future periods to differ materially from those anticipated or projected in such forward-looking statements. Such factors, among others, include changes in laws, regulations or accounting principles generally accepted in the United States; 1st Source's competitive position within its markets served; increasing consolidation within the banking industry; unforeseen changes in interest rates; unforeseen downturns in the local, regional or national economies or in the industries in which 1st Source has credit concentrations; and other risks discussed in 1st Source's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, which filings are available from the SEC. 1st Source undertakes no obligation to publicly update or revise any forward-looking statements.

NON-GAAP FINANCIAL MEASURES

The accounting and reporting policies of 1st Source conform to generally accepted accounting principles ("GAAP") in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures are used by management to evaluate and measure the Company's performance. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity-to-tangible assets ratio and tangible book value per common share. Management believes that these measures provide users of the Company's financial information with a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company's operating efficiency. Other financial holding companies may define or calculate these measures differently.

Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent ("FTE") basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company's efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses and lease depreciation), measures how much it costs to produce one dollar of revenue. Securities gains or losses and lease depreciation are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity-to-tangible assets ratio and tangible book value per common share as useful measurements of the Company's equity.

See the table marked "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of certain non-GAAP financial measures used by the Company with their most closely related GAAP measures.

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(charts attached)

1st SOURCE CORPORATION
1st QUARTER 2026 FINANCIAL HIGHLIGHTS
(Unaudited - Dollars in thousands, except per share data)

		Three Months Ended
		March 31,			December 31,			March 31,
		2026			2025			2025
AVERAGE BALANCES
Assets	$	9,020,305		$	9,070,471		$	8,856,278
Earning assets		8,618,611			8,651,605			8,434,790
Investments		1,527,070			1,519,175			1,519,177
Loans and leases		7,022,759			6,953,090			6,798,952
Deposits		7,191,569			7,421,006			7,333,542
Interest bearing liabilities		5,930,767			5,956,902			5,920,255
Common shareholders' equity		1,292,902			1,261,725			1,141,922
Total equity		1,335,986			1,306,954			1,208,236
INCOME STATEMENT DATA
Net interest income	$	90,138		$	93,295		$	80,938
Net interest income - FTE⁽¹⁾		90,293			93,453			81,085
Provision for credit losses		7,272			711			3,265
Noninterest income		23,001			17,537			23,103
Noninterest expense		54,517			56,557			53,076
Net income		39,961			41,131			37,523
Net income available to common shareholders		39,956			41,142			37,520
PER SHARE DATA
Basic net income per common share	$	1.63		$	1.67		$	1.52
Diluted net income per common share		1.63			1.67			1.52
Common cash dividends declared		0.40			0.40			0.36
Book value per common share⁽²⁾		53.10			52.32			47.29
Tangible book value per common share⁽¹⁾		49.61			48.88			43.87
Market value - High		71.98			67.39			67.77
Market value - Low		60.30			56.89			53.23
Basic weighted average common shares outstanding		24,276,666			24,391,070			24,546,819
Diluted weighted average common shares outstanding		24,276,666			24,391,070			24,546,819
KEY RATIOS
Return on average assets		1.80	%		1.80	%		1.72	%
Return on average common shareholders' equity		12.53			12.94			13.33
Average common shareholders' equity to average assets		14.33			13.91			12.89
End of period tangible common equity to tangible assets⁽¹⁾		13.22			13.28			12.14
Risk-based capital - Common Equity Tier 1⁽³⁾		15.30			15.52			14.71
Risk-based capital - Tier 1⁽³⁾		16.54			16.79			16.20
Risk-based capital - Total⁽³⁾		17.80			18.05			17.46
Net interest margin		4.24			4.28			3.89
Net interest margin - FTE⁽¹⁾		4.25			4.29			3.90
Efficiency ratio: expense to revenue		48.19			51.03			51.01
Efficiency ratio: expense to revenue - adjusted⁽¹⁾		48.16			48.56			51.31
Net charge-offs to average loans and leases		0.23			0.02			0.01
Loan and lease loss allowance to loans and leases		2.33			2.30			2.29
Nonperforming assets to loans and leases		1.03			1.10			0.63

		March 31,		December 31,		September 30,		June 30,		March 31,
		2026		2025		2025		2025		2025
END OF PERIOD BALANCES
Assets	$	9,113,429	$	9,055,270	$	9,056,691	$	9,087,162	$	8,963,114
Loans and leases		7,083,528		7,046,669		6,964,454		7,097,969		6,863,393
Deposits		7,227,596		7,225,575		7,409,819		7,442,669		7,417,765
Allowance for loan and lease losses		164,898		161,846		161,430		163,484		157,470
Goodwill and intangible assets		83,895		83,895		83,895		83,895		83,895
Common shareholders' equity		1,277,956		1,274,971		1,236,472		1,198,589		1,161,459
Total equity		1,320,838		1,318,090		1,291,431		1,257,424		1,220,542
ASSET QUALITY
Loans and leases past due 90 days or more	$	398	$	460	$	317	$	198	$	122
Nonaccrual loans and leases		71,652		76,602		62,264		71,732		40,540
Other real estate		-		-		120		-		-
Repossessions		1,319		267		435		3,549		2,410
Equipment owned under operating leases		46		49		56		62		-
Total nonperforming assets	$	73,415	$	77,378	$	63,192	$	75,541	$	43,072

