1St Source (SRCE) AI Stock Analysis

• Market Cap: $1.72B
• Dividend Yield: 2.37%
• Average Volume (3M): 105.85K
• Price to Earnings (P/E): 10.9
• Beta (1Y): 0.70
• Revenue Growth: 5.09%
• EPS Growth: 15.78%
• Country: US
• Employees: 1,205
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 1.67
• Shares Outstanding: 24,330,147
• 10 Day Avg. Volume: 102,430
• 30 Day Avg. Volume: 105,848
• PEG Ratio: 0.47
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 2.54
• P/FCF Ratio: 7.14
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 3.33
• Enterprise Value/Gross Profit: 4.73
• Enterprise Value/Ebitda: 9.33
• 1Y Price Target: $76.33
• Price Target Upside: 8.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: $78.00 ▲(10.50% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

SRCE scores highest on technical strength and reasonable valuation, supported by solid profitability and improving leverage. The overall score is held back most by the sharp deterioration to zero reported 2025 operating/free cash flow, which raises uncertainty about recent cash conversion quality.

Positive Factors

Renewable energy finance expansion

A sizeable and growing renewable finance book diversifies revenue beyond local commercial banking, leverages specialty finance margins, and builds a national niche. This aligns with structural clean-energy demand and can create durable fee and interest income streams over multiple years.

Consistent revenue growth and profitability

Sustained revenue expansion alongside low-teens ROE indicates repeatable core earnings and effective capital use. Durable topline growth and steady returns support reinvestment, dividend capacity, and resilience through economic cycles, underpinning long-term franchise value.

Improving leverage and capital base

Declining leverage and a growing equity base enhance loss-absorption capacity and funding flexibility. Strong capitalization supports measured asset growth, regulatory resilience, and the ability to weather loan stress without resorting to dilutive capital actions.

Negative Factors

2025 cash-flow collapse

A sudden drop to zero operating and free cash flow materially undermines earnings quality and internal funding. Over the medium term this can constrain organic loan growth, dividend flexibility, or force reliance on external funding, making cash conversion a persistent monitoring item.

Margin compression

Sustained margin compression reduces profitability headroom and weakens incremental returns on new assets. If driven by funding cost rises or competitive pricing, compressed margins can lower ROE and limit internal capital generation, pressuring strategic investments and shareholder distributions.

Rising asset base raises credit and funding risk

Rapidly expanding assets require disciplined underwriting and diversified funding. If credit standards slip or wholesale funding tightens, the bank could face elevated credit losses or liquidity strain. This structural growth-risk tradeoff demands sustained risk management focus.

1St Source Business Overview & Revenue Model

Company Description

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. As of December 31, 2021, the company operated through 79 banking centers in 18 counties in Indiana and Michigan, as well as Sarasota County in Florida. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

How the Company Makes Money

1st Source generates revenue primarily through interest income from loans and fees associated with its banking services. The company's main revenue streams include interest earned on commercial and consumer loans, mortgage financing, and leasing services. Additionally, 1st Source earns non-interest income through various fees for services such as account maintenance, wire transfers, and investment management. The bank also participates in wealth management and trust services, providing advisory services that contribute to its earnings. Strategic partnerships with local businesses and organizations enhance its customer base, while a strong focus on community engagement helps to drive customer loyalty and retention.

1St Source Financial Statement Overview

Summary

Strong multi-year revenue growth and solid profitability with improving leverage and consistent low-teens ROE, but the reported 2025 collapse to zero operating cash flow/free cash flow is a major red flag that materially weakens overall quality despite otherwise sound fundamentals.

Income Statement

Revenue has expanded steadily from 2021–2025 (with a particularly strong step-up in 2023), supporting consistent earnings growth. Profitability is strong for the period, with net margins generally in the low-to-mid 20% range and improving year over year into 2025, alongside solid operating profitability. A key weakness is some margin compression versus 2021–2022 levels, suggesting profitability is not at peak levels despite higher revenue.

