SRCE
SRCE
1st Source Corporation (NASDAQ: SRCE) is a diversified financial services company headquartered in South Bend, Indiana. Founded in 1863 — over 160 years ago — 1st Source operates through its principal subsidiary, 1st Source Bank, which provides commercial and retail banking services in northern Indiana and southwestern Michigan. The company also has specialty finance businesses including equipment leasing for aircraft, trucks, and construction equipment. With $9.1B in total assets and a strong deposit franchise in its regional markets, 1st Source is a classic community bank with a 39-year dividend growth streak — making it one of the longest-tenured dividend growers among U.S. banks. The company has delivered consistent profitability with ROE of 13% and loan growth driven by its specialty equipment finance niche.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Community Banking | $348M | 80% | +8.0% | — | Commercial/retail banking in IN/MI |
| Specialty Finance | $86M | 20% | +5.0% | — | Aircraft, truck, construction equipment leasing |
| Blended Growth Rate | — | 100% | +7.4% | — | Weighted avg across segments |
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 13.0% | ≥12% strong |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $340 | $341 | $363 | $375 | $421 |
| Rev YoY Growth | — | +0.3% | +6.5% | +3.3% | +12.3% |
| Gross Margin | — | — | — | — | — |
| EBITDA ($M) | $0 | $0 | $0 | $0 | $0 |
| EBITDA Margin | — | — | — | — | — |
| Operating Income ($M) | $0 | $0 | $0 | $0 | $0 |
| Operating Margin | — | — | — | — | — |
| Net Income ($M) | $117 | $121 | $125 | $133 | $158 |
| Net Margin | 34.4% | 35.5% | 34.4% | 35.5% | 37.5% |
| EPS (diluted) | $4.70 | $4.84 | $5.03 | $5.36 | $6.41 |
| Free Cash Flow ($M) | $0 | $0 | $0 | $0 | $0 |
| Annual DPS | $1.220 | $1.260 | $1.320 | $1.420 | $1.560 |
| Total Debt ($M) | $0 | $0 | $0 | $0 | $0 |
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 5.0% | 4.0% | 2.5% | 7.55% | $38 | ▼45.6% |
| 📊 Base | 8.0% | 5.5% | 3.0% | 7.55% | $49 | ▼29.7% |
| 🚀 Bull | 10.0% | 6.5% | 3.5% | 7.55% | $61 | ▼13.4% |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.680 | $1.562 | $1.56 |
| Year 2 | Stage 1 | $1.764 | $1.525 | $3.09 |
| Year 3 | Stage 1 | $1.852 | $1.489 | $4.58 |
| Year 4 | Stage 1 | $1.945 | $1.454 | $6.03 |
| Year 5 | Stage 1 | $2.042 | $1.419 | $7.45 |
| Year 6 | Stage 2 | $2.124 | $1.372 | $8.82 |
| Year 7 | Stage 2 | $2.209 | $1.327 | $10.15 |
| Year 8 | Stage 2 | $2.297 | $1.283 | $11.43 |
| Year 9 | Stage 2 | $2.389 | $1.241 | $12.67 |
| Year 10 | Stage 2 | $2.484 | $1.200 | $13.87 |
| Terminal | — | TV=$50.43 | PV(TV)=$24.35 (64% of IV) | $38.23 |
| Intrinsic Value | — | — | PV(Divs) $13.87 + PV(TV) $24.35 | $38.23 |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.728 | $1.607 | $1.61 |
| Year 2 | Stage 1 | $1.866 | $1.613 | $3.22 |
| Year 3 | Stage 1 | $2.016 | $1.620 | $4.84 |
| Year 4 | Stage 1 | $2.177 | $1.627 | $6.47 |
| Year 5 | Stage 1 | $2.351 | $1.634 | $8.10 |
| Year 6 | Stage 2 | $2.480 | $1.603 | $9.70 |
| Year 7 | Stage 2 | $2.617 | $1.572 | $11.28 |
| Year 8 | Stage 2 | $2.761 | $1.542 | $12.82 |
| Year 9 | Stage 2 | $2.912 | $1.513 | $14.33 |
| Year 10 | Stage 2 | $3.073 | $1.484 | $15.81 |