(1) See "Reconciliation of Non-GAAP Financial Measures" for more information on this performance measure/ratio.
(2) Calculated as common shareholders' equity divided by common shares outstanding at the end of the period.
(3) Calculated under banking regulatory guidelines.

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - Dollars in thousands)

		March 31,			December 31,			September 30,			March 31,
		2026			2025			2025			2025
ASSETS
Cash and due from banks	$	67,670		$	69,249		$	75,316		$	87,816
Federal funds sold and interest bearing deposits with other banks		51,136			50,608			138,942			135,003
Investment securities available-for-sale, at fair value (amortized cost of $1,583,272, $1,568,429, $1,555,564, and $1,591,072 at March 31, 2026, December 31, 2025, September 30, 2025, and March 31, 2025, respectively)		1,529,593			1,522,486			1,495,117			1,501,877
Other investments		22,140			22,140			22,140			23,855
Mortgages held for sale		3,142			4,866			7,110			2,305
Loans and leases, net of unearned discount:
Commercial and agricultural		821,818			797,592			759,167			775,118
Renewable energy		713,110			652,799			603,715			505,413
Auto and light truck		831,365			887,876			924,992			955,945
Medium and heavy duty truck		264,165			269,749			280,302			289,837
Aircraft		1,073,282			1,086,821			1,095,423			1,118,099
Construction equipment		1,210,493			1,221,135			1,207,446			1,171,934
Commercial real estate		1,319,361			1,269,765			1,244,306			1,230,760
Residential real estate and home equity		735,743			740,777			726,585			689,101
Consumer		114,191			120,155			122,518			127,186
Total loans and leases		7,083,528			7,046,669			6,964,454			6,863,393
Allowance for loan and lease losses		(164,898	)		(161,846	)		(161,430	)		(157,470	)
Net loans and leases		6,918,630			6,884,823			6,803,024			6,705,923
Equipment owned under operating leases, net		6,603			6,964			7,649			9,864
Premises and equipment, net		57,973			58,318			57,852			54,778
Goodwill and intangible assets		83,895			83,895			83,895			83,895
Accrued income and other assets		372,647			351,921			365,646			357,798
Total assets	$	9,113,429		$	9,055,270		$	9,056,691		$	8,963,114
LIABILITIES
Deposits:
Noninterest-bearing demand	$	1,655,736		$	1,600,495		$	1,633,786		$	1,651,479
Interest-bearing deposits:
Interest-bearing demand		2,487,201			2,592,202			2,512,205			2,451,169
Savings		1,466,564			1,446,278			1,396,931			1,392,391
Time		1,618,095			1,586,600			1,866,897			1,922,726
Total interest-bearing deposits		5,571,860			5,625,080			5,776,033			5,766,286
Total deposits		7,227,596			7,225,575			7,409,819			7,417,765
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase		153,391			112,470			72,190			60,025
Other short-term borrowings		135,789			126,151			1,384			1,152
Total short-term borrowings		289,180			238,621			73,574			61,177
Long-term debt and mandatorily redeemable securities		35,508			43,330			42,234			41,210
Subordinated notes		58,764			58,764			58,764			58,764
Accrued expenses and other liabilities		181,543			170,890			180,869			163,656
Total liabilities		7,792,591			7,737,180			7,765,260			7,742,572
SHAREHOLDERS' EQUITY
Preferred stock; no par value Authorized 10,000,000 shares; none issued or outstanding		-			-			-			-
Common stock; no par value Authorized 40,000,000 shares; issued 28,205,674 shares at March 31, 2026, December 31, 2025, September 30, 2025, and March 31, 2025		436,538			436,538			436,538			436,538
Retained earnings		1,047,027			1,015,160			983,615			921,717
Cost of common stock in treasury (4,136,793, 3,836,656, 3,771,570, and 3,643,063 shares at March 31, 2026, December 31, 2025, September 30, 2025, and March 31, 2025, respectively)		(164,709	)		(141,950	)		(137,818	)		(128,912	)
Accumulated other comprehensive loss		(40,900	)		(34,777	)		(45,863	)		(67,884	)
Total shareholders' equity		1,277,956			1,274,971			1,236,472			1,161,459
Noncontrolling interests		42,882			43,119			54,959			59,083
Total equity		1,320,838			1,318,090			1,291,431			1,220,542
Total liabilities and equity	$	9,113,429		$	9,055,270		$	9,056,691		$	8,963,114

