1st Source SRCE Q2 2025 Earnings Preview Upside Potential with Higher Revenue Projections

Forward-Looking Analysis
1st Source Corporation (NASDAQ: SRCE) is expected to report its Q2 2025 earnings next week, with Wall Street anticipating flat earnings compared to the previous year. However, higher revenue projections suggest potential for upside. Analysts have adjusted their forecasts, with DA Davidson's P. Winter now predicting earnings of $1.49 per share for the quarter, slightly up from their previous estimate of $1.47. This aligns with the broader consensus, which estimates full-year earnings at $5.82 per share and forecasts a slight increase to $5.96 EPS for FY2025. The company is projected to achieve annual earnings and revenue growth rates of 3.4% and 5.9%, respectively. EPS growth is expected to be 3.9% per annum. Despite the expected flat earnings, the revenue growth could positively impact the financial services provider’s performance, reflecting its capacity to expand its core business operations effectively.

Historical Performance Review
In Q1 2025, 1st Source Corporation achieved a record net income of $37.52 million, up from $31.44 million in the previous quarter, and $29.46 million a year ago. The diluted EPS reached a new high of $1.52. The company reported improved profitability ratios, with return on average assets at 1.72% and return on average common shareholders’ equity at 13.33%. Core business growth was evident in increased average loans and leases, along with strong deposit growth. These figures underscore the company's robust financial health and operational efficiency.

Additional News
1st Source Corporation has continued to strengthen its capital position, with the Common Equity Tier 1 ratio rising to 14.71% and tangible common equity to tangible assets increasing to 12.14% as of March 31, 2025. The board approved an increased cash dividend of $0.38 per common share, representing an 11.8% increase from a year ago. The bank's focus on core business expansion is evident in its strategic moves to grow average loans, leases, and deposits. Furthermore, the company has maintained low net charge-offs and decreased its provision for credit losses, reinforcing its sound risk management practices despite the slightly higher ratio of nonperforming assets to loans and leases.

Summary & Outlook
1st Source Corporation demonstrates strong financial health with a record Q1 2025 net income and a solid capital position. The anticipated revenue growth in Q2 2025 and strategic business expansion efforts present favorable growth catalysts. While the ratio of nonperforming assets indicates some risk, the company's effective risk management and capital strength support a positive outlook. Given these factors, the overall stance on 1st Source Corporation remains bullish, as the company is well-positioned to capitalize on growth opportunities while managing potential risks effectively.