| Terminal | — | TV=$69.55 | PV(TV)=$33.59 (68% of IV) | $49.41 |
| Intrinsic Value | — | — | PV(Divs) $15.81 + PV(TV) $33.59 | $49.41 |
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.760 | $1.636 | $1.64 |
| Year 2 | Stage 1 | $1.936 | $1.674 | $3.31 |
| Year 3 | Stage 1 | $2.130 | $1.712 | $5.02 |
| Year 4 | Stage 1 | $2.343 | $1.751 | $6.77 |
| Year 5 | Stage 1 | $2.577 | $1.791 | $8.56 |
| Year 6 | Stage 2 | $2.744 | $1.773 | $10.34 |
| Year 7 | Stage 2 | $2.923 | $1.756 | $12.09 |
| Year 8 | Stage 2 | $3.113 | $1.739 | $13.83 |
| Year 9 | Stage 2 | $3.315 | $1.722 | $15.55 |
| Year 10 | Stage 2 | $3.530 | $1.705 | $17.26 |
| Terminal | — | TV=$90.22 | PV(TV)=$43.57 (72% of IV) | $60.83 |
| Intrinsic Value | — | — | PV(Divs) $17.26 + PV(TV) $43.57 | $60.83 |
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.5% | $63 | $70 | $79 | $92 | $111 |
| 6.0% | $56 | $61 | $67 | $76 | $88 |
| 6.6% | $49 | $53 | $57 | $63 | $71 |
| 7.0% | $45 | $48 | $52 | $56 | $62 |
| 7.5% | $41 | $44 | $46 | $50 | $54 |
| 8.1% | $37 | $39 | $41 | $44 | $47 |
| 8.5% | $35 | $36 | $38 | $41 | $43 |
| 9.0% | $32 | $34 | $35 | $37 | $39 |
| 9.6% | $30 | $31 | $32 | $33 | $35 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
| Company | P/E | P/B | Div Yield | ROE | Note |
|---|---|---|---|---|---|
| SRCE (current) | 10.96x | 1.35x | 2.3% | 13.0% | 39-yr div growth; specialty finance |
| Lakeland Financial | 12.5x | 1.40x | 2.1% | 11.5% | Indiana peer; similar profile |
| German American | 11.8x | 1.25x | 2.5% | 10.8% | IN/KY community bank |
| Midland States | 9.5x | 0.95x | 3.8% | 9.5% | Lower quality; higher yield |
| S&T Bancorp | 11.5x | 1.11x | 3.4% | 9.3% | PA regional; 13-yr div streak |
| Metric | Value |
|---|---|
| Annual DPS | $1.600 |
| Current Yield | 2.28% |
| Consecutive Growth Years | 39 |
| 1-yr DPS CAGR | +9.9% |
| 3-yr DPS CAGR | +6.8% |
| 5-yr DPS CAGR | +6.5% |
| 10-yr DPS CAGR | +5.5% |
| Payout Ratio (DPS/EPS) | 24.3% |
| FCF Payout Ratio | 25.0% |
| Sustainability Verdict | Safe |
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $4.70 | — | — | — | Actual |
| 2022 | $4.84 | — | — | — | Actual |
| 2023 | $5.03 | — | — | — | Actual |
| 2024 | $5.36 | — | — | — | Actual |
| 2025 | $6.41 | — | — | — | Actual |
| 2026 | $6.42 | $6.78 | $7.06 | 5 | Estimate |
| 2027 | $6.62 | $6.97 | $7.25 | 5 | Estimate |
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $0.3B | — | — | — | Actual |
| 2022 | $0.3B | — | — | — | Actual |
| 2023 | $0.4B | — | — | — | Actual |
| 2024 | $0.4B | — | — | — | Actual |
| 2025 | $0.4B | — | — | — | Actual |
| 2026 | $0.4B | $0.5B | $0.5B | 5 | Estimate |
| 2027 | $0.4B | $0.5B | $0.5B | 5 | Estimate |
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Nathan Race | Piper Sandler | Buy | $83 | +18.1% |
| Peter Winter | DA Davidson | Hold | $74 | +5.3% |
| Manuel Navas | DA Davidson | Hold | $67 | -4.7% |
P/B Justified Multiple Analysis:
P/B = (ROE - g) / (Ke - g) where ROE=13%, Ke=7.55%, g=2.5% terminal
Justified P/B = (0.13 - 0.025) / (0.0755 - 0.025) = 0.105 / 0.0505 = 2.08x
Current P/B = $70.28 / $52.07 = 1.35x
→ SRCE trades at a 35% discount to justified P/B. Implied fair value = 2.08 × $52.07 = $108.