1st SOURCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - Dollars in thousands, except per share amounts)

		Three Months Ended
		March 31,			December 31,			March 31,
		2026			2025			2025
Interest income:
Loans and leases	$	113,423		$	119,981		$	113,560
Investment securities, taxable		11,704			10,802			8,153
Investment securities, tax-exempt		307			316			277
Other		699			1,887			1,314
Total interest income		126,133			132,986			123,304
Interest expense:
Deposits		32,578			37,308			39,846
Short-term borrowings		1,720			234			232
Subordinated notes		995			1,002			1,014
Long-term debt and mandatorily redeemable securities		702			1,147			1,274
Total interest expense		35,995			39,691			42,366
Net interest income		90,138			93,295			80,938
Provision for credit losses:
Provision for credit losses - loans and leases		7,010			695			2,112
Provision for credit losses - unfunded loan commitments		262			16			1,153
Total provision for credit losses		7,272			711			3,265
Net interest income after provision for credit losses		82,866			92,584			77,673
Noninterest income:
Trust and wealth advisory		7,018			7,110			6,666
Service charges on deposit accounts		3,354			3,487			3,071
Debit card		4,380			4,528			4,149
Mortgage banking		1,011			1,103			853
Insurance commissions		2,511			1,730			2,440
Equipment rental		589			650			899
Losses on investment securities available-for-sale		-			(5,805	)		-
Other		4,138			4,734			5,025
Total noninterest income		23,001			17,537			23,103
Noninterest expense:
Salaries and employee benefits		32,821			33,432			32,115
Net occupancy		3,548			3,380			3,224
Furniture and equipment		1,462			1,857			1,347
Data processing		7,573			7,565			7,291
Depreciation - leased equipment		454			521			718
Professional fees		1,575			2,183			1,668
FDIC and other insurance		1,449			1,461			1,440
Business development and marketing		1,903			2,200			1,925
Other		3,732			3,958			3,348
Total noninterest expense		54,517			56,557			53,076
Income before income taxes		51,350			53,564			47,700
Income tax expense		11,389			12,433			10,177
Net income		39,961			41,131			37,523
Net (income) loss attributable to noncontrolling interests		(5	)		11			(3	)
Net income available to common shareholders	$	39,956		$	41,142		$	37,520
Per common share:
Basic net income per common share	$	1.63		$	1.67		$	1.52
Diluted net income per common share	$	1.63		$	1.67		$	1.52
Basic weighted average common shares outstanding		24,276,666			24,391,070			24,546,819
Diluted weighted average common shares outstanding		24,276,666			24,391,070			24,546,819

1st SOURCE CORPORATION
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
(Unaudited - Dollars in thousands)

					Three Months Ended
		March 31, 2026			December 31, 2025		March 31, 2025
		Average Balance			Interest Income/Expense		Yield/ Rate		Average Balance			Interest Income/Expense		Yield/ Rate		Average Balance			Interest Income/Expense		Yield/ Rate
ASSETS
Investment securities available-for-sale:
Taxable	$	1,493,065		$	11,704		3.18 %	$	1,483,960		$	10,802		2.89 %	$	1,488,005		$	8,153		2.22 %
Tax exempt⁽¹⁾		34,005			387		4.62 %		35,215			398		4.48 %		31,172			349		4.54 %
Mortgages held for sale		4,930			75		6.17 %		5,228			78		5.92 %		2,409			39		6.57 %
Loans and leases, net of unearned discount⁽¹⁾		7,022,759			113,423		6.55 %		6,953,090			119,979		6.85 %		6,798,952			113,596		6.78 %
Other investments		63,852			699		4.44 %		174,112			1,887		4.30 %		114,252			1,314		4.66 %
Total earning assets⁽¹⁾		8,618,611			126,288		5.94 %		8,651,605			133,144		6.11 %		8,434,790			123,451		5.94 %
Cash and due from banks		57,339							75,004							64,009
Allowance for loan and lease losses		(163,666	)						(162,941	)						(157,318	)
Other assets		508,021							506,803							514,797
Total assets	$	9,020,305						$	9,070,471						$	8,856,278

