SRCE

1st Source

Fundamental data last updated:April 13, 2026

company profile

SECTOR

Financial Services

industry

Banks - Regional

Exchange

Nasdaq

County of HQ

United States

Next Earnings Date

04/23/26

Business Summary

1st Source operates as a regional banking franchise generating revenue primarily through net interest income—borrowing at lower short-term rates and lending at higher long-term or commercial rates—while supplementing income with fee-based financial services. Its moat is relationship-driven, rooted in localized commercial and consumer banking ties that create sticky deposits and repeat lending business. The bank converts deposits into earning assets and attempts to optimize spread while maintaining credit discipline, which drives its 21.90% ROIC when underwriting is sound. Competitive strength comes from regional brand equity and underwriting expertise rather than scale, meaning execution and credit quality are the true determinants of durable cash generation.

VALUATION

P/E

11.5

Market Cap ($M USD)

$1,797

Forward P/E

10.8

PEG

1.7

PRICE TO SALES

4.2

PRICE TO BOOK

1.4

EV / EBITDA

-

5-Year Average P/E

DIVIDEND

Yield

2.10%

Annual Payout

$1.60

Payout Ratio

23.70%

Consecutive Years of Dividend Growth

10+

5-Year Dividend Growth Rate

6.60%

Financial Health & Profitability

Earnings Per Share

$6.41

Next Year EPS Growth Estimate

$6.84

Next Year Revenue Growth Estimate

3.10%

Return on Equity (ROE)

12.30%

Operating Margin

50.00%

Debt-to-Equity

0.2

Piotroski F-Score

7

Altman Z-Score

0.4

Return on Invested Capital (ROIC)

21.90%%

Current Ratio

-

Quick Ratio

Gainseekers Quantitative Analysis

Summary

At 11.5x earnings and 10.8x forward earnings, SRCE trades like a low-growth regional bank, yet the balance sheet risk signal is flashing red with an Altman Z-Score of 0.4, a level typically associated with financial distress risk. The 1.7 forward PEG implies growth is not particularly cheap relative to expectations, and the market is not pricing this as a high-quality compounder despite a 21.90% ROIC. The combination of a modest valuation multiple and a deeply weak Z-score suggests the market is discounting latent balance sheet or credit-cycle risk rather than near-term earnings weakness. This is not a classic “mispriced gem” — it is a statistically cheap bank with embedded solvency skepticism.

AI Exposure / Tech Reliance

As a regional bank within Financial Services, SRCE’s AI exposure is indirect, primarily through underwriting automation, risk modeling, and operational efficiency enhancements. Technology adoption can improve operating margin beyond the current 12.30%, but it does not fundamentally alter credit risk exposure. Its resilience will depend more on asset quality and funding stability than technological disruption.

The Bull Case

A value or GARP investor could argue that 10.8x forward earnings for a bank generating 21.90% ROIC and carrying a Piotroski F-Score of 7 represents operational quality at a reasonable price. Institutional ownership at 76.33% suggests sophisticated capital sees durability in the franchise, while a 12.30% operating margin in a regional banking model indicates disciplined cost control. The 1.4x price-to-book multiple is not demanding for a bank producing double-digit capital returns, and the 2.10% dividend with a 10+ five-year average dividend growth rate adds a shareholder return component. If credit remains stable, the earnings base implied by a $6.41 EPS next year estimate makes the current multiple look conservatively set.

The Bear Case

The red flags are structural and cannot be ignored: a Debt/Equity ratio of 50.00% in combination with an Altman Z-Score of 0.4 signals fragility under stress. A PEG of 1.7 suggests growth is not cheap, and with Return on Equity at just 3.10%, profitability relative to shareholder capital is underwhelming. Short interest at 6.60% of float is not trivial for a regional bank, indicating a meaningful bearish contingent. The market may be correctly pricing in balance sheet vulnerability, and if credit conditions tighten, the low Z-score implies disproportionate downside risk.

Market Sentiment & Smart Money

Short Interest %

2.40%

Analyst Consensus

2.5

Average Analyst Price Target

$76.33

Institutional Ownership %

75.40%

1-Year Beta

0.69

Insider Buying % (6 Mo)

26.70%%

Distance to 52-Week High

98.30%%

Distance to 52-Week Low

140.50%%