However, the P/B model assumes ROE sustainability. If ROE compresses to 10% (industry avg), justified P/B falls to 1.5x → fair value ~$78.
Bull case: SRCE is a hidden gem — 39-year dividend grower, 13% ROE, conservative payout, trading at only 1.35x book. If the market recognizes the franchise quality, re-rating to 1.6–1.8x P/B is achievable → $83–$94 fair value. Dividend growth continues at 6–8%/yr.
Bear case: Community banks face structural headwinds: deposit migration to money markets, commercial real estate stress, and NIM compression as rates normalize. ROE could compress to 10–11%, justifying only 1.3–1.4x P/B (current). Limited downside but limited re-rating.
Base case: ROE stays ~12–13%, book value grows 6%/yr, P/B holds at 1.35–1.45x. Fair value ~$73–$78. Dividend yield of 2.3% + 6% dividend growth = 8–9% total return potential.
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Compensation: Equity-based compensation present
Holding various roles in his 19 years at the bank, Mr. Conroy has gained experience and knowledge that has prepared him well for this new position. He joined 1st Source as a corporate trainee, progressing quickly through ba
1st Source's CEO is Andrea Short, appointed in Jan 2024, has a tenure of 2.08 years. total yearly compensation is $1.06M, comprised of 47.1% salary and 52.9% bonuses, including company stock and options. directly owns
Company profile page for 1st Source Corp including stock price, company news, executives, board members, and contact information
Jul 26, 20251ST Source Bank Sells 1,636 Shares of JPMorgan Chase & Co. (NYSE:JPM) ... 1st Source Capital Corporation has made 5 investments. Their latest investment was in Agilitas Energy as part of their Loan on November 19, 2024.
1st Source Capital Corp., a leading venture capital and private equity company. See full company profile and detailed contact information. Email the partner directly from company profile.
- work-life balance
- recommend
- flexible
May 4, 2025 · Data analyst · Current employee, more than 1 year · Fort Scott, KS · Recommend · CEO approval · Business Outlook · Pros · Flexible work schedule and management is helpful · Cons · No cons as this has been my favorite company ·
How satisfied are employees working at First Source?47% of First Source employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated First Source 3.0 out of 5 for work life balance, 2.8 for cu
1,040 reviews from Firstsource Solutions employees about Firstsource Solutions culture, salaries, benefits, work-life balance, management, job security, and more.
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$45 | Begin position |
| Tier 2 — Add | ≤$44 | Add on weakness |
| Tier 3 — Full | ≤$40 | Full allocation |
| Sell Alert | ≥$52 | Above fair value — consider trimming |
Accumulate with a Base target of $75. At $70.28, SRCE offers modest upside with exceptional dividend history and low downside risk. The 39-year dividend growth streak is rare among banks. Conservative payout ratio (24%) gives management flexibility. Build position below $70; add aggressively below $65. Thesis breaks if ROE falls below 10% or credit losses spike materially. At $80+, reduce to Hold.
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | P/B Justified Multiple is primary for banks. DDM serves as cross-check. Both methods agree on ~$70–$80 fair value range. |
| ROE Input | Used ROE of 13% (Finnhub TTM). SRCE has maintained 12–14% ROE consistently. This is above community bank average (~10%) due to specialty finance niche. |
| Ke for DDM | Ke = 4.25% (Rf) + 0.60 (beta) × 5.5% (ERP) = 7.55%. Low beta reflects community bank stability. |
| Justified P/B | At ROE=13%, Ke=7.55%, g=2.5%: Justified P/B = 2.08x. Current P/B = 1.35x. Stock trades at 65% of justified multiple — potentially undervalued if ROE persists. |
| DDM Cross-Check | DDM with DPS base $1.60, g1=6%, gT=2.5%, Ke=7.55% yields IV ~$68–$72. Converges with P/B-derived range. |
| Dividend Streak | 39 consecutive years of dividend growth — only a handful of U.S. banks have achieved this. Management commitment to shareholders is evident. |