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits	$	5,605,444		$	32,578		2.36 %	$	5,783,353		$	37,308		2.56 %	$	5,745,134		$	39,846		2.81 %
Short-term borrowings:
Securities sold under agreements to repurchase		53,514			91		0.69 %		59,330			121		0.81 %		58,232			104		0.72 %
Other short-term borrowings		173,524			1,629		3.81 %		13,028			113		3.44 %		18,450			128		2.81 %
Subordinated notes		58,764			995		6.87 %		58,764			1,002		6.76 %		58,764			1,014		7.00 %
Long-term debt and mandatorily redeemable securities		39,521			702		7.20 %		42,427			1,147		10.73 %		39,675			1,274		13.02 %
Total interest-bearing liabilities		5,930,767			35,995		2.46 %		5,956,902			39,691		2.64 %		5,920,255			42,366		2.90 %
Noninterest-bearing deposits		1,586,125							1,637,653							1,588,408
Other liabilities		167,427							168,962							139,379
Shareholders' equity		1,292,902							1,261,725							1,141,922
Noncontrolling interests		43,084							45,229							66,314
Total liabilities and equity	$	9,020,305						$	9,070,471						$	8,856,278
Less: Fully tax-equivalent adjustments					(155	)						(158	)						(147	)
Net interest income/margin (GAAP-derived)⁽¹⁾				$	90,138		4.24 %				$	93,295		4.28 %				$	80,938		3.89 %
Fully tax-equivalent adjustments					155							158							147
Net interest income/margin - FTE⁽¹⁾				$	90,293		4.25 %				$	93,453		4.29 %				$	81,085		3.90 %

(1) See "Reconciliation of Non-GAAP Financial Measures" for more information on this performance measure/ratio.

1st SOURCE CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited - Dollars in thousands, except per share data)

			Three Months Ended
			March 31,			December 31,			March 31,
			2026			2025			2025
Calculation of Net Interest Margin
(A)	Interest income (GAAP)	$	126,133		$	132,986		$	123,304
	Fully tax-equivalent adjustments:
(B)	- Loans and leases		75			76			75
(C)	- Tax exempt investment securities		80			82			72
(D)	Interest income - FTE (A+B+C)		126,288			133,144			123,451
(E)	Interest expense (GAAP)		35,995			39,691			42,366
(F)	Net interest income (GAAP) (A-E)		90,138			93,295			80,938
(G)	Net interest income - FTE (D-E)		90,293			93,453			81,085
(H)	Annualization factor		4.056			3.967			4.056
(I)	Total earning assets	$	8,618,611		$	8,651,605		$	8,434,790
	Net interest margin (GAAP-derived) (F*H)/I		4.24 %			4.28 %			3.89 %
	Net interest margin - FTE (G*H)/I		4.25 %			4.29 %			3.90 %

Calculation of Efficiency Ratio
(F)	Net interest income (GAAP)	$	90,138		$	93,295		$	80,938
(G)	Net interest income - FTE		90,293			93,453			81,085
(J)	Plus: noninterest income (GAAP)		23,001			17,537			23,103
(K)	Less: gains/losses on investment securities and partnership investments		(586	)		4,919			(1,427	)
(L)	Less: depreciation - leased equipment		(454	)		(521	)		(718	)
(M)	Total net revenue (GAAP) (F+J)		113,139			110,832			104,041
(N)	Total net revenue - adjusted (G+J-K-L)		112,254			115,388			102,043
(O)	Noninterest expense (GAAP)		54,517			56,557			53,076
(L)	Less:depreciation - leased equipment		(454	)		(521	)		(718	)
(P)	Noninterest expense - adjusted (O-L)		54,063			56,036			52,358
	Efficiency ratio (GAAP-derived) (O/M)		48.19 %			51.03 %			51.01 %
	Efficiency ratio - adjusted (P/N)		48.16 %			48.56 %			51.31 %

			End of Period
			March 31,			December 31,			March 31,
			2026			2025			2025
Calculation of Tangible Common Equity-to-Tangible Assets Ratio
(Q)	Total common shareholders' equity (GAAP)	$	1,277,956		$	1,274,971		$	1,161,459
(R)	Less: goodwill and intangible assets		(83,895	)		(83,895	)		(83,895	)
(S)	Total tangible common shareholders' equity (Q-R)	$	1,194,061		$	1,191,076		$	1,077,564
(T)	Total assets (GAAP)		9,113,429			9,055,270			8,963,114
(R)	Less: goodwill and intangible assets		(83,895	)		(83,895	)		(83,895	)
(U)	Total tangible assets (T-R)	$	9,029,534		$	8,971,375		$	8,879,219
	Common equity-to-assets ratio (GAAP-derived) (Q/T)		14.02 %			14.08 %			12.96 %
	Tangible common equity-to-tangible assets ratio (S/U)		13.22 %			13.28 %			12.14 %


Calculation of Tangible Book Value per Common Share
(Q)	Total common shareholders' equity (GAAP)	$	1,277,956		$	1,274,971		$	1,161,459
(V)	Actual common shares outstanding		24,068,881			24,369,018			24,562,611
	Book value per common share (GAAP-derived) (Q/V)*1000	$	53.10		$	52.32		$	47.29
	Tangible common book value per share (S/V)*1000	$	49.61		$	48.88		$	43.87

The NASDAQ Stock Market National Market Symbol: "SRCE" (CUSIP #336901 10 3)

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