Balance Sheet

Leverage looks reasonable and improving: debt-to-equity declines meaningfully by 2025 versus 2023, and equity has grown over time, supporting a larger asset base. Returns on equity are consistently solid (roughly low-teens), indicating good profitability relative to shareholder capital. The main watch-out is that total assets continue to rise, so maintaining credit quality and funding stability is important even with moderate reported debt levels.

Cash Flow

Cash generation was strong and consistent from 2020–2024, with free cash flow closely tracking net income (roughly near one-to-one), which typically signals good earnings quality. However, 2025 reports operating cash flow and free cash flow at zero with a sharp drop in free cash flow growth, creating a major year-over-year deterioration and raising uncertainty around cash conversion in the most recent period.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	600.00M	570.32M	507.53M	385.08M	354.86M
Gross Profit	421.93M	374.66M	363.40M	341.49M	341.03M
EBITDA	214.03M	183.42M	177.14M	175.87M	178.88M
Net Income	158.27M	132.62M	124.93M	120.51M	118.53M
Balance Sheet
Total Assets	9.06B	8.93B	8.73B	8.34B	8.10B
Cash, Cash Equivalents and Short-Term Investments	1.59B	1.02B	1.70B	1.86B	1.92B
Total Debt	340.71M	325.05M	397.39M	302.94M	309.44M
Total Liabilities	7.74B	7.75B	7.66B	7.42B	7.13B
Stockholders Equity	1.27B	1.11B	989.57M	864.07M	916.25M
Cash Flow
Free Cash Flow	213.62M	181.49M	181.96M	173.15M	163.88M
Operating Cash Flow	223.70M	194.07M	187.94M	175.53M	166.76M
Investing Cash Flow	-159.12M	-276.61M	-358.29M	-784.87M	-598.56M
Financing Cash Flow	-69.55M	77.91M	177.22M	206.95M	713.94M

1St Source Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 70.59
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SRCE, the sentiment is Positive. The current price of 70.59 is above the 20-day moving average (MA) of 68.68, above the 50-day MA of 66.08, and above the 200-day MA of 62.14, indicating a bullish trend. The MACD of 1.48 indicates Negative momentum. The RSI at 63.50 is Neutral, neither overbought nor oversold. The STOCH value of 58.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SRCE.

1St Source Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STBA	81 Outperform	$1.68B	12.62	9.35%	3.38%	-1.48%	-1.58%
GABC	75 Outperform	$1.62B	14.11	10.75%	2.89%	30.45%	3.13%
STEL	73 Outperform	$1.97B	19.51	6.38%	1.82%	-4.40%	-8.80%
SRCE	72 Outperform	$1.72B	10.92	13.25%	2.37%	5.09%	15.78%
MBIN	72 Outperform	$2.13B	12.29	11.84%	1.19%	-2.45%	-28.20%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CLBK	66 Neutral	$1.89B	35.73	1.34%	―	-3.60%	-8.63%

1St Source Corporate Events

1st Source Highlights Q4 2025 Growth and Renewable Expansion

In an investor presentation for the fourth quarter of 2025, 1st Source highlighted a diversified loan and lease portfolio split roughly evenly between community banking and specialty finance, supported by 78 banking centers, extensive wealth and insurance operations, and a growing national platform in renewable energy finance. As of December 31, 2025, the bank reported more than $652 million in renewable energy loans and leases and over $198 million in tax equity investments across the U.S., projects that are estimated to avoid over 406,000 metric tons of carbon emissions annually, while its digital banking franchise showed rising mobile adoption, strong app ratings, and rapid uptake of instant payment services launched in 2023, with cumulative RTP and FedNow volumes surpassing $496 million and 395,000 transactions by the end of 2025; together with its long-tenured management team and repeated recognition as a top SBA and community development lender in Indiana, these trends underscore the company’s efforts to deepen its regional banking franchise while expanding in high-growth, technology-enabled and renewable sectors.

The most recent analyst rating on (SRCE) stock is a Hold with a $74.00 price target. To see the full list of analyst forecasts on 1St Source stock, see the SRCE Stock Forecast page.