1st Source Corporation Reports $37.52 Million Net Income in Q1 2025

1st Source Corporation reported a net income of $37.52 million for the first quarter of 2025, a significant increase from $29.46 million in the same period of 2024. This translates to a diluted earnings per share of $1.52, up from $1.19 year-over-year. The company's return on average common shareholders' equity improved to 13.33% from 11.77%, while the return on total average assets rose to 1.72% from 1.37%. The increase in net income was attributed to higher net interest income and noninterest income, alongside a decrease in the provision for credit losses, which fell to $3.27 million from $7.48 million in the prior year.

Total assets for 1st Source Corporation reached $8.96 billion as of March 31, 2025, reflecting a modest increase of $31.18 million or 0.35% from the end of 2024. The company’s total loans and leases increased slightly to $6.86 billion, driven by growth in the renewable energy, commercial real estate, residential real estate, and auto and light truck portfolios. However, this was partially offset by declines in the construction equipment, consumer, and aircraft portfolios. Total deposits rose to $7.42 billion, an increase of $187.73 million or 2.60%, primarily due to higher savings and time deposits.

In terms of operational metrics, 1st Source Corporation's nonperforming assets totaled $43.07 million, a 37.46% increase from $31.33 million at the end of 2024, largely due to higher nonaccrual loans and leases. The allowance for loan and lease losses as a percentage of loans and leases outstanding was 2.29%, compared to 2.26% a year prior. The company reported net charge-offs of $0.18 million, or 0.01% of average loans and leases, a significant decrease from $6.12 million, or 0.38%, in the same quarter of 2024.

Strategically, 1st Source Corporation has focused on enhancing its product offerings and expanding its market presence. The company continues to monitor economic conditions closely, particularly the impact of geopolitical instability and inflation on its loan portfolios. The management expressed concerns regarding the potential risks in its small business portfolio and the overall economic outlook, which could affect future performance. The company remains committed to maintaining a strong capital position, with total shareholders' equity increasing to $1.16 billion, up 4.54% from the previous quarter, supported by retained earnings and a decrease in accumulated other comprehensive losses.

Looking ahead, 1st Source Corporation anticipates challenges stemming from a fragile economic environment, characterized by elevated inflation and interest rates, as well as uncertainties in domestic trade policies. The company is focused on managing its credit risk and maintaining liquidity to navigate these conditions effectively. The management's outlook reflects a cautious approach, emphasizing the need for ongoing assessment of market dynamics and potential impacts on the company's financial performance.